The Healthcare sector has been the top performing group during the last 6 months with a 11.4% gain during that period.
Based on this observation I screened for companies in the healthcare sector where at least one insider made a buy transaction during the September month. Here is a look at five stocks that I found.
1. Bacterin International Holdings (BONE) develops, manufactures and markets biologics products to domestic and international markets. Bacterin's proprietary methods optimize the growth factors in human allografts to create the ideal stem cell scaffold to promote bone, subchondral repair and dermal growth. These products are used in a variety of applications including enhancing fusion in spine surgery, relief of back pain, promotion of bone growth in foot and ankle surgery, promotion of cranial healing following neurosurgery and subchondral repair in knee and other joint surgeries. Bacterin's Medical Device division develops, employs and licenses bioactive coatings for various medical device applications. Bacterin's strategic coating initiatives include antimicrobial coatings designed to inhibit biofilm formation and microbial contamination.
- Guy Cook purchased 5,000 shares on September 11 and 95,451 shares during May 9 - June 8 period. Guy Cook owns 25.2% of the company. Guy Cook serves as a Chairman of the board, CEO and President of the company.
- Kent Swanson purchased 27,977 shares on June 11 and currently controls 450,000 shares of the company. Kent Swanson serves as a Director and Compensation Committee Chairman.
- Jon Wickwire purchased 20,000 shares on May 8 and currently controls 363,139 shares of the company. Jon Wickwire serves as a Director and Chairman of Corporate Governance and Nominating Committees.
The company reported second-quarter financial results on August 9, with the following highlights:
|Net income||$0.7 million|
On August 28 Bacterin announced the closing of a $25 million non-dilutive financing with an affiliate of OrbiMed Advisors LLC. The financing will enable Bacterin to execute its growth strategy through anticipated profitability.
Under the terms of the agreement, Bacterin initially received $20 million and has the ability to draw down an additional $5 million based upon the achievement of mutually agreed upon revenue objectives prior to December 31, 2013. The company received net proceeds of approximately $10 million after repayment of existing indebtedness as well as other transaction related fees and expenses. Net proceeds will be used by the company for general working capital purposes. No equity securities or warrants were issued as part of the transaction.
Guy Cook, CEO of Bacterin commented on August 9:
We have already achieved 45% of the low end of our annual revenue guidance in the first half of this year. With our backorder behind us, inventory levels up and planned clean room expansion for 3Q, we expect continuing increased revenues in the second half of 2012 enabling us to achieve our stated 2012 annual revenue guidance. Gross margin of 72% was within our previous guidance and operating expenses decreased from the 1Q of 2012 enabling us to report positive EBITDA for the quarter, and a 54% reduction in EBITDA loss for the first half of 2012 compared to the prior periods.
We expect uptake in the wound care market for hMatrix to accelerate next year with the expected issuance of a Q code by January 1, 2013. In the interim, we are gaining traction with our shifted manufacturing and marketing focus, beginning in the second quarter, for hMatrix to address additional markets in sports medicine and reconstructive surgery.
OsteoSelect DBM putty is gaining sales momentum, leveraging recent animal data equivalency to autologous bone graft, the current gold standard for spinal fusion.
Data for our coatings remains on track for the second half of this year, as well as independent data on OsteoSponge SC.
Bacterin gave a presentation on September 6, at Stifel Nicolaus 2012 Healthcare Conference with more details on the upcoming milestones.
There have been 16 insider buy transactions and has been only one insider sell transaction this year. There are upcoming catalysts pending for this year and 2013. I believe the current share price is a good entry point for the stock based on the insider trading activity and the upcoming milestones.
2. Codexis (CDXS) is a developer of cost-advantaged processes for the production of biofuels, bio-based chemicals and pharmaceuticals. Codexis' product lines include CodeXyme cellulase enzymes and CodeXol detergent alcohol. Partners and customers include global leaders such as Merck (MRK), Pfizer (PFE) and Teva (TEVA).
