When insiders buy shares on the open market, their companies are usually undervalued. Corporate insiders often have the inside track on their companies' prospects. Insiders probably wouldn't risk investing too much of their own money into their own companies unless they thought the stock might rise.
I screened for companies where at least one insider made an insider buy on July 3rd - July 5th. Here are three healthcare stocks that I found:
1. Tesaro (TSRO) is an oncology-focused biopharmaceutical company dedicated to improving the lives of cancer patients. The company was founded in March 2010 by former executives of MGI Pharma, an oncology and acute-care focused biopharmaceutical company, which was bought by Japanese drug maker Eisai (OTC:ESALF) on December 2007 for $3.9 billion in cash.
Tesaro's product portfolio currently consists of three oncology-related product candidates:
- Rolapitant, a potent and long-acting neurokinin-1, or NK-1, receptor antagonist currently in Phase 3 clinical trials for the prevention of chemotherapy induced nausea and vomiting, or CINV;
- Niraparib, formerly known as MK-4827, is an orally active and potent poly (ADP-ribose) polymerase, or PARP, inhibitor that has undergone a Phase 1 clinical trial in cancer patients as a monotherapy and is currently under evaluation by Merck (MRK) for use in combination with temozolomide for the treatment of solid tumors. The company intends to evaluate niraparib for the treatment of patients with solid tumors; and
- TSR-011, an orally available anaplastic lymphoma kinase, or ALK, inhibitor (targeted anti-cancer agent) currently in preclinical development. The company plans to test TSR-011 in clinical trials as a treatment for non-small cell lung cancer, or NSCLC, and potentially other cancer indications.
On June 27, 2012 Tesaro announced the pricing of its initial public offering of 6,000,000 shares of its common stock at a price to the public of $13.50 per share. All the insider buys were made at IPO price of $13.50 per share. The company has 26,670,486 shares outstanding after the IPO.
- Beth Seidenberg purchased 222,222 shares on July 3rd and currently controls 2,192,665 shares of the company. Beth Seidenberg, M.D., has served as a member of Tesaro's board of directors since June 2011. Dr. Seidenberg joined Kleiner Perkins Caufield & Byers in May 2005.
- Arnold Oronsky purchased 444,444 shares on July 3rd and currently controls 3,071,701 shares of the company. Arnold Oronsky, Ph.D., has served as a member of Tesaro's board of directors since June 2011. Dr. Oronsky has been with InterWest's life sciences team since 1994.
- Lawrence Alleva purchased 11,481 shares on July 3rd and currently holds 11,481 shares of the company. Lawrence Alleva was appointed to Tesaro's Board of Directors in March 2012. Mr. Alleva is currently retired. Prior to his retirement in June 2010, Mr. Alleva was employed by PriceWaterhouseCoopers LLP for 39 years, 28 of which as a partner with the firm.
- New Enterprise Associates 13 LP purchased 1,111,111 shares on July 3rd and currently holds 11,499,255 shares (or 43%) of the company.
2. OPKO Health (OPK) is a publicly traded healthcare company involved in the discovery, development, and commercialization of pharmaceutical products, vaccines and diagnostic products.
- Phillip Frost purchased 50,000 shares on July 5th and currently controls 128,827,900 shares of the company. The company has 297,543,066 shares outstanding which makes Mr. Frost a 43% owner of the company. Mr. Frost is the CEO and Chairman of the company.
2. Catalyst Pharmaceutical Partners (CPRX) is a specialty biopharmaceutical company focused on the development and commercialization of prescription drugs targeting diseases and disorders of the central nervous system (CNS), with a focus on the treatment of addiction, infantile spasms, epilepsy and other CNS indications. Catalyst is developing vigabatrin (designated CPP-109 by Catalyst) for the treatment of addiction to cocaine, methamphetamine and other addictive substances. Catalyst is also developing a more potent vigabatrin analogue (designated CPP-115 by Catalyst) for the treatment of cocaine addiction, infantile spasms and epilepsy, as well as other addiction and CNS indications. Catalyst believes that it controls all current intellectual property for drugs like CPP-109 and CPP-115 whose primary mechanism of action relates to GABA aminotransferase (GABA-AT), which is also known as GABA transaminase (GABA-T).
- Steven Miller purchased 40,000 shares on July 3rd and currently holds 114,754 shares of the company. Steven Miller, PhD, is Chief Operating Officer and Chief Scientific Officer of the company. Mr. Miller is responsible for Catalyst's product development program, which includes all aspects of chemistry and manufacturing controls, quality systems, contract operations, and development planning.
- Alicia Grande purchased 20,000 shares on July 3rd and currently holds 66,346 shares of the company. Alicia Grande, CPA, CMA, was appointed Vice President, Chief Financial Officer and Treasurer of Catalyst in December 2011, having joined the company as Corporate Controller and Chief Accounting Officer in 2007.
Patrick McEnany purchased 31,200 shares on July 2-3rd and currently holds 3,249,297 shares of the company which makes him a 10% owner. Patrick McEnany has been Chief Executive Officer and a director of Catalyst since its formation in January 2002. In July 2006, he became Chairman, President and Chief Executive Officer.
Tesaro's insider buys were made at IPO. Both Catalyst Pharmaceutical Partners and OPKO health have seen constant insider buying for more than one month already.
Disclosure: I am long CPRX.