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 on August 29 - September 7. Here are the five stocks:
1. Iridex Corporation (IRIX) is a worldwide leader in developing, manufacturing, and marketing innovative and versatile laser-based medical systems, delivery devices and consumable instrumentation for the ophthalmology and otolaryngology market. We maintain a deep commitment to the success of our customers, with comprehensive technical, clinical, and service support programs. Iridex is dedicated to a standard of excellence, offering superior technology for superior results. Iridex products are sold in the United States through a direct sales force and internationally through a combination of a direct sales force and a network of approximately 70 independent distributors into over 100 countries.
- William Moore's wife purchased 10,000 shares on September 5-6 and currently holds 73,944 shares of the company. William Moore is interim President and CEO of the company. William Moore currently holds 30,396 shares of the company.
- Blueline Catalyst Fund IX purchased 60,900 shares on August 13-15 and currently holds 2,605,536 shares of the company. The company has 9,007,300 shares outstanding which makes Blueline Catalyst Fund IX a 28.9% owner of the company.
The company reported the second-quarter financial results on August 2 with the following highlights:
|Net income||$0.3 million|
President and CEO Dominik Beck commented on August 2:
As we indicated last quarter, we anticipate that our increased investments in people and programs across the organization will drive overall sales growth in the second half of the year, and we intend to balance our investments in line with our revenue growth to maintain profitability for the year.
There have been two insider buy transactions this year and two insider sell transactions this year as well. The stock is trading at a P/E ratio of 34.82. The company has a book value of $2.75 per share and a cash position of $1.53 per share. I would expect the $2.75 level to act like a support for the stock. I am expecting the company to be profitable this year.
2. CAS Medical Systems (CASM) is a leading developer and manufacturer of medical devices for non-invasive patient monitoring. The company's Fore-Sight Absolute Cerebral Oximeter provides a highly accurate, non-invasive, continuous measurement of absolute cerebral tissue oxygen saturation. Direct monitoring of tissue oxygenation provides a superior and powerful tool to alert clinicians to otherwise unrecognized and dangerously low levels of oxygenation of the brain and other tissues, thereby allowing them to intervene appropriately in the care of their patients. In addition to Fore-Sight Oximeters and accessories, the company provides a line of bedside patient vital signs monitoring products, proprietary non-invasive blood pressure monitoring solutions for OEM use, neonatal intensive care supplies, and service.
The company reported the second-quarter financial results on August 8 with the following highlights:
|Net loss||$1.9 million|
Thomas Patton, President and Chief Executive Officer of CASMED commented on August 8:
With quarterly FORE-SIGHT disposable sensor revenues up 45% overall and 57% in the U.S., we see continued evidence that the careful execution of our growth strategies, including our upgrades to our U.S. sales force, is yielding positive results. We remain on track to achieve our goal of increasing our installed base of FORE-SIGHT monitors to 750 by the end of the year.
Sales of our traditional monitoring products were lower in the second quarter compared with the prior year. However, we believe that with the improvements we have made to the distribution channel for vital signs monitors, combined with steady OEM non-invasive blood pressure revenues, traditional monitoring revenues should improve over second quarter lows.
The stock has seen only insider buying since August 2011. The latest insider sell transaction was in December 2010. The company has a book value of $1.16 per share which I would expect to act like support for the stock. I believe the stock could be a good pick from the current level. I am not expecting the company to be profitable this year.
3. Celsion (CLSN) is a leading oncology company dedicated to the development and commercialization of innovative cancer drugs including tumor-targeting treatments using focused heat energy in combination with heat-activated liposomal drug technology. Celsion has research, license, or commercialization agreements with leading institutions including the National Institutes of Health, Duke University Medical Center, University of Hong Kong, the University of Pisa, the UCLA Department of Medicine, Kyungpook National University Hospital and the Beijing Cancer Hospital.
- Robert Hooper purchased 2,500 shares on August 29, 4,520 shares on May 15 and 4,500 shares on March 21. Robert Hooper currently holds 68,427 shares and serves as a director of the company.
- Frederick Fritz purchased 5,000 shares on May 17 and 4,000 shares on March 19. Frederick Fritz currently holds 21,000 shares and serves as a director of the company.
The company reported the second-quarter financial results on August 14 with the following highlights:
|Net loss||$6.1 million|
The company is projecting average cash usage per month to be $1.7 million. With $24 million in cash as of June 30 the company should have enough cash to last until mid-2013.
Celsion announced on May 30 that it has reached its enrollment objective of 700 patients in the company's pivotal, Phase III HEAT Study, a multinational, randomized, double-blind, placebo-controlled clinical trial of ThermoDox in combination with radiofrequency ablation for the treatment of hepatocellular carcinoma, also known as primary liver cancer. The primary endpoint for the study is progression-free survival [PFS], and a total of 380 events of progression are required to reach the planned final analysis of the study. Celsion notes that 380 PFS events are projected to occur in late 2012. Top line results will be announced following review by the company's independent Data Monitoring Committee.
