Global Blood Therapeutics Options Pop on FDA Buzz

GBT stock is near the top of the Nasdaq this afternoon

Dec 3, 2018 at 2:27 PM
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Options traders are making a beeline toward Global Blood Therapeutics Inc (NASDAQ:GBT), after the Food and Drug Administration (FDA) agreed to the company's proposal for an accelerated approval pathway for its sickle cell disease (SCD) treatment, voxelotor. The San Francisco-based firm said it would give more details for its plan to submit a New Drug Application (NDA) early next year.

With GBT stock shooting up 52.2% today to trade at $48, most of today's options activity has occurred on the call side. Specifically, 15,400 calls have changed hands so far, compared to fewer than 3,300 puts. This is more than eight times what's typically seen at this point in the day. And in the wake of today's news, short-term volatility expectations have imploded. The stock's 30-day implied volatility is down 50.2% from last Friday's close, to 75% -- in the low 32nd percentile of its annual range.

Analysts have been quick to chime in today, too, with H.C. Wainwright boosting its GBT price target to $150 from $125 -- a 213% premium to current trading levels. Plus, Cantor Fitzgerald reiterated its "overweight" rating and $96 price target, saying current clinical data for voxelotor "offers a compelling treatment option in SCD that lacks disease-modifying therapies." Already, 12 of 13 brokerages maintain a "strong buy" rating on Global Blood Therapeutics, while the average 12-month price target sits all the way up at $81.92.

Not all of the sentiment surrounding the drug stock is upbeat, though, with short sellers controlling roughly one-fifth of the available float. An unwinding of this pessimism could be helping the hot stock, considering it would take shorts nearly two weeks to cover all these bearish bets, at GBT's average daily pace of trading.

Looking at the charts, the stock wrapped up its third straight monthly loss late last week, and has shed 29.4% since its Feb. 21 record high of $68.05. The shares bottomed out at a 13-month low of $30.15 on Friday, and despite pacing for their best day ever today, they are running out of steam near familiar resistance in the round $50 region.

gbt stock daily chart dec 3


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