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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 17. Here are the five stocks:

1. Clovis Oncology (NASDAQ:CLVS) is a biopharmaceutical company focused on acquiring, developing and commercializing innovative anti-cancer agents in the U.S., Europe and additional international markets. Clovis Oncology targets development programs at specific subsets of cancer populations, and simultaneously develops diagnostic tools that direct a compound in development to the population that is most likely to benefit from its use. Clovis Oncology is headquartered in Boulder, Colorado, and has additional offices in San Francisco, California and Cambridge, UK.

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Insider buys

Edward McKinley purchased 9,701 shares on August 14-16 and currently holds 295,431 shares of the company. Edward McKinley serves as a director of the company.

Financials

The company reported the second-quarter financial results on August 8 with the following highlights:

Net loss$15.7 million
Cash$176.9 million
Shares outstanding$26.1 million

The company expects a cash burn of $67 to $72 million for 2012, and to end the year with approximately $140 million in cash.

Upcoming milestones

The company expects to announce top-line overall survival results of the pivotal LEAP study of CO-101 in metastatic pancreatic cancer during the fourth quarter of 2012. If the trial is successful, the company intends to file for approval with a New Drug Application (NDA) with the U.S. Food and Drug Administration (FDA) and a Marketing Approval Application (MAA) with the European Medicines Agency (EMA) in mid-2013. The company owns global development and commercialization rights to CO-101.

My analysis

I believe the stock could have a run-up leading into the LEAP study results in the fourth quarter. I believe we could see at least a $25 share price if the results are positive. If the results are negative we could dip below $10.

2. Depomed (NASDAQ:DEPO) is a specialty pharmaceutical company with three approved and marketed products. Gralise (gabapentin) is a once-daily treatment approved for the management of postherpetic neuralgia (PHN). Zipsor (diclofenac potassium) Liquid Filled Capsules is a non-steroidal anti-inflammatory drug (NSAID) indicated for relief of mild to moderate acute pain in adults. Glumetza (metformin hydrochloride extended release tablets) is approved for use in adults with type 2 diabetes and is commercialized by Santarus (NASDAQ:SNTS) in the United States. Depomed formulates its products and product candidates with its proven, proprietary Acuform drug delivery technology, which is designed to improve existing oral medications, allowing for extended release of medications to the upper gastrointestinal tract when dosed with food.

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Insider buys

Peter Staple purchased 5,000 shares on August 14 and currently holds 25,000 shares of the company. Peter Staple serves as a director of the company.

Financials

The company reported the second-quarter financial results on August 2 with the following highlights:

Revenue$14.1 million
Net loss$15.8 million
Cash$89 million

Upcoming milestones

  • In January, the company announced the commencement of a Phase II trial in Parkinson's Disease with DM-1992, the company's proprietary formulation of levodopa/carbidopa. Enrollment in that trial is now complete and Depomed expects to have the results before the end of the year.
  • In April, the company met with the FDA concerning Serada, Depomed's compound for menopausal hot flashes, and announced the intent to file the drug with the New Drug Application for Serada in the second half of 2012. The NDA was submitted on July 31. Based on that submission date, the PDUFA date for Serada would be at the end of May 2013.

My analysis

The stock has a $12.75 price target from the Point and Figure chart. I believe the target price could be reached after the FDA approval of Serada in May 2013.

3. Inovio (NASDAQ:INO) is revolutionizing vaccines to prevent and treat today's cancers and challenging infectious diseases. Its SynCon vaccines are designed to provide universal cross-strain protection against known as well as newly emergent unmatched strains of pathogens such as influenza. These synthetic vaccines, in combination with Inovio's proprietary electroporation delivery, have been shown in humans to generate best-in-class immune responses with a favorable safety profile. Inovio's clinical programs include phase II studies for cervical dysplasia, leukemia and hepatitis C virus and phase I studies for influenza and HIV. Partners and collaborators include the University of Pennsylvania, Merck, ChronTech, National Cancer Institute, U.S. Military HIV Research Program, NIH, HIV Vaccines Trial Network, University of Southampton, US Dept. of Homeland Security and PATH Malaria Vaccine Initiative.

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Insider buys

Angel Cabrera purchased 75,000 shares on August 15. Angel Cabrera serves as a director of the company.

Financials

The company reported the second-quarter financial results on August 9 with the following highlights:

Revenue$0.4 million
Net loss$4.1 million
Cash$19.5 million

Based on management's projections and analysis, the company believes that current cash and cash equivalents plus short-term investments are sufficient to meet its planned working capital requirements into the third quarter of 2013.

