Each year, there are around 200,000 distinct insider transactions reported to SEC via Form 4 filings. While the term "insider trading" sounds nefarious, there are just a handful of cases deemed illegal by federal prosecutors each year, though anomalous, above-average returns remain.
On average, a host of empirical studies and our own research have found that individuals who mimic insider trades can beat the market by 7 percentage points a year, and buying activity is typically a stronger indicator than selling activity. In other words, there are many reasons for an insider to sell shares of his or her company, but only one, very bullish reason to buy. Let's take a look at one stock in particular that looks like a good candidate to be "monkeyed," so to speak.
Opko Health Inc. (NYSE:OPK) is a drug and medical device company that most investors associate with ophthalmology exclusively, though it has been making significant headway in the point-of-care diagnostics arena of late. While POC tests for Alzheimer's, testosterone (multiplex urology panel-based), and a blood test for Vitamin D are still in development, Opko has a prostate-specific antigen (PSA) test on the cusp of a European launch, and a four-step prostate cancer test that was launched in Europe this October.
Called 4Kscore, Opko's newest prostate cancer test reduces the need for full biopsies, which are costlier and more time-consuming than the typical POC test. On its corporate website, Opko predicts that 4Kscore "could lead to a 50% decrease" in the near "750,000 unnecessary prostate biopsies [that] are performed annually in the US" alone. A domestic launch is expected to occur in the coming months, as European launch partner International Health Technology is in the process of "expanding" into the U.S., according to an Oct 1st press release from Opko (via BusinessWire).
Supporting expectations of a U.S. launch is Opko's Dec 18th acquisition of OURLab, a moderately sized CLIA laboratory that gives the company "a commercial platform to support the near-term U.S. commercial launch of its novel panel of kallikrein biomarkers and associated algorithm (4Kscore™),” according to an official PR statement. In short, it looks as though Opko will now employ the usage of two commercial partners to bolster the domestic release of 4Kscore.
There are three reasons why investors must pay attention to these developments (continued on the next page):