Peanut Drug Short Sellers Must Beware of Aimmune Sales Potential

(Bloomberg) -- Investors looking to bet against a strong start to sales of Aimmune Therapeutics Inc.’s peanut allergy medicine should proceed with caution, according to Piper Jaffray.

Surveys from allergists that have shown pent up demand for what would be the first peanut allergy treatment approved by U.S. regulators combined with impressive meetings with the Brisbane, California-based drugmaker’s management team have Piper analyst Christopher Raymond more comfortable with his bullish call.

“We are much more confident that Palforzia’s launch can meaningfully outperform expectations, both near- and long-term,” Raymond wrote in a note Monday. “Coupling this with the stock’s 30% short interest, we like the opportunity for meaningful upside into this drug’s late January expected approval and launch.”

The thesis of shorting shares of drugmakers as they prepare for their first drug launch has been successful “nine out of ten times,” according to Baird analyst Brian Skorney. But he also voiced concerns that short sellers looking to profit from a lackluster start to sales of Aimmune’s Palforzia should look elsewhere -- given its potential sales and demand.

The stock’s short interest has peeled back from recent highs, though roughly 30% of shares available for trading are still sold short, according to financial analytics firm S3 Partners. That’s down from an October peak at 37% when Piper’s Raymond said an allergist survey portended “massive upside.”

Aimmune’s Palforzia is expected to win U.S. approval by late January, according to analysts, after winning broad backing from an advisory panel to the U.S. Food and Drug Administration in September. Wall Street analysts model 2020 sales of $51.9 million, rising to $500 million by 2022, data compiled by Bloomberg show.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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