A Dendreon Inc., director, Gerardo Canet, sold over 200,000 stock options in the company on April 14. According to a filing with the SEC (Securities and Exchange Commission), the sale was made "pursuant to a Rule 10b5-1 trading plan." Such trading plans are set up to defend company insiders from allegations of trading on insider information.
At 9 A:M ET on April 14 Dendreon's CEO Mitchell Gold told investor analysts that Dendreon's Provenge prostate cancer immunotherapy vaccine significantly prolongs survival in men with advanced metastatic prostate cancer. The results are "robust" and "unambiguous," Gold stated.
"The successful outcome from the Phase 3 IMPACT study provides validation of the long-pursued goal of harnessing the human immune system against a patient's own cancer," the company stated in a press release April 14.
Mr. Canet's SEC Form 4 filing was pointed out today by a member of the Dendreon message board at Investor Village. Members discussed whether Mr. Canet may have had a GTC or "Good 'Til Canceled" order. This is "An order to buy or sell a security at a set price that is active until the investor decides to cancel it or the trade is executed. If an order does not have a good-'til-canceled instruction then the order will expire at the end of the trading day the order was placed."
The SEC form in question states "The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the reporting person."
Rule 10b5-1 is a rule against insider trading and states:
Subject to the affirmative defenses in paragraph (c) of this section, a purchase or sale of a security of an issuer is "on the basis of" material nonpublic information about that security or issuer if the person making the purchase or sale was aware of the material nonpublic information when the person made the purchase or sale.
"Numerous public company directors and officers," according to a summary by Priya Cherian Huskins, Esq. for WS & Co, "systematically sell stock of the companies that they serve through 10b5-1 trading plans. The plans, Huskins says, "When properly implemented" help insiders avoid any risk or appearance of violating the rules against insider trading.
"Given the affirmative defense against insider trading afforded to executives who follow the prescriptions of Rule 10b5-1, the popularity of 10b5-1 trading plans is unsurprising. In addition to enabling sales of stock by insiders, 10b5-1 trading plans may afford protection to defendants in securities class action lawsuits."
Data on which CEO Gold based his forward-looking statements on April 14 are scheduled for publication at the annual meeting of the American Urological Association April 28 in Orlando, FL.
Update 3.16 PM ET
Gerardo Canet is Chairman of the Board, IntegraMed, a boutique or "niche" healthcare company operating "highly specialized outpatient centers in technology–based medical sectors. We provide our networks with a full suite of management services and infrastructure and offer treatment financing for self–pay patients."
Update 4:30 PM ET
Mr. Canet sold 109,171 shares, which had cost him $699,417.90, for $2,336,259.40 at the April 14 price of $21.40, for a capital gain of $1,639,841.50. I don't have details of his 10b5-5 trading plan at this time, just SEC's statement that this was so. Denreon has been a part of Canet's portfolio since 2001.
According to Mintz Levin: "Most plans state the date or dates upon which trades should be made (typically a particular day of the week or month), the number of shares to be sold on each date and a limit price at which the shares should be sold. If the trading price of the stock is below the limit order price, then the trade will not be made. Some plans specify a period of time during which a particular number of shares should be sold as long as the trading price is above a particular threshold. Most Trading Plans that authorize sales on particular dates provide for such sales on a weekly or monthly basis. Although allowed under Rule 10b5-1, most Trading Plans we have seen do not include an algorithm or computer program for determining amounts, prices and dates." Rule 10b5-1 Trading Plans: Common Questions and Practical Guidance (2001), section 4.
