Short Report: Bearishness on BioXcel at record high amid trial conduct review

Welcome to this week’s installment of “The Short Interest Report” – The Fly’s weekly recap of short interest trends among some of the most widely followed high-short-float stocks. Using the data from our partner Ortex.com, which utilizes the latest information from stock lenders to estimate short interest changes for thousands of publicly traded companies, this report will screen for some of biggest changes in short interest as a percentage of free float and days-to-cover ratios while also considering the short interest data on some of the more volatile and heavier-traded names of the week. Based on the availability of data from Ortex, the report tracks the trading period that covers prior Friday through Thursday of this week, excluding holidays. As a basis of comparison for stocks discussed below, the S&P 500 index was up 2.2%, the Russell 2000 index was up 5.9%, the Russell 2000 Growth ETF (IWO) was up 5.7%, and the Russell 2000 Value ETF (IWN) was up 6.0% in the five-day trading session range.

SHORT INTEREST GAINERS

• Estimated short interest on BioXcel Therapeutics (BTAI) has continued to increase steadily, rising for the third consecutive week from 37.2% to 41.5% – a record high for the stock. The name is a newcomer to our screen this week though the stock has been under intense investor scrutiny since late June when the management disclosed a regulatory inquiry into BXCL501 development after the company admitted that fabricated email correspondence was provided to the FDA by the principal investigator’s employer during the on-site inspection in December 2022 in conjunction with its update on the drug’s progress in Alzheimer’s agitation trials. Shares had lost over 60% of the value over the trial conduct overhang, even though half of those losses have since been pared. In the five-day period covered through Thursday, BioXcel shares are up nearly 5%.
• Ortex-reported short interest on AMC Entertainment (AMC) had been confined to a 20%-26% range for the entirety of 2023, but has broken to the upside sharply this week, rising to a two-year high of 28%. Likewise, days-to-cover on the name was at its highest level in three and a half year, rising to 10.1 from 9.1. Earlier this month, a research note by Citi forecasted the stock to come under pressure due to expected convergence of the value of AMC common units and APE units. AMC shares were up 3.5% this week but declined 2.5% on Friday.
• Ortex-reported short interest on Marathon Digital (MARA) rose from 22.0% to 25.1% this week – the highest level in three weeks – even as the stock has continued to grind higher in concert with other crypto-related names. Short position as a percentage of free float had previously slid from 25.4% to 21.5% over the course of prior three weeks since the June-end start of the rally in crypto space, though bears appear to be in accumulation mode again. In the five-day period covered, Marathon Digital shares gained 26% and have now quintupled this year, also breaching their August 2022 highs this week.
• Estimated short interest on Axsome Therapeutics (AXSM) hit a new record high this week, rising from 25.5% to 31.4%. The stock was down sharply in late June after the company conducted a $225M equity raise that priced over 10% below prior close and has since traded in a narrow sideways range. In the five-day period covered through Thursday, Axsome was down just over 1%.

SHORT INTEREST DECLINERS

• Ortex-reported short interest in PacWest Bancorp (PACW) had briefly eclipsed the highs seen in the wake of the regional bank crisis earlier this year, rising to a record high of 27.3% in the first week of July. Shorts as a percentage of free float were down sharply this week however, falling to 21% from 26.8%, as investors prepare to assess the state of the financials and deposits among the regionals that will be disclosing Q2 results over the coming week. PacWest shares were down by over 90% from this year’s high at the peak of the crisis in early May but have since squared some of those losses. The stock has been mostly flat in July, gaining just over 5% in the five-day period covered through Thursday.