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Short Report: Bears pounce on disappointing drug news from Gossamer and Verve
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Short Report: Bears pounce on disappointing drug news from Gossamer and Verve

Short interest in Gossamer Bio hits all-time high and that of Verve Therapeutics reaches three month high as bears follow shares lower on drug trial setbacks

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. As a basis of comparison for stocks discussed below, the S&P 500 index was down 1.9%, the Russell 2000 index down 1.1%, the Russell 1000 Growth ETF (IWF) was down 2.9%, and the Russell 1000 Value ETF (IWD) was down 1.0% in the period range.

SHORT INTEREST GAINERS

  • Estimated short interest in Gossamer Bio (GOSS) was up another four percentage points for the week to 35.9% as of Thursday, having risen as high as 37.4% this week to an all-time high. The stock plunged earlier this month when the company released its headline data from the seralutinib Phase 2 TORREY study in pulmonary arterial hypertension that analysts deemed to have fallen short of clinical significance. While the debate has continued on whether investors overreacted given the drug’s potential, the stock has not seen any signs of a bounce back, and the bearish positioning is still growing. In the five-day period covered, Gossamer Bio shares were down 17.1% and have now shed 81% since the seralutinib study release.
  • Verve Therapeutics (VERV) has also seen its short interest building after an FDA communication on December 5th requesting more clinical data before the agency can resolve the clinical hold on a study evaluating VERVE-101 in patients with heterozygous familial hypercholesterolemia.  The hold was initially announced on November 4th. Ortex-reported shorts were up over two percentage points to 28.7% this week – the highest level since late September – and days-to-cover was up nearly 200 basis points to 10.3. In contrast to Gossamer, the decline in Verve Therapeutics was quickly reversed in the same week, though the stock was still down 2.1% in the five-day period covered and has now lost over 55% from its August highs.
  • Ortex-reported short interest in Stitch Fix (SFIX) is up two percentage points to 21.4% this week, which is a one-month high. Days-to-cover on the name is also up by over 100 basis points to 3.0 – a near two-year high. Volumes on the stock were also elevated as shares fell to their lowest levels of the year. In the five-day period covered, Stitch Fix fell 25.5% and are now down 85% for 2022.
  • Estimated short interest in Virgin Galactic (SPCE) fell to an eleven-month low in the first week of December but has now risen for two consecutive weeks, adding another two percentage points this week to 21.7. Days to cover on Virgin Galactic is up 250 basis points to 14.6 – an all-time high. Volumes were up late last week as well, with Friday marking the highest level of trading activity in three months despite the absence of any meaningful news. In the five-day period covered, Virgin Galactic is down 13.3% and is now down 72% year-to-date.

 SHORT INTEREST DECLINERS

  • Rite Aid (RAD) shares fell over 10% to their worst levels in 2022 after the company announced a Q3 loss and cut its guidance for the year, though the reduction in bearish appetite that started about two weeks ago has been sustained. Ortex-reported short interest in the stock was down from 16.6% to 13.9% and days to cover slid from 3.2 to 2.3 – the lowest level since January. In the five-day period covered, Rite Aid was down 19% and has now fallen 77% in 2022.

Keywords: Short selling, short interest, days to cover, securities, lending, utilization, sentiment analysis, Gossamer Bio, Verve Therapeutics, Stitch Fix, Virgin Galactic, Rite Aid

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