Blockchain Stock Jumps on SEC Insider Trading Accusations

The SEC has frozen $27 million in profits from LFIN stock sales

Apr 6, 2018 at 3:09 PM
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Trade war fears have resurfaced, sending the major U.S. benchmarks spiraling into the red for the week. Among individual stocks making big moves today are drugmakers Incyte Corporation (NASDAQ:INCY) and NewLink Genetics Corp (NASDAQ:NLNK), as well as blockchain technology firm Longfin Corp (NASDAQ:LFIN). Here's a quick roundup of what's moving shares of INCY, NLNK, and LFIN.

Halted Drug Study Sends Incyte Stock to New Lows

Incyte stock has plunged 21% to trade at $65.50 -- earlier hitting a two-year low of $63.81 -- after the company ended the study of its cancer drug, epacadostat, used in combination with Merck's (MRK) Keytruda, after an external agency found late-stage results failed to meet the main goal of delaying progression in patients with metastatic melanoma. A round of bearish brokerage notes is only adding additional pressure, with William Blair and Guggenheim downgrading INCY to the equivalent of a "neutral," with the latter joining no fewer than three other analysts in slashing their price targets on the stock.

While the shares are pacing for their worst week since August 2012 -- down 19.7% so far -- this negative price action is nothing new. The stock has been charting a path steadily lower over the last 12 months, and is now off 51% year-over-year. More negative analyst attention could come down the pike, too, considering the majority of brokerages still maintain a "buy" rating on INCY stock, with not a single "sell" on the books. Plus, the average 12-month price target sits all the way up at $121.65.

NewLink Genetics Shares Get Hit By Incyte Headwinds

NewLink Genetics stock is sinking on sector headwinds, especially considering the biotech's drug indoximod -- currently being tested in a clinical collaboration with AstraZeneca (AZN) -- was a lead competitor to epacadostat. NLNK shares are down 45.4% to trade at $4.00, not far from the record low of $3.95 they tagged earlier. The stock was also downgraded at SunTrust Robinson to "hold" from "buy," with the brokerage firm also cutting its price target to $5 from $19.

The security has shed more than half its value year-to-date, and short sellers are sitting pretty. Though NLNK is on the short-sale restricted list today, 5.48 million shares are currently sold short -- accounting for more than 19% of the stock's available float.

Longfin Call Options Pop With Stock

After being halted earlier, Longfin stock was last seen up 47.3% to trade at $28.19. The U.S. Securities and Exchange Commission (SEC) froze $27 million in profits from insider stock sales involving cryptocurrency firm's CEO Venkat Meenavalli and three other individuals. This just caps a volatile week for LFIN shares, which have made double-digit percentage moves each day -- though on a net basis, they're on track for a 63% weekly gain.

Longfin options traders have been active, too, with single-session trading volume topping out at a record high of 56,332 contracts yesterday. Today, more than 15,000 contracts are on the tape, with buy-to-open activity detected at the April 20 call. The volume-weighted average price (VWAP) for the calls is $7.98, making breakeven for the call buyers $27.98 (strike plus VWAP).

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