Drug Stock Down Over 90%, Option Bears Circle

GTXI's urinary continence drug failed a mid-stage study

Managing Editor
Sep 21, 2018 at 2:24 PM
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The shares of GTx, Inc. (NASDAQ:GTXI) are down an incredible 92% to trade at $1.86 today, the worst stock on the Nasdaq by far, after the healthcare name's urinary incontinence treatment failed a mid-stage study. The company plans to conduct a full review of the data to identify what went wrong. In response, Baird downgraded GTXI to "neutral " from "buy," while slicing its price target by $28 all the way down to $2. Further, options traders are flocking to GTXI puts.

More specifically, over 12,000 puts have been traded -- 42 times what's typically seen at this point in the day, with volume already at an annual high. Most active is the September 2.50 put, where over 10,000 contracts have changed hands, and it appears that new positions are being opened. It appears most of these puts were bought as eleventh-hour bearish bets, before the option expires later today.

Earlier today, GTXI sunk to a new record low of $1.81, despite nabbing a five-year high of $25.60 just over a week ago. It's no surprise that the stock is heading toward its worst single-day loss ever, but the trouble may be far from over. Only two brokerages cover GTXI, and both rate it a "strong buy." In addition, GTXI's consensus 12-month price target of $37.50 was a 60% premium to even last night's closing price.

Daily Stock Chart GTX

Although the security finds itself on the short-sale restricted list (SSR) today, short sellers are likely cheering the freefall. Short interest increased by 33% in the last two reporting periods, to a record high 2 million shares. This represents nearly 16% of GTXI's total available float, and 8.9 times the equity's average daily trading volume.


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