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Biotech / Medical : Biotech Valuation

CRSP 51.54

-1.2%

3:59 PM EST

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To: Biomaven who wrote (1749)	9/28/2000 1:25:56 PM
From: Biomaven	Read Replies (1) of 52153

On a quite different issue, note the forthcoming Rule 10b5-1, which relates to insider sales, and which is part of a broader change that will be effective in about a month. sec.gov Currently, an insider can't sell if he/she is in possession of material non-public information. What this means (and this is particularly relevant to biotech) is that if you do see insider selling at a reputable company, it means there is likely no significant adverse information that just hasn't yet been disclosed. Thus (paradoxically and quite differently from the rest of the world) I'm generally reassured if I see a steady stream of (small relative to holdings) insider sales. What this new 10b5-1 rule will allow for the first time is for insider selling according to a pre-arranged plan. Thus an insider might arrange to sell some number of shares each month provided the price meets some predetermined condition. This will make insider's lives much easier, given that for many companies there is only a very small window where they can currently sell, and that only if there is no significant undisclosed news (such as pending M&A activity). Unfortunately, the rules don't seem to require that these sales be flagged as done pursuant to this new rule, and so unless companies or insiders voluntarily do this (which is certainly possible), my reassurance on seeing an insider sale will be a thing of the past. Peter P.S. Note there have recently been some fairly significant sales by SEPR insiders. I think this is likely just some reasonable diversification - something any sensible financial advisor would suggest to the individuals after the large run-up the stock has enjoyed over the last few years.

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