You Don’t See This Insider Action Too Often

penny stocks

Last week’s Excel spreadsheet of insider buys was a little bit shorter than the previous week’s number of rows. Maybe, the stock market’s aggressive rebound spooked some potential purchasers back to the sidelines. Whatever the reason for the pause, it did not scare off ORIC Pharmaceuticals, Inc.’s (ORIC) Chief Executive Officer (CEO) and Chief Financial Officers (CFO).

CFO Dominic Pisitelli purchased $60,000 shares of ORIC at $5.36 for a $321,624 investment. However, it’s CEO Jacob Chacko $1.7 million buy that catches our attention. (1)

ORIC is a clinical-stage biopharmaceutical company that discovers and develops therapies for treatment of cancers. Shares of the small-cap biotech closed at $6.68 on March 21 and opened a lot lower on the 22nd, printing $4.38 to start the day.

Wall Street roughed up the developmental drug company after management announced, “the discontinuation of pipeline candidate ORIC-101” as the treatment “did not demonstrate sufficient clinical activity to warrant further development.” The candidate was studied together with other treatments for the treatment of metastatic prostate cancer. (2)

The bad news for the biotech punctuated what has been a rough ride since the end of 2020 when shares hit a high of $40.72 on December 28th.  It’s been a steady decline since, with shares going as low as $3.94 on the day after the sour ORIC-101 news.

As ORIC Pharmaceuticals steadily declined, CEO Chacko sold and sold and sold and sold some more, nine sales totaling more than $1.5 million. The selling spree began on April Fool’s 2021 and continued unabated until the middle of September 2021. With ORIC on its back, the CEO swooped in and bought a quarter-million more than he sold in just on transaction. To see one buy outweigh multiple sales isn’t something we see too often when seven figures are involved.

Analysts don’t see the startup biotech making any money as far out as their models can see. That means ORIC’s price swings are going to be news dependent. Their pipeline has three possible treatments headed toward Phase 1 with the FDA and another in the early stages of the approval process. (3)

Overall: It’s early in the game for ORIC Pharmaceuticals, Inc.’s (ORIC). Without a product to sell, the company is going to be heavily dependent on raising money, most likely through issuing new shares, which will dilute shareholder value.

Expect ORIC to be volatile as good news during the path to final FDA review will likely make ORIC soar and, as investors experienced recently, bad news and shareholders will take it on the chin. It is encouraging to see CEO Jacob Chacko take a seven-figure stand recently. While a big investment might be right for Chacko, ORIC is only appropriate for investors with the highest risk tolerance and a time horizon of at least 24 months, maybe longer.

 

1 – https://www.secform4.com/insider-trading/1796280.htm

2 – https://finance.yahoo.com/news/oric-stock-plunges-discontinuation-oncology-154003050.html

3 – https://oricpharma.com/pipeline/