Insiders Are Selling Raptor Pharmaceuticals

Sep.20.13 | About: Raptor Pharmaceutical (RPTP)

In this article, I will feature one healthcare company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Raptor Pharmaceuticals (NASDAQ:RPTP) is a biopharmaceutical company focused on developing and commercializing life-altering therapeutics that treat rare, debilitating and often fatal diseases.

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Insider selling during the last 30 days

  • Christopher Starr sold 25,000 shares on September 16 pursuant to a 10b5-1 trading plan. Christopher Starr currently holds 699,370 shares and 1,167,330 options or 3.3% of the company. Christopher Starr is CEO and Co-founder of Raptor. Christopher Starr decreased his holdings by 1.3% in September.
  • Erich Sager sold 17,000 shares on September 16 pursuant to a 10b5-1 trading plan. Erich Sager currently holds 130,727 shares and 495,531 options or 1.1% of the company. Erich Sager serves as a director of the company. Erich Sager decreased his holdings by 2.6% in September.
  • Timothy Walbert sold 5,520 shares on September 13 pursuant to a 10b5-1 trading plan. Timothy Walbert currently holds zero shares and 224,480 options or 0.4% of the company. Timothy Walbert serves as a director of the company. Timothy Walbert decreased his holdings by 2.4% in September.
  • Suzanne Bruhn sold 2,760 shares on September 13 pursuant to a 10b5-1 trading plan. Suzanne Bruhn currently holds zero shares and 227,240 options or 0.4% of the company. Suzanne Bruhn serves as a director of the company. Suzanne Bruhn decreased her holdings by 1.2% in September.
  • Thomas Daley sold 25,000 shares on September 9 pursuant to a 10b5-1 trading plan. Thomas Daley currently holds 69,906 shares and 24,969 options or 0.2% of the company. Thomas Daley is Chief Business Officer. Thomas Daley decreased his holdings by 20.9% in September.
  • Raymond Anderson sold 15,000 shares on September 9 pursuant to a 10b5-1 trading plan. Raymond Anderson currently holds zero shares and 18,306 options or less than 0.1% of the company. Raymond Anderson serves as a director of the company. Raymond Anderson decreased his holdings by 45.0% in September.
  • Richard Franklin sold 10,715 shares on September 9 pursuant to a 10b5-1 trading plan. Richard Franklin currently holds zero shares and 329,254 options or 0.6% of the company. Richard Franklin serves as a director of the company. Richard Franklin decreased his holdings by 3.2% in September.
  • Georgia Erbez sold 7,400 shares on August 30 and currently holds zero shares and zero options of the company. Georgia Erbez serves as Raptor's Chief Financial Officer. Georgia Erbez decreased her holdings by 100% in August.

Insider selling by calendar month

Here is a table of Raptor's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
September 2013 100,995 0
August 2013 7,400 0
July 2013 0 0
June 2013 0 0
May 2013 0 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 108,395 shares sold and there have been zero shares purchased by insiders this year.

Financials

Raptor reported the second-quarter financial results on August 8 with the following highlights:

Revenue $21,000
Net loss $24.1 million
Cash $74.6 million
Debt $50.1 million
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Outlook

Raptor believes that its cash balance will be sufficient to meet its projected operational requirements and obligations through the end of 2014.

Pipeline

Raptor's lead product, Procysbi (cysteamine bitartrate) delayed-release capsules, received FDA approval on April 30, 2013 and EU approval on September 12, 2013.

Raptor's clinical-stage product pipeline includes two active development programs based on the company's proprietary delayed-release formulation of cysteamine bitartrate (RP103 capsules), as well as the company's Convivia (oral 4-methylpyrazole) program which the company licensed to Uni Pharma, Taiwan. Raptor's preclinical pipeline includes two development programs based upon the company's proprietary molecules.

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Upcoming milestones

Raptor has the following upcoming milestones during the next 12 months.

Phase 2/3 18 month treatment data on RP103 in HD Q1/2014
Health Canada NDS submission H1/2014
NAFLD Phase 2b enrollment completed H1/2014
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Competition

Cystinosis

Raptor is aware of only one pharmaceutical product currently approved by the FDA and the EMA to treat cystinosis, Cystagon (immediate-release cysteamine bitartrate capsules), is marketed in the U.S. by Mylan Pharmaceuticals (NASDAQ:MYL), and by Recordati (OTC:RCDTF) and Orphan Europe in markets outside of the U.S. Cystagon was approved by the FDA in 1994 and by EMA in 1997 and is the standard of care for cystinosis treatment.

Raptor is not aware of any pharmaceutical company with an active program to develop an alternative therapy for cystinosis. There are companies developing and/or marketing products to treat symptoms and conditions related to, or resulting from cystinosis, but none developing products to treat the underlying metabolic disorder (toxic cystine accumulation). Academic researchers in the U.S. and Europe are pursuing potential cures for cystinosis through gene therapy, stem cell therapy, pro-drug and pegylated drug approaches as alternatives to cysteamine bitartrate. Raptor believes that the development timeline to an approved product for these approaches is many years with substantial uncertainty.

Huntington's Disease

Raptor is not aware of any currently available treatment alternatives for HD, although there are products available such as Haldol, Klonopin and Xenazine to treat uncontrollable movements and mood swings that result from the disease. There are several pharmaceutical companies pursuing potential cures and treatments for HD, as well as numerous academic and foundation sponsored research efforts. Raptor's product candidate, RP103, is the only compound in clinical development which specifically targets the fundamental metabolic defect of the disease (deficient brain-derived neurotrophic factor), with the goal of slowing disease progression.

Companies with HD product candidates in development include Eli Lilly & Co. (NYSE:LLY) and Pfizer (NYSE:PFE). Several other companies have drug candidates in preclinical development. Additionally, nutritional supplements including creatinine and coenzyme Q10 have been investigated as potential treatments for HD. The Huntington Study Group sponsors numerous studies of potential therapies for HD, including coenzyme Q10 and the antibiotic minocycline.

Conclusion

There have been eight different insiders selling Raptor and there have not been any insiders buying Raptor during the past 30 days. Three of these eight insiders decreased their holdings by more than 10%.

The next catalyst for the stock will be the Phase 2/3 18 month treatment data on RP103 in HD anticipated in the first quarter of 2014. Raptor is currently fully funded through the end of 2014.

There are eight analyst buy ratings, one neutral rating and zero sell ratings with an average price target of $13.78.

Before entering short Raptor, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst target prices and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.