2 Red-Hot Biotech Stocks Squeezing Shorts

Both IOVA and MGNX reported upbeat cancer drug data

by Patrick Martin

Published on May 16, 2019 at 10:18 AM

Two biotech stocks are making noise this morning on Wall Street. First, there's Iovance Biotherapeutics Inc (NASDAQ:IOVA), up 42.2% to trade at $15.63, one of the best stocks on the Nasdaq this morning, after the company reported upbeat cancer drug data at the annual American Society of Clinical Oncology (ASCO) meeting. Analyst Biren Amin at Jefferies called Iovance the "big winner" of the conference.

This is shaping up to be Iovance stock's best single-session gain since June 2016. The shares are trading at their highest point since a early September bear gap, and have now toppled their 320-day moving average; a trendline that turned away a rally back in April. IOVA has now more than doubled off its Dec. 21 bottom of $7.26. 

A short squeeze could send IOVA closer to its Aug. 31 annual high of $18.25. Short interest dropped 7.9% in the most recent period to 9.80 million shares, the lowest since December. Yet this still accounts for 13.7% of the stock's total available float, and more than two weeks' worth of pent-up buying power, at its average pace of trading.

Also red-hot today is MacroGenics Inc (NASDAQ:MGNX), up 10.6% to trade at $18, after the company's late-stage study for Margetuximab, its breast cancer drug, met the first main goal. MacroGenics plans to file for U.S. approval in the second half of 2019. 

Going into today, MacroGenics stock had only turned in one positive session in the last seven days. Since an annual high of $32.32 on Feb. 6, MGNX carved out a channel of lower lows, with its 40-day moving average keeping a lid on breakouts the last two months. Now, that trendline is set to be toppled, and the equity has extended its year-to-date lead to 28%. 

Short sellers are likely not too thrilled about today's price action. Short interest increased by 13.6% in the two most recent reporting periods to 3.84 million shares. This represents a healthy 10.4% of the stock's total available float, and six times the average daily trading volume; plenty of fuel to squeeze shorts, should MGNX keep climbing. 

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