Bluebird Bio: 5 Different Insiders Have Sold Shares During The Last 30 Days

Jan.13.14 | About: bluebird bio, (BLUE)

In this article, I will feature one biotech stock 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%.

Bluebird Bio (NASDAQ:BLUE) focuses on the development, manufacture, and marketing of therapies to treat various human diseases.

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Insider selling during the last 30 days

Here is a table of Bluebird's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Jeffrey Walsh COO Jan 10 6,000 Yes 0 shares + 223,307 options 2.6%
Nick Leschly CEO Jan 2 5,000 Yes 324,318 shares 1.5%
David Davidson CMO Dec 16-Jan 3 30,000 Yes 0 shares + 127,239 options 19.1%
Linda Bain VP Dec 16-Jan 3 7,000 Yes 0 shares + 58,516 options 10.7%
Mitchell Finer CSO Dec 16 18,000 Yes 0 shares + 91,769 options 16.4%
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There have been 66,000 shares sold by insiders during the last 30 days. All these shares were sold pursuant to a Rule 10b5-1 plan.

SEC Rule 10b5-1 is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading, which is prohibited by SEC Rule 10b-5. After Rule 10b5-1 was enacted, the SEC staff publicly took the position that canceling a planned trade made under the safe harbor does not constitute insider trading, even if the person was aware of the inside information when canceling the trade. This staff interpretation raises the possibility that executives can exploit this safe harbor by entering into 10b5-1 trading plans before they have inside information while retaining the option to later cancel those plans based on inside information.

For example, a CEO of a company could call a broker on January 1 and enter into a plan to sell a particular quantity of shares of his company's stock on March 1, find out terrible news about his company on February 1 that will not become public until April 1, and then go forward with the March 1 sale anyway, saving himself from losing money when the bad news becomes public. Under the terms of Rule 10b5-1(b) this is insider trading because the CEO "was aware" of the inside information when he made the trade. But he can assert an affirmative defense under Rule 10b5-1(c), because he planned the trade before he learned the inside information.

In general, it is a safer way for an insider to sell shares pursuant to a Rule 10b5-1 trading plan than without it.

Insider selling by calendar month

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

Month Insider selling / shares Insider buying / shares
January 2014 31,000 0
December 2013 35,000 0
November 2013 0 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
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There have been 66,000 shares sold, and there have been zero shares purchased by insiders since June 2013.

Financials

Bluebird reported the third-quarter financial results on November 14 with the following highlights:

Revenue $6.4 million
Net loss $6.1 million
Cash $216.8 million
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Pipeline

Bluebird has clinical-stage programs in development for childhood cerebral adrenoleokodystrophy (CCALD), beta-thalassemia and sickle cell disease as well as a preclinical oncology program in the chimeric antigen receptor T cells field under a collaboration with Celgene (NASDAQ:CELG).

(Source: Bluebird)

Competition

Bluebird's competitors include Sangamo BioSciences (NASDAQ:SGMO), and GlaxoSmithKline (NYSE:GSK). Here is a table comparing these companies.

Company BLUE SGMO GSK
Market Cap: 503.13M 822.52M 127.17B
Employees: 76 84 99,488
Qtrly Rev Growth (yoy): 74.12 0.16 -0.00
Revenue: 13.93M 26.20M 42.44B
Gross Margin: 0.70 0.86 0.70
EBITDA: -25.08M -21.30M 14.92B
Operating Margin: -1.85 -0.84 0.26
Net Income: -20.96M -21.96M 6.25B
EPS: -3.16 -0.41 2.54
P/E: N/A N/A 20.82
PEG (5 yr expected): 1.51 N/A 1.59
P/S: 36.12 31.99 3.00
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Bluebird doesn't have any approved products yet.

Here is a table of these competitors' insider-trading activities during the last 30 days.

Company Insider buying / shares Insider selling / shares
SGMO 0 80,000
GSK

N/A

N/A
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Only Bluebird has seen intensive insider selling during the last 30 days.

Conclusion

There have been five different insiders selling Bluebird, and there have not been any insiders buying Bluebird during the last 30 days. Three of these five insiders decreased their holdings by more than 10%.

Before entering short Bluebird, 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.

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.