The company reported second-quarter financial results on August 9, with the following highlights:
|Net loss||$5.5 million|
|Shares outstanding||36.3 million|
|Cash per share||$1.58|
Codexis adjusted its revenue forecast for the full year 2012 and now expects a decline in total revenues relative to its full year 2011 total revenues of $124 million. The company also now expects 2012 Adjusted EBITDA to be negative and anticipates its year-end cash, cash equivalents, and marketable securities, excluding any special items, to be approximately $50 million.
John Nicols, President and CEO of Codexis commented on August 9:
In pharmaceutical products, we are revising our forecast to account for a shift in timing of orders for certain on-patent products. As a result, we now forecast total product sales in line with last year's result of $49 million.
There have been one insider buy transaction and two insider sell transactions this year. I am not expecting the company to be profitable this year. The company has a cash position of $1.58 per share which I would expect to act like a support for the stock. I have a neutral bias for the stock currently.
3. MRI Interventions (MRIC.OB) is a publicly traded company creating innovative platforms for performing the next generation of minimally invasive surgical procedures in the brain and heart. Utilizing a hospital's existing MRI suite, the company's FDA-cleared ClearPoint system is designed to enable a range of minimally invasive procedures in the brain. MRI Interventions has a co-development and co-distribution agreement with Brainlab, a leader in software-driven medical technology, relating to the ClearPoint system. In partnership with Siemens Healthcare (SI), MRI Interventions is developing the ClearTrace system to enable MRI-guided catheter ablations to treat cardiac arrhythmias, including atrial fibrillation. Building on the imaging power of MRI, the company's interventional platforms strive to improve patient care while reducing procedure costs and times. MRI Interventions is also working with Boston Scientific Corporation (BSX) to incorporate its MRI-safety technologies into Boston Scientific's implantable leads for cardiac and neurological applications.
The company reported second-quarter financial results on August 14, with the following highlights:
|Net loss||$0.6 million|
The company announced on July 5 that it has completed a private placement equity financing. In the financing, MRI Interventions received gross proceeds of $6 million from the sale of approximately 5.45 million units at a purchase price of $1.10 per unit.
Management believes that the company's existing cash resources, including funds received in July 2012, together with cash generated from sales of products, will be sufficient to meet anticipated cash requirements through the first quarter of 2013.
There have been 16 insider buy transactions since the May 2012 initial public offering. There has not been any insider selling since the IPO. I believe the stock could be a good pick here based on the insider trading activity and a very promising product.
4. AtriCure (ATRC) is a medical device company and a leader in developing, manufacturing and selling innovative cardiac surgical ablation systems designed to create precise lesions, or scars, in cardiac, or heart, tissue for the treatment of atrial fibrillation, or AF, and systems for the exclusion of the left atrial appendage. The company believes cardiothoracic surgeons are adopting its ablation products for the treatment of AF during concomitant open-heart surgical procedures and sole-therapy minimally invasive procedures. AF affects more than 5.5 million people worldwide and predisposes them to a five-fold increased risk of stroke. The FDA has not cleared or approved certain AtriCure products for the treatment of AF or a reduction in the risk of stroke.
- Mark Lanning purchased 11,006 shares on September 14 and currently holds 25,000 shares of the company. Mark Lanning serves as a director of the company.
- Michael Hooven purchased 6,880 shares during September 7-14 and currently controls 758,513 shares of the company. Michael Hooven serves as a director of the company.
The company reported second-quarter financial results on August 2, with the following highlights:
|Net loss||$1.3 million|
Given the recently announced management transition, the company is suspending its financial guidance until it hires a new Chief Executive Officer and that person is comfortable resuming guidance.
The stock has a $3.5 price target from the Point and Figure chart. There have been nine insider buy transactions and 12 insider sell transactions this year. I have a neutral bias for the stock currently based on the insider trading activity and the lack of guidance from the company.
5. Sarepta Therapeutics (SRPT) -- formerly AVI BioPharma -- is focused on developing first-in-class RNA-based therapeutics to improve and save the lives of people affected by serious and life-threatening rare and infectious diseases. The company's diverse pipeline includes its lead program eteplirsen, for Duchenne muscular dystrophy, as well as potential treatments for some of the world's most lethal infectious diseases. Sarepta aims to build a leading, independent biotech company dedicated to translating its RNA-based science into transformational therapeutics for patients who face significant unmet medical needs.
