My disclaimer: Sold at 19.65 yesterday and then sold short on top of that.
I hate the idea of shorting. It is “negative.” And I have been very, very long on another biotech (NVAX) for a long time ($1s) and hate the things I have read by the shorts over the years. But now I am one of the “bad guys” with regard to NBIX. Why have I turned to the dark side?
According to Yahoo, from January 10 through January 17, insiders sold almost 270,000 shares for over $4.6 million. That was in a week – and may be more sells have happened this week that are not yet on the webpage. One can dismiss this as “not much” or one can realize something more fundamental about this behavior. People (including me) have their own self-interest in mind. These insiders are selling now because they know there is not much more to gain in the near run. If you knew you were sitting on phenomenal news that would drive the stock to $25+ in the near future, would you sell any shares let alone $4.6million worth? So yes it may go up a little bit, but in general these guys are telling you they expect the share price to drop. The CEO sold $1.8 million at $16.76 (and then again at $18.57 later in the week). I consider myself lucky to have sold my 4,000 shares at $19.65.
Besides the major red flag indicator of insider selling, I am worried about the recent positive news. It seems to me the endpoints were changed from the previous trial. I think this will cause a major problem with the FDA. So NBIX says they NOW have great data and $$$ pour into the stock, but will the change in methodology stand up to FDA scientific standards when it really counts? It may. Or it may not. Having seen how the FDA behaves, I think there will be problems. So to me this extra uncertainty doesn’t justify the massive run up after the run up. I think the insider sells are hinting at that too.
Another point. At this current stock price, it is a perfect time to have a secondary offering. So I am wa
Nice post. The insider sales are alarming. Yesterday Schwab reported large insider sales from 5 top officers at NBIX. The news feed is removed or I'd post it. I don't believe those new sales are included in the Yahoo sales you quoted.
Continuation of post:
Another point. At this current stock price, it is a perfect time to have a secondary offering. So I am waiting for that shoe to drop. But if I could, I would urge those institutions involved to have their science consultants dig into what I mentioned above.
So why is the stock going up? I think it is because institutions are just putting money into the biotech industry – some of that gets spread into NBIX. That is cyclical. Painfully cyclical as I am sure most of you are aware. Once that stops, I fear (and now I hope) the bottom will be pulled out. I think the peak may have happened when it crossed $20 the other day.
I will likely be a “long” again but I am hoping (and obviously believe) that will occur at much lower price than where we are today. Other than a buyout, I don’t see why NBIX would go up any higher from near in the near term. The Elagolix result may also push NBIX higher, but that may be some time away. But those results are a #$%$ shoot too. What if those results are not good? It seems to me NBIX has had its short term run. Now it is time to follow what the insiders hinting to us – especially the CEO.
Before I get hateful responses, I don’t know what is going to happen. This is just one person’s perspectives. In the end I wish everyone luck.