Smith rang the cash register on his Vertex holdings April 19 -- less than 24 hours after Vertex shares soared on positive data for its cystic fibrosis drug VX-661. The Form 4 detailing Smith's insider sales was filed with the SEC yesterday.
Vertex shares hit an intraday high of $85.90 on April 19 and closed at $85.60 -- a 62% one-day jump fueled by investors rushing into the stock on the positive cystic fibrosis drug announcement. But as outside investors were buying, Smith, Vertex's CFO since 2001, was selling a massive stake in the company -- 745,685 shares -- with the largest chunk sold at $81.50 per share.
Smith grossed almost $61 million from his insider sale. After accounting for the cost of exercising his options, Smith's take home was more than $35 million.Smith sold his Vertex shares under a 10b5-1 plan which allows corporate executives and other insiders to schedule sales of company stock in advance, thereby insulating themselves from the risk of insider trading. 10b5-1 plans can be set up to trigger stock sales on a specific pre-specified date or when a stock hits a certain price. Vertex spokesman Zach Barber would not provide details of Smith's 10b5-1 plan but the company's soaring stock price on April 18 was likely the trigger for Smith's sales. "I can't comment on why he sold his stock, those are personal decisions, but the company has done really well since he's been here," said Barber. A large, institutional investor in Vertex, asked whether Smith's insider sale bothered him, said the payday was justified. "When a company not only makes their investors $7 billion richer but comes up with a potential cure for a fatal disease, some reward is deserved," he said. Vertex Corporate Controller Paul Silva also sold a smaller amount of Vertex stock on April 19, according to an SEC filing. Vertex shares closed Tuesday at $83.53. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein