Biotech Stock Drops on FDA Update

The news is drawing options traders as well

Deputy Editor
May 24, 2023 at 10:53 AM
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Sarepta Therapeutics Inc (NASDAQ:SRPT) is gaining some attention in the biotech realm today. The company is seeking accelerated approval from the U.S. Food & Drug Administration (FDA) for its gene therapy, SRP-9001, to treat Duchenne muscular dystrophy (DMD). However, the FDA has extended its review period until June 22, after originally planning to make a decision by May 29, and has indicated that it is working toward "potentially granting an accelerated approval" for a smaller patient population consisting of 4-5 year olds. 

Sarepta Therapeutics stock is down 6.4% at $137.50 at last glance, though its 30-day moving average appears to be keeping losses in check. Both SRPT's rallies over the last couple months have been capped at the $160 level, including its recent May 15 two-year high of $159.89. Year-over-year, the equity has done well, surging 91%. 

Options traders are chiming in at four times the volume typically seen at this point. So far, 9,725 calls and 3,041 puts have been exchanged, with the June 150 and 170 calls seeing the most activity. 

This amount of calls looks indicative of a sentiment shift, as 1.63 puts have been picked up for every call in the last 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 90% of readings from the past year, meaning puts have been picked up at a faster-than-usual rate of late. 

 

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