Relypsa Inc (RLYP) Breaks Out on Drug Data

Relypsa Inc (NASDAQ:RLYP) is among the top-performing Nasdaq stocks today, jumping 8% to trade at $21.87. Fueling the gains is the company's recent release of June Veltassa data, which revealed growing demand for the hyperkalemia drug.

Reacting to this, Wedbush maintained its "outperform" rating and $51 price target, representing two-year-high territory. In a note to investors, the brokerage firm said it's "especially encouraged by the continued growth in revenue-generating outpatient prescriptions filled and view the growth as a sign of decreased insurer pushback and physicians becoming more comfortable prescribing Veltassa as a chronic treatment for hyperkalemia." More details could be on the way, too, with RLYP scheduled to make an appearance this afternoon at the Cantor Fitzgerald Healthcare Conference.

In general, the analyst crowd has been extremely upbeat toward RLYP. Eight brokerages currently rate the biotech stock a "strong buy," versus two "holds" and one "strong sell." That said, not everyone on Wall Street is so enthusiastic.

Take, for instance, the incredible levels of short interest on RLYP. Specifically, over 19 million shares are shorted, or roughly one-half of the stock's total float. At the equity's average daily trading levels, it would take more than one week to cover these bearish positions.

Put buying has picked up recently, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), RLYP's 10-day put/call volume ratio of 0.38 outranks four-fifths of all readings from the prior year. In other words, options traders have bought to open puts over calls at a faster-than-usual clip in recent weeks.

While the Veltassa data should undoubtedly put bears on notice, their skepticism certainly makes sense from a long-term technical perspective. So far in 2016, Relypsa Inc (NASDAQ:RLYP) has dropped nearly23%. Looking at the charts more closely, the biotech stock is quickly nearing its historically significant 60-week moving average, which rejected the shares late last year.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.