24/7 Wall St. Insights
- Initial public offerings at three biotechs last week tempted insiders to make huge purchases of shares.
- This effect spilled over into buying at a couple of other biotechs as well.
- Also: 2 Dividend Legends to Hold Forever.
Three biotech companies had initial public offerings (IPOs) this past week, making it the busiest week for pharmaceutical IPOs since the summer of 2021. And those biotech companies going public has brought out some huge insider buying. Some of these insiders also bought shares of other biotechs, including one that had a secondary offering. Let’s take a quick look at these transactions.
Is Insider Buying Important?
A well-known adage reminds us that corporate insiders and 10% owners really only buy shares of a company because they believe the stock price will rise and they want to profit from it. Thus, insider buying can be an encouraging signal for potential investors. This is all the more so during times of uncertainty in the markets, and even when markets are near all-time highs.
Remember that, during earnings-reporting season, insiders are prohibited from buying or selling shares. Below are some of the more notable insider purchases that were reported in the past week, starting with the largest and most prominent.
Zenas BioPharma
- Buyer(s): 10% owner Enavate Sciences GP and four directors
- Total shares: more than 2.5 million
- Price per share: $17
- Total cost: almost $43.6 million
Zenas BioPharma Inc. (NASDAQ: ZBIO) is a Massachusetts-based clinical-stage biopharmaceutical company engaged in the development and commercialization of transformative immunology-based therapies. The IPO raised $225 million, and the shares have changed hands for between $17.02 and $18.99 apiece thus far. Enavate Sciences acquired $15 million worth of the above total and has a stake of more than 3.7 million shares. And note that one of the directors also bought shares of Viridian Therapeutics (see below) last week, and another picked up shares of Terns Pharmaceuticals (see below).
MBX Biosciences
- Buyer(s): three 10% owners and two directors
- Total shares: more than 2.6 million
- Price per share: $16
- Total cost: $42.0 million
Clinical-stage biopharmaceutical company MBX Biosciences Inc. (NASDAQ: MBX) is based in Indiana. It focuses on the discovery and development of precision peptide therapies for the treatment of endocrine and metabolic disorders. Shares priced at the upper limit of the range, and the offering raised $163 million. Thus far, the stock has traded for as high as $26.80 per share. These buyers all have stakes of between 2.1 million and 4.6 million. Note that one of these directors almost just bought shares of Mirum Pharmaceuticals Inc. (NASDAQ: MIRM), and one of the beneficial owners trimmed a stake in Passage Bio Inc. (NASDAQ: PASG).
Bicara Therapeutics
- Buyer(s): 10% owners R.A. Capital Management and James Flynn
- Total shares: around 1.9 million
- Price per share: $18
- Total cost: more than $34.2 million
Boston-based Bicara Therapeutics Inc. (NASDAQ: BCAX) is also a clinical-stage biopharmaceutical company. It develops bifunctional therapies for solid tumors, and it expanded its offering to 17.5 million shares. At the top of the price range, it raised $315 million. The share price has been as high as $27.94 since the offering and was last seen above $25. R.A. Capital has a stake of over 4.3 million shares. Note that it also picked up shares of Artiva Biotherapeutics Inc. (NASDAQ: ARTV) and Eliem Therapeutics Inc. (NASDAQ: ELYM) earlier in the summer.
Viridian Therapeutics
- Buyer(s): 10% owner Fairmount Funds Management
- Total shares: 1.6 million
- Price per share: $18.75
- Total cost: $30.0 million
Viridian Therapeutics Inc. (NASDAQ: VRDN) had a secondary offering of shares in the wake of positive Phase 3 clinical results. This clinical-stage biopharmaceutical company engages in the development of proprietary RNA-targeted therapeutics to treat cancer. The stock has popped more than 64% since the clinical results were reported but is up 6% or so year to date. Shares were last seen trading well above the buyer’s purchase price. Analysts see them gaining about 72% in the next 12 months to their consensus price target of $38.44. Fifteen of 17 analysts covering the stock recommend buying shares.
Impinj
- Buyer(s): 10% owner Sylebra Capital
- Total shares: more than 4.2 million
- Price per share: $4.69
- Total cost: about $20.0 million
Impinj Inc. (NASDAQ: PI) stock hit an all-time high this week after it joined the S&P SmallCap 600. Shares of this radio-frequency identification (RFID) technology company are more than 123% higher than at the beginning of the year, and they have overrun the consensus price target. Four of seven analysts who follow the stock recommend buying shares, and two of them have Strong Buy ratings. Note that this buyer has a stake of more than 33 million shares, and also note that a director just sold over $665,000 worth of shares.
Terns Pharmaceuticals
- Buyer(s): a director
- Total shares: almost 476,200
- Price per share: $10.50
- Total cost: nearly $5.0 million
Terns Pharmaceuticals Inc. (NASDAQ: TERN) has a promising weight-loss drug that could compete with bestsellers from its rivals. Shares of the clinical-stage biopharmaceutical company were last seen marginally higher than the director’s purchase price and almost 76% higher than six months ago. The $18.25 consensus price target represents about 78% upside potential in the next 12 months. Analysts on average recommend buying shares. Note that the buyer above also picked up some shares of Zenas BioPharma (see above).
And Other Insider Buying
In the past week, some insider buying was reported at Appian, BJ’s Wholesale Club, Core Scientific, Liquidia, Matador Resources, Medical Properties Trust, Profrac, Prospect Capital, and Weyerhaeuser.
Prediction: This Will Be the Biggest Pharma Stock in 10 Years
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