Biotech Virus Rally Draws Over $600 Million in Short Bets

(Bloomberg) -- Bets against just two companies working on vaccines for the novel coronavirus topped $603 million this week, according to data from financial analytics firm S3 Partners.

Short interest in Inovio Pharmaceuticals Inc. reached $186 million, the highest in at least a year, after short-seller Citron Research predicted shares would fall back to $2 on Monday. The stock rallied 47% Wednesday after halting a two-day plunge. Inovio was up as much as 43% in Thursday trading after saying it received a $5 million grant from the Bill & Melinda Gates Foundation to work on its vaccine for the novel coronavirus now making its way across the U.S.

Hedges against Moderna Inc. -- which is also working on a Covid-19 vaccine -- reached over $500 million earlier this month before retreating to $417 million, S3 data show. Neither company has ever brought a product to market, though Inovio has been targeting epidemics like Ebola and Zika for years. Moderna, which first listed in late 2018, is better known for its pursuit of personalized cancer vaccines based on messenger RNA technology.

Doubts about either company’s chances of future success against Covid-19 hasn’t yet turned the tide for the pair of stocks. Inovio has more than trebled so far this year while Moderna has gained 19% despite the stock slipping intraday.

Smaller players promising a means to combat the virus, including treatments and protective gear, also extended Wednesday’s climb into Thursday. Alpha Pro Tech Ltd. and Co-Diagnostics Inc. both posted gains in the double digits.

Short interest in Alpha Pro Tech was more than 30% of shares available, while Co-Diagnostics stands at 13%. Both short plays are valued over $30 million, S3 data show.

To contact the reporter on this story: Cristin Flanagan in New York at cflanagan1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Kristine Owram, Janet Freund

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