United Therapeutics: 7 Different Insiders Have Sold Shares This Month

Apr. 1.14 | About: United Therapeutics (UTHR)

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.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Martine Rothblatt CEO March 6-27 25,797 Yes 533,400 shares + 1,102,364 options 1.6%
Roger Jeffs COO March 7-25 40,000 Yes 26,870 shares + 41,426 options 36.9%
John Ferrari CFO March 6-20 20,000 Yes 407 shares + 87,500 options 18.5%
Christopher Causey Director March 20 1,500 Yes 1,183 shares + 3,000 options 26.4%
Paul Mahon EVP March 6-20 12,000 Yes 34,832 shares + 32,000 options 15.2%
Raymond Dwek Director March 6 3,000 Yes 0 shares + 21,000 options 12.5%
Christopher Patusky Director March 6 5,000 Yes 1,300 shares 79.4%
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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.

Month Insider selling / shares Insider buying / shares
March 2014 107,297 0
February 2014 66,832 0
January 2014 60,665 0
December 2013 225,660 0
November 2013 68,332 0
October 2013 61,915 0
September 2013 102,832 0
August 2013 69,165 0
July 2013 68,366 0
June 2013 45,500 0
May 2013 53,500 0
April 2013 47,000 0
March 2013 92,166 0
February 2013 26,000 0
January 2013 31,249 0
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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
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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.

Company UTHR GSK TEVA PFE
Market Cap: 4.69B 128.15B 44.58B 204.32B
Employees: 706 99,451 44,945 77,700
Qtrly Rev Growth (yoy): 0.20 0.02 0.03 -0.02
Revenue: 1.12B 42.60B 20.31B 51.58B
Gross Margin: 0.88 0.70 0.53 0.82
EBITDA: 323.76M 13.94B 5.61B 23.12B
Operating Margin: 0.26 0.28 0.20 0.33
Net Income: 174.56M 8.74B 1.27B 11.34B
EPS: 3.28 3.55 1.49 3.19
P/E: 28.41 15.05 35.19 10.03
PEG (5 yr expected): 1.81 1.55 11.69 6.76
P/S: 4.10 3.03 2.06 3.94
Insider Ownership: 18.16% N/A N/A 0.02%
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United Therapeutics 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
TEVA N/A N/A
PFE 0 375,317
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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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Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in UTHR 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.