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In this article, I will feature one biotech 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%.

Biogen Idec (NASDAQ:BIIB) discovers, develops, manufactures, and markets therapies for the treatment of neurodegenerative diseases, hemophilia, and autoimmune disorders in the United States and internationally.

(click to enlarge)

Insider selling during the last 30 days

  • Paul Clancy sold 125,815 shares on September 16-18, pursuant to a Rule 10b5-1 trading plan. Paul Clancy currently holds 7,087 shares or less than 0.1% of the company. Paul Clancy is Executive Vice President and Chief Financial Officer. Paul Clancy decreased his holdings by 94.7% in September.
  • Steven Holtzman sold 3,501 shares on September 17, pursuant to a Rule 10b5-1 trading plan. Steven Holtzman currently holds 4,885 shares or less than 0.1% of the company. Steven Holtzman is Executive Vice President, Corporate Development. Steven Holtzman decreased his holdings by 41.7% in September.
  • Alfred Sandrock sold 9,820 shares on September 16, pursuant to a Rule 10b5-1 trading plan. Alfred Sandrock currently holds 14,500 shares or less than 0.1% of the company. Alfred Sandrock is Group Senior Vice President, Chief Medical Officer. Alfred Sandrock decreased his holdings by 40.4% in September.
  • Raymond Pawlicki sold 4,000 shares on September 16, pursuant to a Rule 10b5-1 trading plan. Raymond Pawlicki currently holds 8,710 shares and 8,480 options or less than 0.1% of the company. Raymond Pawlicki is Senior Vice President and Chief Information Officer. Raymond Pawlicki decreased his holdings by 18.9% in September.
  • Lynn Schenk sold 900 shares on September 11, pursuant to a Rule 10b5-1 trading plan. Lynn Schenk currently controls 10,425 shares or less than 0.1% of the company. Lynn Schenk serves as a director of the company. Lynn Schenk decreased her holdings by 7.9% in September.
  • George Scangos sold 2,239 shares on September 3, pursuant to a Rule 10b5-1 trading plan. George Scangos currently holds 43,522 shares or less than 0.1% of the company. George Scangos was appointed Chief Executive Officer and a member of the Board of Directors in June 2010. George Scangos decreased his holdings by 4.9% in September.
  • Douglas Williams sold 4,368 shares on August 26, pursuant to a Rule 10b5-1 trading plan. Douglas Williams currently holds 4,571 shares or less than 0.1% of the company. Douglas Williams is Executive Vice President, Research and Development. Douglas Williams decreased his holdings by 48.9% during the last 30 days.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
September 2013146,2750
August 20136,6070
July 20132,2390
June 201323,3630
May 201383,4480
April 201325,2100
March 201365,1530
February 201314,0980
January 201300

There have been 366,393 shares sold and there have been zero shares purchased by insiders this year.

Financials

Biogen Idec reported the second-quarter financial results on July 25, with the following highlights:

Revenue$1.7 billion
Net income$490.7 million
Cash$775 million
Debt$729.6 million

Outlook

Biogen Idec's full-year 2013 financial guidance is as follows:

  • Revenue growth is expected to be approximately 22% to 23%.
  • GAAP diluted EPS is expected to be between $7.28 and $7.53.
  • Capital expenditures are expected to be in the range of $250 million to $270 million.

Pipeline

The Tecfidera launch is currently under way in the U.S. The company has three approved multiple sclerosis [MS] products in the U.S. The products are Tecfidera, Tysabri and Avonex. Biogen Idec believes that it is the global leader in the treatment of MS. Here is a picture of Biogen Idec's development pipeline.

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Upcoming milestones

Biogen Idec has three potential new products coming forward in the next 18 months.

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Competition

Biogen Idec's marketed products face competition from the following companies and products.

Avonex and Tysabri

Each of Avonex and Tysabri competes with the following products:

  • Copaxone (glatiramer acetate), which is marketed by Teva Pharmaceutical Industries (NYSE:TEVA).
  • Rebif (interferon-beta-1a), which is marketed by Merck (NYSE:MRK) (and co-promoted with Pfizer (NYSE:PFE) in the U.S.).
  • Betaseron/Betaferon (interferon-beta-1b), which is marketed by the Bayer Group (OTCPK:BAYZF).
  • Extavia (interferon-beta-1b), which is marketed by Novartis AG (NYSE:NVS).
  • Gilenya (fingolimod), which is marketed by Novartis AG.
  • Aubagio (teriflunomide), which is marketed by Sanofi-Aventis (NYSE:SNY).

Fampyra

Fampyra is indicated as a treatment to improve walking in adult patients with MS who have walking disability and is the first treatment that addresses this unmet medical need with demonstrated efficacy in people with all types of MS. The product benefits from exclusivity rights that prohibit generic versions from being manufactured. However, the exclusivity rights are set to expire in 2017, which is the earliest predictable date that a generic version may be available. There are no commercially available generic versions of Fampyra.

Fumaderm

Fumaderm competes with several different types of therapies in the psoriasis market within Germany, including oral systemics such as methotrexate and cyclosporine.

Rituxan in oncology

Rituxan competes with several different types of therapies in the oncology market, including:

Treanda (bendamustine HCL) [marketed by Cephalon (NASDAQ:CEPH)], which is indicated for patients with indolent B-cell NHL that has progressed within six months of treatment with Rituxan for CLL.

Arzerra (ofatumumab) [marketed by GenMab (OTC:GNMSY) in collaboration with GlaxoSmithKline (NYSE:GSK)], which is indicated for refractory CLL patients to both alemtuzumab and fludarabine.

Rituxan in Rheumatoid Arthritis [RA]

Rituxan competes with several different types of therapies in the RA market, including:

  • Traditional therapies for RA, including disease-modifying anti-rheumatic drugs such as steroids, methotrexate and cyclosporine, and pain relievers such as acetaminophen.
  • TNF inhibitors, such as Remicade (infliximab) and Simponi (golimumab) [marketed by Johnson & Johnson (NYSE:JNJ)], Humira (adalimumab) [marketed by AbbVie (NYSE:ABBV)], Enbrel (etanercept) [marketed by Amgen (NASDAQ:AMGN) and Pfizer] and Cimzia (certolizumab pegol) [marketed by UCB, S.A. (OTCPK:UCBJF)].
  • Orencia (abatacept) [marketed by Bristol-Myers Squibb Company (NYSE:BMY)].
  • Actemra (tocilizumab) [marketed by the Roche Group (OTCQX:RHHBY)].

Here is a table of these competitors' insider-trading activities during the last six months.

CompanyInsider buying / sharesInsider selling / shares
MRK0430,984
PFE0450,449
CEPH00
JNJ0113,709
ABBV0134,250
AMGN0125,263
BMY01,807,308

None of these competitors have seen any insider buying during the last six months. Only Biogen Idec has seen intensive insider selling during the last 30 days.

Conclusion

There have been seven different insiders selling Biogen Idec and there have not been any insiders buying Biogen Idec during the past 30 days. Five of these seven insiders decreased their holdings by more than 10%.

Biogen Idec is trading at a P/E ratio of 36.81 and a forward P/E ratio of 22.65. The company has a book value of $33.27 per share.

Before entering short Biogen Idec, I would like to get a bearish confirmation from the Point and Figure chart. The main reason for the proposed short entry is the intensive insider selling activity.

Source: Insiders Are Selling Biogen Idec