Upcoming milestones

  • Enrollment is ongoing in Inovio's phase II clinical study of VGX-3100 for cervical dysplasia. Data is expected in the second half of 2013. Two Inovio collaborators, the University of Southampton and ChronTech Pharma AB, are expected to report interim data from their phase II studies of DNA vaccines for leukemia and hepatitis C virus, respectively, before year end.
  • Inovio is advancing discussions with large pharmaceutical companies with the goal of securing new partnerships to advance the development and commercialization of its SynCon vaccines.

My analysis

I would recommend only a small speculative position in the stock currently. The pipeline is still in an early stage of development. Insiders have been buying the stock since March this year.

4. Furiex Pharmaceuticals (NASDAQ:FURX) is a drug development collaboration company that uses innovative clinical development design to accelerate and increase value of drug development programs by advancing them through the drug discovery and development process in a cost-efficient manner. The company's drug development programs are designed and driven by a core team with extensive drug development experience. The company collaborates with pharmaceutical and biotechnology companies and has a strong, diversified product portfolio and pipeline with multiple therapeutic candidates, including one Phase III-ready asset, two compounds in Phase III development, one of which is with a partner, and two products on the market. The company's mission is to develop innovative medicines faster and at a lower cost, thereby improving profitability and accelerating time to market while providing life-improving therapies for patients.

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Insider buys

June Almenoff purchased 1,000 shares on August 14-15 and currently holds 7,000 shares of the company. June Almenoff, M.D., Ph.D., is president and chief medical officer, and serves on the board of directors. She is Furiex's principal executive officer. Dr. Almenoff joined Furiex after a successful 12-year career at GlaxoSmithKline (NYSE:GSK), and has served as president and chief medical officer of Furiex since its inception in 2010.

Financials

The company reported the second-quarter financial results on August 2 with the following highlights:

Revenue$13.1 million
Net loss$20.8 million
Cash$26.5 million

Upcoming milestones

MuDelta Program Status and Economics

  • FDA Fast-Tracked, potential for NDA submission in 1H2014

JNJ-Q2: Best-in-class Fluoroquinolone with Potent MRSA Coverage

  • Phase III ready for both skin and pneumonia indications

NESINA (Alogliptin)

  • Launched in Japan in 2010; sales trajectory driving FURX royalties
  • Takeda received complete response letter on April 25th 2012
  • Takeda believes additional data requested by the FDA can be provided from ongoing clinical trials and ex-US post-marketing data. Project approval by end Takeda's fiscal year 2012.
  • Filed MAA in the EU in Q2 2012 triggering $10mm milestone for Furiex

My analysis

The stock has a $30.5 price target from the Point and Figure chart. The stock has seen heavy insider buying since May 2011. The stock was reiterated as Buy on May 14 by Ladenburg Thalmann with a $33 price target. I am not arguing with the price target nor planning to take any positions in the stock currently.

5. OncoGenex (NASDAQ:OGXI) is a biopharmaceutical company uniquely focused on cancer treatment resistance. The company is committed to the development and commercialization of first-in-class, innovative therapies that target mechanisms of resistance and that have the potential to re-define treatment paradigms in a variety of cancers.

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Insider buys

Jack Goldstein purchased 1,000 shares on August 15. Jack Goldstein serves as a director of the company.

Financials

The company reported the second-quarter financial results on August 2 with the following highlights:

Revenue$2.4 million
Net loss$4.2 million
Cash$97.6 million

2012 cash guidance:

  • Net cash requirements are expected to be in the range of $45 million to $50 million.
  • Year-end cash, cash equivalents, investments and receivables from Teva are expected to be in the range of $68 million to $73 million and include the receipt of proceeds from March offering of common stock.

Based on the company's current expectations, the company believes its capital resources as of June 30, 2012 will be sufficient to fund currently planned operations into 2015.

Upcoming milestones

Custirsen's primary registration Phase 3 study, SYNERGY, evaluating a survival benefit for custirsen plus first-line chemotherapy in patients with castrate-resistant prostate cancer (CRPC), is on schedule and patient accrual is expected to be completed in the second half of 2012.

My analysis

The stock has a $19 price target from the Point and Figure chart. I believe the target price is achievable after positive Phase 3 data from the SYNERGY trial in 2013. The stock has seen three different insider buys since August 2011. I am not currently planning any positions in the stock.

Source: 5 Pharmaceutical Companies With Insider Buying During August 14-16