Seneca Biopharma (SNCA) Stock: Why It Could Go Far Higher

Seneca Biopharma SNCA Stock News

Seneca Biopharma Inc (NASDAQ: SNCA) is having a strong start to the trading session in the premarket hours this morning. The stock is up 20% early on, following up on more than 20% gains yesterday.

If you go searching Yahoo! Finance or even the company’s investor relations website, you’re not going to find any press releases. So, what’s the deal? The excitement seems to surround a European Patent. Here’s what’s going on:

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SNCA Stock Soars On Patent News

While Seneca Biopharma hasn’t issued any news, I was able to dig up a recently granted European patent. The patent, No. 2913393 B1 is titled Transplantation Of Human Neural Cells For Treatment Of Neurodegenerative Conditions.

According to the European Patent Office, the patent was granted and published on the eight of January (yesterday). Of course, this gives a little light as to why the stock was up more than 20% yesterday.

The patent surrounds methods of treating disorders through transplantation of cells that are uniquely beneficial for such treatment methods. In particular, the disclosed methods provide methods of treating neurodegenerative conditions with neural stem cells.

Of course, this is great news for SNCA. After all, when investing, it’s important to choose companies that have built a strong economic moat. Essentially, each patent awarded helps to strengthen the company’s economic moat to ensure that competition stays off of the playing field.

However, this isn’t the only reason that SNCA could go far higher.

Why SNCA Stock May Climb From Here

The truth of the matter is that Seneca Biopharma has struggled quite a bit in the past. In fact, the company recently changed its name from Neuralstem, likely in an effort to alleviate short-side pressure.

Unfortunately, shorts are still all over the stock. In fact, SNCA is seeing incredible growth in short interest, which currently sits well over 50%. Nonetheless, this may be a good thing.

The truth of the matter is that when heavily shorted stocks start to rise, the move puts pressure on those with short positions, threatening large losses. In this particular case, the newly issued patent has the stock soaring, and short sellers are clearly losing quite a bit of money here.

As a result, the move may trigger a short squeeze in SNCA. This is when short sellers race to cover their positions, leading to high volume and monumental growth in value. So, keep a close eye on the stock as a short squeeze may be ahead within the next couple of trading sessions.

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