Short Interest In Conatus Pharmaceuticals Surges

• Short sellers loaded up on this biotech stock in the most recent period.
• The company announced a license agreement back in December.
• The share price rose to a new high between the most recent settlement dates.

After Conatus Pharmaceuticals Inc (NASDAQ: CNAT) announced a new licensing deal with Novartis AG (NYSE: NVS) back in December, investors pushed the shares to a new 52-week high of $6.30, a gain of nearly 220 percent. Recently released data show that short sellers appear to have smelled opportunity.

Between the December 15 and December 30 settlement dates, this biotechnology company focused on treating liver disease saw the number of its shares short jump more than 173 percent to around 1.98 million. Its short interest already had been trending higher since last August. The new figure represents 9.1 percent of the total float and is the highest level of short interest in at least a year. As the average daily trading volume surged, the number of days it would take to cover all short positions dropped from more than six to less than one.

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In the week before Christmas, Conatus announced the collaboration and license deal for the development of its orally active pan-caspase inhibitor emricasan, including a $50 million upfront payment. Its share price ended the two-week short interest period almost 179 percent higher. The Nasdaq gained about 1 percent in that time.

Conatus has pulled back around 4 percent year-to-date. All seven analysts polled by Thomson/First Call recommend buying shares.