Senomyx: 5 Different Insiders Have Sold Shares During The Last 30 Days

Apr.22.14 | About: Senomyx, Inc. (SNMX)

Summary

Five insiders sold Senomyx stock within one month.

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

All five of these insiders decreased their holdings by more than 10%.

Senomyx (NASDAQ:SNMX) discovers, develops, and commercializes flavor ingredients for the packaged food, beverage, and ingredient supply industries using proprietary taste receptor-based assays and screening technologies.

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Insider selling during the last 30 days

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

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Donald Karanewsky CSO April 17 20,000 Yes 0 shares + 124,515 options 13.8%
Kent Snyder Chairman Mar 31-Apr 11 228,440 Yes 414,288 shares 35.5%
Sharon Wicker SVP April 7 31,154 Yes 40,692 shares + 145,596 options 14.3%
Roger Billingsley Director April 2 30,000 Yes 0 shares 100%
Jay Short Director April 1 11,590 Yes 17,678 shares + 7,500 options 31.5%
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There have been 321,184 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 Senomyx' insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
April 2014 298,340 0
March 2014 22,844 33,000
February 2014 0 0
January 2014 4,090 0
December 2013 52,314 0
November 2013 170,504 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 0 0
May 2013 0 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 548,092 shares sold, and there have been 33,000 shares purchased by insiders since January 2013. The month of April 2014 has seen the most insider selling.

Financials

Senomyx reported the full-year 2013 financial results on March 12 with the following highlights:

Revenue $29.3 million
Net loss $11.9 million
Cash $33.0 million
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The five insiders sold their shares after these results.

Outlook

Senomyx' 2014 guidance is as follows:

Revenue $32-$35 million
Net loss $10-$12 million
Year-end cash greater than $25 million
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Competition

Senomyx' competitors include International Flavors & Fragrances (NYSE:IFF), and PureCircle Limited (OTCPK:PCRTF). Here is a table comparing these companies.

Company SNMX IFF PCRTF
Market Cap: 387.66M 7.73B 1.68B
Employees: 113 6,000 N/A
Qtrly Rev Growth (yoy): -0.10 0.07 0.32
Revenue: 29.29M 2.95B 79.62M
Gross Margin: 0.01 0.44 N/A
EBITDA: -9.09M 617.03M 6.65M
Operating Margin: -0.41 0.18 0.01
Net Income: -11.90M 351.24M -4.47M
EPS: -0.29 4.29 -0.03
P/E: N/A 22.23 N/A
PEG (5 yr expected): N/A 1.87 N/A
P/S: 12.87 2.62 21.09
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Senomyx has the second-highest P/S ratio among these three companies.

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

Company Insider buying / shares Insider selling / shares
IFF 1,100 13,486
PCRTF N/A N/A
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Only Senomyx has seen intensive insider selling during the last 30 days.

Conclusion

There have been five different insiders selling Senomyx, and there have not been any insiders buying Senomyx during the last 30 days. All five of these insiders decreased their holdings by more than 10%. Senomyx has an insider ownership of 1.49%.

Senomyx has a $3.5 price target from the Point & Figure chart. I believe there is an opportunity for a short entry with the $3.5 price target. I would place a stop loss at $13, which is the six-year high. The three main reasons for the proposed short entry are a bearish Point & Figure chart, negative earnings, 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 SNMX 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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.