4 Healthcare Companies With Insider Buys This Week

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Includes: CO, DRTX, MTP, NLNK
by: Markus Aarnio

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 filed this week. Here are four healthcare stocks that I found:

1. Durata Therapeutics (DRTX) is a pharmaceutical company focused on the development and commercialization of therapeutic solutions for physicians and providers to advance patient care in infectious disease. Durata is currently enrolling patients in two global Phase 3 clinical trials with its lead product candidate, dalbavancin, for the treatment of patients with acute bacterial skin and skin structure infections.

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Insider buys

  • Aisling Capital III purchased 1,111,111 shares on July 24th through the initial public offering and currently holds 3,130,824 shares of the company. The company has 18,365,363 shares outstanding which makes Aisling Capital III a 17% owner of the company.
  • Domain Partners VIII purchased 778,536 shares on July 24th through the initial public offering and currently holds 3,006,132 shares of the company. The company has 18,365,363 shares outstanding which makes Domain Partners Viii a 16% owner of the company.
  • James Healy purchased 588,236 shares on July 24th through the initial public offering and currently controls 2,277,580 shares of the company. The company has 18,365,363 shares outstanding which makes James Healy a 12.5% owner of the company.

Upcoming milestones

The company expects to complete two Phase 3 clinical trials and have initial, top-line data available in the beginning of 2013. If the company's ongoing Phase 3 clinical trials are successful, the company plans to submit a New Drug Application to the FDA in the first half of 2013 and a marketing authorization application to the EMA in the second half of 2013.

Financials

The company's financial highlights include:

Cash $96 million
Net loss $8.2 million (Q1 2012)
Shares outstanding 18.4 million
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My analysis

The stock has traded only five days. With the upcoming milestones I might consider taking a position in the stock.

2. China Cord Blood Corporation (CO) is the first and largest cord blood banking operator in China in terms of geographical coverage and the only cord blood banking operator with multiple licenses. Under current PRC government regulations, only one licensed cord blood banking operator is permitted to operate in each licensed region and only seven licenses have been authorized as of today. China Cord Blood Corporation provides cord blood collection, laboratory testing, hematopoietic stem cell processing and stem cell storage services.

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Insider buys

Kent McCarthy purchased 325,000 shares on July 20th and currently controls 7,859,821 shares of the company. Kent McCarthy is a 10% owner according to SEC filings.

Financials

The company reported its FY2012 results on June 11th with the following highlights:

Revenue $60.4 million
Net income $21.0 million
Cash $126.1 million
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My analysis

The company has a 62.6% insider ownership and cash $1.7 per share. I believe the current price is a good entry point for the stock.

3. DARA BioSciences (DARA) is a specialty pharmaceutical company focused on the development and commercialization of oncology treatment and supportive care products. DARA sharpened its focus in oncology through its January 2012 acquisition of Oncogenerix, which holds the exclusive U.S. marketing rights to Soltamox. Soltamox is a novel oral liquid formulation of tamoxifen, a product used widely in the treatment and prevention of breast cancer. Soltamox is the only FDA approved oral liquid version of tamoxifen and fulfills a vital clinical need for patients who cannot tolerate existing tablet formulations of this drug. DARA plans to begin marketing Soltamox in the U.S. later this year. Additionally, in June 2012 DARA launched its first product, Bionect, a topical treatment for skin irritation and burns associated with radiation therapy.

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Insider buys

  • Haywood Cochrane purchased 10,000 shares on July 19-20th and currently holds 13,073 shares of the company. Mr. Cochrane is a Director of the company.
  • David Drutz purchased 25,000 shares on June 8th and currently holds 53,073 shares of the company. David Drutz, MD is President and Chief Executive Officer of the company. Dr. Drutz' career spans 36 years in clinical medicine and patient care, basic and clinical research, pharmaceutical and biotechnology operational and research management and venture capital.

Financials

The company reported first quarter results on May 21st with the following highlights:

Cash $9.5 million
Net loss $2 million
Shares outstanding 18.3 million
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Upcoming milestones

  • DARA plans to begin marketing Soltamox in the U.S. in Q3 2012.
  • DARA has obtained the U.S. rights to gemcitabine, a widely used generic chemotherapeutic cancer drug, from Uman Pharma. The Abbreviated New Drug Application (NASDAQ:ANDA) for gemcitabine is expected to be filed with the FDA later this year.

My analysis

The company is launching two products this year. With the recent financing and insider buying I believe this stock is a good pick for the rest of the year.

4. NewLink Genetics Corporation (NLNK) is a late-stage, biopharmaceutical company focused on discovering, developing, and commercializing novel immunotherapeutic products to improve cancer treatment options for patients and physicians. The company's portfolio includes both "off-the-shelf" biologic and small-molecule immunotherapy product candidates intended to address large, unmet oncology indications, including treatment of pancreatic cancer, non-small cell lung cancer (NSCLC), and melanoma. The company believes its technologies may also be useful in the field of infectious disease.

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Insider buys

Charles Link purchased 139 shares on July 19th and currently controls 1,233,626 shares of the company. Charles Link, Jr., M.D. founded NewLink Genetics Corporation in 1999 and has served as Chairman of its Board of Directors and the company's Chief Scientific Officer since inception in 1999. Charles Link served as the company's President from 2001 to 2009 and has served as the company's Chief Executive Officer since 2003.

Financials

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

Cash $35.8 million
Net loss $4.8 million
Shares outstanding 20.6 million
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NewLink is maintaining its financial guidance and continues to expect to end 2012 with about $20 million in cash, cash equivalents and marketable securities. NewLink continues to anticipate that this capital should allow it to fund its operations through 2013 based on its current operating plans.

Upcoming milestones

The company's lead product candidate, HyperAcute Pancreas cancer immunotherapy is being studied in a Phase 3 clinical trial in surgically-resected pancreatic cancer patients. The company initiated this trial in May 2010 and have enrolled 200 patients at 55 clinical sites in the United States as of October 25, 2011. The company plans to complete the first interim analyses of data from its Phase 3 clinical trial in early 2013. The company has also received Fast Track and Orphan Drug designations from the FDA for HyperAcute Pancreas for the adjuvant treatment of surgically-resected pancreatic cancer.

My analysis

I would be looking to be a buyer around $10 level. The next milestone is in early 2013.

Disclosure: I am long DARA.