With the threat of severe drug pricing regulations behind it for now, the biotech sector has launched a rally in recent days, with the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) gaining over 5% in the past three weeks.
President Trump’s blueprint for lowering drug prices that was revealed last week wasn’t nearly as tough as many critics expected, laying much of the blame on middlemen rather than the pharma companies that he said were “getting away with murder” during a speech last year.
In light of that, several biotech insiders have confidently bought shares of their companies in recent days, a clear signal that they see big things ahead for these companies and their shares in the near future. We’ll check out those purchases below.
Alongside our tracking of insider trading activity, we also track the top consensus picks of the best performing hedge funds each quarter. This “Best Performing Hedge Funds Strategy” gained 4% last quarter vs. a loss of 1% for the S&P 500 ETF (SPY), and a further 7.6% so far in the second-quarter compared to a 0.9% loss for the SPY. Since its inception in May 2014 this strategy’s picks have returned 87.8% vs. 53.3% for the SPY. You can see our latest picks by trying our newsletters free of charge for 14 days.
Nabriva Therapeutics PLC – ADR (NASDAQ:NBRV)
Who Bought Shares: General Counsel & Secretary Robert Crotty
How Many Shares Were Bought: 10,000 @ $4.48 per share
Date of the Transaction(s): May 23
Nabriva Therapeutics PLC – ADR (NASDAQ:NBRV) released positive top-line results on Monday from the Phase 3 trial of its community-acquired bacterial pneumonia (CABP) treatment lemafulin. The stock shot up in pre-market trading on the news, but then sank during the day’s trading session. That sequence of events prompted Nabriva’s General Counsel and Secretary Robert Crotty to purchase 10,000 shares of the company today, his first purchase of the stock.
In the trial, lemafulin was tested against the current standard-of-care CABP treatment, moxifloxacin, and achieved an identical 90.8% early clinical response rate, which is the primary outcome for CABP trials. While strong, the fact that it didn’t outperform moxifloxacin, while also having a slightly higher incidence rate of treatment-emergent adverse events (32.6% compared to 25%), may have contributed to the later selloff. Nonetheless, lemafulin appears to be another potent treatment option to combat the serious issue of growing antibiotic resistance.
On the next page we’ll delve into the recent insider buying activity at Aerie Pharmaceuticals Inc (NASDAQ:AERI) and Editas Medicine Inc (NASDAQ:EDIT).
Aerie Pharmaceuticals Inc (NASDAQ:AERI)
Who Bought Shares: Director Gerald Cagle
How Many Shares Were Bought: 1,000 @ $50.25 per share
Date of the Transaction(s): May 21
Director Gerald Cagle was the first Aerie Pharmaceuticals Inc (NASDAQ:AERI) insider to purchase shares of the company in a year when he snatched up 1,000 shares on Monday to raise his ownership in the company to 15,050 shares. Aerie shares sank below $50 earlier this month for the first time since last September, but have rallied by nearly 10% since May 10.
Aerie Pharmaceuticals Inc (NASDAQ:AERI) launched its first FDA-approved drug, the glaucoma treatment Rhopressa, earlier this month. Sales of that drug are expected to be between $20 and $30 million this year, rising to as much as $100 million in 2019. Last week, it submitted another glaucoma treatment, Roclatan, for FDA approval, which is expected to take ten months. That treatment, which is a fixed-dose combination of Rhopressa and latanaprost, has delivered exceptional results in several trials and could have even greater commercial potential than Rhopressa.
In addition to the insider purchase, we recently identified Aerie Pharmaceuticals Inc (NASDAQ:AERI) as one of Five Stocks To Buy According To Top Biotech-Focused Funds. As of March 31, Aerie was owned by several prominent biotech-focused hedge funds, including OrbiMed Advisors, Julian Baker and Felix Baker’s Baker Bros Advisors, Christopher Medlock James’ Partner Fund Management, and James E. Flynn‘s Deerfield Management.
Editas Medicine Inc (NASDAQ:EDIT)
Who Bought Shares: Directors Jessica Hopfield and James Mullen
How Many Shares Were Bought: 6,700 @ $37.28 per share and 10,000 @ $38.03 per share respectively
Date of the Transaction(s): May 17 – 18
Two different directors on Editas Medicine Inc (NASDAQ:EDIT)’s board purchased shares last week, and like at Aerie, they were the first insider purchases by a company insider in nearly a year. The purchases came on the heels of the genome editing company’s shares sliding by over 10% on May 18, the same day it released data from a pre-clinical study of EDIT101.
That data showed that EDIT101, an experimental treatment for Leber Congenital Amaurosis, which can lead to blindness in children, was well tolerated by the non-human primates tested in the study. Additionally, it was observed that an immunity to either AAV5 or Staph. aureus Cas9 did not negatively impact the treatment’s efficacy. EDIT101 uses Cas9 to edit the CEP290 gene, mutations in which are a leading cause of Leber Congenital Amaurosis.