This coming week is traditionally the annual Santa Claus rally. This is a time when stocks breaking out can potentially make for very profitable trades, especially among ones that have extra large short interest and may be undergoing a short squeeze. With the fears of the fiscal cliff still looming, biotechs can provide some perceived safety as they are largely less affected by the economy than companies in many other industries.
I performed a screen search for biotech stocks that rallied at least 20% last week. I then further filtered down my search to only stocks over $1.00 as they usually can't be legally shorted much anyway and my attempt is to locate those undergoing or possibly about to undergo a short squeeze. There are five stocks that resulted from my screen, and they all happened to have decent sized short ratios. Use this list only as a mere first step for possible ideas warranting further research. They are sorted from largest to smallest short interest ratio.
(1) Halozyme Therapeutics (NASDAQ:HALO) develops and commercializes various products for patient care. Its research focuses on human enzymes that transiently modify tissue under the skin to facilitate injection of other therapies or correct diseased tissue structures for clinical benefits. The company's Enhanze technology, a proprietary delivery platform that enables the subcutaneous delivery of injectable biologics, such as monoclonal antibodies and other therapeutic molecules, as well as small molecules and fluids. HALO rallied 26.99% last week closing Friday at $7.01 per share after an announcement that it and Pfizer (NYSE:PFE) had entered into a worldwide collaboration and license agreement. It has a short ratio of 11.3 and short interest of 7.45 million shares.
(2) Vanda Pharmaceuticals (NASDAQ:VNDA) engages in the development and commercialization of products for the treatment of central nervous system disorders. It offers Fanapt, an oral formulation of a compound for the acute treatment of schizophrenia in adults. The company is also developing Fanapt, a Phase II clinical trial injectable formulation for the treatment of Schizophrenia. Its products in clinical development also include Tasimelteon, which completed Phase III clinical trials for the treatment of sleep and mood disorders, including circadian rhythm sleep disorders; and Tasimelteon that is in Phase IIb/III trials for the treatment of major depressive disorder. VNDA rallied 23.91% last week closing Friday at $3.88 per share on news of positive results from its final round of testing of tasimelteon, a drug to improve sleep for blind individuals. It has a short ratio of 9.9 and short interest of 1.05 million shares.
(3) Sinovac Biotech (NASDAQ:SVA) engages in the research, development, manufacture, and commercialization of vaccines for hepatitis A, hepatitis B, and influenza viruses in the People's Republic of China. It offers Healive, an inactivated hepatitis A vaccine; Bilive, a combination of hepatitis A and B vaccine; Anflu, a split virus influenza vaccine; Panflu, a vaccine against the H5N1 influenza virus; Panflu.1, a vaccine against the influenza A H1N1 virus; split viron pandemic influenza vaccine; and RabEnd, an inactivated animal rabies vaccine. SVA rallied 34.42% last week closing Friday at $3.28 per share. There was no company news or SEC filings last week despite what appears to be a short squeeze. It has a short ratio of 8.0 and short interest of 604,200 shares.
(4) TrovaGene (NASDAQ:TROV) focuses on developing and marketing urine-based nucleic acid tests for patient/disease screening and monitoring in the United States. The company uses urine-based testing platform to facilitate improvements in the management of cancer care and women's healthcare. It is involved in developing its technology for the detection of transrenal DNA and RNA, and short nucleic acid fragments, which originate from normal and diseased cell death that cross the kidney barrier and can be detected in urine. TROV rallied 25.30% from $5.81 open Friday December 14 to close at $7.28 Friday December 21 on news that it has granted Genoptix, Inc. (a Novartis Group Company) a worldwide, non-exclusive license to incorporate nucleophosmin protein (NPM1) into research and clinical testing services for acute myelogenous leukemia (AML). It has a short ratio of 4.3 and short interest of 105,500 shares.
(5) Progenics Pharmaceuticals (NASDAQ:PGNX) engages in research and development of biotechnology product candidates in the areas of oncology, virology, supportive care, and gastroenterology worldwide. The company offers RELISTOR (methylnaltrexone bromide), a subcutaneous injection for the treatment of opioid induced constipation (OIC) in patients with advanced illnesses, such as cancer. It is also developing RELISTOR, a subcutaneous injection for the treatment of OIC in patients with non-cancer pain; and RELISTOR-Oral, which has completed Phase III testing for the treatment of OIC in patients with non-cancer pain. PGNX rallied 25.33% last week closing Friday at $2.87 per share on news of the signing of an in-licensing agreement with MedImmune, the global biologics arm of AstraZeneca (NYSE:AZN). It has a short ratio of 3.7 and short interest of 1.54 million shares.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in HALO, PGNX, TROV, VNDA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.