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Insmed Crushing Short Sellers, Here's Why

From Insmed’s SEC filing:

 Insmed Incorporated (the “Company”) announced today that the U.S. Food and Drug Administration (the “FDA”) granted ARIKAYCE™, or liposomal amikacin for inhalation, Breakthrough Therapy Designation for the treatment of adult patients with nontuberculous mycobacterial (NTM) lung disease who are treatment refractory.  This designation is based on findings from the Company’s U.S. phase 2 clinical trial of ARIKAYCE to treat NTM lung infections.  The Company has plans to meet with the FDA to discuss the regulatory pathway for ARIKAYCE.

ARIKAYCE (liposomal amikacin for inhalation) is a differentiated, inhaled antibiotic engineered to deliver a proven and potent anti-infective directly to the site of serious lung infections to improve the efficacy, safety and convenience of treatment for patients.

Nontuberculous Mycobacterium (NTM) Infections symptoms include Fever, Cough (and coughing up blood), weight loss/loss of appetite, Fatigue, and night sweats according to the American Lung Association.

The shares are heavily shorted with the latest short interest reported at 11.3%. The stock opened above the 200 day moving average, which many trend followers consider bullish.

Last week Friday, Karyopharm Therapeutics, Inc. (KPTI), another heavily shorted pharma stock pressed shorts to the tune of a 100%ish move higher from the previous close. It’s now trading below Friday’s closing, but still well above the key moving averages.

Arikayce projected timeline graph from phase 2 to market

ARIKAYCE is in phase II, leaving a lot of time between today and a possible commercial entry into the market. That said, the stock is likely to attract new short sellers to replace currently squeezed and covering shorts. I took a quick glance at Twitter (TWTR) and found several posts by traders claiming to short the stock. I also witnessed more than one describing why the shares should fall, an apparent indication that shorts are actively trading this one.

I bought a few shares near the open and closed just above $17. I may reenter either long again or possibly short (unlikely) for a day trade, but don’t anticipate I will.

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Stock Tickers: KPTI TWTR Author Disclosure: None, but I may enter another trade today.
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