Insider buying is often a sign of potential positive developments within a company, particularly if the insiders who are buying have a good track record with respect to their own buying. This is, however, only a secondary indicator and should not be relied upon solely when making the decision whether or not to purchase a security. Insider buying in and of itself will not make a stock go higher, but can provide a further clue if all the other pieces of the puzzle (e.g., earnings, sales, return on equity, profit margins, etc.) are in place.
I screened for companies in the healthcare sector where at least one insider made a buy filed during the week ending August 10. Here are the five stocks:
1. Pacific Biosciences (PACB) offers the PacBio RS High Resolution Genetic Analyzer to help scientists solve genetically complex problems. Based on its novel Single Molecule, Real-Time (SMRT) technology, the company's products enable: targeted sequencing to more comprehensively characterize genetic variations; de novo genome assembly to more fully identify, annotate and decipher genomic structures; and DNA base modification identification to help characterize epigenetic regulation and DNA damage. By providing access to genetic information that was previously inaccessible, Pacific Biosciences enables scientists to increase their understanding of biological systems.
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Michael Hunkapiller purchased 400,000 shares on August 6-7 and currently holds 500,000 shares of the company. Michael Hunkapiller became President & CEO of Pacific Biosciences in 2012. He is Chairman of PacBio's Board of Directors, and has served on the Board since 2005.
The company reported its second-quarter financial results on July 26 with the following highlights:
|Net loss per share||$0.40|
|Cash per share||$2.46|
The company's revenues are expected to be lower in the second half of the year, and it continues to target approximately $20 million of cash used per quarter and $80 million of cash used for the year.
CEO Michael W. Hunkapiller commented at the second-quarter conference call:
With a series of new product releases scheduled to go out during the second half of the year, we feel that we are well-positioned to drive business from them.
The stock is currently trading below net cash. The main problem with the stock is that the company spends about $20 million per quarter more than it makes. Short-term catalysts for the stock could be buyout speculations across the sector.
2. Boston Scientific (BSX) is a worldwide developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties.
- Ernest Mario purchased 32,000 shares on August 6 and currently holds 500,604 shares of the company. Dr. Mario serves as a director of the company.
- Michael Mahoney purchased 22,000 shares on July 31. Michael Mahoney is President for Boston Scientific Corporation and a member of its Executive Committee. In this role, he is responsible for the company's Cardiac Rhythm Management (CRM) and Endoscopy (GI and Pulmonary) businesses, as well as certain corporate functions.
- Hank Kucheman purchased 10,000 shares on July 31 and currently holds 180,828 shares of the company. Hank Kucheman is Chief Executive Officer for Boston Scientific Corporation and serves on its Board of Directors.
The company reported the second-quarter financial results on July 26 with the following highlights:
|Earnings per share (adjusted)||$0.17|
The company estimates sales for the third quarter of 2012 in a range of $1.725 billion to $1.825 billion. It estimates earnings on a GAAP basis in a range of $0.06 to $0.09 per share. Adjusted earnings, excluding acquisition- and restructuring-related charges and amortization expense are estimated in a range of $0.14 to $0.17 per share.
The company estimates sales for the full year 2012 in a range of $7.2 billion to $7.4 billion. It estimates losses on a GAAP basis in a range of $2.16 to $2.09 per share. Adjusted earnings, excluding goodwill and other intangible asset impairment charges, acquisition-, restructuring- and litigation-related charges and amortization expense are estimated in a range of $0.62 to $0.68 per share.
There has not been other insider buys than these three mentioned above since March 2012. The stock has bounced from the $5 level three times already. One time in 2010, one time in 2011 and the most recent bounce just 2 weeks ago after the earnings dip. Stephen Simpson wrote an article about Boston Scientific on July 26. I would give about 50% chance that the $5 level will hold this year.
3. 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 282,500 shares last week, and currently controls 130,625,400 shares of the company. The company has 297,836,707 shares outstanding, which makes Frost a 43.9% owner of the company. Phillip Frost is the CEO and chairman of the company. Frost has been a buyer almost every day this year. His net worth is $2.3 billion as of March 2012.
