Intercept Pharmaceuticals: 6 Different Insiders Have Sold Shares This Year

In this article, I will feature one healthcare 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%.

Intercept Pharmaceuticals (NASDAQ:ICPT) focuses on the development and commercialization of novel therapeutics to treat chronic liver diseases utilizing its proprietary bile acid chemistry.

Click to enlarge

Insider selling during the last 30 days

Here is a table of Intercept'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
Srinivas Akkaraju Director Jan 16 3,250 Yes 2,916 shares + 8,749 options 21.8%
Barbara Duncan CFO Jan 15 5,625 Yes 10,708 shares + 16,875 options 16.9%
Mark Pruzanski CEO Jan 16 10,000 Yes 430,298 shares + 240,960 options 1.5%
David Shapiro CMO Jan 8 4,928 Yes 8,663 shares + 98,339 options 4.4%
Luciano Adorini CSO Jan 7 1,634 Yes 6,392 shares + 8,000 options 10.2%
Lorenzo Tallarigo Director Jan 7 1,839 Yes 5,940,530 shares 0.03%
Click to enlarge

There have been 27,276 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 Intercept's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
January 2014 27,276 0
December 2013 5,276 0
November 2013 6,892 0
October 2013 1,672,063 0
September 2013 40,100 0
August 2013 29,029 0
July 2013 93,869 0
June 2013 95,091 0
May 2013 39,441 0
April 2013 3,750 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
Click to enlarge

There have been 2,012,787 shares sold, and there have been zero shares purchased by insiders since January 2013.


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

Revenue $0.5 million
Net loss $6.2 million
Cash $156.8 million
Click to enlarge


Based upon currently expected level of operating expenditures, Intercept believes that it will be able to fund its operations through early 2016.


On January 9, Intercept announced that the FLINT trial of obeticholic acid (OCA) for the treatment of nonalcoholic steatohepatitis had been stopped early for efficacy based on a planned interim analysis showing that the primary endpoint of the trial had been met.

Pipeline and upcoming milestones

Intercept's product candidates have the potential to treat orphan and more prevalent liver and intestinal diseases for which there currently are limited therapeutic solutions.

(Source: January presentation)

Intercept has the following upcoming milestones:

(Source: January presentation)


Intercept's competitors include Eli Lilly (NYSE:LLY), and Exelixis (NASDAQ:EXEL). Here is a table comparing these companies.

Market Cap: 5.66B 59.58B 1.49B
Employees: 25 38,350 174
Qtrly Rev Growth (yoy): -0.47 0.06 -0.59
Revenue: 2.09M 23.26B 34.81M
Gross Margin: 1.00 0.79 0.98
EBITDA: -22.23M 7.26B -170.83M
Operating Margin: -10.69 0.25 -5.02
Net Income: -53.05M 4.78B -226.21M
EPS: -5.53 4.37 -1.23
P/E: N/A 12.62 N/A
PEG (5 yr expected): N/A -7.20 0.26
P/S: 3,310.13 2.57 43.13
Click to enlarge
Click to enlarge

Intercept doesn't have any approved products yet.

Here is a table of these competitors' insider-trading activities during the last 12 months.

Company Insider buying / shares Insider selling / shares
LLY 0 122,646
EXEL 10,000 0
Click to enlarge

Only Intercept has seen intensive insider selling during the last 30 days.


There have been six different insiders selling Intercept, and there have not been any insiders buying Intercept during the last 30 days. Three of these six insiders decreased their holdings by more than 10%. Intercept has an insider ownership of 33.10%.

Before going short Intercept, 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 am long EXEL, . 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.