Esperion Thera (ESPR) Puts Fly on Regeneron-Sanofi FDA Nod

Esperion Therapeutics Inc (ESPR) is plummeting on drug news, but competitor Regeneron Pharmaceuticals Inc (REGN) isn't faring much better

Jun 10, 2015 at 11:06 AM
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It's shaping up to be a dismal day for biotech stocks. Among the biggest losers on the Nasdaq is Esperion Therapeutics Inc (NASDAQ:ESPR), down 20.6% at $79.86 after a cholesterol drug (Praluent) made by competitors Sanofi SA (ADR) (NYSE:SNY) and Regeneron Pharmaceuticals Inc (NASDAQ:REGN) received a thumbs up from an FDA advisory committee. With ESPR on the short-sale restricted list, traders are flooding the stock's options pits to place downside bets.

Specifically, ESPR puts are crossing at 16 times the expected intraday rate, and potential buy-to-open activity is transpiring at the June 80 strike. By purchasing these in-the-money contracts for a volume-weighted average price (VWAP) of $4.80, these speculators think the shares will continue to move lower, and settle south of breakeven at $75.20 (strike less VWAP) at the close next Friday, June 19 -- when front-month options expire.

Short sellers are also counting on ESPR to pare some of its longer-term gains, as the stock is up over 97% year-to-date and over 400% year-over-year. Short interest on the equity rose 8.5% during the latest two-week reporting period, and now accounts for 16% of its total float.

While one might expect Esperion Therapeutics Inc (NASDAQ:ESPR) rival REGN to be rallying on the aforementioned news, shares of the latter are down 5% to test the $500 half-millennium level -- making it the leading loser on the S&P 500 Index (SPX). Weighing on the security is the panelists' recommendation to limit Praluent's use to patients with certain genetic predisposition, until more data can be gathered. Earlier, CNBC's Jim Cramer drew attention to this stipulation, and warned it could hurt Regeneron Pharmaceuticals Inc (NASDAQ:REGN).

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