I agree with Gunner that the short interest is not a big factor to push up the price, but still a factor in favor the bull.
The major issue here is the removal of the uncertainty of generic. That might open the door for a buyout.
The only weakness of HZPN is the company still burning the cash and its weak debt/cash position. But with the steady growth of its revenue, the company will be make even by the end of next year. The Street will realize the value eventually.
Technically, HZPN looks great. It is highly likely it will be 3.4-3.6 be year end after the recent breakout. Good luck for all the longs.
I rather doubt it. I think what's happening here is that finally we're developing a bit of momentum between sales of Rayos and Duexis getting some traction and a big part of the generic threat falling away. My last report shows the short percentage of float at a bit over 12%, which isn't particularly high for this sector (MNKD for example is over 30%, ARNA is just a little under that and SRPT's a whopping 39.5%. We've seen the percentage of the float held short here significantly higher over the past several months.
Should longs hold onto their shares? Sure they should - there's a lot of potential here. Should they do it because the stock is, out of the blue, going to go parabolic because of a puny 12% short float? Not so much. This isn't a "battleground" stock. We aren't looking at some huge binary catalyst here. We have a company whose business plan is giving nice signals of actually working, where sales are in a footrace with cash burn that they might actually win and whose products have a lot of market potential. That should be enough.
In the case of HZNP, the shorts have held so far no covering is because the genetic drug issue, which has been removed in favor of HZNP. Now the shorts have no reason to believe the company will go out of business, to believe that revenue may collapse. So why pay hefty interests, and not cover. If they cover now they still make some money or make no money later.
As the process is going ahead, panic may come in. That's why the higher price. Of course, nobody is sure about his theory.
One more point, SPPI had 25M shares short back in March, 40% of the total outstanding shares.
The stock price was $12.5 and everyone on the MB said there is no way they can cover without shooting the price to $20.
Guess what? SPPI F..ed big time and the stock price fell from $12.5 to $7.5 in one day... The volume was 40M shares.
Every short that desired to cover at $7.5 had a chance of doing so.
BTW, the SI in HZNP is less than 10% of outstanding shares.....