Top-level corporate insiders such as CEOs tend to have the most up-to-date information on their companies. If they’re buying company stock, it’s generally a sign that the outlook for the company is favorable.
In this report, we are going to highlight a large CEO purchase at Biogen Inc (BIIB:US). Biogen is a biopharmaceutical company that discovers, develops, and delivers innovative therapies for people living with serious neurological and neurodegenerative diseases. It is listed on the NASDAQ Global Select Market and currently has a market capitalization of $37.6 billion.
Biogen Inc: insider buying
Our records show that on 30 November, Biogen’s CEO Michel Vounatsos purchased 3,100 shares in the company. This purchase – which increased the size of his holding by 10% – cost the insider approximately $750,000.
High insider IQ
This insider purchase stands out for two main reasons. Firstly, Vounatsos has a very good track record when it comes to the timing of his purchases and sales. Our model gives the insider a long-term trading IQ of 126 and a short-term trading IQ of 111. We don’t see many insiders with these kinds of trading IQ scores.
Secondly, it is a large purchase. The fact that Vounatsos has increased the size of his holding by 10% suggests that he is quite confident that the stock is undervalued at present.
Biogen shares had a volatile month in November. Early in the month, the stock surged on the back of speculation that the company’s Alzheimer's drug, aducanumab, would be approved by the US Food and Drug Administration (FDA).
However, the FDA advisory panel was not impressed with the data from the trials and voted 1 yes, 8 no, and 2 uncertain in relation to whether there was strong evidence that supports the effectiveness of aducanumab for the treatment of Alzheimer’s disease. This resulted in Biogen’s share price crashing from $350 to $235. Biogen subsequently advised that the FDA will continue the review process with a decision on whether to approve the aducanumab Biologics License Application by 7 March, 2021. If approved, it could bring in tens of billions of dollars in sales for the company.
The large insider purchase here suggests that CEO Michel Vounatsos remains confident about the future. We see this insider transaction activity as a bullish signal.