Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

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%.

Alexion Pharmaceuticals (NASDAQ:ALXN) develops and commercializes life-transforming therapeutic products.

(click to enlarge)

Insider selling during the last 30 days

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

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Stephen SquintoEVPFeb 432,937No94,818 shares25.8%
Larry MathisDirectorFeb 380,729No29,456 shares + 11,713 options66.2%
Max LinkDirectorFeb 340,000No58,574 shares40.6%
Leonard BellCEOJan 8-22191,436Yes977,726 shares + 130,280 options14.7%

There have been 345,102 shares sold by insiders during the last 30 days. Leonard Bell sold shares pursuant to a Rule 10b5-1 plan. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

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

MonthInsider selling / sharesInsider buying / shares
February 2014153,6660
January 2014191,4360
December 2013273,0000
November 201314,1250
October 2013139,0370
September 201336,3500
August 2013187,2750
July 2013372,1250
June 201300
May 2013122,1030
April 2013147,7290
March 201323,1150
February 201300
January 201370,0000

There have been 1,729,961 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Alexion reported the full-year 2013 financial results on January 30 with the following highlights:

Revenue$1.6 billion
GAAP net income$252.9 million
Cash$1.5 billion
Debt$113.0 million

Outlook

Alexion's 2014 guidance is as follows:

Revenue$2.00-$2.02 billion
Non-GAAP earnings$3.70-$3.80 per share

Pipeline and upcoming milestones

Alexion's Soliris is approved in nearly 50 countries for the treatment of patients with Paroxysmal Nocturnal Hemoglobinuria, including the United States, European Union and Japan. Soliris is also approved in the United States, European Union, Japan and other countries as the first and only treatment for pediatric and adult patients with aHUS, a genetic, chronic, ultra-rare disease associated with vital organ failure and premature death.

In 2014, Alexion expects to continue to extend its aHUS initiatives in the United States, complete the aHUS reimbursement processes across Western Europe, achieve a robust launch in Japan on its first full year of aHUS operations, and build on its initial presence in Turkey, Russia and Brazil.

Alexion is anticipating as many as seven potential product approvals between 2014 and 2018. These product approvals include asfotase alfa near late 2014.

Competition

There are currently no approved drugs other than Soliris for the treatment of PNH and aHUS. However, many companies, including major pharmaceutical and chemical companies as well as specialized biotechnology companies, are engaged in activities similar to Alexion's.

Conclusion

There have been four different insiders selling Alexion, and there have not been any insiders buying Alexion during the last 30 days. All four of these insiders decreased their holdings by more than 10%. Alexion has an insider ownership of 0.80%.

Before going short Alexion, 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: Alexion Pharmaceuticals: 4 Different Insiders Have Sold Shares This Year