Abarelix

You've got to be selective, but the insider profile remains generally positive in biotech, especially among the smaller, more speculative names. At cardio-device maker Thoratec Corp. (THOR), Director William Hitchcock picked up more than 20,000 shares at $8 to $9 in late-April. This got our attention mainly because it arrived on the heels of an $11 million investment by Wall Street veteran Peter Kellogg in March.

Kellogg is senior managing director of market maker Spear Leeds and Kellogg (acquired last November by Goldman Sachs). For Kellogg, who holds substantial beneficial stakes in six other companies, the investment was his largest in any like period on file with the SEC. Not only has Kellogg bought Thoratec at these prices before, he was fortunate enough to have sold at about twice the price last June, and has reinvested nearly five times what he took out last year.

The activity is even more impressive at Praecis Pharmaceuticals (PRCS). Indeed, while the stock ultimately succumbed to last year's biotech sell-off, it is still up nearly 100% from its April '00 IPO close. And its pipeline looks promising. The company is awaiting approval for Abarelix, developed with Amgen for the treatment of prostate cancer. The drug not only suppresses hormone levels without an initial surge unlike standard medications, but also is in Phase II/III trials for the treatment of endometriosis.

The FDA granted fast track review of Abarelix in January, but the time frame for approval remains uncertain. Amgen recently indicated a year-end '01 approval in a recent conference call, but this is considered a worst case scenario. Praecis still expects approval in the third quarter and insiders appear to be displaying their optimism through the accumulation of shares. From March 19 to March 22, four insiders acquired 185,065 shares through the exercise of options.

In addition to the chairman and chief financial officer's continued accumulation since last December, other insiders recently reversed course from previous sales. praecis' chief medical officer and its senior vice president of research both sold shares last November, ahead of a 30% sell-off. Though the stock has since given up more ground, it's encouraging to see these individuals holding on to their shares while others continue to build their positions.

At Ligand Pharmaceuticals Inc. (LGND), three insiders, led by Chief Executive David Robinson, picked up more than 15,000 shares in March and April at $9 to $10. Though the stock subsequently gave up most of its gains, the stock did run up some 200% in the six months after these same insiders bought in the summer of '99.

On the one hand, with so much depending on company specific developments, biotech is a tricky group from an insider perspective. That being said, you get the feeling that just now biotech executives are a fairly optimistic bunch.

COPYRIGHT 2001 American Banker-Bond Buyer
COPYRIGHT 2001 Gale Group