Insider Trades/The Melnyk ConnectionOn Balance insider trading in the last three months is hugely positive in what it says about the confidence insiders have in the prospects of Trimel. Of a total 23,950,000 major trades by insiders (including the 2 million additional just announced by Melnyk) 89.35% are buys.
Of most significance are recent purchases by Ian Ihnatowycz (65.9%), if one considers the timing of buys and his total access to insider information. Ian became a director September 9, 2013 which gave him total access to all available information on Trimel including complete data and results of Compleo’s P3, and Tefina’s first P2. He would have seen the FDA request for information in October and is privy to information on subsequent meetings and ongoing negotiation with the FDA. He would have taken part in discussions which led to the TID amendment filed Dec. 19 and just five days later he purchased a further 6.6 million shares. Jan 10, 2014, Ian became COB, the FDA announced a 3 month extension Jan 17 and Feb. 19 Ian purchased another 9.2 million shares .
Westface Capital, does not have access to insider information but is considered an insider due to the size of its holding. After taking a large position in the April ’13 financing, Westface added 5.6 million shares post the NDA amendment and the FDA extension.
Which brings me to Eugene Melnyk. As Tgtbtroi points out, reasons suggested for Melnyk’s selling are conjecture. But I am not sure it is all useless in that there is certainly a lot of smoke in the press about his financial situation. An October ’13 article said the Ottawa Senators have lost $110 million, continue to pile up annual losses and have a debt load approaching 50%, high even by the standards of the NHL. And in a radio show Melnyk said the Senators losses are actually much higher than reported. Rumors have abounded that the Senators would have to be sold, denied by Melnyk. Fans have been irate over some of the player trades citing his deteriorating financial situation as a possible reason. Although he is said to have net assets in excess of $1 billion, down from $1.5 billion at the height of his career, few of those assets seem to be liquid or generating cash to support a lavish lifestyle and multiple investments. He is COB of private botanical pharma company PurGenesis which is in early development of therapies to treat disease – using not generating cash. Last year it is reported he sold the majority of his broodmares on his Winding Oaks farm in Florida, perhaps to raise much needed cash and to stop some of the bleeding. Married for 16 years, details of his divorce in 2011-2 were sealed in a Barbados court but this could not have helped him financially and may have contributed to what looks like the perfect storm. Melnyk appears to attract controversy wherever he goes, with his reputation tarnished by the OSC fine and sanctions, a purported war with Ottawa mayor over placement of a casino, and Senators fans questioning his decisions.
I believe Melnyk is selling Trimel shares because he needs the cash and it says nothing about the health of the company. He has no access to true insider information. However having a large shareholder in need of cash is not a positive for Trimel shareholders. Melnyk refinanced a large loan in April 2013 by pledging Trimel shares as security. This may the only reason more shares have not been sold.