2 Drug Stocks Scaling the Nasdaq

Recro Pharma was granted an appeal by the FDA for its non-opioid shot

Managing Editor
Oct 31, 2019 at 10:02 AM
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Near the top of the Nasdaq this morning sit two drug stocks. First up is Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), after the company scored a research and licensing agreement with Roche AG. The two will develop treatments for chronic hepatitis B, with Dicerna getting $200 million up front and up to $1.47 billion in milestone payments. 

In response, DRNA is up 14.4% to trade at $18, and earlier tapped a new four-year high of $18.39. The shares have carved out a channel of higher lows and highs for the past in 2019, with their 160-day moving average catching recent pullbacks. The equity is now up over 65%year-to-date.

A short squeeze could be fueling additional gains today. Short interest fell in the two most recent reporting periods, but the 4.37 million shares sold short still accounts for a healthy 8.4% of DRNA's total available float. At the stock's average pace of trading, it would take more than two weeks for shorts to buy back their bearish bets.

Then there's Recro Pharma Inc (NASDAQ:REPH), up 8.7% to trade at $15, earlier scoring an over four-year high of $15.46. The Food and Drug Administration (FDA) granted an appeal to the rejected application for IV meloxicam, the company's non-opioid shot for pain relief. Recro had sought an appeal after the FDA rejected the intravenous shot twice. REPH stock -- heading toward its fourth straight win -- has now more than doubled in 2019, with its 80-day moving average containing pullbacks in August and October. 

Prior to today, the stock's options pits seemed strictly reserved for calls, amid light absolute volume. In the last 10 days, 942 calls were bought to open at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just two puts.

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