Intercept Pharmaceuticals: 3 Different Insiders Have Sold Shares During The Last 30 Days

Summary

Three insiders sold Intercept stock within one month.

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

All three of these insiders 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.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
David Shapiro CMO Mar 17-Apr 2 9,849 Yes 25,037 shares 28.2%
Luciano Adorini CSO March 7 2,000 Yes 6,392 shares + 4,000 options 16.1%
Daniel Regan CCO March 5 20,000 Yes 0 shares + 110,000 options 15.4%
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There have been 31,849 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 activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2014 5,393 0
March 2014 26,456 0
February 2014 15,548 0
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
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There have been 2,060,184 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Intercept reported the full-year 2013 financial results on March 14 with the following highlights:

Revenue $1.6 million
Net loss $67.8 million
Cash $144.8 million
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One of these three insiders sold their shares after these results.

On April 3, Intercept announced the pricing of a $183.3 million public offering.

Pipeline and upcoming milestones

Intercept's pipeline consists of the following product candidates.

(Source: Intercept)

Intercept has the following upcoming milestones:

Program Milestone Timing
PBC Program Phase 3 confirmatory trial planned to be initiated Q3/2014
PBC Program NDA and MAA Filings for OCA in PBC anticipated end of 2014
FLINT trial in NASH Final results July 2014
FLINT trial in NASH Phase 3 program anticipated to begin H1/2015
NASH Program Phase 2 DSP NASH trial results Q4/2015
NASH Program Phase 2 lipid metabolism trial H2/2014
Portal Hypertension Program Additional data from POISE trial April 9-13
Bile Acid Diarrhea Program Proof of concept trial data to be presented at DDW 2014 2014
PSC Program Double-blind Phase 2 trial planned to be initiated in Primary Sclerosing Cholangitis (PSC) H2/2014
INT-767 Program Phase 1 trial for INT-767 planned to be initiated Q4/2014
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Competition

Intercept's competitors include Gilead Sciences (NASDAQ:GILD), Raptor Pharmaceutical Corp. (NASDAQ:RPTP), and Genfit SA (OTCPK:GNFTF). Here is a table comparing these companies.

Company ICPT GILD RPTP GNFTF
Market Cap: 5.82B 111.57B 553.56M 830.72M
Employees: 50 6,100 70 78
Qtrly Rev Growth (yoy): 0.00 0.21 N/A -0.08
Revenue: 1.62M 11.20B 16.87M 7.53M
Gross Margin: 1.00 0.74 0.90 N/A
EBITDA: -39.35M 4.87B -51.47M -12.87M
Operating Margin: -24.33 0.40 -3.08 -1.79
Net Income: -67.79M 3.07B -69.42M -16.38M
EPS: -3.76 1.81 -1.20 -0.84
P/E: N/A 40.07 N/A N/A
PEG (5 yr expected): N/A 0.58 N/A N/A
P/S: 3,873.53 10.16 33.96 110.33
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Intercept doesn't have any approved products yet.

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

Company Insider buying / shares Insider selling / shares
GILD 0 1,507,192
RPTP 0 182,567
GNFTF N/A N/A
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Gilead Sciences has also seen intensive insider selling during the last 30 days.

Conclusion

There have been three different insiders selling Intercept, and there have not been any insiders buying Intercept during the last 30 days. All three of these insiders decreased their holdings by more than 10%. Intercept has an insider ownership of 32.90%.

Intercept has a $244 price target from the Point & Figure chart. I believe there is an opportunity for a short entry with the $244 price target. I would place a stop loss at $497, 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 ICPT 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.