What happened
Shares of Axsome Therapeutics (AXSM -1.36%) were soaring 12.7% higher as of 11:19 a.m. ET on Thursday. The company didn't report any new developments, so what's behind the nice gain? There are two potential catalysts at the top of the list.
Perhaps the most likely explanation for Axsome jumping today is that large institutional investors could be buying the biotech stock. Another possibility is that some short-sellers are covering their positions, creating upward pressure on the share prices in the process.
So what
Axsome Therapeutics shareholders should be especially encouraged if institutional investors are increasing their stakes in the company. Where the big money goes, more money typically follows.
Institutional investors could be optimistic about Axsome's U.S. launch of Auvelity in treating major depressive disorder. The new drug became available in the U.S. market just last week. Although it will take several years for Auvelity to reach peak sales, some analysts believe the drug could eventually rake in as much as $1.8 billion globally.
It's perhaps too soon to proclaim that a full-blown short squeeze is underway. However, nearly 16.5% of Axsome's stock float was sold short as of Oct. 14. Some short-sellers could be getting nervous about the potential for the stock to continue rebounding.
Now what
Axsome is scheduled to report its third-quarter results before the market open on Nov. 7. The consensus Wall Street estimate for Q3 is for revenue of $17.2 million with a net loss of $1.08 per share. Whether or not Axsome's momentum extends into next week will depend on how positive the company's update is.
