Biogen Idec: 7 Different Insiders Have Sold Shares This Month

Mar.24.14 | About: Biogen Inc. (BIIB)

Summary

Seven insiders sold Biogen Idec stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

All seven of these insiders 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.

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Insider selling during the last 30 days

Here is a table of Biogen Idec's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Caroline Dorsa Director March 20 10,000 Yes 14,468 shares + 25,000 options 20.2%
Douglas Williams EVP March 19 3,505 Yes 7,976 shares 30.5%
Steven Holtzman EVP March 17 1,221 Yes 8,191 shares 13.0%
George Scangos CEO March 3-10 29,066 Yes 39,021 shares 42.7%
Nancy Leaming Director March 10 2,000 Yes 7,660 shares 20.7%
Stuart Kingsley EVP March 11 8,428 Yes 3,511 shares 70.6%
Alfred Sandrock SVP Feb 26-Mar 4 4,219 Yes 15,407 shares 21.5%
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There have been 58,439 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 Biogen Idec's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
March 2014 57,391 0
February 2014 10,667 0
January 2014 29,770 0
December 2013 1,439 0
November 2013 7,239 0
October 2013 18,269 0
September 2013 147,715 0
August 2013 6,607 0
July 2013 2,239 0
June 2013 23,363 0
May 2013 83,448 0
April 2013 25,210 0
March 2013 65,153 0
February 2013 14,098 0
January 2013 0 0
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There have been 492,608 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Biogen Idec reported the full-year 2013 financial results on January 29 with the following highlights:

Revenue $6.9 billion
GAAP net income $1.9 billion
Cash $1.2 billion
Debt $595.9 million
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(Source: Earnings presentation)

The seven insiders sold their shares after these results.

Outlook

Biogen Idec's full-year 2014 financial guidance is as follows:

Revenue growth 22% to 25%
Non-GAAP EPS $11.00-$11.20
GAAP EPS $9.74-$9.94
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(Source: Earnings presentation)

Pipeline and upcoming milestones

Biogen Idec's approved products include Gazyva, Tecfidera, Tysabri, Avonex, Rituxan, and Fampyra. Biogen Idec has several product candidates in the pipeline.

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(Source: Earnings presentation)

Biogen Idec's upcoming late stage pipeline events include the following.

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(Source: Earnings presentation)

Competition

Biogen Idec's competitors include Teva Pharmaceutical Industries (NYSE:TEVA) with Copaxone, GlaxoSmithKline (NYSE:GSK) with Arzerra, and Pfizer (NYSE:PFE) with Rebif. Here is a table comparing these companies.

Company BIIB TEVA GSK PFE
Market Cap: 75.30B 41.90B 127.13B 205.40B
Employees: 6,850 44,945 99,451 77,700
Qtrly Rev Growth (yoy): 0.39 0.03 0.02 -0.02
Revenue: 6.93B 20.31B 42.60B 51.58B
Gross Margin: 0.88 0.53 0.70 0.82
EBITDA: 3.02B 5.61B 13.94B 23.12B
Operating Margin: 0.36 0.20 0.28 0.33
Net Income: 1.86B 1.27B 8.74B 11.34B
EPS: 7.81 1.49 3.55 3.19
P/E: 40.78 33.16 14.94 10.08
PEG (5 yr expected): 1.68 11.77 1.56 6.81
P/S: 11.83 2.08 3.04 3.95
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Biogen Idec has the highest P/S ratio among these four companies.

Here is a table of these competitors' insider activities this year.

Company Insider buying / shares Insider selling / shares
GSK N/A N/A
PFE

0

375,317
TEVA N/A N/A
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Pfizer has also 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 last 30 days. All seven of these insiders decreased their holdings by more than 10%. Biogen Idec has an insider ownership of 0.10%.

Biogen Idec has a $272 price target from the Point & Figure chart. I believe there is an opportunity for a short entry with the $272 price target. I would place a stop loss at $353, which is the all-time high. The two main reasons for the proposed short entry are a bearish Point & Figure chart, and the intensive insider-selling activity.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in BIIB over 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.