Biotech Déjà vu – Insider Weekends
Ardelyx Inc. (ARDX): $5.52
Market Cap: $1.31B
Enterprise Value: $1.25B
Key Insights:
It felt like we experienced déjà vu last week when we saw the biopharmaceutical company, Ardelyx (ARDX), find its way into our list of top insider purchases.
Ardelyx reminds us a lot of Avadel Pharmaceuticals (AVDL) in the sense that both companies have benefited from new drug launches and this is reflected in their financials.
Both companies appear to be at an inflection point with revenue growing quarter over quarter and net losses reducing over time to a level where they will likely see profitability in the next quarter or two.
Ardelyx develops two main drugs (which have the same active ingredient) – IBSRELA and XPHOZAH, meant to treat Irritable Bowel Syndrome with Constipation (IBS-C) and reduce serum phosphorus in adults with chronic kidney disease respectively.
Ardelyx has experienced repeated struggles with XPHOZAH, which is the largest factor contributing to the stock being down by over 37% in the last year.
The insider purchase that stood out to us this week was by the Chairman of Ardelyx, David Mott, who has very deep industry and investing experience – exactly the type of background we like to see from an insider who is purchasing shares.
Fifth Insider Purchase of Avadel Pharmaceuticals
The week prior week, we wrote about the biopharmaceutical company Avadel Pharmaceuticals (AVDL), which focuses on treating narcolepsy (excessive daytime sleepiness). We saw numerous insider purchases at the company, and last week, we actually saw another insider, Director Linda Palczuk, purchase shares. Ms. Palczuk last bought stock of Avadel in early December 2024, when the company was trading at $10.19 per share. She doubled down and purchased shares again now that Avadel currently sits at $7.85. This brings our total count to five different insiders of Avadel purchasing stock in the span of a little over a month.
Avadel developed a drug to treat narcolepsy that was deemed “clinically superior” to the only other competitor in the market – Jazz Pharmaceuticals. This created a strong competitive advantage for Avadel, and the commercialization of the drug can clearly be seen in the graph below of Avadel’s financials. The sudden swing to generating revenue and reduced net losses over time point to Avadel reaching an inflection point. The company appears to be poised to start generating net income in the coming quarters.
A Sense of Déjà vu
I bring these points up because when we saw another biopharmaceutical company, Ardelyx (ARDX), make our list of top insider purchases this week, we felt a sense of déjà vu.
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