Speculation is swirling that the FDA will reject Chiasma Inc's (CHMA) acromegaly treatment
It's
a pretty mild day for the broader stock market, but biotech stock
Chiasma Inc (NASDAQ:CHMA) is seeing some action. Specifically, the stock has plunged 13.8% to $9.40 -- after earlier being off by more than 17% -- on speculation the Food and Drug Administration (FDA) is preparing to reject Chiasma's oral treatment for acromegaly, a rare disease affecting the pituitary gland.
However, this negative price action is nothing new for Wall Street freshman CHMA, which is down 69% from its mid-August all-time high of $30.52. What's more, the stock's recent rally attempt was quickly halted by its 80-day moving average. CHMA has only closed north of this trendline twice since it was formed in mid-November.
Short sellers, meanwhile, have been bracing for more downside.
Short interest jumped 8.3% in the last two reporting periods, and now accounts for a lofty 12.5% of CHMA's available float. It would take almost a week to cover these shorted shares, at the stock's average daily pace of trading.
Analysts, however, have a taken a glass-half-full approach to CHMA. In fact, all four analysts covering the shares maintain a "strong buy" rating on the equity. Should Chiasma Inc (NASDAQ:CHMA) continue to struggle both on and off the charts, a round of
downgrades could create more headwinds for the shares.
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