Why This Trio of Biotechs is Blasting Off

News has propelled KemPharm Inc (NASDAQ:KMPH), Onconova Therapeutics Inc (NASDAQ:ONTX), and Prima Biomed Ltd. (NASDAQ:PBMD) to enormous gains

by Alex Eppstein

Published on Aug 14, 2015 at 1:25 PM

While several biotechs are making notable moves lower, several others are sitting on impressive afternoon gains. Included among the outperformers are KemPharm Inc (NASDAQ:KMPH), Onconova Therapeutics Inc (NASDAQ:ONTX), and Prima Biomed Ltd. (NASDAQ:PBMD). Here's a quick look at the news driving these biotech stocks up the charts.

Last night, KMPH revealed encouraging data concerning its experimental abuse-resistant pain drug. This is apparently outweighing a massive earnings miss -- at least in the minds of brokerage firms, with three boosting their price targets on the drugmaker. As such, the security has soared 25.2% to trade at $21.33, and earlier hit a record high of $26.15.

Analysts have been bullish toward KemPharm Inc for a while now. In fact, 100% of analysts tracking the shares consider them a "buy" or better. Also, the stock's average 12-month price target of $24.25 stood at a 42.3% premium to last night's close.

Moving along, ONTX said it submitted its application to the FDA, seeking approval to launch a late-stage trial on its cancer treatment, rigosertib. The news has sent the shares to the moon, up over 34% at $2.66. Longer term, though, the stock remains about 19% south of its year-to-date breakeven mark.

Today's bull gap is bad news for short sellers. Onconova Therapeutics Inc's short-interest ratio of 9.60 indicates it would take nearly two weeks for short sellers to buy back their positions, at average daily volumes.

Finally, PBMD has exploded 44% higher to trade at $1.44, after the firm said it will receive a clinical milestones payment from Novartis AG (ADR) (NYSE:NVS), based on a research and licensing arrangement with the larger drugmaker. Even more impressive, PBMD has now more than doubled in 2015.

However, short sellers aren't convinced. Short interest on Prima Biomed Ltd. more than tripled during the last two reporting periods -- though, at the stock's typical trading levels, it would still take less than a day to cover these bearish bets.

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