Insiders Buying Into the Huge Rallies in Evolus (EOLS), Verastem (VSTM)

Insiders are masters of snatching up shares of their companies at a discount, expanding their positions during weakness in the stock. In contrast, they are far less likely to buy into rallies, which makes their occurrence of particular note.

That was exactly the case with recent insider purchases of shares of Evolus Inc (NASDAQ:EOLS), Eli Lilly and Co (NYSE:LLY), and Verastem Inc (NASDAQ:VSTM), two of which have rallied by more than 100% in 2018. We’ll check out those insider purchases below and see what has insiders so excited about these stocks.

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Evolus Inc (NASDAQ:EOLS)

Who Bought Shares: Directors Vikram Malik, Kristine Romine, and Bosun Hao

How Many Shares Were Bought: 8,600, 9,200, and 10,040 shares respectively

Date of the Transaction(s): May 31 – June 14

Insider buying has recently intensified at Evolus Inc (NASDAQ:EOLS), one of the biggest success stories on the market this year. Shares of the medical aesthetics company, which went public in early-February, have surged by nearly 150% in 2018, with all of those gains coming in the last six weeks. That hasn’t stopped several insiders from buying into the rally, with directors Vikram Malik, Kristine Romine, and Bosun Hao purchasing a combined total of 27,840 shares over the past two weeks.

Shares have surged since a setback on May 16 when the FDA slapped a Complete Response Letter (CRL) on Evolus Inc (NASDAQ:EOLS)’s lead compound DWP-450, essentially rejecting it for approval. However, the CRL was actually good news of a sort, as it was entirely related to the company’s Chemistry, Manufacturing, and Controls processes and not the botox treatment’s clinical results. With approval now all but a certainty and investors growing more bullish on the market potential for DWP-450, the stock has enjoyed a rapid run-up since mid-May, even as a large pullback since June 6 has made finding an entry point more palatable.

On the next page we’ll look at two other companies with recent insider buying activity.

Verastem Inc (NASDAQ:VSTM)

Who Bought Shares: Joseph Lobacki, Executive Vice President and Chief Commercial Officer

How Many Shares Were Bought: 7,700 @ $5.39 per share

Date of the Transaction(s): June 8

The 7,700-share purchase represented a new position in the stock for Lobacki, who was appointed as Verastem Inc (NASDAQ:VSTM)’s EVP and CCO in early-January. Verastem represents another case of an insider buying into a rally, as the stock has doubled in value in 2018.

Those gains could be just the tip of the iceberg however, as several analysts believe the stock is vastly undervalued and that duvelisib’s commercial potential is being underestimated, even by the company itself. Verastem Inc (NASDAQ:VSTM)’s blood cancer drug has proven to be more effective than Novartis AG (ADR) (NYSE:NVS)’s Arzerra when it comes to chronic lymphocytic leukemia or small lymphocytic lymphoma, and could receive regulatory approval within the next few months.

Eli Lilly and Co (NYSE:LLY)

Who Bought Shares: Daniel Skovronsky, Chief Scientific Officer, SVP – Science & Technology, President – Lilly Research Laboratories

How Many Shares Were Bought: 10,000 @ $86.22 per share

Date of the Transaction(s): June 14

It had been more than a year-and-a-half since the last time an Eli Lilly and Co (NYSE:LLY) insider bought shares of the company when Daniel Skovronsky did so on June 14. His purchase of 10,000 shares raised his position to 55,199 shares. His purchase comes on the heels of a six-week rally in the stock that has pushed shares up by 10%.

Eli Lilly and Co (NYSE:LLY) shares have gained very little ground over the last three years, but the drugmaker’s portfolio is now showing a much brighter future, which will help offset the impending patent loss of Cialis. Sales of the erectile dysfunction drug were $1.47 billion last year, but that total is expected to shrink to a rather impotent $55 million by 2022, a 96% decline. Among the positive growing contributors in Eli Lilly’s stable are Trulicity and Basaglar, which grew sales by 82% (to $678 million) and 261% (to $166 million) respectively in the first-quarter.

Disclosure: None