Market Overview

Short Sellers Shy Away from Biotech Firms

The short interest data is out from the August 31 settlement date. By and large short sellers have retreated from gambles on biotech firms, compared to the August 15 settlement date. A few notable exceptions were Amgen (NASDAQ: AMGN), for which short interest was higher by 8.8 percent to 12.8 million shares in that time, Arena Pharmaceuticals (NASDAQ: ARNA) saw short interest increase 2.7 percent to 43.9 million shares, and shares sold short in Illumina (NASDAQ: ILMN) increased 7.2 percent to 23.6 million.

Here is closer look at Biogen Idec (NASDAQ: BIIB), Celgene (NASDAQ: CELG), Gilead Sciences (NASDAQ: GILD), Onyx Pharmaceuticals (NASDAQ: ONXX) and VIVUS Inc. (NASDAQ: VVUS), which saw the largest declines in short interest in the sector between August 15 and August 31.

Biogen Idec

This S&P 500 component saw short interest fall 5.6 percent to 2.1 million shares. Biogen Idec develops and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders. It has a market capitalization near $36 billion and a return on equity of nearly 22 percent. Biogen Idec set a deal with Regulus Therapeutics in late August identify biomarkers for multiple sclerosis. Shares are up about 34 percent year to date and trading near a multiyear high.

Celgene

Short interest in this maker of therapies to treat cancer and immune-inflammatory related diseases declined 8.4 percent to 5.8 million shares. The return on equity of this S&P 500 component is a healthy 26 percent, and the long-term earnings per share (EPS) growth forecast is more than 22 percent. The company said in late August that it may increase its stake in Globelmmune. Twenty-three out of 28 analysts polled by Thomson/First Call recommend buying shares of Celgene; none recommend selling.

Gilead Sciences

Shares sold short in Gilead Sciences dropped 10.4 percent to 18.8 million. This maker of therapeutics for the treatment of life-threatening diseases such as HIV and hepatitis has a market cap near $45 billion. It too is an S&P 500 component and has a return on equity is more than 36 percent. The company received FDA approval of hits HIV drug Stribild at the end of August. Out of 29 analysts surveyed, 22 rate the stock at Buy or Strong Buy; none recommend selling shares.

Onyx Pharmaceuticals

Short interest in Onyx Pharmaceuticals fell 6.7 percent to 5.35 million shares. This South San Francisco-based company develops therapies that target the molecular mechanisms that cause cancer. Its long-term EPS growth forecast is more than 19 percent, and the mean price target is about 18 percent higher than the current share price. Its market cap is near $5 billion. Back in August, Onyx filed for FDA approval of its drug regorafenib as a treatment for certain gastrointestinal tumors.

VIVUS

This Mountain View, Calif.-based biopharmaceutical company saw short interest fall 4.2 percent to 15.7 million shares. That is about 15 percent of the float. The market cap is more than $2 billion. The long-term EPS growth forecast is about 51 percent. The mean price target of analysts is about 40 percent higher than the current share price and would be a multiyear high. But shares have traded mostly between $21 and $23 since July, though they are up more than 126 percent year to date.

Posted-In: amgen Arena Pharmaceuticals biogen idec Celgene FDALong Ideas Short Ideas Trading Ideas Best of Benzinga

 

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