The company reported the second-quarter financial results on August 9 with the following highlights:
|Net loss per share||$0.04|
|Cash per share||$0.19|
- The company expects to begin marketing its test for Alzheimer's disease in 2013. The company believes that this test could initially be useful in stratifying patients for ongoing clinical trials of potential Alzheimer's drugs, as well as to confirm the diagnosis in a clinical setting and to track the progression of the disease or effectiveness of a therapeutic in a clinical trial.
- The company has already obtained a CE Mark for its point-of-care diagnostic test for prostate specific antigen (PSA) using its system in Europe, and the company intends to launch the PSA test in Europe in the second half of 2012.
- In December 2011, the company commenced a multi-center study in the U.S. for the PSA test, which is designed for 510(k) clearance and potential waiver under The Clinical Laboratory Improvement Amendments of 1988. The company intends to submit its application to the Food and Drug Administration for clearance of the PSA test in 2012 and expects to begin marketing the test in the U.S. in 2013.
The company has several catalyst pending for 2012 and 2013. I would be watching the $4 level closely if it holds or not. Phillip Frost purchased 10% of the shares traded last week.
4. MAKO Surgical Corporation (MAKO) is a medical device company that markets its RIO Robotic-Arm Interactive Orthopedic system, joint specific applications for the knee and hip, and proprietary RESTORIS implants for orthopedic procedures called MAKOplasty. The RIO is a surgeon-interactive tactile surgical platform that incorporates a robotic arm and patient-specific visualization technology, which enables precise, consistently reproducible bone resection for the accurate insertion and alignment of MAKO's RESTORIS implants. The MAKOplasty solution incorporates technologies enabled by an intellectual property portfolio including more than 300 U.S. and foreign, owned and licensed, patents and patent applications.
- Charles Federico purchased 2,000 shares on August 3 and currently holds 12,000 shares of the company. Charles Federico has served as one of the company's directors since June 2007.
Richard Pettingill purchased 7,775 shares on August 3. Richard Pettingill has served as one of the company's directors since August 2010.
The company reported the second-quarter financial results on August 1 with the following highlights:
|Net loss||$0.2 per share|
Guidance of 42 to 48 expected annual RIO system sales and 11,000 to 12,000 expected annual MAKOplasty procedures remains unchanged from July 9.
The stock has seen more insider selling than buying since February 2011. The stock dipped from $25 to $15 in July after the company lowered its full-year guidance. I believe the current dip is a buying opportunity for the stock.
5. AspenBio Pharma (APPY) is an in vitro diagnostic company focused on the clinical development and commercialization of its lead product, AppyScore. AppyScore is a unique blood-based test with projected high sensitivity and negative predictive value that is designed to aid in the identification of patients at low risk for acute appendicitis, allowing for more conservative patient management. AppyScore is initially being developed for pediatric, adolescent and young adult patients with abdominal pain as this population is at the highest risk for appendicitis as well having the highest risk of the long-term health effects associated with CT imaging.
- Gail Schoettler purchased 2,500 shares on August 3 and currently holds 3,000 shares of the company. Ambassador Gail Schoettler has served on the board of AspenBio Pharma since August 2001. She sits on the audit committee and the nominating and governance committee of AspenBio Pharma. In October 2010, Ms. Schoettler became Non-Executive Chair of the board of AspenBio.
- Stephen Lundy purchased 4,000 shares on June 29. Stephen Lundy was appointed to the positions of Chief Executive Officer and President on March 24, 2010. Effective on the same date, he was appointed to the company's Board of Directors. Mr. Lundy has more than 20 years of experience in drug and diagnostic product development and commercialization. He was Chief Executive Officer of MicroPhage from 2008 to 2010.
- Jeffrey McGonegal CFO purchased 5,000 shares on June 28 and currently holds 13,622 shares of the company.
- Gregory Pusey, a director and officer, purchased 2,000 shares on June 29 and currently holds 31,795 shares of the company.
- Michael Merson purchased 1,000 shares on June 29 and currently holds 1,180 shares of the company. Mr. Merson is chair of the nominating and governance committee and sits on the audit committee of AspenBio Pharma.
I wrote an article about AspenBio on July 26. I recommend reading the article if you are interested in the stock and the upcoming catalysts.