While many retail investors appear spooked by all the noise and confusing economic data, many corporate insiders appear to be buying up the suddenly discounted shares of their own firms. Yes, the situation remains volatile, but several of the bankers that we’ve spoken to expect that things will begin to settle down a bit as we head into Fall. Let’s hope they’re right.
Either way, one helpful way to gauge a company’s prospects is by looking at its insider buying activity. Experienced traders know that when insiders buy shares on the open market, their companies may be preparing to enjoy bullish moves ahead. The simplest reasoning dictates that corporate insiders have the inside track on their companies' prospects, and often have significant exposure to the company's stock through options or restricted shares that are part of their compensation.
In other words, a simple winning strategy to maximize profitability is to follow the insiders. By tracking SEC filings, we’ve been noticing some particularly heavy ($1 million plus) buying in some of these healthcare sector firms:
There are 13 upcoming Trade Catalysts listed in our calendar including one upcoming Full Phase II trial result for Captisol-Enabled melphalan hydrochloride as indicated for Multiple Myeloma.
Ligands Captisol-enabled melphalan program has been granted Orphan Drug status by the FDA as a conditioning treatment for use in autologous transplant for patients with multiple myeloma. This new IV formulation of melphalan (currently sold as Alkeran for Injection) has the potential to offer multiple advantages for clinicians and patients in the multiple myeloma transplant setting.
Ligand engages in the research, milestone, and royalty revenue activities resulting from its collaborations with pharmaceutical partners. The collaborations primarily include ongoing clinical programs at Bristol-Myers Squibb (BMY), GlaxoSmithKline (GSK), Pfizer (PFE), Merck & Co. (MRK), Cephalon, Inc (CEPH), and Celgene (CELG). These partnered product candidates are being studied for the treatment of indications such as thrombocytopenia, rheumatoid arthritis, chronic obstructive pulmonary disease, asthma, osteoporosis, menopausal symptoms, and Alzheimer’s disease.
VIROPHARMA INC (Nasdaq: VPHM)
Total Insider buying: $4,145,431.04
An upcoming trade catalyst from the calendar involves the initiation of a Phase III study for Cinryze in adolescent and adult subjects with hereditary angioedema (HAE).
ViroPharma's core focus is on providing patients and physicians new therapeutic alternatives for great unmet medical needs. Their product folio includes: Vancocin; Cinryze; NTCD, a non-toxigenic strain of Clostridium difficile for the prevention of recurrence of Clostridium difficile infection (CDI) following initial treatment of acute CDI with Vancocin and VP20621 for the prevention of recurrence of CDI disease.
ZIOPHARM Oncology (Nasdaq: ZIOP)
Total Insider buying: $4,068,159.06
One of their Upcoming Trade Catalysts involves a 4th quarter, pivotal Clinical Trial Initiation for Darinaparsin - a novel mitochondrial-targeted agent being developed intravenously for the treatment of relapsed peripheral T-cell lymphoma. An oral form is in a Phase I trial in solid tumors.
ZIOPHARM engages in the development and commercialization of a diverse, risk-sensitive portfolio of in-licensed cancer drugs to address unmet medical needs. It was founded in 2003, with a mission to advance patient treatment in cancer.
ZIOPHARM applies new insights from molecular and cancer biology to understand the method to improve the efficacy and safety of cancer therapies. Its product pipeline includes: Darinaparsin (ZIO-101), a novel organic arsenic indicated for the treatment of various hematologic and solid cancers; Palifosfamide (ZIO-201), a novel molecule which is the functional active metabolite of ifosfamide indicated for the treatment of sarcoma, testicular and other cancers including breast and prostate; and Indibulin (ZIO-301), a novel, oral tubulin binding agent that targets both mitosis and cancer cell migration.
Opko Health (AMEX: OPK)
Total Insider buying: $2,221,313.55
Billionaire Phil Frost, who already owns quite a bit of OPKO Health, Inc’s stock has been buying more. The company is involved in the discovery, development, and commercialization of proprietary pharmaceutical products, medical devices, vaccines, diagnostic technologies and imaging systems. It is initially focused on the treatment and management of ophthalmologic diseases and has expanded into other areas of major unmet medical need such as oncology, infectious diseases, and neurological disorders.
Theravance, Inc. (Nasdaq:THRX)
Total Insider buying: $2,019,604.88
GlaxoSmithKline Plc which is a 10% owner of the company purchased more shares at an average price of $19.71 in early August and shares saw a low of $16.59 before bouncing to $18.55, then finally settling at $17.50.
There are three upcoming milestones for the company highlighted in the calendar, including two separate approval decisions for Telavancin that are under review at the European Medicines Agency.
