1 Biotech And 1 Gold Miner With Recent Intensive Insider Buying

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 |  Includes: DRGDF, VSTM
by: Markus Aarnio

There was intensive insider buying in SunEdison (SUNE) in November 2012, when the stock was trading below $3. The stock is currently trading at $8.28 or 285% above the low made in November 2012.

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With this episode in mind, I screened for stocks which have seen recent intensive insider buying. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

In this article I will feature two stocks that have seen intensive insider buying during the last 30 days.

1. Verastem (NASDAQ:VSTM), a biopharmaceutical company, focuses on discovering and developing proprietary small molecule drugs targeting cancer stem cells [CSCs] with companion diagnostics.

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Insider buying by insider (last 30 days)

  • Robert Forrester purchased 1,000 shares on June 13 and currently holds 254,974 shares or 1.2% of the company. Robert Forrester is President/Chief Operating Officer of the company.
  • CHP III LP purchased 48,171 shares on June 11-12 and currently holds 2,329,121 shares or 10.9% of the company.
  • Louise Phanstiel purchased 16,500 shares on June 10-12 and currently holds 16,500 shares or less than 0.1% of the company. Louise Phanstiel serves as a director of the company.
  • Henri Termeer purchased 17,179 shares on June 11-12 and currently holds 17,179 shares or less than 0.1% of the company. Henri Termeer serves as a director of the company.
  • Christoph Westphal purchased 1,800 shares on May 21 - June 7 and currently holds 707,089 shares or 3.3% of the company. Christoph Westphal is Chairman/CEO of the company.

Insider buying by calendar month

Here is a table of Verastem's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
June 2013 83,850 0
May 2013 36,600 0
April 2013 6,431 0
March 2013 2,400 0
February 2013 1,600 0
January 2013 1,900 0
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The month of June has seen the most insider buying this year.

Financials

The company reported the first-quarter financial results on May 9 with the following highlights:

Revenue $0
Net loss $9.0 million
Cash $84.4 million
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Upcoming milestones

The company's planned upcoming clinical milestones include the following:

  • Initiate the potentially pivotal trial in mesothelioma for VS-6063 mid-year 2013.
  • Complete the dose finding portion of the Phase 1/1b trial of VS-6063 plus paclitaxel in ovarian cancer.
  • Begin enrollment of the expanded cohort of the Phase 1/1b trial of VS-6063 plus paclitaxel in ovarian cancer.
  • Initiate Phase I clinical development of VS-4718 H1 2013.
  • Initiate Phase I clinical development of VS-5584 H2 2013.

Pipeline

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Competition

There are other companies working to develop therapies that target CSCs. These companies include divisions of large pharmaceutical companies including Astellas Pharma (OTCPK:ALPMF), Sanofi-Aventis U.S. LLC (NYSE:SNY), GlaxoSmithKline (NYSE:GSK), Boehringer Ingelheim GmbH, Pfizer (NYSE:PFE) and others. There are also biotechnology companies of various sizes that are developing therapies against CSCs, including OncoMed Pharmaceuticals, Inc., Boston Biomedical Inc. and Stemline Therapeutics (NASDAQ:STML).

My analysis

There have been five different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. The company has insider ownership of 5.33%. There are seven analyst buy ratings, zero neutral ratings and zero sell ratings with an average target price of $17.17. I believe the most important upcoming milestone will be the initiation of a potentially pivotal trial in mesothelioma for VS-6063 which is planned for mid-year 2013. The 200-day moving average is currently at $9.05, which could be a good entry point for the stock.

2. Detour Gold Corporation (OTCPK:DRGDF) engages in the acquisition, exploration, and development of mineral property interests in Canada.

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Insider buying by insider (last 30 days)

  • Patrick Donovan purchased 5,000 shares on June 11 pursuant to a public offering. Patrick Donovan currently holds 49,000 shares or less than 0.1% of the company. Patrick Donovan is Vice President Corporate Development.
  • James Mavor purchased 10,000 shares on June 11 pursuant to a public offering. James Mavor currently holds 15,000 shares or less than 0.1% of the company. James Mavor is Vice President Finance.
  • Gerald Panneton purchased 11,000 shares on June 11 pursuant to a public offering. Gerald Panneton currently holds 642,014 shares or 0.5% of the company. Gerald Panneton is President, Chief Executive Officer and Director of the company.
  • Rachel Pineault purchased 2,000 shares on June 11 pursuant to a public offering. Rachel Pineault currently holds 2,800 shares or less than 0.1% of the company. Rachel Pineault is Vice President Human Resources and Aboriginal Affairs.
  • James Robertson purchased 2,000 shares on June 11 pursuant to a public offering. James Robertson currently holds 12,885 shares or less than 0.1% of the company. James Robertson is Vice President Environment and Sustainability.
  • Derek Teevan purchased 10,000 shares on June 11 pursuant to a public offering. Derek Teevan currently holds 14,500 shares or less than 0.1% of the company. Derek Teevan is Senior Vice President Aboriginal and Governmental Affairs.

Insider buying by calendar month

Here is a table of Detour Gold's insider trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
June 2013 40,000 0
May 2013 1,500 0
April 2013 4,606 0
March 2013 0 0
February 2013 0 24,175
January 2013 0 27,000
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The month of June has seen the most insider buying this year.

Financials

The company reported the first-quarter financial results on May 10 with the following highlights:

Net loss $23.4 million
Cash $166.8 million
Debt $585.0 million
Gold production 16,841 ounces
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Outlook

The company remains on target to achieve commercial production in the third quarter of the year. Detour Gold has revised its 2013 production outlook to between 260,000 ounces and 320,000 ounces of gold to reflect a slower ramp-up than expected at the Detour Lake mine. Post-commercial production, total cash costs are expected to be between $800/oz and $1,000/oz for 2013.

Competition

The precious metal mineral exploration and mining business is competitive. Detour Gold competes with numerous other companies, including many large established mining companies having substantial capabilities and greater financial and technical resources than Detour Gold. Such competition may result in Detour Gold being disadvantaged in the acquisition of attractive mineral properties. The ability of Detour Gold to acquire mineral properties in the future will also depend on its ability to develop its present property.

My analysis

There have been six different insiders buying the shares and there have not been any insiders selling the shares during the last 30 days. There are 12 analyst buy ratings, zero neutral ratings and zero sell ratings with an average target price of $23.40. The company's gold reserves are 15.6 million ounces. The stock is trading at a forward P/E ratio of 6.01 and the company has a book value of $14.21 per share. I believe the stock could be a good pick below the book value.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OTCPK:DRGDF over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.