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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%.

Gilead Sciences (GILD), a biopharmaceutical company, discovers, develops, and commercializes human therapeutics for the treatment of life threatening diseases in North America, Europe, and Asia. Gilead's portfolio of products and pipeline of investigational drugs includes treatments for HIV/AIDS, hepatitis, serious respiratory and cardiovascular conditions, cancer and inflammation.

Insider selling during the last 30 days

  • Kevin Young sold 100,000 shares on September 23 pursuant to a Rule 10b5-1 trading plan. Kevin Young currently holds 161,840 shares and 432,508 options or less than 0.1% of the company. Kevin Young joined Gilead Sciences in 2004 as Executive Vice President of Commercial Operations. Kevin Young decreased his holdings by 14.4% in September.
  • Norbert Bischofberger sold 90,000 shares on September 16 pursuant to a Rule 10b5-1 trading plan. Norbert Bischofberger currently holds 2,159,643 shares and 450,000 options or 0.2% of the company. Norbert Bischofberger joined Gilead Sciences in 1990 and has served as Executive Vice President for Research and Development since 2000 and Chief Scientific Officer since 2007. Norbert Bischofberger decreased his holdings by 3.3% in September.
  • John Martin sold 282,242 shares on September 3 pursuant to a Rule 10b5-1 trading plan. John Martin currently holds 4,057,121 shares and 846,726 options or 0.3% of the company. Dr. Martin joined Gilead Sciences in 1990 and currently serves as Chairman of the Board of Directors and Chief Executive Officer. John Martin decreased his holdings by 5.4% in September.
  • Gregg Alton sold 30,000 shares on September 3 pursuant to a Rule 10b5-1 trading plan. Gregg Alton currently holds 46,938 shares and 14,742 options or less than 0.1% of the company. Gregg Alton is Executive Vice President, Corporate and Medical Affairs. Gregg Alton decreased his holdings by 32.7% in September.
  • Nicholas Moore sold 151,720 shares on August 30 pursuant to a Rule 10b5-1 trading plan. Nicholas Moore currently holds 37,274 shares or less than 0.1% of the company. Nicholas Moore serves as a director of the company. Nicholas Moore decreased his holdings by 80.3% during the last 30 days.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
September 2013502,2420
August 2013570,9620
July 2013713,8420
June 2013422,2420
May 2013312,2420
April 2013326,2100
March 2013416,3460
February 2013312,24210,000
January 2013267,6710

There have been 3,843,999 shares sold and there have been 10,000 shares purchased by insiders this year.

Financials

Gilead reported the second-quarter financial results on July 25 with the following highlights:

Revenue$2.8 billion
Net income$772.6 million
Cash$3.0 billion
Debt$7.3 billion

Outlook

Gilead's guidance for the full year 2013 is as follows:

Net product sales$10,000 - $10,200 million
Non-GAAP product gross margin74%-76%

Upcoming milestones

Gilead has the following upcoming milestones in 2013.

Competition

Gilead's competitors include GlaxoSmithKline (GSK), Pfizer (PFE) and Roche Holding AG (OTCQX:RHHBY). Here is a table comparing these companies.

CompanyGILDGSKPFERHHBY
Market Cap:97.26B122.29B191.19B228.47B
Employees:5,00099,48879,00079,132
Qtrly Rev Growth (yoy):0.150.02-0.070.04
Revenue:10.31B42.46B56.56B51.85B
Gross Margin:0.750.700.810.75
EBITDA:4.45B14.65B24.60B19.79B
Operating Margin:0.400.270.320.33
Net Income:2.93B6.47B11.09B12.09B
EPS:1.792.633.603.51
P/E:35.5619.218.0119.20
PEG (5 yr expected):1.263.534.552.31
P/S:9.322.913.344.36

Gilead has the highest P/S ratio among these four companies. In Pfizer, there have been zero shares purchased and there have been 450,449 shares sold by insiders during the last six months. The insider selling in Pfizer was not intensive during the last 30 days.

Conclusion

There have been five different insiders selling Gilead and there have not been any insiders buying Gilead during the past 30 days. Three of these five insiders decreased their holdings by more than 10%. Gilead has an insider ownership of 0.50%.

Gilead is trading at a P/E ratio of 35.56 and a forward P/E ratio of 21.09. The company has a book value of $7.26 per share. Before entering short Gilead, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio and the intensive insider selling activity.

Source: Insiders Are Selling Gilead Sciences