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There was intensive insider selling in Affymax (OTCQB:AFFY) in October 2012. The stock peaked at $27.74 on October 17, 2012 and is currently trading at $1.02, or 96.3% below the October 2012 peak.

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

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

In this article, I will feature two healthcare companies that met these three criteria of intensive insider selling in the last 30 days.

1. Thermo Fisher Scientific (NYSE:TMO) provides analytical instruments, equipment, reagents and consumables, software, and services for research, manufacture, analysis, discovery, and diagnostics.

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Insider selling by insider (last 30 days)

  • Marc Casper sold 43,396 shares on June 17 pursuant to a Rule 10b5-1 trading plan. Marc Casper currently controls 437,311 shares or 0.1% of the company. Marc Casper was named President and Chief Executive Officer of Thermo Fisher Scientific in October 2009.
  • Seth Hoogasian sold 35,431 shares on June 17 pursuant to a Rule 10b5-1 trading plan. Seth Hoogasian currently holds 54,063 shares or less than 0.1% of the company. Seth Hoogasian is Senior Vice President, General Counsel & Secretary of the company.
  • Judy Lewent sold 15,000 shares on June 10 pursuant to a Rule 10b5-1 trading plan. Judy Lewent currently holds 12,188 shares or less than 0.1% of the company. Judy Lewent has been a director of the company since May 2008.
  • Edward Pesicka sold 167,980 shares on June 7 pursuant to a Rule 10b5-1 trading plan. Edward Pesicka currently holds 106,490 shares or less than 0.1% of the company. Edward Pesicka is Senior Vice President and President, Customer Channels.

Insider selling by calendar month

Here is a table of Thermo Fisher Scientific's insider trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
June 2013261,8070
May 201341,4600
April 201300
March 20134,7610
February 20135,7560
January 2013105,2800

There have been 419,064 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on April 24 with the following highlights:

Revenue$3.2 billion
Net income$336.2 million
Cash$1.0 billion
Debt$7.1 billion

Outlook

The company updated its 2013 guidance based on the solid first quarter performance and the company's decision to suspend share buybacks in light of the pending acquisition of Life Technologies.

The company updated its revenue guidance range from $12.80 to $13.00 billion to a new range of $12.84 to $13.00 billion, resulting in 3% to 4% growth year over year. The company also updated full year 2013 adjusted EPS guidance from $5.32 to $5.46 to a new range of $5.27 to $5.39, reflecting the suspension of share buybacks and tightening of its revenue range. This would lead to 7% to 9% growth over 2012.

The 2013 guidance does not include the acquisition of Life Technologies or the impact of related financing activities.

Competition

Thermo Fisher Scientific's competitors include Agilent Technologies (NYSE:A) and Becton, Dickinson and Company (NYSE:BDX). Here is a table comparing these companies.

CompanyTMOABDX
Market Cap:30.66B15.24B19.17B
Employees:38,90020,50029,555
Qtrly Rev Growth (yoy):0.04-0.000.04
Revenue:12.64B6.90B7.85B
Gross Margin:0.430.520.52
EBITDA:2.65B1.40B2.15B
Operating Margin:0.130.150.21
Net Income:1.32B1.01B1.13B
EPS:3.392.887.51
P/E:25.2215.3413.14
PEG (5 yr expected):1.591.911.89
P/S:2.412.152.42

Thermo Fisher Scientific's P/S ratio is in line with its direct competitors'.

My analysis

There have been four different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.30%. The stock is trading at a P/E ratio of 25.22 and a forward P/E ratio of 14.86. The company has a book value of $43.56 per share and the stock has a dividend yield of 0.70%. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

2. Onyx Pharmaceuticals (NASDAQ:ONXX), a biopharmaceutical company, engages in the development and commercialization of therapies that target the molecular mechanisms that cause cancer in the United States and internationally.

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Insider selling by insider (last 30 days)

