Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

The healthcare sector has been the top performing group during the last six months, with a 11.4% gain during that period.

(click to enlarge)

Based on this observation I screened for companies in the healthcare sector where at least one insider made a buy transaction during the October month. Here is a look at five stocks that I found.

1. Regulus Therapeutics (RGLS), founded by Alnylam Pharmaceuticals (ALNY) and Isis Pharmaceuticals (ISIS), is a biopharmaceutical company leading the discovery and development of innovative medicines targeting microRNAs. Regulus is using a mature therapeutic platform based on technology that has been developed over 20 years. Regulus is advancing microRNA therapeutics toward clinical development in several areas, including oncology, fibrosis, hepatitis C and metabolic diseases.

(click to enlarge)

Insider buys

Financials

The company has reported the first-half of 2012 financial results with the following highlights:

Revenue$6.7 million
Net loss$4.8 million
Cash after IPO$96.5 million
Debt$5.6 million
Net cash$90.9 million
Shares outstanding34.1 million
Net cash per share$2.67

Upcoming milestones

The company has identified and validated several micro RNA targets across a number of disease categories and are working independently and with its strategic alliance partners to optimize anti-miR development candidates. The company expects that anti-miR development candidates will be easily formulated in saline solution and administered systemically or locally depending on the therapeutic indication. The company's five distinct therapeutic development programs are shown in the table below:

(click to enlarge)

The company anticipates that it will nominate at least two clinical development candidates within the next 12 months and file its first INDs in 2014.

One aspect of the company's strategy is to pursue a balanced approach between product candidates that the company develops by itself and those that the company develops with partners. The company intends to focus its own resources on proprietary product opportunities in therapeutic areas where development and commercialization are appropriate for the company's size and financial resources, which the company anticipates will include niche indications and orphan diseases, of which its miR-10b program for glioblastoma is one example. In therapeutic areas where costs are more significant, development timelines are longer or markets are too large for its own capabilities, the company will seek to secure partners with requisite expertise and resources.

The company's approach has been validated to date by the following strategic alliances with large pharmaceutical companies:

In April 2008, the company formed a strategic alliance with GSK to discover and develop micro RNA therapeutics for immuno-inflammatory diseases. In February 2010, Regulus and GSK expanded the alliance to include potential micro RNA therapeutics for the treatment of hepatitis C virus infection, or HCV.
In June 2010, the company formed a strategic alliance with Sanofi to discover and develop micro RNA therapeutics for fibrotic diseases. In July 2012, the company expanded the alliance to include potential micro RNA therapeutics in oncology.
In August 2012, the company formed a strategic alliance with AstraZeneca to discover and develop micro RNA therapeutics for cardiovascular diseases, metabolic diseases and oncology.

Under Regulus' existing strategic alliances with AstraZeneca, GSK and Sanofi, Regulus is eligible to receive up to approximately $1.7 billion in milestone payments upon successful commercialization of micro RNA therapeutics for the eight programs contemplated by its agreements. These payments include up to $106.5 million upon achievement of preclinical and IND milestones, up to $350.0 million upon achievement of clinical development milestones, up to $420.0 million upon achievement of regulatory milestones and up to $850.0 million upon achievement of commercialization milestones.

My analysis

The stock started trading on October 4, 2012. There were four insider buy transactions and there were not any insider sell transactions during the IPO. The pipeline is still in a very early stage. The company has a sizeable net cash position after the IPO. I am cautiously bullish on the stock for the long term.

2. Galectin Therapeutics (GALT) is developing promising carbohydrate-based therapies for the treatment of fibrotic liver disease and cancer based on the company's unique understanding of galectin proteins, key mediators of biologic function. The company is leveraging extensive scientific and development expertise as well as established relationships with external sources to achieve cost effective and efficient development. The company is pursuing a clear development pathway to clinical enhancement and commercialization for its lead compounds in liver fibrosis and cancer.

