Insys, GW Pharmaceuticals Rise On Short Seller's Comments

A well-known short-seller accused GW Pharmaceuticals GWPH of making misleading statements about progress with its cannabis-based development drug for childhood epilepsy.

The accusation Monday appeared counter-productive as GW gained more than six percent.

Commentary by the short-seller GeoInvesting was two-pronged and praised GW's competitor Insys Therapeutics INSY because it has licenses to manufacture and distribute cannabis products in the Unite States, Insys is "much better suited for success" than GW, which it said lacks licenses.

Insys, slated to post second-quarter results Tuesday, saw its shares up more than nine percent. Insys has reported upside earnings surprises in three of the past four quarters.

GW missed second-quarter expectations by a wide margin last week.

Both companies recently obtained orphan drug status for cannabis-based treatment of a rare form of epilepsy in children called Dravet syndrome.

The author of commentary from GeoInvesting disclosed a long position in Insys and headlined the piece "The Long And The Short Of It: Buy Insys And Sell GW."

Short interest represents about 5.3 million of Insys' 34.2 million shares outstanding. About 1.9 million of GW's 215.5 million shares are held as short interest.