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Jul 13, 2017

Amicus Therapeutics Shorts Down $76 million Since Fast-Track Drug Approval

Amicus Therapeutics Inc. (FOLD US) hit a year-to-date high of $13.17 on Wednesday, up 165% for the year and up 26% in three days, on news that its experimental drug for Fabry disease received fast-track approval status from the FDA. Their drug, migalastat, may be able to launch in the U.S. by the second half of 2018. FOLD is giving back some of the spike today, down 7.4% on high volume trading.

Short interest in the biopharmaceutical company had been minimal prior to 2017, averaging $131 million in 2015 and $156 million in 2016, but after hitting a two year low of $4.53 in December 2016 short interest has been steadily climbing. Prior to Tuesday’s price spike short interest had risen 173% for the year, to $385 million, notional short interest was $466 million yesterday, a historical high for the company and is now $455 million with today’s additional shorting and price drop.

The 24 million shares traded on Tuesday were not just long shareholders hoping for a continued FOLD rally, there were also two million shares of short sellers selling into the rally hoping to catch at least a partial reversal to this sudden move.  Today’s trading volume of over 15 million shares is also seeing significant short action, with over one million shares shorted as FOLD’s stock price retreats.

FOLD’s stock price increased from $10.26/share to $13.17/share over the last two days, with shorts down $99 million over those two days. Today shorts made back $23 million as FOLD’s stock price dropped $0.65. Overall, FOLD short sellers are down $266 million for the year for a 102% negative return. 

FOLD’s shares shorted has remained between 36 and 37.6 million shares since the end of February and has not decreased even as FOLD’s stock price almost doubled.  Stock borrow rates are at General Collateral levels (the cheapest fees for the easiest to borrow stocks) and there is still over 40 million shares available on the street to borrow. So if FOLD’s price appreciation did not trigger a short squeeze, borrow cost and borrow available will not cause one either – expect shorts to hold onto their convictions and stay in their positions.

For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC
The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC ('S3 Partners') to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks and merits, as well as the legal, tax, accounting and investment consequences, of such decision.

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