FDA News Sends 2 Biotech Stocks Reeling

Madrigal Pharma's big day is lifting Viking Therapeutics stock

Managing Editor
May 31, 2018 at 2:55 PM
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The Dow is down triple digits today, as Canada and the European Union (EU) vowed to fight back against President Donald Trump's steel and aluminum tariffs. Among individual stocks making notable moves, drug stocks scPharmaceuticals Inc. (NASDAQ:SCPH) and Crispr Therapeutics AG (NASDAQ:CRSP) gapped lower this morning, while fellow biotech name Viking Therapeutics Inc (NASDAQ:VKTX) is soaring. Here's a closer look at how shares of SCPH, CRSP, and VKTX are trading today.

Drug Setback Sends SCPH Stock to Bottom of Nasdaq

scPharmaceuticals stock is down 30% to trade at $9.97 -- one of the worst stocks on the Nasdaq today -- after the Food and Drug Administration (FDA) identified deficiencies in the company's marketing application for its heart failure treatment. Although the issues were not specified, the drug company will work with the FDA to address the problems. The news sent SCPH stock as low as $8.91 today -- within striking distance of its record low of $8.88 set on April 30. The equity is on track for its worst week in history.

Although the stock has found itself on the short-sale restricted (SSR) list today, plenty of short sellers are likely toasting the collapse. Short interest increased by a whopping 76% in the two most recent reporting periods, to 980,000 shares -- a record high.

FDA Delay Ignites Crispr Therapeutics Stock Pullback

Last night, the FDA placed a clinical hold on Crispr's new drug application for CTX001, a stem cell therapy treatment for sickle cell disease. The drug was the part of collaboration between Vertex Pharmaceuticals (VRTX) and Crispr Therapeutics. In response, CRSP stock is down 8.9% to trade at $67. CRSP shares are now on track to finish below their 10-day moving average for the first time in nearly a month, and are in danger of snapping their four-week winning streak. Nevertheless, CRSP stock has still quintupled in 2018, and touched a record high of $73.90 on May 24.

Analysts at SunTrust Robinson said the application hold "clearly raises questions." However, most brokerage firms are bullish on CRSP stock. The biotech boasts five "strong buy" ratings, compared to just two "holds."

Viking Therapeutics Stock Gets Halo Lift From MDGL

Viking Therapeutics stock is up an incredible 80% to trade at $8.99 -- the second-best stock on the Nasdaq -- after Madrigal Pharma's (MDGL) non-alcoholic steatohepatitis (NASH) treatment met its main goal in a mid-stage study. Viking stock is getting a halo lift, as the company is developing its own treatment for NASH. Earlier today, VKTX scored a three-year high of $9.36, and is currently on track for its best single-day performance since December 2015. 

The biotech stock is ripe for a short squeeze, too. Short interest has fallen by nearly 10% in the two most recent reporting periods, yet the 2.64 million shares sold short represents a healthy 14% of VKTX's total available float. It would take almost four days to cover these bearish bets, at the equity's average pace of trading.

Call volume has exploded today. Over 15,000 calls have exchanged hands so far -- 11 times the average intraday amount, and volume already at an annual high. The June 7.50 call is most popular, with new positions likely being bought to open.


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