The stock has a $8.75 price target from the Point and Figure chart. I believe the target price is achievable after positive HEAT study results later this year. If we get negative results the stock could dip below $2. The stock has seen steady insider buying since June 2004. There has not been any insider selling since at least May 2004. I have had a long position in this stock in the past and plan to re-enter the stock again closer to a $4 level.
4. 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 (ESALF.PK) 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.
- Leon Moulder purchased 10,000 shares on August 30 and currently holds 1,006,428 shares of the company. Leon Moulder has served as Chief Executive Officer and as a member of the company's Board of Directors since co-founding Tesaro in March 2010.
- Beth Seidenberg purchased 222,222 shares on July 3 via IPO 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 3 via IPO 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 3 via IPO and currently holds 11,481 shares of the company. Lawrence Alleva was appointed to Tesaro's Board of Directors in March 2012.
- New Enterprise Associates 13 LP purchased 1,111,111 shares on July 3 via IPO and currently holds 11,499,255 shares (or 43%) of the company.
The company reported the second-quarter financial results on July 26 with the following highlights:
|Net loss||$20.2 million|
Rolapitant is a potent and long-acting NK-1 receptor antagonist that is being developed as a supportive care product for the prevention of CINV and is currently being studied in Phase 3 clinical trials. Tesaro is investigating whether a single dose of rolapitant will, when administered along with the current standard of care for CINV (a 5-HT3 receptor antagonist plus a corticosteroid), significantly increase the control of both nausea and vomiting over the 5-day period of risk for cancer patients receiving emetogenic chemotherapy as compared to the current standard of care alone. The company presented data from a 454-patient, randomized, placebo controlled Phase 2 clinical trial that evaluated rolapitant in patients at high risk of CINV at the American Society of Clinical Oncology conference in June 2012. The company expects to report top line results for the ongoing Phase 3 clinical program for rolapitant during the second half of 2013.
Chemotherapy induced nausea and vomiting [CINV] has the potential to afflict up to 90% or more of cancer patients undergoing chemotherapy, depending upon the type of chemotherapy administered, the dosing schedule of the chemotherapy and the patients' gender, among other predisposing factors. Prolonged nausea and vomiting may result in unwanted weight loss, dehydration and malnutrition as well as hospitalization. If not prevented, CINV may result in a delay or even discontinuation of chemotherapy treatment.
The company had an initial public offering in July. There has only been insider buying (no selling) since the IPO. The company expects to report top line results for the ongoing Phase 3 clinical program for rolapitant during the second half of 2013. If the results are positive the stock could be trading above $20. With negative results the stock would likely dip to $5. I could take a long position in the stock closer to the year end.
5. Rockwell Medical (RMTI) is a fully-integrated biopharmaceutical company targeting end-stage renal disease [ESRD] and chronic kidney disease [CKD] with innovative products and services for the treatment of iron deficiency, secondary hyperparathyroidism and hemodialysis.
Rockwell's lead, late-stage investigational drug for iron therapy treatment is called Soluble Ferric Pyrophosphate [SFP]. SFP delivers iron in a non-invasive, physiologic manner to dialysis patients via dialysate during their regular dialysis treatment. SFP is currently in ongoing Phase III clinical trials (CRUISE-1 and CRUISE-2) and addresses a $600M U.S. and $1B global market. Rockwell's Calcitriol (generic Active Vitamin D) injection for treating secondary hyperparathyroidism is expected to launch in Q1 2013 and addresses a $350M U.S. market.
Rockwell is also an established manufacturer and leader in delivering high-quality hemodialysis concentrates/dialysates to dialysis providers and distributors in the U.S. and abroad. These products are used to maintain human life by removing toxins and replacing critical nutrients in the dialysis patient's bloodstream. Rockwell's operating infrastructure is a ready-made sales and distribution channel to provide seamless integration into the commercial market for its drug products, Calcitriol and SFP, upon FDA market approval.
Rockwell's exclusive renal drug therapies support disease management initiatives to improve the quality of life and care of dialysis patients and are intended to deliver safe and effective therapy, while decreasing drug administration costs and improving patient convenience. Rockwell Medical is developing a pipeline of drug therapies, including extensions of SFP for indications outside of hemodialysis.
The company reported the second-quarter financial results on August 7 with the following highlights:
|Net loss||$11.9 million|
Mr. Robert L. Chioini, Chairman and CEO, stated on August 7:
We are pleased to report solid progress this past quarter, highlighted by the completion of enrollment in our Phase III CRUISE studies. We are approximately six months from seeing data on ESA sparing from the PRIME study, our Calcitriol product launch is expected to occur first quarter 2013, and we anticipate completion of the Phase III CRUISE studies mid-year 2013.
The stock has a $17 price target from the Point and Figure chart. The stock has seen only insider buying this year. The latest insider sell transaction was in September 2011. I believe the stock could reach the $17 price target after positive results from the Phase III Cruise studies due mid-year 2013. If the results are negative we would likely dip below $5. I could take a long position in the stock closer to the year end.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CLSN over the next 72 hours.