Replies to post #12878 on Biotech Values

[DewDiligence]

Re: DNDN CFO

>>If he knew he couldn't sell after exercising, and his purpose in exercising was to sell, he would not have exercised. Make sense? I'm not entirely sure myself.<<

My working hypothesis is that Mr Simonetti thought he would be able to sell the exercised shares, but then he found out that the company would not allow it because they were in a blackout period for insider sales.

Note that Simonetti would not have needed anyone’s permission to merely exercise the options—in fact, the SEC does not consider option exercises to be a form insider trading because the transaction is between an insider and the company itself and does not involve the general public.

However, except in extremely rare cases option exercises are irreversible. Hence, even if Simonetti found out immediately after exercising that he could not sell, he would have been stuck with the exercised shares.

Perhaps this sounds far-fetched, but IMHO it is more plausible than the notion that Simonetti is bullish on DNDN’s prospects and wants to start the one-year clock for long-term capital gains.