Short-Sellers Favor These 2 Biotech Stocks In July

Short interest in a number of biotech stocks dwindled in the most recent settlement period.

• However, two stocks bucked that trend in the first two weeks of July.
• During the period, the share price of one grew and of the other dropped sharply.

Biotechnology is one of those segments that have had a rough go at it so far this year. And yet, short interest in many of the leading biotech stocks dwindled between the June 30 and July 15 settlement dates, ahead of second-quarter earnings reports. Have short sellers grown more cautious?

Two stocks in particular bucked this short interest trend: Alexion Pharmaceuticals, Inc. ALXN and Juno Therapeutics Inc JUNO. In the period, at least one analyst predicted an upside surprise from the former, and the latter suffered a clinical trial setback.

Note that Biogen also saw modest bump in the number of its shares short earlier this month, but in Acadia Pharmaceuticals, Amgen and Seattle Genetics, the short interest was about the same as on the previous settlement date.

Related Link: Short-Sellers Shy Away From These 2 Biotechs This Settlement Period

Among those stocks that short sellers shied away from in the period were BioMarin Pharmaceutical, Celgene, Gilead Sciences, Illumina, Incyte, Medivation, Opko Health, Regeneron Pharmaceuticals and Vertex Pharmaceuticals.

Here we take a quick look at how Alexion Pharmaceuticals and Juno Therapeutics have fared recently and what analysts expect from them.

Alexion Pharmaceuticals

This Connecticut-based biopharmaceutical company saw the number of its shares short jump about 34 percent to more than 6.35 million shares in the first half of the month. That was 2.9 percent of the total float, and also the highest level of short interest year-to-date. At the most recently average daily volume, it would take about three days to cover all short positions.

Credit Suisse upgraded Alexion to Outperform but lowered its price target in the period. The share price ended the two-week short interest period more than 7 percent higher, and it has added another 3 percent since then. The stock still is down about 32 percent since the beginning of the year.

Juno Therapeutics

For the fifth period in a row, short interest for this company focused on cell-based cancer immunotherapies increased, most recently about 13 percent to around 10.79 million shares. Here too it was a year-to-date high, as well as 14.2 percent of the float. A spike in the average daily volume to a year-to-date high allowed the days to cover to fall from almost six to less than two.

Two deaths put a key cancer drug trial on hold temporarily during the period. Short sellers watched the shares rise about 6 percent, but then tumble and end the two-week short interest period down about 24 percent. The current share price is around 30 percent lower year-to-date, compared to gain of less than 3 percent for the Nasdaq.

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

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