Theravance is a biopharmaceutical company focused on the discovery, development and commercialization of small molecule medicines in therapeutic areas of respiratory disease, bacterial infections and central nervous system.
Quidel Corporation (Nasdaq:QDEL)
Total Insider buying: $1,688,878.22
Latest ChartQuidel Corporation is engaged in the development, manufacturing and marketing of diagnostic testing solutions at the point of care (POC) in infectious diseases and reproductive health. It commenced operations in 1979, with a mission to build its own branded business and market franchises in the professional use markets. This past week they received the CE Mark approval for its Sofia Fluorescent Immunoassay Analyzer and for its Sofia Influenza A+B Fluorescent Immunoassay (FIA).
"Obtaining a CE mark for our Sofia Analyzer and Influenza Assay ahead of the next flu season is a significant accomplishment," said Douglas Bryant, president and chief executive officer of Quidel Corporation. "We are very delighted with the milestones we have achieved with respect to our new product pipeline, and specifically with our next-generation immunoassay platform."
Merck & Company (NYSE: MRK)
Total Insider buying: $1,519,203.41
For Merck, there are several upcoming milestones highlighted in the calendar, including Phase III TRACER trial results for Arterial Thrombosis.
Merck's research is focused on the therapeutic areas of: Cardiovascular, Diabetes and Obesity, Bone, Respiratory, Immunology, and Dermatology, Infectious Disease, Oncology, Neurosciences and Ophthalmology and Women's Health and Endocrine. The company's products include: Vaccines - BCG Vaccine, GARDASIL, COMVAX, PEDVAX HIB, VAQTA etc; Prescription products - ASMANEX, TWISTHALER, CANCIDAS, CLARINEX, COMVAX, COZAAR, CRIXIVAN etc; Consumer products - AFRIN, BAIN DE SOLEIL, DR. SCHOLL'S Freeze Away, GYNE-LOTRIMIN, LOTRIMIN, MIRALAX, Zegerid OTC, Zegerid OTC etc.
Skilled Healthcare Group, Inc.(NYSE: SKH)
Total Insider buying: $1,212,742.61
In early August, SKH shares dropped 40 percent after the nursing home operator said its profits more than doubled in the second quarter. The drop happened after Medicare announced a large payment cut to companies that run skilled nursing facilities. The Centers for Medicare & Medicaid Services said it will cut reimbursement rates by 11.1 percent starting in October.
Skilled Healthcare will adjust its annual profit guidance to include the payment cut, but did not say how much its profit might decrease. Shares have traded between $2.26 and $15.93 during the past 12 months.
"While we are extremely disappointed with the announcement by the Centers for Medicare & Medicaid Services, we believe we are well positioned for the future with our conservative model for managing our skilled nursing facility business and diversification of our operations to reduce the exposure to such radical changes in Medicare and Medicaid rates," said Skilled Health Chairman and CEO Boyd Hendrickson.
Agenus (Nasdaq: AGEN)
Total Insider buying: $1,212,742.61
Share price was slashed when the company raised money in early August. Antigenics announced the pricing of an at-market underwritten offering of 13,725,491 primary shares of its common stock at a price of $0.51 per share with a group of investors including the Company's Chairman and CEO, Dr. Garo Armen.
Last week, Armen came in and purchased another 2,150,976 discounted shares at an average price of $.51.
Agenus Inc. is a biopharmaceutical company developing treatments for cancers and infectious diseases. The company was founded in 1994 by Garo Armen and Pramod Srivastava as Antigenics and changed its name to Agenus Inc. in 2011.
Agenus' technology platforms include Heat shock protein (HSPs), also called stress proteins, a group of proteins that are present in all cells (normal cells, cancer cells and infected cells) in all life forms.
Celgene Corporation (Nasdaq:CELG)
Total Insider buying: $1,075,585.70
Our calendar indicates that the company is anticipating two upcoming milestones – including the end of a Phase II trial for Abraxane with Avastin (First-line Therapy) for Metastatic Melanoma.
More importantly, Celgene Corp's board has authorized the biotechnology company to buy back $2 billion of its shares. The company said last Thursday that it now has a total of about $2.25 billion remaining from previous authorizations plus the new one.
The stock has 19 analysts covering it with a new price target of $70.11.
Celgene's Research and Development is engaged to develop oral therapies that address the source of disease not just the symptoms. Its discovery and development platforms for drug and cell-based therapies allow them to both create and retain significant value within its therapeutic franchise areas of cancer and inflammatory diseases. Its IMiDs compounds are proprietary novel small molecule, orally available compounds that modulate the immune system and other biologically important targets through multiple mechanisms of action. It also developed target-identification and drug-discovery technology platforms that enable the company to proceed rapidly from target identification through lead optimization.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.