When multiple insiders are buying company stock, it’s always worth taking note. This buying pattern – which we call ‘cluster buying’ – is a particularly strong insider transaction signal.
Recently, we have observed multiple insiders buying at Avadel Pharmaceuticals PLC (AVDL:US). Avadel is a biopharmaceutical company that is focused on providing solutions for unmet medical needs. Its lead product candidate, FT218, is designed for patients with narcolepsy. The company is listed on the NASDAQ Global Market and currently has a market capitalisation of $460 million.
Between 12 August and 14 August, five different insiders at Avadel purchased shares in the company. Those buying included CEO Greg Divis (13,000 shares @ $7.78 per share), CFO Thomas McHugh (10,000 shares @ $7.78 per share), and Chairman Geoffrey Glass (13,000 shares @ $7.73 per share), as well as two board members. Combined, these insiders spent around $450,000 on AVDL shares in three days.
Source: 2iQ Research
These insider transactions look interesting for a number of reasons. Firstly, these are top-tier insiders buying. The CEO, CFO, and Chairman are all likely to have an excellent understanding of the company’s recent progress and its future potential.
Secondly, these purchases represent the largest amount of insider buying at Avadel in a single quarter for a number of years. This suggests that insiders believe the company is making progress towards its goals.
In its recent half-year results, issued on 10 August, Avadel said that it is at a ‘pivotal point’ in its transformation as it recently completed its pre-NDA (New Drug Application) meeting with the FDA and is currently focused on completing its NDA submission and filing for FT218. If approved, FT218 could be the first once-nightly therapy to address both excessive daytime sleepiness and cataplexy in patients with narcolepsy.
Clearly, insiders are confident that FT218 will be approved. We see the recent insider buying activity here as a bullish signal.