Acadia's Positive Data News May Have Triggered Short Squeeze

Shares of ACADIA Pharmaceuticals Inc. ACAD are spiking higher by more than 11.1 percent on Tuesday following the release of positive Phase II data on the company’s Alzheimer’s Disease treatment drug pimavanserin.

Acadia has already gained FDA approval for pimavanserin for treatment of Parkinson’s-related hallucinations and delusions.

Acadia reports that pimavanserin met its primary endpoints and demonstrated a statistically significant reduction in symptoms compared to a placebo.

Acadia is also currently testing pimavanserin for treatment of AD Psychosis and other disease states.

The large move in Acadia shares is certainly being driven by the encouraging new data on pimavanserin. However, a short squeeze is likely adding fuel to the fire.

Coming into Tuesday’s session, Acadia’s short interest had climbed 60 percent year-to-date, recently peaking near all-time highs. According to shortsqueeze.com, a large number of short sellers weren’t expecting good news from Acadia.

Acadia has a fairly high short percent of float of 22.3 percent. The stock has more than 21.2 million shares held short with 12.8 days to cover.

The positive news sent Acadia shares as high as $30.14 on Tuesday morning, still way off the stock’s 52-week high of $42.49. However, with pimavanserin seemingly gaining momentum in the Alzheimer’s market, short sellers feeling the heat may sustain the Acadia rally in coming days.