When key insiders buy company shares - a group that includes executives, directors, and major shareholders - it's often considered a positive indicator for the stock's future performance. That's because these insiders are generally presumed to have a sharper insight and more comprehensive understanding of the company's operations and strategic plans than the general public.
Information regarding insider buying and selling activities can be accessed through Form 4 filings. Generally, larger transactions by top executives carry greater weight, and from a sentiment standpoint, insider stock purchases tend to be more revealing than sales.
That said, here's a look at one penny stock that top executives are buying hand over fist lately.
Opko Health
Founded in 1991, Opko Health (OPK) is a medical testing and biopharma company with a focus on diagnostics. With multinational operations across the U.S., Ireland, Mexico, and more, its market cap currently stands at $1.1 billion.
On a YTD basis, OPK stock is up 15% to trade just below $1.50 per share.
Notably, some top Opko company insiders holding key positions were loading up on the company's shares just below current levels. All three transactions were made on Nov. 10, as OPK traded around near-term lows following the company's latest quarterly earnings.
Steven Rubin, an EVP of the company, purchased 10,000 shares at an average price of $1.30, for a total cost of $13,000. Following this transaction, Rubin now holds a stake of 0.7991% in the company.
Next up is Dr. Jane Hsiao, who bought 100,000 shares of the company at an average price of $1.27 for a total investment of $126,660. The Vice Chair and CTO now holds a stake of 4.2464% in the company.
But easily the most noteworthy OPK insider buy was made by Chairman and CEO Dr. Phillip Frost. In his latest buy, he purchased 1 million shares of the company at an average price of $1.27, shelling out a total of $1,266,901. The latest purchase took Frost's stake in the company to 30.4186%.
Frost has been quite active in loading up on his company's shares throughout the year. Before this purchase, Frost had bought 2.125 million shares of OPK for a total value of about $3.1 million in 2023.
Here's what else you need to know about Opko around current levels:
Ngnela Approval: Earlier this year, Opko scored FDA approval for Ngnela, which focuses on the development and commercialization of diagnostic tests and biomarkers for the early detection and diagnosis of cancer. The approval led to an immediate inflow of $90 million from partner Pfizer (PFE) as a form of co-promotion fee.
Apart from this fee, Opko is also expected to receive royalties from the gross profit from Ngnela.
What's in the Pipeline: Recently, Opko revealed that its subsidiary ModeX has bagged an initial $59 million contract from the Biomedical Advanced Research and Development Authority (BARDA) to develop novel multispecific antibodies against viral infectious disease threats. Moreover, ModeX may be eligible to receive up to an additional $109 million from BARDA upon achieving certain milestones.
Also, Opko Biologics entered into a research collaboration agreement with Entera Bio Ltd. to develop oral peptide tablet formulations for obesity and intestinal malabsorption syndromes. The terms of the agreement involve Opko supplying its long-acting GLP-2 peptide and certain oxyntomodulin (OXM) analogs for the development of oral tablet formulations using Entera’s proprietary oral delivery technology.
Another key product that remains under development for the company is MDX-2201. Opko is preparing this drug through a licensing agreement with Merck (MRK). With MDX-2201, the company has the potential to receive up to $872 million, and also royalties on global sales.
Analyst Are Optimistic: In Q3 2023, Opko reported a mixed set of numbers. While revenues for the quarter came in at a stronger-than-forecast $178.6 million, the company's loss per share of $0.11 was wider than expected. Notably, the losses are expected to narrow in the upcoming fiscal year.
Overall, analysts seem as upbeat as key insiders at OPK. With a unanimous consensus rating of “Strong Buy” among five analysts, the mean target price of $3.60 represents upside potential of 150% from current levels.
