3 Bio-Techs Insiders Love
Mohsin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The biotechnology industry has given exceptional returns in the last couple of years. Quite a few stocks have soared due to FDA approval of their respective drugs. The high number of expiring patents has also forced larger bio-pharmaceutical companies to adopt aggressive acquisition strategies.
The following three companies have seen strong insider buying during the last six months. This can be an indication of positive catalysts approaching because insiders have information about a company which is not available to other investors.
Sequenom Inc. (NASDAQ: SQNM)
Sequenom is focused on enabling the translation of genomic science into solutions for transitional research, medicine applications, agricultural research, biomedical research etc. Sequenom provides services, products, applications and genetic analysis for this purpose. The company has divided itself into two segments i.e. Genetic Analysis and Diagnostics.
The stock has traded in the range of $2.7 to $5.8 in the last 52 weeks and is currently trading at a 35% discount to the mean sell side target price of $6.9. The company has shown impressive sales growth of 14%, and analyst are expecting it to report revenues of $188 million in 2013. The mean revenue growth rate expectations are also pretty high with the market expecting the company to post revenues of $262 million in 2014, a growth of 40%. In the last six months insiders have added approximately 183,000 shares to their holdings, an increase of 43%. However, in the same period institutions have reduced their stock holdings by approximately 34%.
Infinity Pharmaceuticals (NASDAQ: INFI)
Infinity is a bio-pharmaceutical company involved in the discovery and development of treatments for various indications. The company currently has two main product candidates in Phase II clinical trials and is also focusing on discovering new potential candidates. Infinity has witnessed some very high insider interest during the last six months. Insiders have bought approximately 5 million shares of the company bringing total insider holdings to a staggering 20 million, an increase of 36%. Institutions have also added to their Infinity position by purchasing an additional 7 million shares, an increase of 15%. The stock is currently trading almost equal to its mean sell side target price of $49.
MannKind (NASDAQ: MNKD)
MannKind is one of the most interesting bets in the biotechnology sector. The company focuses on discovery, development and commercialization of cancer and diabetes treatments. The main candidate of MannKind is AFREZZA, which is an inhalable insulin product. The drug is currently in late stage clinical trials and it is highly likely that it will get the FDA approval. This is because Pfizer’s Exubera has already received FDAs approval and it was a very similar product.
Pfizer’s product failed due to low absorption rates of its delivery mechanism. This low absorption resulted in lung deposits, which was a health risk. AFREZZA is a much safer product due to a better delivery mechanism and is also available at cheaper prices. These price levels will make it much easier for the company to compete with conventional insulin products.
The company is currently trading at a 35% discount to its mean sell side target price of $5.5. In the last six months insiders have purchased approximately 40 million shares of the company, increasing insider holdings by approximately 150%. In the same period institutions have increased their holdings by approximately 7 million shares, an increase of 17%.
All three companies provide a good buying opportunity for investors. Insider interest shows that good things can be expected from these stocks in the future. Prospective investors should do their own due diligence before going for anyone of these stocks.
Mohsin Saeed has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!