We present here one noteworthy buy and four noteworthy sells from Friday's SEC Form 4 (insider trading) filings in the healthcare sector, as part of our daily and weekly coverage of insider trades. These were selected by a review of over 430 separate transactions in over 225 different companies filed by insiders on Friday.
The filings are noteworthy based on the dollar amount sold, the number of insiders buying or selling, and based on whether the overall buying or selling represents a strong pick-up based on historical buying and selling in the stock:
Alexion Pharmaceuticals (ALXN): ALXN is a commercial-stage biotech focused on serving patients with severe and ultra-rare disorders. On Friday, three insiders filed SEC Forms 4 indicating that they exercised options and sold the resulting 138,515 shares for $11.8 million. The large majority of the sales were by SVP Patrice Coissac (90,000 shares) and SVP David Hallal (40,000 shares). After the sale they ended with 85,882 shares and 53,210 shares respectively (not including derivative holdings). In comparison, insiders sold a total of 0.94 million shares in the past year.
ALXN shares have been among the strongest consistent performers in the biotech group, up more than three-fold in the last eighteen months, and up nearly forty-fold since the lows almost ten years ago. The appreciation has been based almost solely on the commercial success of its Soliris drug for the treatment of patients with paroxysmal nocturnal hemoglobinuria, a blood disorder, and atypical hemolytic uremic syndrome, an ultra-rare and life-threatening genetic disease. In the latest Q4 report earlier this month, on February 9th, it beat earnings (41c v/s 33c) and revenues ($228 million v/s $221 million).
Furthermore, analysts are projecting strong earnings growth from $1.38 in 2011 to $2.46 in 2013 at an annual rate of 33.5%, while the stock trades at a 34-35 forward P/E and 14.1 P/B compared to averages of 62.9 and 10.2 for its peers in the biotech group. Analysts are bullish on the company with thirteen of twenty analysts that cover the company rating it at buy / strong buy, six at hold, and only one at underperform. While the stock has attractive growth and a reasonable valuation, it is very extended technically. As such, we would wait for a pullback into the low- to mid-$70s before buying.
Vivus Inc. (VVUS): VVUS is a biopharmaceutical company developing therapeutic products to address unmet medical needs in obesity, diabetes and sexual health. On Friday, four insiders filed SEC Forms 4 indicating that they exercised options and sold the resulting 488,567 shares for $10.1 million, pursuant to 10b5-1 plans. The large majority of the sales were by CEO Leland Wilson (150,000 shares) and VP & Chief Accounting Officer Lee Perry (171,832 shares). In comparison, insiders sold 0.62 million shares in the past year.
VVUS shares gapped up strongly late last week, on Thursday, after the company announced that an FDA advisory panel voted 20 to 2 in favor of recommending Qnexa, the company's treatment for obesity. The positive advisory panel decision bolsters the probability that the drug will ultimately be approved at the April 17th PDUFA date, and a number of brokers raised their targets in response. Most notably, JMP Securities raised the target to $45 and Rodman & Renshaw to $39, significantly higher than the current $22 price, even after the near double just in the last two trading days.
CytRx Corp. (CYTR): CYTR is a clinical-stage biotech engaged in the development of cancer therapeutics. On Friday, seven insiders filed SEC Forms 4 indicating that they purchased 0.74 million shares for $0.23 million, with the largest purchasers being Director Max Link (205,329 shares), CEO Steven Kriegsman (158,676 shares), and Director Richard Wennekamp (111,965 shares). Insider buying is rare at CytRx-- and in fact, there has been no other insider buying in at least the last two years. CYTR shares currently trade near all-time lows, and are down over 60% in the last year and over 90% in the last five years.
Mylan Inc. (MYL): MYL is one of the world's leading developers of generic and branded drugs, providing products that cover a vast array of therapeutic categories to customers in over 150 countries and territories. Also, through its India-based subsidiary, it is also one of the world's largest manufacturers of active pharmaceutical ingredients. On Friday, two insiders filed SEC Forms 4 indicating that they exercised options and sold the resulting 123,750 shares for $2.9 million, with the majority of the sales by Director Wendy Cameron (106,875 shares) and the remaining 16,875 shares were sold by Director Douglas Leech. This is in addition to the sale of 150,000 shares for $3.5 million by Executive Chairman Robert Coury that we reported just over a week ago, so that insiders have reported selling a total of 0.27 million shares in just the past six trading days. In comparison, insiders sold a total of 0.71 million shares in the past year.
MYL just reported its Q4 last Tuesday, beating earnings (53c v/s 50c) and missing of revenues ($1.53 billion v/s $1.56 billion). Its shares are within striking range of its recent highs, and they trade at 8-9 forward P/E and 2.6 P/B compared to the averages of 13.2 and 2.9 for its peers in the generics drug group, while earnings are projected to rise at a 14.0% annual rate from $2.04 in 2011 to $2.65 in 2013.
Becton Dickinson & Co (BDX): BDX is a medical technology company that develops, manufactures and sells medical devices, instrument systems, and reagents worldwide. On Friday, Chairman Edward Ludwig filed SEC Form 4 indicating that he sold 40,000 shares for $3.1 million, ending with 122,188 shares in direct and less than 68,000 shares in indirect holdings in the company. In comparison, insiders sold a total of 0.29 million shares in the past year.
BDX has been a consistent long-term performer, and its shares have doubled in the last decade at an average annual rate of over 7%. It posted a lackluster Q4 earlier this month, on February 7th, beating earnings ($1.21 v/s $1.17) but guiding FY12 EPS below consensus ($5.60-$5.70 v/s $5.82), implying almost flat earnings going forward. The shares are trading lower as a result, at 12-13 forward P/E and 3.4 P/B compared to averages of 20.5 and 5.4 for its peers in the medical & dental supplies group. However, its growth-- at a projected less than 5%-- is significantly lower than the 15.6% growth rate of its peers, so the discount is not as much as it seems.
Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.