Pharma Stock Down Despite 'Clinically Meaningful' FDA Nod

The FDA weighed in on the company's SMA treatment

The shares of Cytokinetics, Inc. (NASDAQ:CYTK) are down 1.3% at $6.76 in earlytrading, reversing pre-market gains, despite theFood and Drug Administration's (FDA) sign-off on the "Six Minute Walk Test" (6MWT) as the primary endpoint for a reldesemtiv registration program among patients with spinal muscular atrophy (SMA) who have maintained ambulatory function. The biotech company expects to begin additional studies of reldesemtiv in the first quarter.

Cantor Fitzgerald weighed in, calling the FDA nod "clinically meaningful," as "the 6MWT has been used for the FDA approval of a number of drugs." As such, the analyst maintains an "overweight" rating and $14 price target -- more than double CYTK's current price, and on pace with the consensus 12-month price target among Wall Street. Likewise, CYTK sports three "strong buy" opinions, compared to just one "hold."

CYTK stock gapped lower in November 2017, after the firm abandoned its treatment for amyotrophic lateral sclerosis (ALS), or Lou Gehrig's disease. The shares haven't recovered from that drop, with rebound attempts capped at the $10 area. More recently, the equity touched a three-year low of $5.90 on Dec. 27, and a subsequent bounce was halted at its 200-day moving average.

Short interest is down 9.8% in the past reporting period, but there's still plenty of pessimism surrounding CYTK stock. Currently, the 2.6 million shares sold short represent 5% of the stock's available float. It would take almost two weeks for traders to buy back their bearish bets, at the equity's average daily trading volume. However, these skeptics have little reason to abandon ship yet, considering the stock's struggles on the charts of late.

In the options pits, CYTK's Schaeffer's put/call open interest ratio (SOIR) of 1.17 sits in the 85th percentile of its annual range, suggesting that short-term options players are more put-heavy than usual right now. Most popular is the in-the-money February 10 put, with just over 600 contracts outstanding.