Insiders buying shares of a biotech company’s stock is typically a good sign that executives have confidence in its future growth.
The biotech sector has faced a rough year, actually losing ground by some measures vs. double-digit gains in the broader markets.
“A snapback rise was overdue in hindsight as the sector had woefully underperformed the overall market since its highs earlier in the year in mid-February” wrote Bret Jensen in a recent Real Money Pro column.
The buying spree could also indicate that shares in some biotechs were oversold. One is Myovant Sciences (MYOV) - Get Myovant Sciences Ltd. Report, “which has held up better than most small biotech names in recent months,” Jensen wrote.
During the past two weeks, a beneficial owner bought over $6 million of stock in the company. This is the first purchase made by an insider since last May after the massive selloff in the stock market. The FDA approved the company's drug, Myfembree, that helps treat the management of heavy menstrual bleeding associated with uterine fibroids in premenopausal women, in May.
An insider also bought Vertex Pharmaceuticals (VRTX) - Get Vertex Pharmaceuticals Incorporated Report, which was sold frequently by insiders in 2020 and 2021. Since that time span the company's CEO purchased almost $2 million in new holdings on Aug. 19. This large-cap biotech “lost more than a quarter of its market value over the past year,” Jensen wrote.
Vertex’s new chief operating officer began working in August. During August, the company signed a collaboration deal with Arbor Biotechnologies, a small privately-held biotech “to jointly develop ex vivo engineered cell therapies, using Arbor's proprietary CRISPR gene-editing technology for select diseases,” Jensen wrote. Canada also granted marketing authorization for the drug Kalydeco that is used to treat some children with cystic fibrosis.