Unusual Insider Buying in Biotech

Last week, I compared the performance of stock purchases by company insiders to the performance of the S&P 500. Digging deeper, we learned that stock purchases by Chief Medical Officers in biotech companies outperformed the S&P 500 by 11-17 percentage points.

On 12/17/2023, I wrote about Robert Duggan’s stock purchases in biotech company Pulse Therapeutics (PLSE) when the stock was $9.84 - the stock is now trading at $12.80 (~25% increase).

On 12/10/2023, I wrote about Jonathan Lim’s stock purchases in biotech company Erasca (ERAS) when the stock was $1.91 - the stock is now trading at $2.15 (~20% increase).

I decided to follow the breadcrumbs and spent the last week researching biotech stocks.

I found an unusual number of insider purchases followed by outsized returns.

Let’s look at a few examples:

Liquidia (LQDA)

• Liquidia develops precision-engineered therapies using its proprietary PRINT® technology, primarily targeting respiratory and immunological conditions.

• Caligan Partners (10% Owner), Paul Manning (Director), and Roger Jeffs (CEO) all purchased stock in LQDA through a public offering on 12/14/2023.

• Stock is up ~70% since their purchases. Source here

BioAtla (BCAB)

• BioAtla specializes in the development of conditionally active biologics to address unmet medical needs in oncology.

• Insider Purchases

  • Christian Vasquez (SVP Finance) purchased stock on 12/19/2023

  • Lawrence Steinman (Director) purchased stock on 12/19/2023

  • Jay Short (CEO) purchased stock on 12/20/2023

  • Sylvia McBrinn (Director) purchased stock on 12/26/2023

• Stock is up 40% since their purchases. Source here

Perspective Therapeutics (CATX)

• Perspective Therapeutics develops innovative therapies for genetic disorders and rare diseases.

• Insider Purchases

  • Lori Woods (Director) purchased stock on 12/14/2023

  • Markus Puhlmann (Chief Medical Officer) purchased stock on 12/15/2023

  • Robert Williamson (Director) purchased stock on 12/18/2023 and 12/21/2023

  • Robert Hunt (CFO) purchased stock on 12/18/2023

• Stock is up ~80% since their purchases. Source here

Granted, some of the increases above may be attributed to wider market trends (the S&P 500 increased 5% in the month of December). Biotech stocks also have a higher beta (volatility) compared to the average company.

However, those factors wouldn’t explain away material news emerging right on the heels of sizable insider buys. Notably, the insider purchases of Liquidia stock highlighted above were closely followed by a legal victory in the company’s patent dispute with United Therapeutics. The stock jumped 70% on the news.

Ok so what?

In light of recent, concentrated insider buying in biotech, we think the industry may be having a moment. Take a look at the following video explaining what may drive a biotech resurgence in 2024.

The S&P Biotech ETF - XBI is one way to gain exposure to the industry without picking individual stocks.

To screen individual names, here are some tools we offer at StockOcean:

1. Latest Open Market Buys (Over $100k) - We monitor this page daily to screen for notable recent insider purchases.

2. Real-time Alerts - Turn on buy or sell alerts for any company or insider to be notified immediately.

Using the above methods, we flagged recent purchases at $VRCA and $SYRS. We will continue to monitor unusual insider buys and sells both inside and outside the biotech industry.

Feel free to message us if you have interesting insights or knowledge!

That’s all for this week, follow us on Twitter for real-time thoughts, subscribe to our newsletter, and check out StockOcean to sign up for free alerts when insiders sell stock.