Kathleen Behrens purchased 17,500 shares on September 7, and currently holds 36,666 shares of the company. Kathleen Behrens serves as a director of the company.
The company reported second-quarter financial results on August 7, with the following highlights:
|Operating loss||$5.6 million|
On August 2, 2012, Sarepta received a stop-work order on the Ebola virus portion of the U.S. government contract for Advanced Development of Hemorrhagic Fever Virus Therapeutics due to recently imposed funding constraints. The stop-work order does not apply to the Marburg portion of the contract. If the stop-work order is not lifted, Sarepta anticipates 2012 full year revenue will be in the $37 to $43 million range and operating loss will be in the $25 to $30 million range.
Sarepta announced on July 24 that treatment with its exon-skipping compound, eteplirsen, achieved a significant clinical benefit on the primary clinical outcome, the 6-minute walk test (6MWT), over a placebo/delayed treatment cohort in a Phase IIb trial in Duchenne muscular dystrophy [DMD] patients. Eteplirsen administered once weekly at 50mg/kg over 36 weeks resulted in a 69.4 meter benefit compared with patients who received placebo for 24 weeks followed by 12 weeks of treatment with eteplirsen in the open-label extension. In the predefined prospective analysis of the study's intent-to-treat [ITT] population on the primary clinical outcome measure, the change in 6MWT distance from baseline, eteplirsen-treated patients who received 50mg/kg of the drug weekly (n=4) demonstrated a decline of 8.7 meters in distance walked from baseline (mean=396.0 meters), while patients who received placebo/delayed-eteplirsen treatment for 36 weeks (n=4) showed a decline of 78.0 meters from baseline (mean=394.5 meters), for a statistically significant treatment benefit of 69.4 meters over 36 weeks (p≤0.019). The 48-week data from this study will be presented on October 9-13.
Duchenne Muscular Dystrophy [DMD] is one of the most common fatal genetic disorders to affect children around the world. Approximately one in every 3,500 boys worldwide is affected with DMD. Girls are rarely affected by the disorder. DMD is a devastating and incurable muscle-wasting disease associated with specific inborn errors in the gene that codes for dystrophin, a protein that plays a key structural role in muscle fiber function. Symptoms usually appear in children by age three. Progressive muscle weakness of the legs and pelvis eventually spreads to the arms, neck and other areas. By age 10, braces may be required for walking, and most patients require full-time use of a wheelchair by age 12. Eventually, this progresses to complete paralysis and increasing difficulty in breathing due to respiratory muscle dysfunction requiring ventilatory support, and cardiac muscle dysfunction leading to heart failure. The condition is terminal, and death usually occurs before the age of 30. The outpatient cost of care for a non-ambulatory DMD patient is very high. There is currently no cure for DMD, but for the first time ever there are promising therapies in, or moving into, development.
Sarepta announced September 4, that the U.S. Department of Defense [DoD] is extending the period of the temporary stop-work order on the Ebola portion of the company's pre-existing contract with JPM-TMT for advanced development of therapeutics for both Marburg virus and Ebola virus. By September 30, 2012, the DoD will either: (1) terminate the Ebola portion of the contract; (2) cancel the stop-work order; or (3) again extend the stop-work order period.
Sarepta announced September 18, that the U.S. Food and Drug Administration [FDA] has granted Fast Track status for the development of its lead infectious disease drug candidates, AVI-7288 and AVI-7537, for the treatment of Marburg virus and Ebola virus, respectively. Currently, the JPM-TMT's Ebola programs, including development of AVI-7537, remain under a temporary stop-work order due to funding constraints.
The stock has a $23.5 price target from the Point and Figure chart. There have been two insider buy transactions and there has been one insider sell transaction this year. The stock has two near-term catalysts. By September 30, the DoD will decide the faith of the Ebola program. And the 48-week data from the DMD study will be presented on October 9-13. If both of these catalysts turn out to be positive the stock could be trading at $20. If both of these catalysts turn out to be negative the stock could be trading at $10.
Disclosure: I am long BONE.