One strategy for selecting top stocks is to track insider transactions. After all, if insiders are dipping into their own pockets you can imagine it’s because they believe the stock looks compelling. A Harvard study revealed that insider purchases earn “abnormal” returns of more than 6% per year. The authors of the study conclude that insider buyers “have a good feel for near-term developments within their firm.” The advantage of following these insiders isn’t just that they are privy to data which the rest of us don’t necessarily know – it’s also that they are held responsible for their decisions. Company officers can’t just make trading choices based on personal preference or profit. They must account for their choices to board members and shareholders – and that audience wants to make money, too. So, when corporate insiders start buying up stock in their own company, it’s a strong signal for investors. Bearing this in mind, we used the Insiders’ Hot Stocks tool from TipRanks to point us in the direction of “Strong Buy” stocks the insiders are snapping up. We found two names flashing signs of strong insider buying that warrant a closer look. Epizyme (EPZM) We’ll start with Epizyme, a clinical stage biotechnology company focused on the development of novel epigenetic medicines designed to specifically target the genetic causes of various cancers, including non-Hodgkin lymphoma (NHL) and certain genetically defined solid tumors. The company’s flagship product, tazemetostat, was approved last year for use as a monotherapy in two indications: epithelioid sarcoma, and non-Hodgkin lymphoma. The company is also planning several clinical trials to measure tazemetostat’s efficacy as a combination drug against NHL and several solid tumor cancers, including some types of prostate cancer. Having a marketable drug approved and available for prescription is the goal of every biotech pharma company – so Epizyme has achieved a major milestone with tazemetostat. The drug, marketed as Tazverik, brought in net revenues of $4.5 million in 4Q20, slightly more than half of the company’s quarterly revenue total of $8.4 million. For the full year 2020, the company’s top line came in at $15.8 million; Tazverik’s share was $11.5 million. Looking at the pipeline, Epizyme has upcoming Phase 1b studies of Tazverik in the treatment of castration-resistant prostate cancer. This study is already fully enrolled, and the initial safety and activity data is expected to come in 2H21. Additional studies of Tazverik in the treatment of heme and solid tumors are slated to begin later this year. Turning to the inside trades, we note that David Mott, of Epizyme’s Board of Directors, made a purchase of $500,099 in EPZM shares. He made the purchase, totaling 62,717 shares, in three tranches on March 25 and 26. His display of confidence gets the backing of Wedbush’s David Nierengarten. The 5-star analyst rates EPZM an Outperform (i.e. Buy), and his $27 price target implies a robust upside of 212% in the coming year. (To watch Niergarten’s track record, click here) “[We] are encouraged by the progress EPZM made with marketing Tazverik for the first year. After the challenges of the pandemic environment recede, we expect more rapid adoption in the clinic. EPZM is also looking to partner the marketing of Tazverik abroad. EPZM has a strong cash position with runway into 2023,” Nierengarten commented. Overall, it’s clear that Wall Street generally agrees with Nierengarten on this one. There are 8 recent reviews of this stock, and they break down strongly – by 6 to 2 – in favor of Buy versus Hold, giving EPZM its Strong Buy analyst consensus rating. The share are trading for $8.66, and their $18.67 average price target suggests a one-year upside of ~116%. (See EPZM stock analysis on TipRanks) Verrica Pharmaceuticals (VRCA) Next up is Verrica, a dermatology-focused therapeutics company working on new treatments and medical interventions for a wide range of skin conditions. The company has three drug candidates in the pipeline – V-102, V-103, and LTX-315. Of these, the latter two are in the pre-IND process with the FDA, while the first, V-102, is waiting for an FDA approval as a treatment for molluscum contagiosum. V-102’s NDA is actually a resubmission; the process was started last year, and the FDA send a CRL in July. Verrica resubmitted the NDA in December, and expects acceptance later this year, and the PDUFA date for this application is June 23. Molluscum contagiosum affects some 6 million people in the US, so the patient base for an effective treatment is there. In the meantime, the company is pursuing two additional studies of V-102, as a treatment for common warts and external genital warts. Verrica priced a public offering of stock on March 25, offering over 2 million shares at $14.75 each. And that brings us to the insider purchase. Board member Paul Manning, who is also a 10% owner of the company, picked up over 739,000 shares, paying more than $10.91 million. Turning to the analyst community, H.C. Wainwright, Oren Livnat believes the company has a lot going for it and a bright future. “We see high probability of final approval and believe Verrica more than likely has satisfactorily addressed the items in the prior Complete Response Letter, which necessitated a minor device design update, and additional Human Factors and stability work. We believe FDA should be keen to approve a properly regulated cantharidin product, given all that is available now is poorly regulated, compounded volatile product, and there is nothing approved to treat MC,” Livnat wrote. The analyst added, “Assuming approval, Verrica hopes to launch by end-August. We continue to project a modest ramp through 2022 as Verrica implements an innovative forward-deployed inventory model… [we] continue to project peak sales of about $375M.” In line with these comments, Livnat rates VRCA shares as a Buy, with a $24 price target to indicates a 58% upside on the one-year horizon. (To watch Livnat’s track record, click here) There are only two recent reviews on record for Verrica – but both of them are to Buy the stock, making the Moderate Buy rating unanimous. VRCA is priced at $15.04, with an average price target of $23.33 suggesting a 55% one-year upside potential. (See VRCA stock analysis on TipRanks) To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. 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.