Avalo Therapeutics (NASDAQ:AVTX) traded higher in the premarket on Friday after Cantor Fitzgerald initiated its coverage with an Overweight recommendation in a thesis centered on the Maryland-based biotech’s lead asset, AVTX-009.
Analyst Prakhar Agrawal’s bullish view comes as Avalo (NASDAQ:AVTX) targets a mid-2026 data release from its Phase 2 LOTUS trial for the interleukin-1β antibody in hidradenitis suppurativa, an inflammatory skin condition.
Citing a “strong validation” from AbbVie’s (ABBV) competitive candidate lutikizumab, designed to target IL-1α and IL-1β, Agrawal says he is positive on the prospects for AVTX-009, which, according to him, has approximately $1B in adjusted peak sales potential.
The analyst noted “a very attractive risk/reward for AVTX into the Ph2 HS readout based on the implied probability of success (15-20% by our estimate) in the stock for HS, which seems very low to us based on the validation from lutikizumab.”
shares fell on Friday following a short report from Scorpion Capital, which criticized the company's only product, Vykat XR, as overpriced and potentially unsafe for children with Prader-Willi syndrome (PWS).
Vykat XR, a modified tablet version of a 50-year-old generic suspension, carries an annual cost of $500,000, the report claims.
Cingulate Chairman and CEO Shane Schaffer was arrested and charged with felony aggravated domestic battery on Aug. 9, accused of choking his girlfriend for the second time in less than a year.
Johnson County, Kansas, Assistant District Attorney Daniel Obermeier filed charges claiming Schaffer did “unlawfully, feloniously and knowingly impede the normal breathing or circulation of the blood by applying pressure on the throat, neck or chest of a person … with whom the defendant is involved or has been involved or has been in a dating relationship.”
Filings in Johnson County District Court did not include other details of the alleged battery. The incident is classified as a felony. A conviction could bring a sentence ranging from probation to 11-34 months in prison. Schaffer was scheduled for an appearance at 11 a.m. Monday, but it was canceled.
The average short interest in the S&P 500 Health Care Index Sector (NYSEARCA:XLV) dipped slightly in July to 1.95% from 1.96% in June. However, Moderna (NASDAQ:MRNA) held its position as the sector's most heavily shorted stock, despite the overall softening of negative sentiment.
The healthcare sector, represented by the Health Care Select Sector SPDR® Fund ETF (NYSEARCA:XLV) and holding a weightage of 12.12% in the S&P 500 index, has slipped 2.62% year-to-date. This underperforms the broader S&P 500 index (SP500), which has risen 9.98% over the same period.
Stocks with the largest and least short positions
Ranked by short interest as a percentage of shares float
Seeking Alpha (Seeking Alpha)
Moderna (NASDAQ:MRNA) remained the most heavily shorted stock in the sector, with short interest at 18.29% of its float, a decrease from 19.15% the previous month. Despite the high short position, Seeking Alpha's Quant Rating gives the stock a "Hold" with a score of 2.64 out of 5.
"Moderna (NASDAQ:MRNA) reported a sharp decline in revenue for Q2 2025, earning only $0.1 billion and experiencing a net loss of $0.8 billion. The stock has dropped over 70% in the past year due to investor concerns regarding ongoing losses and reduced demand for COVID vaccines. Despite recent product approval, the company anticipates significant losses in 2025. However, with a strong cash position of $7.5 billion, a revenue recovery is possible through opportunities in vaccines and oncology," a Seeking Alpha analyst wrote.
In July, DaVita (NYSE:DVA) claimed the second spot for highest short interest at 8.99%, just ahead of Henry Schein (NASDAQ:HSIC) at 7.45%.
On the other end, Johnson & Johnson (NYSE:JNJ) had the lowest short interest at 0.71%, followed by Eli Lilly and Company (NYSE:LLY) at 0.85% and AbbVie (NYSE:ABBV) at 0.86%.
Industry Analysis
Average short interest as a percentage of floating shares
Seeking Alpha (Seeking Alpha)
In July, biotechnology remained the most heavily shorted industry within the healthcare index for the 16th consecutive month, with short interest ticking up to 2.99% from June's 2.95%. The healthcare provider and services sector also saw a significant increase in short interest, rising to the second-highest level at 2.61%, up from 2.07% in June.
In contrast, the pharmaceuticals' industry stood out with the lowest short interest, which fell to 1.56% for the month.
Bausch Health (NYSE:BHC) sharesadded ~4%on Friday after John Paulson, a board member of the Canadian pharma giant, disclosed the purchase of more than $300M worth of company shares. Bausch + Lomb (BLCO), a Bausch Health (NYSE:BHC) subsidiary in which Paulson holds another board position, also traded higher.
According to a regulatory filing on Thursday, Paulson, the President and Portfolio Manager of Paulson Capital, bought more than 34.7M shares of Bausch Health (NYSE:BHC) stock for an average of $9.00 apiece in a transaction worth roughly $312.5M.
The transaction conducted on Thursday has lifted Paulson’s stake in the eye care company by 96%. A day earlier, he had purchased about 3.2M BHC shares for an average price of approximately $6.56 apiece in a deal valued at $21.3M.
Meanwhile, according to an amended 13-D filing, billionaire investor Carl Icahn has liquidated his entire stake in Bausch Health (BHC) with a sale of nearly 34.7M BHC shares on Thursday.
