AIMT - Why Are So Many Traders Betting Against the First Therapy for Peanut Allergies?
This January, the U.S. Food and Drug Administration (FDA) approved the first biologic for the treatment of peanut allergies in children and adolescents. The drug is called Palforzia and is marketed by Aimmune Therapeutics (NASDAQ: AIMT).
Expectations for Palforzia are high, as many analysts are predicting the peanut allergy treatment market to grow to over $4 billion by 2024. In addition, multinational food and drink giant Nestle (OTC: NSRGY) believes in the company's potential and has invested over $473 million in the company to date, with the latest investment of $200 million made in February.
Yet since then, Aimmune's stock has declined by nearly 50%. Perhaps more stunningly, nearly 40% of its current shares outstanding are sold short, representing a $468 million bet Aimmune will ultimately fail in its efforts to commercialize Palforzia. That's approximately the size of Nestle's entire stake in the company. Just what exactly could warrant traders to bet against a new therapy that addresses a common medical concern in children?