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Moderna Short Sellers Take $450M Hit Following Coronavirus Vaccine Data

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Moderna Short Sellers Take $450M Hit Following Coronavirus Vaccine Data

Biotech stocks are often high-risk, high-reward investments that have binary outcomes based on one or a handful of drug or device candidates in development. Shorting these types of stocks can be very risky due to the potential for unexpected positive testing data, regulatory approvals and buyouts.

Moderna Inc (NASDAQ: MRNA) shares jumped 20% on Monday and are now up a whopping 339% year to date after the company reported positive Phase I data related to its COVID-19 vaccine candidate mRNA-1273. Moderna bulls have made a killing on mRNA optimism, but Moderna short sellers’ 2020 has gone from bad to worse.

Modena has the fifth-largest outstanding short position in the biotech sector at $1.63 billion, according to S3 Partners analyst Ihor Dusaniwsky. Those shorted shares represent 11.7% of the stock’s float.

Monday’s big gain added another $427 million in 2020 losses for Moderna short sellers, bringing their total year-to-date mark-to-market losses up to $1.52 billion.

While short sellers have performed well overall in 2020, Dusaniwsky said biotech short sellers have not. Biotech short interest has been in the $49 billion range for most of the year, and biotech short sellers are down $2.81 billion overall this year.

Other Costly Biotech Shorts

Dusaniwsy said Moderna has been by far the most costly biotech short of 2020. Year-to-date losses for Moderna short sellers have more than tripled those of any other biotech short. Regeneron Pharmaceuticals Inc (NASDAQ: REGN) is a distante second behind Moderna, but Regeneron short sellers are only down about $441.7 million year to date.

Moderna shares cooled off a bit on Tuesday after the company announced a $1.25 secondary offering after the close on Monday. However, Dusaniwsky said more positive vaccine data or bullish momentum for the stock could be bad news for remaining shorts.

“With today’s rally, MRNA is the primary short squeeze candidate in the Biotech Sector with nearly a billion dollars of month-to-date mark-to-market losses and just over $1.5 billion of year-to-date mark-to-market losses,” Dusaniwsky said.

Dusaniwsky said AbbVie Inc (NYSE: ABBV) and Sarepta Therapeutics Inc (NASDAQ: SRPT) near-term short biotech short squeeze candidates due to the heavy losses short have endured this month.

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Biotech Stock Rally Is Crushing Short Sellers

Latest Ratings for MRNA

DateFirmActionFromTo
Oct 2020Chardan CapitalMaintainsBuy
Sep 2020SVB LeerinkDowngradesMarket PerformUnderperform
Aug 2020SVB LeerinkMaintainsMarket Perform

View More Analyst Ratings for MRNA
View the Latest Analyst Ratings

 

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