Shares in small-cap biopharmaceutical company Cytokinetics (CYTK) were on the move on Wednesday, though that should hardly be a surprise for a stock as volatile as Cytokinetics. Shares opened up $0.07 at $8.95 apiece with a big spike in volume at the open. And, while the volume quickly cooled off, the price continued rising until hitting a high of $9.81 a share, for a gain of 10.5 percent just after 12:30 pm ET. Shares declined from that peak, but remained around $9.60 heading into the final hour of trading.
This sort of swing pales in comparison to some of the other big days for Cytokinetics over the last year, but the action does have the look of a potential short squeeze. While certainly not a dramatic price swing, and on volume that’s high but not dramatic, Cytokinetics has seen a substantial increase in its short interest thus far this year, with its short float increasing over 35 percent just from the end of February to mid-March. That puts the short float heading into today's trading at over 10 percent.
And, with a solid Q4 2013 earnings report in early February showing the company swinging into the black as well as news that a new Phase-II trial testing the effects of omecamtiv mecarbil on heart failure patients, it’s possible that some of these new shorts were looking for a reason to get out while the getting was good. The stock may also have just been subject to momentum buying once it started to climb or some combination of both these factors.
There was also a presentation by President and CEO Robert I. Blum at the 13th Annual Needham Healthcare Conference yesterday that could be moving the stock, but this seems unlikely. The presentation took place at 1:40pm ET, while the markets were still open, and the stock failed to move significantly before, during, or after the presentation. The content of the presentation didn’t appear to contain anything groundbreaking, offering up a fairly standard investor presentation without any information not previously available to the public.
Cytokinetics has experienced wild price action over the last year. Last year, the stock went from a close at $6.78 a share on June 6 to its 52-week high of $14.28 in just over a month after the announcement that it was expanding its omecamtiv mecarbil licensing deal with Amgen (AMGN) . However, the stock pulled back sharply at the beginning of August, then sharply declined in early September when it was revealed that omecamtiv mecarbil had failed to show results in a Phase-II trial.
Shares spiked again at the start of the year, popping over 45 percent in the first ten days of 2014 without a clear motivation for the buying, only to surrender nearly all of these gains later in the month. However, the release of the Q4 earnings report reversed the direction of trading once again, spiking the stock again.
Wild fluctuations in price for a small-cap biotech stock should come as no surprise for seasoned market watchers, but the stock remains a favorite of many analysts. Roth Capital initiated coverage on the stock on March 5 with a “buy” rating and a price target of $25, and the average analyst rating, according to WKRB13.com, is “buy” with an average price target at $23.
Cytokinetics develops small-molecule therapeutics that can be used to treat serious diseases by modulating muscle functions. Its current product pipeline includes omecamtiv mecarbil for treatment of patients with heart failure, and tirasemtiv for treating neuromuscular disorders like ALS (better known as Lou Gehrig’s Disease).
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