Short Sellers Cash In On Shocking Biotech Sell-Off

Short interest on the stock popped in the last two reporting periods

Mar 28, 2018 at 9:54 AM
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Biotech stock Edge Therapeutics Inc (NASDAQ:EDGE) closed Tuesday's session at $15.59, after a big rally to start 2018. In fact, the shares had nearly doubled over the past year. But now those gains seem like a distant memory, with EDGE getting absolutely destroyed today, down 90% at $1.60 and earlier falling to a record low of $1.50.

The sell-off was sparked by news the company is discontinuing its late-stage study for its brain hemorrhage treatment. This news and subsequent price action could be catching analysts off guard, since the two brokerage firms tracking EDGE stock had "buy" ratings and an average 12-month price target of $17.

A number of short sellers made a move just in time, however. In the last two reporting periods alone, short interest on the biotech jumped 13.7%, and now represents almost a week's worth of buying power, based on average daily volumes. Of course, the stock is short sale restricted today.

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