Seneca Biopharma (SNCA) Stock Is Squeezing Shorts

Seneca Biopharma SNCA Stock News

Seneca Biopharma Inc (NASDAQ: SNCA) is running for the top in the market this morning, trading on gains of more than 35%. However, no news has been released. Many are wondering why the stock is running for the top. In my view, what we’re seeing is a short squeeze ahead of an update regarding a Phase 3 trial. Here’s what’s going on:

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SNCA Stock Puts The Hurting On Short Sellers

Recently, Seneca Biopharma has been a pretty heavily shorted stock. However, those shorts seem to be running for cover this morning as a short squeeze begins.

A short squeeze takes place when a heavily shorted stock moves up. Those who have short positions start to lose money. So, they race to buy shares in an attempt to cover their positions.

As the shorts flood their brokers in an attempt to buy share, volume skyrockets, leading prices through the roof, which is what we’re seeing from SNCA. But what triggered the short squeeze?

The truth of the matter is that with no news out, anything I say here is speculation. Nonetheless, in my opinion, the squeeze was prompted as investors await news from the FDA.

In early April, SNCA issued a press release stating that a TYPE C meeting with the United States Food and Drug Administration went well. The meeting surrounded the Phase 3 trial design for NSI-566 as a potential treatment for patients with amyotrophic lateral sclerosis (ALS).

According to the press release, Seneca believes that the positive feedback received in the discussion, along with positive results from Phase 1 and 2 clinical trials, support moving into pivotal Phase 3 trials.

However, since early April, we haven’t heard anything. The general idea on message boards is that the timing is just right for a response from the FDA. Of course, if the FDA gives the company the green light to move forward wit the pivotal clinical study, the stock could skyrocket. So, part of the gains today comes from investors wanting to get in before this news is released.

The Bottom Line

The bottom line here is that Seneca Biopharma has a very important catalyst ahead. With positive feedback from the Type C meeting, there’s a high likelihood that the Phase 3 trial will be approved, and hopefully this will take place soon.

Nonetheless, if SNCA does break into the ALS market, it would be huge news. Think about it, the company trades with a market cap of under $10 million. By 2026, experts expect the ALS market to be worth more than $885 million annually.

Considering the scale of the company, it doesn’t need to take 100% or even 50% of this market to realize meaningful revenue. Just a small percentage of this market would be a big deal for the company and its investors. So, this Phase 3 trial could be the beginning of a game changer, making SNCA stock one that’s well worth watching.

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