This morning shares of CytoDyn Inc. (OTMKTS: CYDY) screamed higher in very active trading and touched $7.00 per share to a $4.14 billion market cap. Investors were very enthused with the announcement that the FDA was resuming their emergency IND (eIND) approvals in Severe-to-Critical COVID-19 patients. During April and May a number of eINDs were approved and news of their success trickled its way into major media outlets and excited the retail investors. So it’s very reasonable that news of the eINDs would be a net positive for the stock ahead of the impossible stories of recovery that seemed to come about the last time eINDs were open. The leader in eIND’s is technically CytoDyn because Relief Therapeutics (OTCMKTS: RLFTF) has 175 in its Expanded Access Protocol (EAP) which essentially is a blanket compassionate use program versus the individualized program that CYDY has to contend with.
At around 10:48AM EST a short attack was launched. Over the course of the next 17 minutes the stock dropped from a price of $6.80 all the way down to a low of $5.00 and traded 3.4 million shares. The market capitalization dropped $1.06 billion on a sensationalized piece from BuyersStrike that was quickly disseminated. The piece highlighted a “misleading headline” and harped on their usage of the word “approval.” To set the record straight there was nothing misleading about the headline.
BuyersStrike would like investors to believe that the upward movement in price was a reaction to investors misreading that an emergency IND (eIND) was approved. That argument is so laughable because CYDY would have had major media coverage with it. Every announced eIND approval has gotten major media attention. The title couldn’t be more clear, the second word is “Resumes” and anyone knowing the story would ask resumes what? The eIND’s of course not an approval. This article is so off the mark.
The next section of their article addresses a planned 10B-5 plan in which executives like the CFO Michael Mullholland are able to sell their shares at fixed prices. Typically share prices are staged above the market price in share amounts and fixed prices. As the executions suggest they are large blocks of shares spaced apart in price and tied to specific warrant exercises. Investors should realize that when this plan was likely approved the stock was about ½ the current prices. Based on the selling it looks like his selling is complete which leaves him with about 248,081 shares. Mulholland has been involved with the company for over a decade and hasn’t disposed of any shares. He did it through a 10B-5 plan which removes any doubt of impropriety.
Investment Analysis
This short attack appears to be over and resembles the one orchestrated by Timothy Sykes on Jun 30, 2020. The stock hit a solid support level and then rebounded. Last time after the rebound the shorts kept pounding and were able to drive it lower but times are much different than during the summer. What’s different is the likelihood of NASDAQ listing. If the stock is above $4.00 on Wednesday it has been at that level for 5 days. The shorts know this. The company indicated they were waiting for NASDAQ to tell them what they were looking to see for uplisting. Perhaps it is the FDA’s vote of confidence to allow additional eIND’s awaiting approval. The other trigger might be an EUA filing by the Philippines or the United Kingdom. Regardless of the trigger there appear to be many, and the shorts realize that once the company is NASDAQ listed these price swings cannot happen due to the circuit breakers built into the NASDAQ exchange.
This short attack appears to be very weak and the media attention that should come from the eIND’s should overshadow anything the shorts can do at this point. Investors should stay peeled to the news screen and the TV screens in the coming days because it’s clear that the stock price wants to move.
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