A Possible Short Squeeze Also Pushes Sarepta

Positive news out of the JPMorgan Healthcare conference has shares of Sarepta Therapeutics Inc SRPT soaring more than 22 percent on Tuesday. The company certainly released some positive numbers related to Exondys 51 during its presentation, but a large part of the huge move may be driven by a short squeeze.

On Tuesday morning, Sarepta reported Q4 Exondys 51 sales of $5.4 million, well ahead of consensus estimates of $4.9 million. The company also reported cash and cash equivalents of $329.3 million. In addition, Sarepta reported a new research agreement with Nationwide Children’s Hospital related to the company’s microdystrophin gene therapy program.

The Street’s Adam Feuerstein reports that Sarepta also noted that 250 boys have started the process required to receive Exondys 51 insurance reimbursement, a reassuring number for investors concerned about the drug’s uptake.

Feuerstein projects that Sarepta could record sales rates of $75-125 million if Exondys 51 continues on its early pace.

Sarepta also reported that clinical review of Exondys 51 in Europe will likely be complete within 15 months.

While the news out of the conference is certainly positive, the huge move in the market suggests other market forces may be in play. According to shortsqueeze.com, Sarepta’s short interest currently stands at an elevated 18.8 percent. Despite falling 51 percent in the past six months, many Sarepta shorts had been hanging onto hope that Exondys 51 would have a difficult path to market.

Today’s presentation may have extinguished that hope and sent shorts scrambling to cover their remaining positions. Sarepta still has more than 8.9 million shares held short with 4.1 days to cover.