Health and Healthcare
8 Biotechs Being Choked by Short Sellers
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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
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
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.
Eidos Therapeutics
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
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.
24/7 Wall St.MannKind
MannKind Corp. (NASDAQ: MNKD) has been a target of short sellers for years now over the long-term disbelief of how widespread and effective inhalable insulin will be. The July 31, short interest was 38.47 million shares (almost 20 days to cover). That may be down from the mid-July figure of 41.33 million shares, the highest short interest since January, but the short sellers that have remained in place here seem convinced that MannKind ultimately has the same value as ashes.
MannKind traded at $1.11, in a 52-week trading range of $0.94 to $3.04. It has a market cap of $207.5 million. The consensus analyst target is $3.00.
Moderna
Moderna Inc. (NASDAQ: MRNA) came public in 2018, just in time for the late-year market tank. The largest IPO in biotech history offers promises of messenger RNA being used to treat multiple cancers and conditions, and when it came public it sold 26.3 million shares at $23 per share. Its lock-up period has ended so its float is now larger, but the stock had 11.456 million shares short as of July 31. This has been the highest short interest since April, but Moderna shares are now down to $13.33 or so, and that is after having raised more than $2 billion via investments, partnerships and collaborations.
Trading at $13.19, Moderna has a 52-week trading range of $11.54 to $29.79. Its market cap is $4.3 billion, and the consensus target price is $30.19.
Paratek Pharmaceuticals
In 2019, Paratek Pharmaceuticals Inc. (NASDAQ: PRTK) has seen its short interest remain steadily above 10 million shares. Its peak of 10.79 million shares short at the end of May has come down to 10.22 million shares short at the end of July, with nearly 38 days to cover. It also implies that nearly one-third of all outstanding shares are short.
The company’s Nuzyra is a U.S.-approved antibiotic targeting bacterial pneumonia, acute bacterial skin, skin structure infections, and the company is hoping to target urinary tract infections. While Nuzyra is now said to have access to more than 50% of the commercial lives in the United States, its latest net sales increase of 26% was only to $1.7 million in the second quarter of 2019.
Short sellers don’t seem too impressed about its big sales prospects, although the shares have recovered from about $3.10 at the start of August.
Paratek Pharma was trading at $4.43, within a 52-week trading range of $2.87 to $12.20. Its market cap is $143.6 million. The consensus target price is $21.29.
24/7 Wall St.Viking Therapeutics
Viking Therapeutics Inc. (NASDAQ: VKTX) saw its short interest fall to 19.837 million shares by the end of July. While the number of shares short has been in steady decline after peaking at 32.07 million shares in March, this stock has lost nearly one-third of its value since its April highs above $10. The short interest still represents close to 15 days to cover.
Viking Therapeutics was trading at $6.95, in a 52-week trading range of $6.68 to $24.00. It has a market cap of $502.2 million, and the consensus target price is $24.30.
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