Insider purchases can provide powerful insights for investors. Insiders may sell company stock for a number of reasons. Yet they only purchase stock for one reason – they expect it to rise.
Today, we are going to highlight some recent insider purchases at Provention Bio Inc (PRVB:US). Provention Bio is a clinical-stage biopharmaceutical company that develops therapeutics that target immune-mediated diseases. Its portfolio includes therapeutics for a broad range of diseases and conditions including type one diabetes, Crohn’s disease, celiac disease, and ulcerative colitis. The company is listed on the NASDAQ Capital Market and currently has a market capitalisation of $754 million.
What has caught our attention here is the fact that since 13 August, four insiders have purchased PRVB shares. Those buying have included Founder and CEO Ashleigh Palmer, CFO Andrew Drechsler, Chief Medical Officer Eleanor Ramos, and Founder and Chief Scientific Officer Francisco Leon. The insider transactions are listed below:
- 13 August: CFO Andrew Drechsler purchased 1,750 shares @ $13.01 per share
- 17 August: Founder and CEO Ashleigh Palmer purchased 2,800 shares @ $12.83 per share
- 18 August: Founder and CEO Ashleigh Palmer purchased 500 shares @ $12.69 per share
- 20 August: Chief Medical Officer Eleanor Ramos purchased 2,500 shares @ $13.23 per share
- 21 August: Founder and Chief Scientific Officer Francisco Leon purchased 2,000 shares @ $13.35 per share
Source: 2iQ Research
High trading IQs
This insider transaction activity looks interesting for a couple of reasons. Firstly, all four of these insiders are top-level insiders. They are likely to have an excellent understanding of Provention Bio’s recent progress and its future prospects. The fact that four insiders have bought within a short space of time – we call this ‘cluster buying’ – is a positive development.
Secondly, two of these insiders have very strong track records when it comes to timing their purchases. CEO Ashleigh Palmer has a short-term trading IQ of 116 and a long-term trading IQ of 121, while Chief Scientific Officer Francisco Leon has a short-term trading IQ of 113 and a long-term trading IQ of 121. This tells us that these two insiders have timed their purchases very well in the past.
Looking at Provention Bio’s recent second-quarter results, issued on 6 August, the company appears to have plenty of momentum right now. CEO Ashleigh Palmer said that the company has made “tremendous progress” in relation to advancing its monoclonal antibody teplizumab toward the market for the delay or prevention of insulin-dependent type 1 diabetes (T1D) in pre-symptomatic patients.
Palmer also advised that Provention Bio continues to scale its organisation in preparation for a potential commercial launch and that it is well-positioned to execute its strategy to bring teplizumab to the T1D community as soon as possible. Given this momentum, we see the recent insider purchases here as a bullish signal.