When key decision-makers within a company - including executives, directors, and major shareholders - engage in stock purchases, it's known as insider buying. The market tends to interpret insider buying as a bullish signal for the stock's future performance, since these insiders are generally presumed to have a deeper understanding of the company's internal workings and strategic plans than the average investor.
Investors seeking to take their cues from insider activity can access relevant data through publicly available Form 4 filings. While insider sales of company stock are also matters of public record, these transactions tend to have a less straightforward sentiment read than stock purchases - which are generally made because the insider thinks the share price will rise.
With this context in mind, it's worth scrutinizing one penny stock that has been a particularly popular target for insider buying over the last year.
About 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 $727.29 million.
Over the past year, Opko stock has declined more than 37%, and is now on pace to close a fourth consecutive session below $1 per share. That's a sharp contrast from its mid-2020 highs above $6, when the shares were boosted by expectations for higher revenue from COVID-19 testing.
However, top Opko company insiders have been loading up on the company's shares consistently - and at prices below current levels, too.
OPK Insiders Load the Boat
The most recent transaction was made by Chairman and CEO Dr. Philip Frost, who added 1 million shares to his stake as recently as Tuesday, Jan. 16. The average price per share was $0.9543, and Frost now holds a stake worth 30.8% of OPK.
This is the fourth time in the past year that Frost has purchased a block of 1 million or more Opko shares, including a recent transaction on Jan. 5 (1.5 million shares at an average price of $0.8964). In between these two purchases, the CEO also bought 511,531 shares at $0.9391 each on Jan. 11.
Other recent notable insider purchases of the company's shares were made by Chief Innovations Officer Gary Nabel, Vice Chair Dr. Elias Zerhouni, and Vice Chair/Chief Technical Officer Dr. Jane Hsiao.
On Jan. 8, Nabel purchased 216,184 shares of the company at an average price of $0.9271 each for a total value of $200,425, taking his OPK stake to 5.245% in the company.
Previously, on Jan. 5, Zerhouni bought 550,300 shares worth $514,090, while Hsiao scooped up 150,010 shares valued at $130,899. After these purchases, Zerhouni and Hsiao own stakes worth 5.1995% and 4.2658% in the company, respectively.
Notably, Jan. 5 was the same day as Frost's 1.5 million share purchase, and it also coincided with smaller buys from company insiders Richard Pfenniger, John Paganelli, and Steven Rubin.
As you can see, the insider buying trend stretches way back on this stock, with this same group buying shares as high as the $1.80s range last year.
What's Next for OPK Stock?
Along with the enthusiastic seal of approval from insiders, here are some of the other key points to know about OPK right now.
Ngenla Approval: Earlier this year, Opko scored FDA approval for Ngenla, 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). Along with this fee, Opko is also expected to receive royalties from the gross profits from Ngenla.
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.
Separately, 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 $872.5 million based on the achievement of milestones, and also royalties on global sales.
Analysts 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. Looking ahead, those losses are expected to narrow in the upcoming fiscal year.
Overall, analysts seem approximately as upbeat as some of the key insiders at OPK. With a unanimous consensus rating of “Strong Buy” among five analysts, the mean target price of $3.50 represents an upside potential of 262% from current levels.
