Amicus Therapeutics, Inc. (FOLD) Stumbles Following Drug Approval

Amicus Therapeutics, Inc. (NASDAQ:FOLD) is trading lower, even though the European Commission approved its Fabry disease drug

May 31, 2016 at 10:21 AM
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It's already been an eventful morning for biotech stocks, and now Amicus Therapeutics, Inc. (NASDAQ:FOLD) is getting in on the action. The stock is fluctuating amid heavy volume -- last seen 1% lower at $6.99 -- on news the drug company's Fabry disease drug, Galafold, was approved by the European Commission. While FOLD shareholders can't be happy about this price action, the stock's short sellers are likely cheering.

Specifically, short interest on FOLD shot to an all-time high back in March, and even though it has edged slightly lower since then, 21% of the stock's float is still controlled by these bears. Even more startling, it would take FOLD short sellers more than two weeks to cover their positions, at the stock's average daily volumes. 

That said, it looks like some of these bearish traders may be hedged against an unexpected upside move in FOLD shares, judging by recent activity in the options pits. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than 25 call options for every put -- though, this is based on rather light volume. In any case, it's possible FOLD shorts are using these calls has insurance

Despite facing heavy skepticism from short sellers, the sentiment picture among analysts is extremely upbeat. For example, six of the seven brokerage firms that cover FOLD say it's a "strong buy," and none recommending selling it. Plus, the stock's average 12-month price target of $12.63 represents a more than 80% premium to current levels. 

Considering Amicus Therapeutics, Inc.'s (NASDAQ:FOLD) price action over the past year, short sellers' opinion seems to make more sense. The stock has fallen 43% in the past 12 months, and has been feeling overhead pressure from its 100-day moving average going for over three months. 

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