Market Overview

Short Sellers Dump Vertex, Load Up On Baxalta

Short Sellers Dump Vertex, Load Up On Baxalta
  • Short interest in many leading biotech stocks declined in the most recent period.
  • Bucking that trend is a biotech company that soon will be acquired by an overseas peer.
  • Short sellers retreated most sharply from a biotech that some analysts now see as a value stock.

Between the March 31 and April 15 settlement dates, short interest in many of the leading biotech and emerging pharmaceutical stocks shrank, although a few managed to buck that trend.

In those two weeks, short sellers were particularly attracted to Baxalta Inc (NYSE: BXLT), which is in the process of being acquired by Ireland-based biopharmaceutical company Shire in a $32 billion deal expected to close later this year. Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) and BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) also saw modest bumps in the number of their shares short during the period.

A double-digit percentage decline in the short interest of Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), which some analysts now consider a value stock, had this Boston-based company leading the downward trend. Short sellers also fled from Biogen, Celgene, Intrexion and Medivation early in the month. More modest declines in short interest were seen at Alnylam Pharmaceuticals, Amgen, Gilead Sciences, Illumina, Incyte, Opko Health and Seattle Genetics.

Below is a quick look at how Baxalta and Vertex Pharmaceuticals have fared recently and what analysts expect from them.

Related Link: Big Biotech In The Earnings Spotlight


This hematology, oncology and immunology focused biopharmaceutical company saw its short interest rise almost 17 percent to more than 9.90 million shares, or about 1.5 percent of float. That was the highest number of shares short so far this year. With the average daily volume at a 52-week high, it would take less than a day to cover all short positions.

Shire said during the period that the acquisition would close as planned despite new government measures aimed at blocking tax inversion deals. Baxalta's share price ended the two-week short interest period about where it began, despite being up almost 3 percent and down more than 4 percent at points in the interval.

Vertex Pharmaceuticals

The number of shares sold short in this company focused on cystic fibrosis and other serious diseases plunged more than 19 percent early in the month to more than 5.02 million, or about 2 percent of the float. That was the lowest level of short interest since January. The days to cover remained at about two, even as the average daily volume inched up for the third straight period.

Vertex stock has struggled since last summer and was one of the worst performers in the first quarter. During the short interest period, shares rose almost 15 percent but gave back most of that gain by the middle of the month. The stock has retreated a bit more since then.

Disclosure: At the time of this writing, the author had no position in the mentioned equities.


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