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Heron Therapeutics Inc Shares Take Wing on Big Insider Buy

On a down day for the Nasdaq, shares of biotech Heron Therapeutics Inc (NASDAQ:HRTX) were faring worse than most in Tuesday trading — until suddenly, they weren’t.

Down 4.8% during ordinary trading hours, shares of Heron suddenly took wing, rising 6.5% in the after-hours market after it was revealed that director and hedge fund manager Kevin Tang had made a series of share purchases of the company over the past few days — totaling 150,000 shares. As can be seen on Insider Monkey’s database, Tang purchased his shares at prices ranging from $19.30 to $23.84, all of which were below the stock’s most recent after-hours price of $24.69.

Kevin C. Tang
Tang Capital Management

Our database provides granular details on the trades, clarifying that the great bulk of the purchases, 115,225 shares in all, were made on May 29 at $19.74 per share. Tang proceeded to scoop up a further 2,380 shares at the bargain price of $19.30 on June 1, then topped that off with a final purchase of 32,395 shares at $23.84 yesterday.

What does it mean to you?
It remains to be seen whether Tang will continue his spending spree now that the rest of the stock market is bidding up his targeted shares, or whether he’ll wait to let the share price spike subside before resuming his buying. As for us outside investors, we have a different choice to make.

Do we follow the insider’s lead, on the presumption that he “knows something?” Or do we take our cue rather from Heron’s publicly available financials?

If the latter, then it’s honestly hard to see much attraction in the shares. After last night’s after-hours run-up, Heron Therapeutics Inc is valued at a market cap north of $730 million. Yet the company has no revenues to speak of, is deeply unprofitable ($79.4 million in net losses over the past 12 months), and indeed, hasn’t earned any profits at all since 2006.

While investing in any unprofitable biotech is always an exercise in speculation, this particular “investment” looks even more speculative than most.


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