12 Biotech Stocks the Insiders Are Buying

When insiders buy shares on the open market, their companies could enjoy bullish times ahead. Corporate insiders often have the inside track on their companies' prospects, and many of them get paid largely in stock options or restricted shares. Besides, insiders probably wouldn't risk plowing too much of their own money into their own company's stock -- reducing their portfolio's diversity, and increasing its risk -- unless they thought the stock might rise.

With that in mind, I screened for companies where at least one insider made an open-market buy in the past 30 days. These 12 biotech stocks made the list.

Security

Net Number of Buys

Number of Shares Bought

Total Value

Market Cap (Millions)

Ligand Pharmaceuticals (Nasdaq: LGND  ) 8 786,442 $8,640,000 $244
Halozyme Therapeutics (Nasdaq: HALO  ) 3 1,014,000 $6,030,000 $683
ZIOPHARM Oncology (Nasdaq: ZIOP  ) 2 851,522 $4,070,000 $342
Opko Health (AMEX: OPK  ) 11 628,000 $2,480,000 $1,123
Theravance 2 9,503,965 $2,020,000 $1,633
Celgene 6 19,500 $1,080,000 $25,845
Human Genome Sciences 5 53,371 $366,000 $2,957
BioSante Pharmaceuticals (Nasdaq: BPAX  ) 4 107,000 $241,000 $290
Keryx Biopharmaceuticals (Nasdaq: KERX  ) 4 37,500 $116,000 $273
GTX (Nasdaq: GTXI  ) 1 30,000 $110,000 $222
SIGA Technologies 3 15,000 $91,000 $297
SciClone Pharmaceuticals 1 2,000 $10,000 $288

Source: Capital IQ, a division of Standard & Poor's, as of Aug. 17, 2011.

When it comes to the number and total value of insider open-market buys, more can be better; I've sorted this table accordingly. Insiders at Ligand Pharmaceuticals, which develops and acquires royalty generating assets,  made eight open-market purchases worth a total of $8,640,000. In contrast, one SciClone Pharmaceuticals insider spent $10,000 on open-market buys. Both are bullish signs, but the Ligand purchases look more promising. The stock doesn't get much attention from Foolish investors; perhaps it deserves more.

Notably, Opko Health and GTX also made the list when I ran the screen on June 16, and Opko made the list when I ran the screen on July 18. Opko stock plunged in March after the company announced plans to raise $100 million of capital through a secondary stock offering.

Foolish takeaway
Insider buying signals that someone who should be in the know is betting that the stock will rise. You can use this list of recent insider purchases as a starting point for further research -- or a good reason to make a contrarian play.

Are these insiders right? To help you find out, The Motley Fool recently introduced a free My Watchlist feature. You can get up-to-date news and analysis by adding companies to your Watchlist now:

Fool contributor Cindy Johnson currently owns no shares of any stock in this story. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


Read/Post Comments (6) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 20, 2011, at 11:59 AM, wax wrote:

    Fascinating, absolutely fascinating.

    Without the benefit of research on my part, or yours either for that matter, of the 12 stocks you list, 3 appear to be profitable, while the rest are simply large sink holes in which to throw money.

    The only reason you wrote about these stocks was because insiders are buying them, which you note COULD mean the stocks are getting ready to surge?

    What a completely silly reason to put investment capital at risk...because Joe the CEO bought some shares. [sigh]

    Sadly, this is what Fooldom has become, silly people writing silly articles, about silly subjects in an effort to transfer dollars from the reader's pockets to the TMF coffers.

    What a waste of web space.

    Wax

  • Report this Comment On August 20, 2011, at 12:36 PM, Momentum21 wrote:

    Hey wax, take it easy now! :) She said it was only a screen...

    Would it be fair for me to drive by your stellar pitch for ARO back in May and get all indignant?? ARO is quite profitable but yet can still manage to lose 50% in value in pretty short order.

    No matter how well-researched each article and post should be a starting point for making your own decision.

  • Report this Comment On August 20, 2011, at 3:11 PM, dcsilver wrote:

    Shouldn't NVAX be on this list.

  • Report this Comment On August 21, 2011, at 8:18 AM, wax wrote:

    You know Momentum [pause] you're right.

    I certainly meant no disrespect to the author, and I apologize if my comment was taken as such.

    It's just that there was a time here, in this place...

    Well I guess it doesn't matter now, folks would of had to experience to understand it.

    So I apologize again...

    Wax

  • Report this Comment On August 22, 2011, at 5:07 PM, Troy2008 wrote:

    Wax- "I certainly meant no disrespect to the author, and I apologize if my comment was taken as such."

    I stabbed a guy 200 times in the face, heart and neck, later I burned his house down.

    I certainly didn't mean too blah blah blah...

    Key word is Biotech, earnings come later with most. Buy at $2 sell at $20, $30 etc.

    Ck. back with us on KERX, EXAS, AEZS, BPAX, ZLCS in a year for starters.

  • Report this Comment On September 22, 2011, at 5:25 PM, Maximix wrote:

    I have been accumulating AAPL since

    I bought my first computer in 1975

    and I will never sell my shares, except

    for kids education, a nicer house or

    a special vacation,But having worked

    20 years with one of the global

    pharma leaders, my interest is in

    picking promising new products,

    My best performers have been

    QCOR and JAZZ. Both have still

    a long way to go, but I like JAZZ for

    innovative management(like buying

    a thriving private Irish biotech firm, at the same

    time moving their headoffice to Ireland

    saving many millions a year in Irish tax.

    considerations.

    (Ireland is also the home of SHPGY

    a very profitable publc big pharma)

    I think Jazz is the better deal -

    Qcor is having problems.in keeping up

    the great sales unprovemens quarter

    after quarter, and have warned that the current quarter wll not show qua to qua advances,

    I am also looking at ZOLL, VICL and and PLX

    which is readying for FDA approval of their first

    drug for a rare disease,,using s plant origins

    (carrots!) I think the BIO Boys will eventually

    create drugs for most current untreatable

    diseases. Let's exchange these sources

    of information:Waveletters@Yahoo.com

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