8 Biotechs Being Choked by Short Sellers
This has been a hard year for biotech. It seems that both Democrats and Republicans are wanting to target drug prices, and fears of universal health care in the years ahead would mean lower profitability for the sector as a whole. There may still be untold billions in future profits for companies targeting cancer, Alzheimer’s and dozens of other rare diseases. That said, short sellers seem to have many emerging and speculative biotech stocks targeted for termination.
24/7 Wall St. has identified eight biotech stocks in which the short interest as of July 31 was so high that it cannot be ignored. Some of these stocks have seen their short interest come down, but the natural selling in biotech and pharma stocks in 2019 in most cases has overwhelmed what might otherwise be very hopeful health care stories.
We have provided color on the short interest of each stock, with trailing data from Nasdaq, and the consensus data outside of trading ranges and trading history has come from Refinitiv. A preference has been given to companies with a market cap of $100 million up into the billions. Here are eight biotechs for which short sellers are betting the farm against the companies.
Akcea Therapeutics Inc. (NASDAQ: AKCA) is a $2 billion biotech targeting rare diseases, and the company is in the stages of rapid revenue growth. While the short interest has been steadily coming down in 2019, the 6.38 million shares short at the end of July represented 35 days to cover. The stock also has lost one-third of its value since peaking in February.
Given revenues of almost $65 million in 2018, some short sellers still seem convinced that the consensus analyst targets of $242 million in 2019 revenue and $363 million in 2020 either are not realistic or may not come with the future earnings potential down the road. Its accumulated earnings deficit is now $532 million since inception.
Akcea was trading at $22.08 on Monday, in a 52-week trading range of $19.08 to $40.75. It has a market cap of $2.1 billion and a consensus target price of $40.75.
AMAG Pharmaceuticals Inc. (NASDAQ: AMAG) saw its short interest rise to 11.43 million shares as of July 31, 2019. That was the highest nominal short interest it has seen in a year or more, and it represents close to 14 days to cover. AMAG’s revenues are no longer growing, and the company has an accumulated $785 million in losses since inception. This stock peaked at $75 in 2015.
AMAG Pharma was trading at $10.65, in a 52-week trading range of $6.81 to $26.10. It has a market cap of $361.0 million, and the consensus target price is $11.25.
At the end of July, Eidos Therapeutics Inc. (NASDAQ: EIDX) had a short interest of 3.634 million shares. While down marginally from the 3.704 million shares short in the prior report, it still has a short interest that is nearly four times as high as the 800,000 to 900,000 share average from late 2018. The current short interest is also close to 21 days to cover.
Eidos Therapeutics was trading at $36.18. The 52-week trading range is $8.89 to $41.35, and the market cap is $1.3 billion. It has a consensus target price of $44.71.
Ligand Pharmaceuticals Inc. (NASDAQ: LGND) has seen its shares come crashing down since last fall, and the short interest of 6.3 million shares represents about 14 days to cover. The only good news for Ligand here is that the number of its shares short has been in steady decline during 2019, after peaking at more than 8.3 million shares short in January. Still, its shares are barely above the lows of 2019, and that short covering (which creates buying) hasn’t been able to keep up with the natural selling pressure on its stock.
The stock was trading at $91.75 a share, in a 52-week trading range of $88.23 to $278.62. The market cap is $1.8 billion, and the consensus target price is $191.80.