The 5 Most Hated Biotechs: Myriad, Sarepta, OncoMed, VIVUS, and MannKind

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The five companies with the largest number of shares sold short as a percentage of float.

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The 5 Most Hated Biotechs: Myriad, Sarepta, OncoMed, VIVUS, and MannKind

  1. 1. 5 Most Hated Biotechs
  2. 2. Defining “Hatred” • Biotechs listed on the NASDAQ with largest short as a percentage of float • As of latest data available on Feb 28, 2014 • Days to cover is defined as the short interest divided by the average daily volume – Longer days to cover can create short squeeze during a rally – Put another way, a longer “days to cover” indicates an increased conviction by short sellers
  3. 3. Myriad Genetics (Nasdaq: MYGN) • 51.9% of float sold short • Decrease of 0.6% in outstanding short from Feb 14 to Feb 28, but still higher than where it was at the end of January • 12 days to cover short interest (down from the end of Jan as volume has increased). • Bear thesis: Potential for diagnostic test competitors to take market share from Myraid’s BRCA1/BRCA2 test, BRACAnalysis. Shares up 68% year to date.
  4. 4. Not a Bad Start to the Year
  5. 5. Sarepta Therapeutics (Nasdaq: SRPT) • 40% of float sold short, up from 35.2% at the end of January • Increase of 1.9% in outstanding shares short from Feb 14 to Feb 28. • 8 days to cover short interest • Bear thesis: FDA won’t give Sarepta’s Duchenne muscular dystrophy drug eteplirsen an accelerated approval. Shares up 40% year to date.
  6. 6. Shorts Are Loosing Here Too
  7. 7. OncoMed Pharmaceuticals (Nasdaq: OMED) • 33.3% of float sold short • Increase of 1.1% in outstanding shares short from Feb 14 to Feb 28 • 12 days to cover short interest • Bear thesis: Early pipeline -- nothing in phase 3 development -- doesn’t justify the nearly $1 billion market cap.
  8. 8. A Long Ways to Go Source: OncoMed Pharmaceuticals
  9. 9. VIVUS (Nasdaq: VVUS) • 29.7% of float sold short • Increase of 4.3% in outstanding shares short from Feb 14 to Feb 28 • 6 days to cover short interest • Bear thesis: Company is struggling to sell its obesity drug Qsymia. VIVUS doesn’t have a large pharma marketing partner like its competitors.
  10. 10. Shorts Winning This Year
  11. 11. MannKind (Nasdaq: MNKD) • 29.4% of float sold short • Increase of 1.9% in outstanding shares short from Feb 14 to Feb 28, but lower than where it was at the end of January. • 7 days to cover short interest • Bear thesis: FDA won’t approve MannKind’s inhaled insulin Afrezza and/or the drug will be a commercial flop.
  12. 12. Talk About a Volatile Stock
  13. 13. Buy? Sell? Short? • A large short interest is a sign that other investors think shares will go down. • It’s not necessarily a sign that you should sell, but it’s important to investigate the bear thesis further. • In fact, investing against the crowd can be rewarding. A high short interest will exaggerate the move as shorts buy the stock to cover their positions.
  14. 14. The Motley Fool's chief investment officer doesn’t think you should short this company. In fact, it’s his No. 1 stock pick for 2014. You can find out which stock it is in our special free report. Just click the button below.

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