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Summary

  • Seven insiders sold United Therapeutics stock within one month.
  • The stock was not purchased by any insiders in the month of intensive selling.
  • Six of these seven insiders decreased their holdings by more than 10%.

United Therapeutics (NASDAQ:UTHR) focuses on the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening conditions worldwide.

(click to enlarge)

Insider selling during the last 30 days

Here is a table of United Therapeutics' insider activity during the last 30 days.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Martine RothblattCEOMarch 6-2725,797Yes533,400 shares + 1,102,364 options1.6%
Roger JeffsCOOMarch 7-2540,000Yes26,870 shares + 41,426 options36.9%
John FerrariCFOMarch 6-2020,000Yes407 shares + 87,500 options18.5%
Christopher CauseyDirectorMarch 201,500Yes1,183 shares + 3,000 options26.4%
Paul MahonEVPMarch 6-2012,000Yes34,832 shares + 32,000 options15.2%
Raymond DwekDirectorMarch 63,000Yes0 shares + 21,000 options12.5%
Christopher PatuskyDirectorMarch 65,000Yes1,300 shares79.4%

There have been 107,297 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 United Therapeutics' insider activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
March 2014107,2970
February 201466,8320
January 201460,6650
December 2013225,6600
November 201368,3320
October 201361,9150
September 2013102,8320
August 201369,1650
July 201368,3660
June 201345,5000
May 201353,5000
April 201347,0000
March 201392,1660
February 201326,0000
January 201331,2490

There have been 1,126,479 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

United Therapeutics reported the full-year 2013 financial results on February 25 with the following highlights:

Revenue$1.1 billion
Net income$174.6 million
Cash$688.5 million
Debt$286.2 million

The seven insiders sold their shares after these results.

Pipeline and upcoming milestones

United Therapeutics' approved products are Remodulin, Tyvaso, Adcirca, and Orenitram.

(Source: 2013 annual report)

United Therapeutics has also several product candidates in the pipeline.

(Source: 2013 annual report)

United Therapeutics' upcoming milestones include the following.

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(Source: Investor presentation)

Competition

United Therapeutics' competitors (according to 2013 annual report) include GlaxoSmithKline (NYSE:GSK) with Flolan, Teva Pharmaceutical Industries (NYSE:TEVA) with generic epoprostenol, and Pfizer (NYSE:PFE) with Revatio. Here is a table comparing these companies.

CompanyUTHRGSKTEVAPFE
Market Cap:4.69B128.15B44.58B204.32B
Employees:70699,45144,94577,700
Qtrly Rev Growth (yoy):0.200.020.03-0.02
Revenue:1.12B42.60B20.31B51.58B
Gross Margin:0.880.700.530.82
EBITDA:323.76M13.94B5.61B23.12B
Operating Margin:0.260.280.200.33
Net Income:174.56M8.74B1.27B11.34B
EPS:3.283.551.493.19
P/E:28.4115.0535.1910.03
PEG (5 yr expected):1.811.5511.696.76
P/S:4.103.032.063.94
Insider Ownership:18.16%N/AN/A0.02%

United Therapeutics has the highest P/S ratio among these four companies.

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

CompanyInsider buying / sharesInsider selling / shares
GSKN/AN/A
TEVAN/AN/A
PFE0375,317

Pfizer has also seen intensive insider selling during the last 30 days.

Conclusion

There have been seven different insiders selling United Therapeutics, and there have not been any insiders buying United Therapeutics during the last 30 days. Six of these seven insiders decreased their holdings by more than 10%. United Therapeutics has an insider ownership of 18.16%.

United Therapeutics has a $76 price target from the Point & Figure chart. I believe there is an opportunity for a short entry with the $76 price target. I would place a stop loss at $117, which is the all-time high. The three main reasons for the proposed short entry are a bearish Point & Figure chart, relatively high P/S ratio, and the intensive insider-selling activity.

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Source: United Therapeutics: 7 Different Insiders Have Sold Shares This Month