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2 “Strong Buy” stock insiders snap up
One strategy for choosing top stocks is to track insider trades. With insiders diving into their own pockets, you can imagine they believe the stock looks compelling. A Harvard study found that insider buying produced “abnormal” returns of more than 6% per year. The study’s authors conclude that insider buyers “have a good feeling for short-term developments in their company”. The benefit of following these insiders is not only that they are familiar with data that the rest of us don’t necessarily know, but also that they will be held accountable for their decisions. Business leaders cannot simply make trading decisions based on personal preferences or profits. They have to explain their decisions to board members and shareholders – and the audience wants to make money too. When company insiders start buying up stocks in their own company, it sends a strong signal to investors. With that in mind, we used TipRanks ‘Insiders’ Hot Stocks tool to point us in the direction of the Strong Buy stocks snapped up by Insiders. We found two names that flash signs of strong insider buying that warrant a closer look. Epizym (EPZM) We’re starting Epizym, a clinical-stage biotechnology company focused on developing novel epigenetic drugs that specifically target the genetic causes of various cancers, including non-Hodgkin lymphoma (NHL) and certain genetically defined solid tumors . The company’s flagship product, tazemetostat, was approved for monotherapy use in two indications last year: epithelial sarcoma and non-Hodgkin lymphoma. The company is also planning several clinical trials to measure the effectiveness of tazemetostat as a combination drug against NHL and several solid cancers, including some types of prostate cancer. It is the goal of every biotech pharmaceutical company to get a marketable drug approved that requires a prescription. That is why Epizyme has reached an important milestone with tazemetostat. Marketed as Tazverik, the drug had net sales of $ 4.5 million in the fourth quarter of 20, just over half of the company’s quarterly sales of $ 8.4 million. For the full year 2020, the company’s return on sales was $ 15.8 million. Tazverik’s stake was $ 11.5 million. Looking to the pipeline, Epizyme has upcoming Phase 1b trials of Tazverik for the treatment of castration-resistant prostate cancer. This study is already fully enrolled and the first safety and activity data is expected to be available in 2H21. Further studies of Tazverik in the treatment of heme and solid tumors are scheduled to begin later this year. Regarding the Insider Trading, we note that Epizyme’s Board of Directors David Mott purchased EPZM shares worth $ 500,099. On March 25 and 26, he bought a total of 62,717 shares in three tranches. His vote of confidence is supported by Wedbush’s David Kidney Garden. The 5-star analyst rates EPZM as an outperform (i.e. buy) and its price target of USD 27 implies a robust uptrend of 212% in the coming year. (To see Niergarten’s track record, click here) “[We] are encouraged by the progress EPZM has made in marketing Tazverik in the first year. Now that the challenges of the pandemic environment have subsided, we expect a faster rollout in the clinic. EPZM is also keen to support the marketing of Tazverik overseas. EPZM has a strong cash position with Runway through 2023, “commented Kidney Garden. Overall, it’s clear that Wall Street Kidney Garden generally agrees on this. There are 8 recent reviews of this stock, and they’re breaking down sharply – around 6 to 2 – in favor of buy versus hold, giving EPZM the consensus rating for analysts at Strong Buy. The stock trades at $ 8.66 and its average price target of $ 18.67 suggests a year-on-year move higher of ~ 116% (See EPZM stock analysis on TipRanks) Verrica Pharmaceuticals (VRCA) Next up is Verrica, a dermatology-focused therapy company working on new treatments and medical interventions for a variety of skin conditions with three drug candidates in the pipeline – V -102, V-103 and LTX-. 315. Of these, the latter two are in the pre-IND process with the FDA, while the first, V-102, is on FDA approval for the treatment of molluscum contagiosum is pending. The NDA of V-102 is actually a follow-up process that was started last year, and the FDA will send a CRL in July. Verrica resubmitted the NDA in December and expects adoption later this year. The PDUFA deadline for this application is June 23rd. Molluscum contagiosum affects approximately 6 million people in the United States, so the patient base for effective treatment is in place. Meanwhile, the company is conducting two more studies on V-102 for the treatment of warts and external genital warts. Verrica evaluated a public offering of shares on March 25, priced at over 2 million shares at $ 14.75 each. And that brings us to insider buying. Board member Paul Manning, who also owns 10% of the company, raised over 739,000 shares and paid more than $ 10.91 million. Reaching out to the HC Wainwright analyst community, Oren Livnat believes the company is busy and has a bright future. “We see a high likelihood of final approval and believe that Verrica has more than likely handled the items in the previous full response letter more than likely satisfactorily, requiring a minor update to the device design and additional human factors and stability work. We believe the FDA should be interested in approving a properly regulated cantharidin product since everything available now is a poorly regulated, compounded volatile product and nothing is approved for the treatment of MC, “wrote Livnat, the analyst added: “Say Verrica is hoping to launch by the end of August. We continue to plan a modest ramp through 2022 as Verrica implements an innovative forward-deployed inventory model … [we] continue to forecast peak sales of around USD 375 million. “Consistent with these comments, Livnat is evaluating VRCA shares as a Buy with a target price of $ 24, indicating an upward trend of 58% over the one year horizon. (To view Livnat’s track record, click here.) There are only two recent ratings for Verrica – but both are set to buy the stock, making the moderate buy rating unanimous. VRCA is priced at $ 15.04 with an average target price of $ 23.33 indicating upside potential of 55% for a year. (See VRCA stock analysis on TipRanks.) To find great ideas for trading stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the presented analysts. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.