Let’s talk about insider trading. Say that, and you might think of Martha Stewart getting some illegal stock tips and trading on them – but she’s the minority. The majority of insiders are honest traders – they are corporate officers who hold high positions and get a true macro-view of what’s going on in the companies they lead. That gives them the knowledge needed for more accurate trading insights.
Clearly, the insiders’ info gives them an advance line, one that makes their stock choices better informed. In order keep the playing field level, Federal regulators require that insiders publish their trades regularly. Retail investors can use that published trading info to see what the insiders are doing – and which stocks they are buying up.
TipRanks offers a set of data tools and filters to sort through the Insiders’ Hot Stocks, the stocks that are getting the most insider action. We’ve used those filters to find two stocks that have really pushed their insider sentiment into positive territory in recent days and weeks, and for interesting reasons. Let’s take a deeper dive in.
Revolution Medicines (RVMD)
The first stock we’ll look at, Revolution Medicines, is a precision oncology company working on two innovative research tracks designed to specifically inhibit frontier targets in RAS-addicted cancers. Revolution’s pipeline includes three drug candidates on the RAS companion inhibitor track, including two that have reached the stage of human clinical trials, and five more drug candidates in the RAS(ON) inhibitor track. All of the latter are in preclinical stages, with four of them in the process of preparing and submitting Investigational New Drug (IND) applications.
On the RAS(ON) track, four of Revolution’s drug candidates are approaching the end of preclinical studies. RMC-6236, -6291, -9805, and -8839 are tri-complex inhibitors which Revolution Medicines has developed through its proprietary RAS(ON) platform. These drugs target ‘diverse oncogenic RAS variants,’ using a wide range of differentiated chemical and pharmacological profiles. The first two on track for IND completion in 1H22, while the second two are expected to complete their IND submissions in 2023.
Turning to the clinical trials, we find that RMC-4630 is Revolution’s most advanced drug candidate so far. This drug is an SHP2 inhibitor, and is the subject of a global Phase 2 study, in combination with sotorasib, as a potential treatment for advanced non-small cell lung cancer. The company expects to complete enrollment in this study during 2H22, and to begin releasing data on clinical benefits before the end of the year. Additional data is expected during 2023. Revolution is conducting this study in partnership with Sanofi, and in 4Q21 the company received $9.5 million from Sanofi per the terms of their collaboration agreement.
Revolution has one other clinical trial in progress, a Phase 1/1b study of RMC-5552. This drug, described as a ‘potent, selective bi-steric inhibitor of mTORC1,’ is in the dose escalation stage of the study, and the company recently released preliminary data showing positive clinical activity. The company plans on releasing additional data from this study of RMC-5552 as a single agent during 2023.
Looking at the insider trades, we find that one Board member, Director Thilo Schroeder, has been making numerous large-sum purchases of RVMD stock. His most recent purchase, made on March 24 for $5.489 million, totaled 232,364 shares. His largest purchase, from March 4, was for 1.088 million shares and cost him $28.62 million. Overall, Schroeder has spent over $43 million on Revolution’s stock this month.
Schroeder is not the only bull on this clinical-stage biopharma. Leerink analyst Jonathan Chang also takes a strongly positive stance here, writing: “We continue to have a positive long-term view on the stock based on RVMD’s experienced management team, promising preclinical data for the innovative RAS(ON) platform, and large addressable population of RAS-dependent cancers. While the RAS pathway drug development landscape is highly competitive, we believe RVMD has a differentiated approach and the scientific ability to solve these challenging targets.”
These upbeat comments back up Chang’s Outperform (i.e. Buy) rating on RVMD, and his $31 price target suggests the stock has a one-year upside of ~26%. (To watch Chang’s track record, click here)
With 6 analyst reviews on file for this stock, including 4 to Buy and 2 to Hold, Wall Street’s analysts give Revolution Medicines a Moderate Buy consensus rating. The shares are priced at $24.67 and their $31.67 average target implies an upside of 28% for the coming year. (See RVMD stock forecast on TipRanks)
Oric Pharmaceuticals (ORIC)
For the second stock, we’ll look at Oric, whose name is an acronym for ‘Overcoming Resistance In Cancer.’ This clinical-stage biopharmaceutical firm is working on new therapies that address the treatment of resistant cancers. These are cancers without effective treatments, for a variety of reasons. Resistance may be innate, that is, inherent to the cancer itself; acquired, or developed by the cancer in response to treatment; or from bypass, a form of acquired resistance in which an established treatment causes the cancer to activate a new signaling pathway. As should be clear, most resistant cancers are highly individualistic, and tied to each patient as a person. Oric addresses these issues through its research pipelines.
Currently, Oric has three drug candidates at the clinical trial stage. These are ORIC-553, a potential treatment for multiple myeloma; ORIC-114, a potential treatment for non-small cell lung cancer; and ORIC-944, under investigation as a treatment for prostate cancer. All three drug candidates are entering the Phase 1b stage of testing, and each trial is expected to show initial data in 1H23.
While having a diverse pipeline of clinical-stage drug candidates is always a positive for a biopharma company, in Oric’s case this was overshadowed recently by a major development in the company’s most advanced product, ORIC-101. This drug candidate, a glucocorticoid receptor antagonist which the company was studying as a potential treatment for a variety of solid tumors, was discontinued – completely – in a March 21 announcement. The discontinuation came after interim data from two Phase 1b studies showed no ‘meaningful clinical benefit’ for patients, and no objective responses.
As can be expected, Oric’s stock tumbled sharply when this news broke. The fall, however, appears to have opened up an opportunity, and a company insider was quick to take advantage of it. Jacob Chacko, Oric’s President and CEO, spent over $1.72 million picking up 350,000 shares of his company’s stock.
Even though Oric faces some difficult times ahead, mainly due to investor perception of the company after canceling its flagship project, there are still some bulls. Mr. Chacko was one; Baird analyst Colleen Kusy is another.
Kusy points out the ORIC-101 termination, and explain how this was the right move for Oric to go forward. She writes: “While disappointing, we believe ORIC management made an educated decision to refocus its resources on the rest of the pipeline, which we think is particularly prudent in the current capital market environment… Importantly, the decision to discontinue ORIC-101 development extends the current cash runway into 2H24 (previously 1H24).”
Looking forward, Kusy rates ORIC shares an Outperform (i.e. Buy), and gives them a $15 price target to imply a robust upside of 187% in the next 12 months. (To watch Kusy’s track record, click here)
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 2 Buys and 4 Holds. The average analyst price target of $18.33 implies ~250% upside potential to current levels. (See ORIC stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
