AKAO Stock Hits New Low on FDA Rejection

Short selling is restricted as AKAO sells off on an FDA disappointment

Managing Editor
Jun 26, 2018 at 3:19 PM
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Stocks are cautiously higher in quiet trading this afternoon. Three stocks making some more noteworthy moves are pharmaceutical concerns Achieve Life Sciences Inc (NASDAQ:ACHV), Puma Biotechnology Inc (NASDAQ:PBYI), and Achaogen Inc (NASDAQ:AKAO). Below, we will take a closer look at how shares of ACHV, PBYI, and AKAO are trading on the charts.

ACHV Rallies Into Resistance on Trial Data

ACHV is up 24.5% at $4.73, at last check, after the company reported positive trial data for its smoking cessation aid cytisine. However, the stock has been suffering long term, shedding 87% of its value over the past 12 months. Achieve Life stock touched a record low of $3.28 last Wednesday, and today's pop has fizzled near the site of its descending 20-day moving average.

Puma Squeezes Shorts with Upbeat EMA Outlook

Puma Biotechnology stock is 22.3% higher at $62.50 after the company announced that a European Medicines Agency (EMA) committee will more than likely issue a positive opinion on Puma's early-stage breast cancer treatment, neratinib. PBYI has gapped above its 50-day moving average for the first time since March, and is set to close above this benchmark trendline for just the fifth time this year.

Today's gains could be the result of a short squeeze. Short interest accounts for nearly 10% of PBYI's float, or 4.8 times the stock's average daily trading volume.

Elsewhere, analysts are upbeat. More than half of the five analysts covering PBYI stock rate it a "strong buy." Further, the drug concern's average 12-month price target stands at $89.50, a more than 43% premium to current levels.

FDA Letter Deals a Blow to Achaogen Antibiotic

Shares of AKAO have fallen 21.3% to $9.46 -- and earlier hit a new annual low of $8.73 -- after the Food and Drug Administration (FDA) approved the company's Zemdri drug to treat complicated urinary tract infections, but declined to clear the drug for treatment of bloodstream infections. The biopharma stock is now 56% lower year-over-year.

In the wake of the much-anticipated FDA ruling, 30-day at-the-money implied volatility on AKAO options has cratered 50.6 percentage points to 79.8%. However, this reading still remains elevated, in the lofty 70th annual percentile.

Achaogen stock has been heavily shorted, with these bearish bets now accounting for 45% of AKAO's total available float. While short selling is temporarily restricted due to today's steep sell-off, it looks as though the bears remain firmly in control for now.


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