• Research

Aug 29, 2016

S3 BLACKLIGHT: Mylan’s Short Interest Falls as Epipen Prices Rise

S3 BLACKLIGHT: Mylan’s Short Interest Falls as Epipen Prices Rise

Last week, generic and specialty pharmaceutical company Mylan NV (MYL US) raised the price of its epinephrine autoinjector, or Epipen, to $300 each or a 600% increase from its $50 price 12 years ago. After hitting a closing price near year to date highs in mid-August, Mylan’s stock price is down almost 10%, to $42.29, since the announcement.

Surprisingly, even with Mylan’s stock price down 20% for the year, short interest has actually gone down dramatically in 2016. Mylan’s short interest started out the year at $3.25 billion and has decreased approximately $1 billion in each of the first two quarters of 2016. Short interest was down to $1.3 billion at July month end and is presently at $808 million, down $539 million in August, or 37%.

Even with all the negative publicity regarding the Epipen price increase short sellers did not change course and continued to cover their positions. Short interest dropped $123 million, or 13% in just the last week. It seems that most short sellers were taking Mylan’s recent drop in price as an opportunity close out their positions and realize their profits and not ride out their trade any longer and risk a quick and sudden upwards price reversal.

The S3 Relative Velocity Indicator, a measure of the real-time relative change in shorting activity, started trending downward on August 12th and accelerated in the last week. With over half a billion dollars of Mylan shorts covered in August, short pressure in the stock is minimal. The last time Mylan short interest was at these levels was in November 2012 when the stock started a two year rally when its stock price more than doubled from $24 to $57.

For more information on the above analysis, please contact:
Ihor Dusaniwsky, Head of Research, S3 Partners, LLC     Ihor.Dusaniwsky@S3Partners.net

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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