Bret Jensen had a piece on the hated SA site regarding Omeros on how the shorts were going to get it in the neck today. Extract:
Quote:It has been a rough nine months for shareholders of Omeros (OMER). This 'Tier 3' concern has been targeted by a couple of what I would call 'hit pieces' by entities that had a short position in the stock
Each time a short piece has been published and highlighted on SA, it has caused an approximate 50% decline in the stock. More importantly, the thesis of both hit pieces has now proven to be inaccurate. In the first attack, the infamous Art Doyle (who is being sued by the company) alleged that trial results from OMS721 were fraudulent. That has been disproved by the continued advancement of this drug in trials across multiple indications. A recent article alleged that Omidria would have next to no shot to be granted 'pass through' status which would crater sales and impact whether OMS721 development could continue to be funded without further dilution to shareholders that would come from a capital raise. Specifically, the article stated
' We believe legislative options to extend OMIDRIA reimbursement status are now effectively dead, as Congress dealt with healthcare spending in the Bipartisan Budget Act of 2018 that was signed into law on February 9. We believe OMER management squandered an opportunity to secure a pricing model independent of the ‘transitional’ Medicare program and continued promoting legislative and regulatory solutions for reimbursement even though there appeared to be a very low chance of success, given CMS explicitly denied the Company’s requests to extend the pass-through period for OMIDRIA on multiple occasions. Without OMIDRIA, Omeros faces a potential funding shortfall of $400 million over the next four years'
Fortunately for shareholders of Omeros, this was just rectified in the proposed spending bill in congress which is on its way to passage. This should limit the impact of falling Omidria sales to just one quarter instead of being a permanent status.
It is going to be long day for shorts as approximately ~five days of daily volume is currently shorted. I would also expect some positive commentary from analysts around this development. This would start with Needham who downgraded Omeros just over two weeks ago to Hold based on the premise of falling Omidria sales going forward.
Verdict:
Shareholders can now get back to focusing on the huge potential of OMS721 instead of any near term potential funding concerns. This possible blockbuster drug candidate has posted robust data for the three of the five potential indications it is being targeted at. This was covered in a recent piece by another SA contributor.
Omero shares are spiking up some 60% in pre-market trading. I plan to sell out of money calls on the shares I bought to average down recently in this name (I am certainly NOT selling them back to the shorts) as the option premiums should be 'yuge' in early going as the shorts panic after being blindsided by this latest development. To the bulls in this stock that remained patient and did not let the recent attacks scare you out of this name, I salute you. To the shorts, I give you the Sheldon Cooper snort of derision.
Power in the hands of the reformer is no less potentially corrupting than in the hands of the oppressor.” ― Derrick A. Bell
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