(click to enlarge)

Insider buys

  • Peter Traber purchased 2,500 shares on October 9 and 5,000 shares on October 8. Peter Traber currently holds 507,500 shares of the company. Dr. Peter Traber has been President and Chief Executive Officer of the company since March 2011.
  • Arthur Greenberg purchased 5,000 shares on July 18 and currently holds 94,667 shares of the company. Arthur Greenberg has served as a Director of the company since August 2009.
  • Gilbert Amelio purchased 7,500 shares on June 20 and currently holds 92,084 shares of the company. Gilbert Amelio has served as a Director of the company since February 2009.
  • Rod Martin purchased 5,000 shares on May 25 and currently holds 91,488 shares of the company. Rod Martin has served as a Vice Chairman of the Board since February 2010 and a Director since February 2009.
  • Thomas McGauley purchased 10,000 shares on May 24. Thomas McGauley has served as a Chief Financial Officer since March 2012.
  • James Czirr purchased 10,000 shares on May 17 and currently holds 843,450 shares of the company. James Czirr has served as an Executive Chairman of the Board since February 2010, Chairman since February 2009 and Founder in 2000.
  • John Mauldin purchased 4,947 shares on April 24. John Mauldin has served as a Director of the company since May 2011.
  • Paul Pressler purchased 5,000 shares on April 25 and currently holds 9,500 shares of the company. Paul Pressler has served as a Director of the company since May 2011.

Financials

The company reported the second-quarter financial results on August 10 with the following highlights:

Revenue$0
Net loss$3.0 million
Cash$13.1 million
Shares outstanding15.7 million
Cash per share$0.83

The company believes that with the funds on hand at June 30, 2012, there is sufficient cash to fund core operations and planned research and development through 2013.

Pipeline

(click to enlarge)

GM-CT-01, the company's lead product candidate for cancer therapy, is a proprietary linear polysaccharide polymer comprised of mannose and galactose derived from a plant source that has a precisely defined chemical structure. GR-MD-02, the company's lead product for treatment of liver fibrosis and fatty liver disease with inflammation and fibrosis, is a proprietary complex polysaccharide polymer possessing both linear and globular structures, which is also derived from a plant source.

Upcoming milestones

Cancer [GM-CT-01]

• Q2/13: Stage 1 top line results (12 patients)

Fibrosis [GR-MD-02]

• Q4/12: NASH FDA IND

• H1/13: Initiate Phase I NASH trial

• H2/13: Initiate Phase II NASH trial

Peter G. Traber, M.D., Chief Executive Officer, President and Chief Medical Officer, Galectin Therapeutics commented on August 10:

Galectin has continued to make progress with its primary candidate, GM-CT-01 in melanoma, part of our pipeline of galectin inhibitors in cancer. There is strong in vitro data that demonstrates that GM-CT-01 can protect immune cells from the 'Galectin Effect'; whereby tumors secrete galectin proteins that block the body's efforts to fight tumors. In May, the first patient was dosed in a Phase 1/2 trial evaluating the safety and efficacy of GM-CT-01 in combination with a peptide tumor vaccine in metastatic melanoma. The trial, being conducted in collaboration with the Cancer Centre at the Cliniques Universitaires Saint-Luc and the Ludwig Institute for Cancer Research [LICR], is evaluating GM-CT-01 in combination with a Ludwig Institute peptide vaccine. We expect top line results from stage 1 of this study by the end of the second quarter of 2013.

The preclinical development of Galectin's lead candidate for the treatment of liver fibrosis, GR-MD-02, continues on track and we expect to file an investigational new drug application [IND] with the U.S. FDA by year end. Following the filing of the IND we plan to initiate a Phase 1 clinical trial of GR-MD-02 in patients with non-alcoholic steatohepatitis [NASH] with fibrosis in early 2013, followed by a Phase 2 study potentially beginning by the end of 2013 with expected top-line results by the end of 2014. The novel mechanism of GR-MD-02, in combination with compelling preclinical data, gives us great hope that this compound may ultimately meet the needs of these patients with this deadly disease that has no currently approved therapeutic options."

"Our Colombian partner, PROCAPS, S.A., continues to attempt to gain approval of GM-CT-01 in Colombia; however, INVIMA has indicated that additional clinical trial data will be required before such approval may be granted. We are working with PROCAPS and INVIMA to design a Phase 3 clinical trial that would evaluate the ability of GM-CT-01 to reduce adverse events (e.g., mucositis and diarrhea) of 5-FU containing a chemotherapy regimen in metastatic colorectal cancer. The timing of such a clinical trial is under discussion and would be financed, at least in large part, by PROCAPS as per our agreement, outside of Galectin providing study drug. We have not taken into account projections for any potential revenues from this agreement in our financing plans.

