SPPI Stock Sinks on Trial Update

Spectrum Pharmaceutical's cancer drug failed a mid-stage trial

Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is one of the biggest losers early on today, down 55.8% at $3.87, after the company's cancer drug poziotinib failed a mid-stage study, with the shares hitting a three-year bottom of $3.61 already as a result. This move could spark bearish analyst attention for the drugmaker, since all five covering brokerage firms came into with "strong buy" recommendations.

Looking at recent options trading, there was a near even split between call buying and put buying. Overall, call buying barely outpaced put buying by a ratio of 1.20 in the past 10 days at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), with peak open interest sitting at the January 2020 5- and 7-strike puts.

Not surprisingly, short interest is also elevated on Spectrum Pharmaceuticals, though it's short-sale restricted today due to the massive move. Based on average daily trading volumes, it'd take roughly eight sessions for SPPI short sellers to cover their bearish bets.