Shares of beleaguered biotechnology specialist T2 Biosystems (NASDAQ:TTOO) continue their worrying descent despite the announcement of positive news. Most alarmingly, a major investor has been exiting out of TTTO stock in recent days. While insiders may sell for several reasons, the scope of the divestitures imposes a dark cloud over the business.
According to a Seeking Alpha report, investment firm CR Group disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) dated Sept. 25 that it disposed of an aggregate of 6.3 million shares of TTOO stock. The transaction, which occurred on Sept. 21, hit a value of approximately $1.9 million.
Adding to the jitters for TTOO stock, investment data aggregator Gurufocus notes that CR Group — which represents a 10% owner — sold 7.75 million shares on Sept. 20 and 10.4 million shares on Sept. 19. In the trailing one-month period, TTOO suffered an erosion of over 40% of equity value.
Even more glaring, the insider selloff materialized despite a Sept. 19 announcement by T2 regarding its direct-from-blood molecular diagnostic test. Offering the first and only Food and Drug Administration (FDA)-cleared product able to simultaneously detect six high-priority biothreat pathogens — including anthrax — the achievement failed to invigorate sentiment.
Insider Fire Sale of TTOO Stock Paints a Grim Picture
Generally speaking, insider acquisitions feature one logical assumption: the belief that shares will swing higher. On the other hand, insider selling can encompass a range of motivations, including mundane ones such as tax considerations. However, the context of TTOO stock generates anxiety.
Primarily, investors will likely be alarmed at the scale of the divestitures. According to data from Fintel, 49 insider acquisitions have been recorded for TTOO stock. Further, the most recent such buy occurred on April 7, 2022. In sharp contrast, insiders have initiated 223 selling transactions. Aside from CR Group, the most recent sale occurred on April 6 of this year.
Another point of concern centers on options trading dynamics. Using Fintel’s screener for options flow — which focuses exclusively on big block trades likely made by institutions — the general sentiment toward TTOO stock appears bearish.
For example, the biggest options premium involved stems from an entity selling (writing) 1,707 contracts of the Feb 16 ’24 2.50 Call. This transaction occurred on Aug. 23, with the trader collecting a premium of $48,165. Since the transaction date, TTOO stock shed more than 58%.
Why It Matters
According to TipRanks, analysts are cautious about TTOO stock, rating it a consensus hold. This assessment breaks down as zero buys, two holds and zero sells. On average, the price target lands at 15 cents, implying 26% downside risk.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
