Biotech Hits Record Low on FDA Curveball

Intercept Pharmaceuticals Inc (NASDAQ: ICPT) stock is down 19.3% at $10.95, after a Food and Drug Administration (FDA) panel voted against recommending accelerated approval for its obeticholic acid treatment for non-alcoholic steatohepatitis (NASH) -- a type of fatty liver disease. The panel referenced data suggesting the benefits of the drug did not outweigh the risks.

Two price-target cuts have already rolled in, with Baird cutting its price objective to $18 from $35, while Wainwright took it down to $8 from $14. Analysts are skeptical on ICPT, with eight calling it a tepid "hold" or worse, while the remaining four rated it a "buy" or better. 

Short sellers are in control, with 3.69 million shares sold short, which account for 9.2% of the equity's available float. It would take nearly one week to buy back these bearish bets, at ICPT's average pace of trading. 

The equity's usually quiet options pits are bursting with activity today. So far, 1,310 calls and 1,344 puts have been traded, which is four times the average intraday volume. Most popular by far is the June 10 put.

The security is fresh off its fourth-straight weekly loss, and earlier gapped to an all-time low of $10.75, guided lower by the 20-day moving average. Shares are also pacing for their biggest single-day percentage drop since June 2020, and have shed more than 45% in the last three months.