Alexion Leads Big Drugmaker Gains as Astra Deal Clears Bar

Alexion Pharmaceuticals Inc. shares rallied on Friday after U.S. regulators cleared AstraZeneca Plc’s $39 billion deal for the U.S. biotech company.

The stock climbed to a five-year high after the U.S. Federal Trade Commission gave the deal a nod. Alexion’s rally lead large-cap drugmakers, with the sector index rising to a record for the second straight day.

Concerns about tougher regulatory reviews have been worrying biopharma investors, especially for so-called mega-deals like the recently-approved purchase by Astra.

Alexion bears may be feeling a bit of a pinch as bets against the Boston-based drugmaker stand at $1.15 billion, according to data from S3 Partners. Shorts were down $46 million on Friday’s 4% jump, “which is not enough of a loss to start squeezing out short sellers,” said Ihor Dusaniwsky, S3’s managing director of predictive analytics. If short seller losses continue to mount, the potential for a short squeeze increases, he said.

Alexion Leads Big Drugmaker Gains as Astra Deal Clears Bar

While the FTC nod clears an overhang for Alexion, the future of other big deals is still far from certain. Agency commissioners are currently split evenly between Democrats and the GOP as the market waits for President Joe Biden to name a fifth nominee. The FTC chair’s desire to assess pharma deals differently will probably increase hurdles in the future, said Jennifer Rie, a Bloomberg Intelligence analyst.

“Though it doesn’t mean that every pharma deal will face big challenges. If the deal doesn’t present problematic overlaps or any threat to an innovation stream or vertical integration issues, the FTC, even with a new Democratic majority, will allow it to close,” she said in an interview.

Alexion’s deal still needs to make is past European Union and U.K. regulators before it can close.

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