My analysis

The stock is currently trading very close to its 52 -week lows. There have been 10 insider buy transactions and there have not been any insider sell transactions this year. I am cautiously bullish on the stock for the long term.

3. Pro-Dex (PDEX), with operations in California and Oregon, specializes in the design, development and manufacture of powered rotary drive surgical and dental instruments used primarily in the orthopedic, spine, maxocranial facial and dental markets. Its OMS division designs and manufactures embedded motion control systems serving the medical, dental, semi-conductor and scientific research markets. Pro-Dex's products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high tech manufacturing operations around the world.

(click to enlarge)

Insider buys

Nicholas Swenson has purchased 52,173 shares by AO Partners Fund this year. The latest purchase of 6,743 shares was made on October 5. Nicholas Swenson is a 14.7% owner of Pro-Dex.

Financials

The company reported the full fiscal year 2012, which ended on June 30, financial results on September 4 with the following highlights:

Revenue$17.3 million
Net loss$0.9 million
Cash$4.1 million
Debt$0.8 million
Net cash$3.3 million
Shares outstanding3.3 million
Net cash per share$1

Outlook

Michael J. Berthelot, the company's President and Chief Executive Officer, commented on September 4:

The results we reported today for fiscal 2012 are consistent with those we previewed a few weeks ago. As we near the end of the first quarter of fiscal 2013 we continue to make progress on all four of our key strategic programs. Our sales effort has identified a number of possible new client relationships which we continue to develop and we see exciting possibilities ahead. Our newly quoted lead times are coming down and we believe we will meet or exceed our customers' expectations as to delivery dates. Our cost control efforts are bearing fruit as our downsized workforce has stepped up to the tasks at hand and increased productivity. Our programs for innovation and quality improvement have identified key strategic objectives and are pursuing their implementation. At the end of the first quarter we will provide a more detailed report on our progress and an update as to our outlook for fiscal 2013.

My analysis

There have been 11 insider buy transactions and there have not been any insider sell transactions this year. The company has a book value of $2.91 per share and has a net cash position of $1 per share. The company has not provided outlook for fiscal 2013 yet, but has promised to do so in the near future. Over the past 5 fiscal years, book value is down from $12.85 million to $9.55 million or -25%, sales are down from $21.56 million to $17.26 million or -20%, and earnings before taxes are down from $575,000 to -$1.4 million or -343%. The stock price is down from $4.44 on October 5, 2007 to $1.88 on October 5, 2012 or -58%. I would like to see more signs of the company turning profitable again before buying the stock.

4. pSivida Corporation (PSDV) develops tiny, sustained release, drug delivery products designed to deliver drugs at a controlled and steady rate for months or years. pSivida is currently focused on treatment of chronic diseases of the back of the eye utilizing its core technology systems, Durasert and BioSilicon. The injectable, sustained release micro-insert Iluvien for the treatment of chronic Diabetic Macular Edema [DME], licensed to Alimera Sciences (ALIM), has received marketing authorization in Austria, France, Germany, Portugal and the U.K. and is awaiting authorization in Italy and Spain. The United States Food and Drug Administration [FDA] has cleared pSivida's Investigational New Drug application [IND] to treat posterior uveitis with the same micro-insert. An investigator-sponsored clinical trial is ongoing for an injectable, bioerodible microinsert to treat glaucoma and ocular hypertension. pSivida's two FDA-approved products, Retisert and Vitrasert, are implants that provide long-term, sustained drug delivery to treat two other chronic diseases of the retina.

(click to enlarge)

Insider buys

Paul Hopper purchased 10,000 shares on October 1. Paul Hopper is a director of the company.

Financials

The company reported the full fiscal year 2012, which ended on June 30, financial results on September 24 with the following highlights:

Revenue$3.5 million
Net loss$24.8 million
Cash$14.6 million

In August 2012, the company completed a registered direct offering of shares of common stock and warrants raising net proceeds of $4.7 million. The company anticipates that its capital resources and expected royalty income from Bausch & Lomb should enable the company to fund its operations as currently planned through the end of calendar year 2013.

