I'm not saying the shorts are trapped, but good news & upward momentum will bring on a significant short squeeze with 55M shares shorted out of the 217M shares out there.
The problem with the idea that institutional investors don't lose money is inaccurate. They rarely lose NET, meaning they make money in some ares, lose in others and it nets out to a positive number. SO, they could easily lose millions on ARNA shorting it while they MAKE millions +$1 on other stocks. That is a far cry from thinking they make every trade a profit.
Still they have two things that most retail investors lack - patience & discipline, and that gives them a big edge.
I don't think anybody is "betting" on the short squeeze. It is simply a fact that there are 55M shares short, and that damage is already done. All they can do now is cover and that will drive the share price up.
The only real danger is a flop out of the gate like Qsymia, but with the big payment looming from Eisai, that will come through no matter what the DEA classifies Belviq as, or when they can start drug sales.
Really the only big danger is if ARNA goes out of business. Otherwise, sales, payments, royalties happen, grow, build ... Buyout maybe (just the threat for shorts) so the risk factors are very poor for the shorts.