This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

A Beaten-Down Biotech Stock Poised for an Epic Short Squeeze

Correction: Removed content that incorrectly stated that progression-free survival is a more challenging clinical trial endpoint to achieve than overall survival. The opposite is true.

DELAFIELD, Wis. (Stockpickr) -- The biotech sector is not the place to be short right now, especially when dealing with some of the beaten-down small-cap names.

>>5 Hated Earnings Stocks You Should Love

Just last week, I flagged shares of small-cap biotechnology player Geron (GERN - Get Report) as a short-squeeze candidate at around $2.10 a share. Shares of GERN didn't wait long to get that short squeeze started. The stock exploded higher that same day and the following two trading sessions before tagging its recent high of $3.47 a share on June 12. That represents a gain of over 60% in just a few days for anyone who caught the move in shares of GERN.

Another biotech that absolutely annihilated the short-sellers last week was Karyopharm Therapeutics (KPTI - Get Report), which exploded higher by over 90% after Wall Street cheered its release of its initial phase I data for Selinexor. I flagged this stock stock in June 3's "3 Big-Volume Stocks in Breakout Territory" at around $26.50 a share. KaPTI tagged an intraday high of $47.98 a share last week on monster upside volume.

>>5 Toxic Stocks You Should Sell This Summer

I love spotting hot biotech stocks that have the potential to make big moves and squeeze the shorts. The next biopharmaceutical player that's setting up from a technical perspective to put a big hurting on the short-sellers is Endocyte (ECYT - Get Report), which develops targeted therapies for the treatment of cancer and inflammatory diseases in the U.S.

Shares of Endocyte plunged back on May 2 by a whopping 62% after the company said it was halting its phase III study for vintafolide. The company decided to stop the study after it failed to show efficiency when treating patients with platinum-resistant ovarian cancer. That was a surprise to Wall Street, especially since a recent trial Endocyte had conducted for non-small-cell lung cancer had shown favorable data.

That phase III failure and subsequent collapse in the stock price for Endocyte has now created a unique opportunity, since the company is running trials for vintafolide as a treatment for lung cancer. That trial is currently in phase IIb testing, and key data results could come out at the end of 2014. RBC Capital Markets analyst Adnan Butt recently said that the lung cancer indication is the most important one because the market is bigger.

>>5 Stocks Poised for Breakouts

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
ECYT $3.35 -4.29%
GERN $2.70 -1.10%
KPTI $8.00 -0.50%
AAPL $93.24 -0.41%
FB $117.81 -0.21%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs