We mentioned in our quarterly letter than we had picked up small stakes in handful of beaten down biotech stocks that insiders were buying. One of those was Merrimack, the largest percentage gainer in the market.
We have been following Merrimack pharmaceuticals for a few months now. The cluster buying from insiders caught our eye at the end of last year.
They have multiple trial drug categories; their most promising is a pancreatic cancer drug in the final trial stage. Results of this trial were to be finalized and released in the 2nd quarter of 2014.
Today, with the news of trial results, we saw the stock trading up 64%. They were also upgraded by Cowen and J.P. Morgan raised their price target to $15.
Can we say that insiders know the company better than anyone else? Judging by this example, we think so.