Analyzing Last Week's Noteworthy Insider Buys And Sells In Healthcare Sector

by: GuruFundPicks

Insiders reported last week, Wednesday through Friday, that they bought and sold stock in over 540 separate transactions in over 300 different companies. These transactions have to be reported within two days of the trade, so the transactions occurred sometime after the Thursday of the week prior to last week. We culled through these 540 or so insider buys and sells (based on SEC Forms 3, 4, and 5 filings), as part of our daily and weekly coverage of insider trades, and present here the most notable trades reported last week in the healthcare sector; notable based on the dollar amount sold, the number of insiders selling, and based on whether the overall buying or selling represents a strong pick-up based on historical buying and selling in the stock (for more info on how to interpret insider trades, please refer to the end of this article):

Health Management Association (NYSE:HMA): HMA is an operator of acute care hospitals, primarily in non-urban communities in the southern U.S. On Thursday, EVP of Operations Finance Kerrin Gillespie filed SEC Form 4 indicating that she purchased 25,000 shares for $0.15 million, a new position for her. Overall, insiders purchased only an additional 7,500 shares in the past year. HMA has been weak recently, gapping down strongly on just Tuesday (January 10th) of the prior week after the company's general counsel suddenly resigned while the company deals with allegations of Medicare overbilling. The shares trade at a discount 7-8 forward P/E and 2.2 P/B compared to averages of 10.8 and 1.5 for its peers in the medical hospitals group, while earnings are projected to increase at 13.7% annual rate from 65c in 2010 to 84c in 2012.

Incyte Corporation (NASDAQ:INCY): INCY develops small molecule drugs for hematologic and oncology indications, and inflammatory and autoimmune diseases. On Friday, Director Paul Brooke filed SEC Form 4 indicating that he purchased 50,000 shares for $0.9 million, increasing his holdings to 150,000 shares. INCY shares have rallied almost 50% since the FDA approved Jafaki, the first and only FDA-approved treatment for myelofibrosis (a progressive and potentially life-threatening blood cancer) in mid-November.

Trius Therapeutics Inc. (TSRX): TSRX is a biotech focused on the development of antibiotics for serious, life-threatening infections. On Tuesday and Friday, Director Michael Powell, also the managing director of venture capital firm Sofinnova Venture Partners, filed SEC Forms 4 indicating that he sold a total of 31,552 shares, all under 10b5-1 plans, for $0.2 million. This sale is on top of a 3.5 million share sale reported by Sofinnova Venture Partners on Friday of the prior week via a SC 13D/A filing.

Forest Labs Inc. (NYSE:FRX): FRX develops, manufactures, and sells both branded and generic forms of ethical drug products which require a physician's prescription, as well as non-prescription pharmaceutical products that are sold over-the-counter (OTC). On Thursday, SVP of Marketing William Meury filed SEC Form 4 indicating that he sold 41,848 shares for $1.3 million, ending with 87,406 shares after the sale. Also, overall, insiders sold a total of 96,367 shares in the past year. FRX recently reported a good December quarter, and the stock is up, trading at 27-28 forward P/E and 1.7 P/B compared to averages of 31.8 and 6.2 respectively for its peers in the drug manufacturers group, while both revenue and earnings are projected to collapse from $4.40 billion and $4.40 in FY 2011 to $3.35 billion and $1.18 in 2013 as it faces intense competition from generics.

Mako Surgical Corp. (NASDAQ:MAKO): MAKO develops proprietary advanced robotic arm solutions and orthopedic implants used in minimally invasive orthopedic knee procedures. On Thursday, insiders SVP Duncan Moffat and SVP James Keller filed SEC Forms 4 indicated that they sold a total of 14,652 shares for $0.5 million, both pursuant to 10b5-1 plans. Furthermore, the 8,437 shares sold by SVP James Keller resulted from the exercise of options. In comparison, insiders sold a total of 62,639 shares in the past three months. MAKO currently generates losses and has negative cash flow. Its shares have rallied recently after it announced impressive Q4 unit sales data on January 9th, and it currently trades at 14.2 P/B compared to the 5.6 average for the medical instruments group.

Salix Pharmaceuticals (NASDAQ:SLXP): SLXP develops branded prescription drugs for the treatment of GI diseases. On Thursday, insiders CFO Adam Derbyshire and EVP William Forbes filed SEC Forms 4 indicating that they exercised options and sold the resulting total 4,977 shares for $0.23 million, all under 10b5-1 plans. Overall, insiders sold a total of 9,677 shares in the past three months and 61,121 shares in the past year. The stock has rallied strongly recently, having almost doubled since mid-September before pulling back last week. It currently trades at 16-17 forward P/E and 6.0 P/B compared to averages of 31.8 and 6.2 for its peers in the drug manufacturers group, while earnings are projected to increase slightly from $2.53 in 2011 to $2.75 in 2012.

Senesco Technologies Inc. (SNT): SNT is a development stage biotech company employing its proprietary eIFSA technology to regulate cell death and survival, with applications in cancer, inflammation and ischemia. On Thursday, two insiders filed SEC Forms 4 indicating that they bought a total of 1.2 million shares for $0.3 million, including Director & 10% owner Christopher Forbes (0.2 million shares) and Director Harlan Waksal (1.0 million shares). Both insiders acquired the shares in connection with the company's public offering of 7.7 million shares earlier this month.

On top of these, some additional large insider trades last week included a $2.6 million sale reported Tuesday and Wednesday, pursuant to 10b5-1 plans, by Director Davit Pyott and CVP of Strategy & Corporate Development John Kehl at medical products provider Edwards Lifesciences Corp. (NYSE:EW); and a $4.5 million sale reported Wednesday, pursuant to 10b5-1 plans, by three insiders, CFO James Truess and Directors William McBride and Kay Coles James, at managed healthcare provider Amerigroup Corp. (AGP).

Credit: Fundamental data in this article were based on SEC filings, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and The information and data is believed to be accurate, but no guarantees or representations are made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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