Biohaven CEO, Director Make $5.5M Bet on Stock After FDA Setback
Coordinated insider purchase at 52-week low signals leadership conviction after regulatory rejection sent shares tumbling.
Biohaven’s top executives have made a significant financial statement of confidence in the company's future, executing a coordinated insider purchase of its stock just as it hit a fresh 52-week low. The move follows a sharp sell-off triggered by a major regulatory setback earlier this month.
CEO Vlad Coric and Director Gregory Bailey collectively purchased $5.5 million worth of Biohaven shares at a price of $7.50 per share, according to regulatory filings. The substantial investment represents approximately 0.5% of the company's battered $1.1 billion market capitalization and serves as a powerful signal of leadership’s belief in a recovery, even after a painful period for shareholders.
Shares of the New Haven-based biotech firm responded positively to the news, climbing 2.7% to $8.30 in recent trading. However, the stock remains deeply depressed, trading far below its 52-week high of $47.75. The technical picture also points to a stock under pressure, with a Relative Strength Index (RSI) below 30, a level typically considered oversold by market technicians.
The insider buying comes on the heels of a devastating blow from the U.S. Food and Drug Administration. On November 5, the FDA issued a Complete Response Letter (CRL) for Biohaven's New Drug Application for troriluzole, a treatment intended for the rare neurological disorder spinocerebellar ataxia (SCA). The rejection caught many investors by surprise and wiped out billions in market value.
The agency's decision centered on the design of the company's pivotal study, which was based on real-world evidence. The FDA cited concerns regarding potential bias, a lack of pre-specification, and other design flaws in its rejection letter, effectively halting the drug's path to market for now.
In response to the regulatory decision, Biohaven swiftly announced a corporate restructuring to preserve capital and refocus its strategy. The company plans to slash its direct research and development spending by approximately 60% and reprioritize its clinical pipeline. While a necessary step to stabilize the business, the move underscored the severity of the setback for what was considered its lead drug candidate.
Against this turbulent backdrop, the multi-million dollar investment from the CEO and a key director is a clear counter-narrative to the prevailing market gloom. Such significant, coordinated insider buys are often interpreted by investors as a sign that leadership believes the market has overreacted and that the company's intrinsic value is substantially higher than its current stock price.
Wall Street analysts, for the most part, appear to agree with that sentiment. Despite the clinical trial failure, the consensus 12-month price target from 18 analysts covering the stock remains a remarkably bullish $33.95. This suggests that industry experts see significant value in Biohaven's remaining pipeline and its scientific platform, even with the rejection of troriluzole.
For investors, the leadership's decisive stock purchase presents a compelling, if high-risk, data point. It signals that those with the deepest insight into the company's assets and future prospects are betting on a significant turnaround from the current lows.