Capricor Therapeutics just delivered a second consecutive weekly gain, but the short position that was showing its first real cracks last week has snapped back with unexpected force.
The most striking development since the June 20 note is that the short covering narrative has reversed. Last week, a 4.6% single-day reduction on June 18 signalled the first meaningful retreat from the bear campaign's peak. That turned out to be a false dawn. Short interest has climbed back to 28.0% of the free float — 12.8 million shares — up 10.7% on the week and now sitting at a new recent high. The month-on-month build is 14.6%, confirming that the June 18 dip was a pause rather than a pivot. The ORTEX short score has responded accordingly, rising to 79.0, its highest reading in the 10-day history available and up sharply from 75.6 when the previous note was filed. Days to cover per the latest FINRA data are 13.7. This is not a position being trimmed — bears rebuilt aggressively into the rally.
The borrow market, however, refuses to confirm the narrative you would expect from a 28% short float. Cost to borrow is a mere 0.65% — cheap by any measure for a small-cap biotech this heavily shorted — and availability is running at 169%, meaning lenders hold roughly 1.7 shares available for every share already borrowed. Both metrics have been largely range-bound for weeks. Availability has tightened from around 350% at end-May as the short build progressed, but it remains well within comfortable territory. Options traders are leaning the same direction as the stock, not the shorts: the put/call ratio has dropped to 0.33, nearly two standard deviations below its 20-day average of 0.38, the lowest it has been in recent weeks and approaching the 52-week low of 0.25. Call demand is outpacing puts by a wide margin.
The setup is therefore a genuine divergence. Options traders are positioned bullishly, the stock is up 7.1% on the week and 5.3% on the month, and the borrow market is relaxed — yet bears are adding, not covering. The most plausible read is that short sellers are fading the pre-PDUFA run-up in deramiocel, Capricor's cell therapy for Duchenne muscular dystrophy, with the August 6 decision now roughly six weeks away. A 28% short float against a $30.40 stock with a benign borrow cost and loose availability suggests shorts are confident in their position size and not being squeezed out. The previous note described bears as "trimming at the margin"; the data since then requires a harder description — they rotated from covering to re-building inside a single week.
Institutional ownership offers a mixed backdrop. Suvretta Capital added 2.9 million shares in Q1, Tang Capital doubled its position, and State Street added 1.4 million shares through May. Against that, Point72 cut its holding by 1.0 million shares in the same period. The insider picture is cleaner: all recent trades are sells, including two $792,000 blocks from CFO Anthony Bergmann and General Counsel Karen Krasney in early May, followed by smaller sales at $30 again this week. Net insider activity over 90 days totals $6.9 million in net selling. The significance scores are low across the board, and the sizes relative to the company are modest — these look like plan-driven disposals rather than conviction calls — but the direction is uniform.
What to watch next is whether the short position continues to build through the final weeks before the PDUFA date, or whether approval confidence begins pulling more covers out of a position that is already stretched at 28% of float with 13-plus days to cover.
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