Drug Stock Breaks Out After FDA Approval

Flexion's arthritis drug got an updated label approval

by Patrick Martin

Published on Dec 27, 2019 at 10:21 AM

The shares of Flexion Therapeutics Inc (NASDAQ:FLXN) are near the top of the Nasdaq this morning, up 10.8% to trade at $21.01, and nabbed a new annual high of $22.98 out of the gate. Powering today's surge is a Food and Drug Administration (FDA) updated label approval of Zilretta, the company's osteoarthritis treatment. At least three brokerages have upped their price targets in response, the highest coming from Craig-Hallum to $29 from $24. 

Flexion stock is pacing for its best day since Aug. 7. Prior to today, the shares briefly breached the $21 level in mid-December, with a subsequent pullback captured by support at their 30-day moving average. Year-to-date, the security is up 95%, and hasn't turned in a monthly loss since July. 

A short squeeze could power additional gains. Short interest fell by 21.6% in the two most recent reporting periods to 6.97 million shares, the lowest since 2017. However this still accounts for roughly 22% of FLXN's total available float, and almost 11 days' worth of buying power, at the stock's average pace of trading. 

Options trading has been quite call-skewed, despite limited absolute volume. For instance, 2,858 long calls crossed the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the past 10 days, compared to just 202 puts, pointing to bullish expectations. Shifting gears to today reveals more of the same. Calls are trading at 10 times the average intraday amount, with new positions opening at the January 30 call, but sell-to-open activity detected.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

The Nevada Discovery That Could Jeopardize Chinese Dominance
Click to continue to advertiser's site.
Extra Space Storage Stock Wavers After Downgrade
Raymond James downgraded to "underperform" from "market perform"
DKS to Continue Providing Benefits to Furloughed Workforce
DKS has seen an increase in put open interest over the past year
The Top Lithium Play of 2020
Click to continue to advertiser's site.