Short Seller Scores Big Win as Tiny Biotech Stock Sinks 72%
Short Seller Scores Big Win as Tiny Biotech Stock Sinks 72%
(Bloomberg) -- Short-seller Joseph Lawler’s bearish call on AnaptysBio Inc. scored a huge pay-day after the company’s experimental drug, etokimab, failed to meet its goals in an eczema study. The stock tumbled as much as 72% to a record low.
Lawler, little known on Wall Street, is the founder of JFL Capital Management and oversees $250 million in Lakeway, Texas. When he pitched AnaptysBio as a short at the Robin Hood conference in New York last year, the shares were trading around $71. Now, the stock is around $11.
“There were warning signs everywhere that this program would fail,” Lawler said in an email, adding that he’s still betting against the stock.
Lawler’s suspicions dated back to a trial in peanut allergy that the company abandoned last year after it reassessed the market. Back then, he also took issue with the fact that AnaptysBio’s website and regulatory filings erred when they said CEO Hamza Suria had a Bachelor of Science degree from Kalamazoo College. In fact, it was a Bachelor of Arts, and the error got fixed on the company’s website after Bloomberg News asked about it.
The etokimab “bombshell” has removed a potential competitor for Dermira Inc., which is working on a rival eczema treatment, SVB Leerink analyst Pasha Sarraf wrote in a note. Shares of Dermira rallied as much as 33%.
AnaptysBio’s trial failure is also positive for Regeneron Pharmaceuticals Inc., whose Dupixent drug is on track to double sales in 2019 to $1.8 billion as it expands use in eczema, Bloomberg Intelligence analyst Michael Shah noted. Regeneron shares rose as much as 3.7%.
AnaptysBio’s short interest hovered around 13% of shares available for trading, down from 17% in August, according to data compiled by S3 Partners. AnaptysBio said it will continue with a separate study of etokimab in chronic rhinosinusitis with nasal polyps, but has postponed its trial in asthma to do more analysis.
To contact the reporter on this story: Tatiana Darie in New York at tdarie1@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Lu Wang
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