  • Matthew Fust sold 1,551 shares on July 2 pursuant to a 10b5-1 plan. Matthew Fust currently holds 48,838 shares or less than 0.1% of the company. Matthew Fust is Executive Vice President and Chief Financial Officer.
  • Antonio Grillo-López sold 3,000 shares on July 1 pursuant to a 10b5-1 plan. Antonio Grillo-López currently holds 3,600 shares or less than 0.1% of the company. Antonio Grillo-López, M.D. has served as a Director since September 2002.
  • Juergen Lasowski sold 25,375 shares on July 1 pursuant to a 10b5-1 plan. Juergen Lasowski currently holds 32,083 shares or less than 0.1% of the company. Juergen Lasowski is executive vice president of corporate development and strategy.
  • Corinne Nevinny sold 5,000 shares on July 1 pursuant to a 10b5-1 plan. Corinne Nevinny currently holds 3,600 shares or less than 0.1% of the company. Corinne Nevinny has served as a Director since October 2005.
  • Paul Goddard sold 6,000 shares on July 1 pursuant to a 10b5-1 plan. Paul Goddard currently holds 14,890 shares or less than 0.1% of the company. Paul Goddard has served as a Director since February 1997 and is currently the Lead Director of the company.
  • Julianna Wood sold 4,610 shares on June 10 - July 1 pursuant to a 10b5-1 plan. Julianna Wood currently holds 19,374 shares and 29,416 options or less than 0.1% of the company. Julianna Wood is Vice President, Public Affairs.
  • Suzanne Shema sold 4,052 shares on June 7 pursuant to a 10b5-1 plan. Suzanne Shema currently holds 34,618 shares and 87,215 options or 0.2% of the company. Suzanne Shema is Executive Vice President, General Counsel and Corporate Secretary.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
July 201343,2300
June 201313,9200
May 201346,1290
April 2013152,4780
March 201332,8230
February 201346,2150
January 201328,0610

There have been 362,856 shares sold and there have been zero shares purchased by the insiders this year.

Financials

The company reported the first-quarter financial results on May 7 with the following highlights:

Revenue$145.5 million
Net loss$33.7 million
Cash$738.9 million
Debt$177.5 million

News

On June 30 Onyx confirmed that it had received and rejected an unsolicited proposal from Amgen (NASDAQ:AMGN) to acquire all of Onyx's outstanding shares and share equivalents for $120 per share in cash, subject to due diligence and other conditions. The Board of Directors of Onyx had evaluated the proposal made by Amgen with the assistance of its financial and legal advisors and concluded that the price proposed by Amgen significantly undervalued Onyx and its prospects, and was not in the best interest of Onyx or its shareholders.

Based upon expressions of interest received from other third parties and the recent proposal from Amgen, the Onyx Board has authorized its financial advisor to contact potential acquirers who may have an interest in the company in a transaction that is in the best interest of Onyx shareholders.

Upcoming milestones

Proteasome Inhibition: Phase 3 Kyprolis trials across all multiple myeloma lines

  • FOCUS trial interim results possible 2H13.
  • ASPIRE trial interim results expected 4Q13 or later.
  • ENDEAVOR trial underway.
  • CLARION trial initiating.
  • Oprozomib, oral proteasome inhibitor; preliminary data at IMW; updated data at EHA; advancing new tablet formulation.

Stivarga: Bayer (OTCPK:BAYZF) executing a global development program

  • Phase 3 trial initiated: second-line liver cancer following progression on Nexavar.
  • Phase 3 trial planned 2H13: colorectal cancer following resection of liver metastases.

Nexavar: Potential in additional indications

  • RESILIENCE trial in breast cancer results expected 1H14.

Competition

Nexavar for unresectable liver cancer. Currently, there are no other targeted systemic therapies approved for unresectable liver cancer. However, there are several other therapies in development, including a Phase 2 trial of bevacizumab plus erlotinib and a Phase 2 trial of TKI 1258 versus Nexavar. Other drugs being studied in HCC include ramucirumab and everolimus. In addition, there are many existing approaches used in the treatment of unresectable liver cancer including alcohol injection, radiofrequency ablation, chemoembolization, cryoablation and radiation therapy.

Nexavar for advanced kidney cancer. Currently, six novel agents besides Nexavar have been approved for the treatment of advanced kidney cancer - Sutent, Torisel, Avastin, Afinitor, Votrient and Inlyta.

Kyprolis for multiple myeloma. Currently, there are three commonly-used agents approved in the U.S. for the treatment of patients with multiple myeloma - Velcade, Revlimid and Thalomid. Other approved agents include Pomalyst, approved by the FDA on February 8, 2013 for the relapsed and refractory patient population. Other potentially competitive therapies are in clinical development for multiple myeloma. Vorinistat, being developed by Merck & Co. (NYSE:MRK), and panobinostat, being developed by Novartis (NYSE:NVS), are being studied in combination with bortezomib for relapsed myeloma; and elotuzumab, being developed by Abbott Laboratories (NYSE:ABT).

My analysis

There have been seven different insiders selling the shares and there have not been any insiders buying the shares during the past 30 days. The company has an insider ownership of 0.60%. There are 17 analyst buy ratings, two neutral ratings and zero sell ratings with an average target price of $128.06. The stock is trading at a forward P/E ratio of 243.35. The company is not expecting to be profitable for 2013. Before entering short this stock, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are negative earnings, bearish analyst target prices and the intensive insider selling activity.

Source: 2 Healthcare Companies With Recent Intensive Insider Selling