FDA Rejection Sends Heron Therapeutics Stock to Nasdaq Cellar

HRTX is on track for its worst day since September 2015

Managing Editor
May 1, 2019 at 10:02 AM
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Near the bottom of the Nasdaq morning sits Heron Therapeutics Inc (NASDAQ:HRTX), down 21% to trade at $17.44 this morning, and earlier fell to a new annual low of $16.20. The Food and Drug Administration (FDA) rejected the company's application for HTX-011, its postoperative non-opioid painkiller, requesting additional information from the company. Heron Therapeutics plans to request a meeting with the FDA to go over the decision. 

This is pacing to be HRTX's third straight loss, and its worst single-session drop since September 2015. But even prior to today, the shares were carving out a channel of lower highs and lows since June, and had shed 16% year-to-date as of yesterday's close. 

Cantor Fitzgerald has chimed in, calling the decision a "short-term negative," but noted that "we remain bullish on the long term commercial prospects for HTX-011." A round of overdue bear notes could keep the pressure on the struggling security. All eight of the brokerages in coverage rate HRTX a "buy" or better, and the average 12-month price target of $52.82 sits up in territory not seen since 2007. 

Options traders, amid limited absolute volume, have been focusing on calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 2,017 calls in the last 10 sessions, compared to just 727 puts. However, given that 25% of the stock's total available float is sold short, its possible some of this call buying could be shorts seeking an options hedge. Of course, today the shares are short-sale restricted due to their losses.


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