|AntriaBio Set For Major Short Squeeze|
|By Peter Depalma,Contributor|
|Thursday, 14 March 2013 09:44|
According to short interest data on octshortreport.com, approximately 50% of Antriabio shares trading hands since February 11, 2013 were sold 'short' (as shown below).
Antriabio - which went public in January of this year - is developing a novel, once-weekly version of a basil insulin product that saw sales well over $8 Billion last year. Sanofi's 'Lantus', a once-daily basil insulin prescribed to help control blood sugar levels in diabetics, is expected to boost its take to $6.6B in 2013. Drug makers stand to make billions capitalizing on a disease that's estimated to affect as many as 30 million people in the United States alone. The American Diabetes Association (ADA) reported this year that the cost of diabetes in the U.S. has swelled to $245 Billion, up from $132 Billion a decade ago. As the table (below) shows, diabetes has long-ago surpassed 'cumbersome', made a left at 'concerning' and sits dead-center at 'epidemic'.
Diabetes therapy and technology accounted for only 12% of the $176 billion in direct medical costs attributed to diabetes in 2012; hospital inpatient care accounted for 43% of costs, a breakdown by the ADA shows. Close Concerns, a leading independent diabetes research firm, concluded on the basis of this data:
“We believe that policies aimed at preventing type 2 diabetes and their complications and on optimizing diabetes management for patients could ultimately produce better cost savings than policies aimed at limiting treatments [...] Additionally, preventing type 2 diabetes and its associated complications would greatly reduce the indirect costs of diabetes - something reducing access or prices will not accomplish.”
As we've observed with other emerging biotechnology companies such as Sarepta (SRPT), Opko Health (OPK), and Santarus (SNTS) (and countless other cases), catalysts like scientific presentations, strategic collaborations, peer-reviewed study publications, and positive data releases have literally added hundreds of millions of dollars to these names overnight. In the context of publicly-traded companies, this means a sharp re-valuation of shares spurred further on by short sellers scrambling to cover their "borrowed" positions.
Sarepta, for instance, saw more than 12% of its float “sold short” by mid-August while climbing from $8 to $16-a-share over the next 6 weeks.
But in mid-October, data on a small study of 12 patients given eteplirsen, the company’s experimental drug for muscular dystrophy, sent shares of the biotech company soaring to $31.80 overnight, closing at $45 the same day.
Similarly, since mid-December, Opko Health (OPK), led by Billionaire healthcare entrepreneur Phil Frost, catapulted over 65% as the company acquired several strategic late-stage assets, completed an oversubscribed $175 Million notes offering and saw a flurry of insider buying. At the beginning of December, 1 in 5 shares “floating” was sold short in Opko Health. According to NASDAQ.com, short interest declined roughly 24%, by mid-January, suggesting short sellers were being squeezed and possibly contributing to the rally in share price.
As Antriabio gains visibility amongst risk-tolerant investors, short sellers could once again finds themselves scrambling to cover their [short] positions. In particular, short sellers may not:
1. Understand the scope of the company and/or their product offering,
2. Comprehend the growing market need and opportunity for a longer-acting insulin drug(s), or
3. Have the foresight to assess the impact that one or several catalysts could have on the price of Antriabio stock in 2013.
Among other catalysts that could ignite shares of this emerging diabetes-drug maker, presentations at scientific meetings, peer-reviewed publications, and initiation of a human clinical study in the second quarter of this year, Antribio could become the focus of M&A activity, as titans like Novo Nordisk (NVO) see the FDA reprimand and reject a thrice-weekly basil insulin over safety concerns. Investors may recall that a bidding war erupted over Amylin last year, culminating in a $7 Billion+ takeover by Bristol Myers Squibb (BMS).
Amylin’s long-acting GLP-1 product(s), a market notably smaller than basil insulins, had sparked the takeover frenzy.
Disclosure: Long ANTB