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

11 Stocks to Buy Before Leap Day

Access your FREE insider report before it's too late!


 
 

Partnercenter


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


Why One Investor Is Betting $523,111 on This 1 Stock
This small, California-based company is pioneering breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds.
Coronavirus Drags Wall Street Into The Red
The coronavirus outbreak is starting to impact company's earnings reports
Fitbit Stock Shocks Wall Street
FIT has surged 111% over the past six months
Why One Investor Is Betting $523,111 on This 1 Stock
This small, California-based company is pioneering breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds.