The FDA declined to approve Valeant's plaque psoriasis lotion
The shares of Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and ZIOPHARM Oncology Inc. (NASDAQ:ZIOP) are falling after recent Food and Drug Administration (FDA) notices. Specifically, the FDA declined to approve Valeant's treatment for plaque psoriasis, sparking an early gap lower for VRX stock. Meanwhile, the regulators placed a clinical hold on ZIOPHARM's cancer treatment study, sending the penny stock spiraling lower.
Valeant Shares Backpedal But Cantor Remains Upbeat
Valeant stock was last seen 6.2% lower to trade at $25.28. The shares just last week notched a new annual high of $27.79, but today are on track to end beneath their 10-day moving average for the first time in June. Further, the equity is staring at its worst session since Feb. 28.

Prior to today, Valeant options buyers were scooping up calls over puts at the fastest clip in at least 12 months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 6.42 is in the 100th percentile of its annual range, pointing to a much healthier-than-usual appetite for bullish bets of late.
In today's trading, calls are still more popular, with roughly 45,000 exchanged so far -- more than twice the number of VRX puts exchanged. Nevertheless, total options volume for Valeant is running at two times the average intraday pace, with the weekly 6/22 25-strike call garnering the most attention.
Despite the FDA setback, analysts at Cantor Fitzgerald today said they "still expect Duobrii" to be approved. As such, the brokerage firm reiterated an "overweight" rating and issued a price-target hike to $32 from $25 price target on VRX.
ZIOP Stock Eyes Worst Day Since 2013
ZIOPHARM stock was lat seen 18.6% lower at $3.50 -- within striking distance of February's three-year low of $3.33. The drugmaker's shares are now on pace for their worst day since 2013, and are trading south of a channel of higher highs and lows that's been in place for most of 2018.

Although ZIOP is on the short-sale restricted list today, quite a few bears are likely celebrating the FDA setback. Short interest accounts for more than 31% of the equity's total available float, or nearly 35 times the stock's average pace of trading.
Elsewhere, ZIOP put options are popping today, trading at nine times the average intraday pace. While absolute volume is light with under 800 puts exchanged, most of the action has transpired around the July 4 put. Speculators buying the puts to open expect ZIOP shares to extend their retreat south of $4 through the next month.