Upcoming milestones

(click to enlarge)

Dr. Paul Ashton, President and CEO, commented on September 24:

The FDA recently cleared our IND for the posterior uveitis product we are independently developing, permitting us to move directly to two Phase III clinical trials with a 12 month primary end point of recurrence of uveitis and allowing us to reference much of the data, including the clinical safety data, from the clinical trials for ILUVIEN® for Diabetic Macular Edema [DME]. We are currently planning the trials, which we expect will target enrollment of a total of 300 patients. Because we are using the same micro-insert used in ILUVIEN for DME, which delivers the same drug as our approved Retisert® product for posterior uveitis, we expect these trials will show efficacy with a comparable side-effect profile in uveitis patients as was seen in DME patients. As a result, we are optimistic that our micro-insert will be efficacious for posterior uveitis, with a favorable risk/benefit profile and fewer side effects compared to Retisert.

We were also pleased with the progress on the commercialization of ILUVIEN for DME in the EU by our licensee Alimera Sciences. ILUVIEN has received marketing authorization in the United Kingdom, Austria, Portugal, France and Germany, and has been recommended for marketing authorization in Italy and Spain, for the treatment of vision impairment associated with DME considered insufficiently responsive to available therapies. Further, Alimera has reported its plan to launch ILUVIEN in Germany, the United Kingdom and France in 2013, and has announced a $40 million equity financing, which Alimera believes upon closing will position it financially to proceed with that commercialization. Our collaboration agreement entitles us to receive 20% of net profits, as defined, on sales of ILUVIEN by Alimera in each of these countries.

The International Diabetes Federation estimates that approximately 19 million people in these 7 EU countries are currently living with diabetes, and Alimera estimates that approximately 1 million people living there suffer from DME.

With respect to U.S. regulatory matters, Alimera has reported that it met with the FDA in an effort to gain a better understanding of the regulatory path for Iluvien for DME. Alimera further reported that based upon this meeting, it plans to submit a response to the FDA's second complete response letter to include additional analysis of the benefits and risks of Iluvien based upon clinical data available from Alimera's completed FAME Study. Approval in the U.S. would entitle pSivida to a $25 million milestone payment and 20% of net profits, as defined, from U.S. sales of Iluvien by Alimera.

My analysis

There have been one insider buy transaction and there have not been any insider sell transactions this year. I am cautiously bullish on the stock currently.

5. Daxor Corporation (DXR) manufactures and markets the BVA-100, which is used in conjunction with Volumex, Daxor's single use diagnostic kit.

(click to enlarge)

Insider buys

  • Joseph Feldschuh has purchased 15,328 shares this year with the latest transaction on October 8. Joseph Feldschuh currently holds 3,097,711 shares of the company. The company has 4,193,722 shares outstanding which makes Joseph Feldschuh a 73.9% owner of the company. Joseph Feldschuh serves as the President and CEO of the company.
  • Robert Willens has purchased 3,600 shares this year with the latest transaction on September 25. Robert Willens currently holds 16,164 shares of the company. Robert Willens serves as a director of the company.
  • Philip Hudson has purchased 4,200 shares this year with the latest transaction on March 28. Philip Hudson currently holds 146,200 shares of the company. Philip Hudson serves as a director of the company.

Financials

For the six months ended June 30, 2012, the company's revenue from the sale of Volumex Kits increased by 3% from the same period in 2011. There were 66 Blood Volume Analyzers in service at June 30, 2012 versus 58 instruments at June 30, 2011.

The company recently received a refund of federal taxes of approximately $2,090,000. The loss for the year ended December 31, 2011 was used to offset taxes paid for the years ended December 31, 2010 and 2009 which generated the refund.

The company used part of the proceeds from the tax refund to pay a dividend of $0.10 per share on August 24, 2012. Management elected to use the remainder of the proceeds to help fund its medical instrumentation and biotechnology operations.

Dr. Joseph Feldschuh, the President of Daxor, commented on September 4:

We don't know if this improvement in the sale of Volumex Kits will continue. We realize there are no guarantees but remain hopeful that members of the medical community will understand the need for measuring patient's blood volume precisely rather than using surrogate tests and clinical guesstimates which can be grossly inaccurate. The precise knowledge of a patient's blood volume is essential for optimally treating critically ill and post operative patients.

My analysis

There have been 35 insider buy transactions and there have not been any insider sell transactions this year. The company has a book value of $7.97 per share which I would expect to act like a support for the stock.

Source: 5 Healthcare Companies With Insider Buying During October 2012