Share Offerings Prompt Huge Insider Buying in These 3 Biotechs

In the past week or so, secondary offerings from biotechs Immunovant Inc. (NASDAQ: IMVT), Kymera Therapeutics Inc. (NASDAQ: KYMR), and Wave Life Sciences Ltd. (NASDAQ: WVE) prompted some huge insider buying from beneficial owners. In addition, a big insider purchase of Kenvue Inc. (NYSE: KVUE) shares followed news that it is to be acquired.

Though these were the most prominent insider purchases lately, there were some other notable ones as well. Let’s take a quick look at these transactions.

Is Insider Buying Important?

What does insider buying tell us?

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 especially so during times of market uncertainty, and even when markets are near all-time highs.

The third-quarter earnings-reporting season is effectively over, so few insiders are prohibited from buying or selling shares. Below are some of the most notable insider purchases that were reported recently, starting with the largest and most prominent.

Immunovant

• Buyer(s): 10% owner Roivant Sciences
• Total shares: almost 16.7 million
• Price per share: $21.00
• Total cost: nearly $350.0 million

Last month, Immunovant reported a wider-than-expected quarterly loss and provided a key pipeline update. That report temporarily halted the stock’s momentum, and the clinical-stage immunology company recently had a public offering of stock intended to raise $550 million. The beneficial owner above took advantage of the offering to boost its stake.

Shares are up 66.7% in the past six months, including a 14.7% pop in the past week, and they were last seen trading well above the offering price. Analysts anticipate 52.9% further upside in the next 12 months to their mean price target of $39.47. Of 17 analysts who cover the stock, 12 of them recommend buying shares. Goldman Sachs just raised its price target to $28 but maintained its Neutral rating.

Note that a couple of directors sold some shares earlier in December.

Kymera Therapeutics

• Buyer(s): 10% owner Baker Bros. Advisors
• Total shares: over 2.o million
• Price per share: $86.00
• Total cost: about $172.5 million

This buyer, a specialized hedge fund and investment manager focused on biotechnology and life sciences companies, also took advantage of a public offering of stock. Kymera received an FDA fast-track designation for its eczema treatment, sending the stock to an all-time high.

The share price is 82.2% higher than six months ago, far outperforming the broader market. The consensus price target of $144.00 suggests there is plenty more room for shares to run in the coming year. All 23 analysts who cover the stock recommend buying shares, five of them with Strong Buy ratings. Citigroup and J.P. Morgan are among the analysts who recently reiterated Buy-equivalent ratings.

Note that the CEO recently parted with almost $9 million worth of shares, and another director sold about $21 million worth of shares.

Kenue

• Buyer(s): a director
• Total shares: under 6.4 million
• Price per share: $17.35 to $17.56
• Total cost: almost $111.0 million

Kimberly-Clark Corp. (NASDAQ: KMB) is acquiring Kenvue for a reported $48.7 billion. Kenvue, the maker of Band-Aids, Tylenol and many other products, was spun out from Johnson & Johnson (NYSE: JNJ) less than three years ago. The share price is 19.7% higher since the merger was announced.

However, the stock was last seen trading for less than the purchase price range above. Shares are down 22.1% from a year ago, underperforming the broader markets. The consensus recommendation of analysts is to hold shares, and fewer analysts are covering the stock than 60 days ago.

The director’s stake is now up to over 27.3 million shares. Earlier in the month, some other insiders exercised options on much smaller numbers of shares.

Wave Life Sciences

• Buyer(s): 10% owner GSK
• Total shares: over 1.4 million
• Price per share: $19.00
• Total cost: more than $27.9 million

Wave Life Sciences shares surged after the Singapore-based company posted encouraging trial results for its obesity treatment. So it also had a public offering of shares, intended to raise $350 million. The biopharmaceutical giant formerly known as GlaxoSmithKline boosted its stake to more than 2.4 million shares.

The stock is 137.9% higher than six months ago, despite dropping 22% in the past week to well below the offering price. The shares have a consensus price target of $30.53, which represents 81.7% potential upside in the next 52 weeks. All 15 analysts who cover the stock recommend buying shares. Oppenheimer just reiterated its Outperform rating and raised its price target to $32.

Note that Wave Life Sciences and GSK PLC (NYSE: GSK) established a major strategic collaboration in late 2022 that aims to discover and develop novel RNA-based therapies for genetic diseases.

And Other Insider Buying

These were not the only notable insider purchases of the past week. Here’s a quick look at some others.

Recently, some smaller insider buying was reported at AAON, Amcor, American Homes 4 Rent, Apple Hospitality REIT, Celanese, Elanco Animal Health, Global Payments, Illinois Tool Works, Lyft, Northern Oil and Gas, Republic Services, Terawulf, Vera Therapeutics, and Warner Music Group, as well.

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