CLBS Stock: Caladrius Biosciences Squeezes Shorts

Caladrius Biosciences Inc (NASDAQ: CLBS) is screaming for the top in the market this morning. After a press release yesterday informed investors about the first patient treated in a Phase 2b trial, the stock popped slightly. However, that upward movement seems to have triggered a short squeeze that’s leading to dramatic gains today. Here’s what’s going on:

Skip to What You Want to Read

CLBS Announces Phase 2b Patient Treatment

In the press release, Caladrius Biosciences said that it has treated the first patient in the Phase 2b FREEDOM trial. The trial is assessing CLBS16 as a potential option for patients with coronary microvascular dysfunction (CMD). 

The first patient was treated at The Christ Hospital Health Network in Cincinnati, Ohio. 

CLBS went on to explain that the trial will include 105 patients. It is a double-blind, placebo-controlled clinical trial that was designed to further evaluate the efficacy and safety of intracoronary delivery of autologous CD34+ cells in subjects with CMD and without obstructive coronary disease. 

Management Commentary

In a statement, David J. Mazzo, PhD, President and CEO at CLBS, had the following to offer:

We are very excited about our CLBS16 program as it represents a potential breakthrough in the treatment of CMD, a condition which afflicts millions of patients in the US alone, many of whom are women. As a result, CMD is a women’s health issue of emerging importance as currently there are no products with approved labeling for coronary microvascular dysfunction. 

The treatment of the first patient in the FREEDOM trial is an important milestone for our Company and the program and we look forward to completing enrollment by the target of year-end 2021. It is especially noteworthy that even during the COVID-19 pandemic, physicians and patients are active in our trial, denoting the seriousness of the disease and underscoring the lack of available effective treatment for CMD.

The above statement was followed up by Timothy D. Henry, M.D., Medical Director of the Carl and Edyth Lindner Center for Research at The Christ Hospital Health Network. Here’s what he had to offer:

Following the outstanding full data results from the ESCaPE-CMD study that I presented at SCAI 2020, we are very excited to participate in the FREEDOM trial. Caladrius’ CLBS16 program has demonstrated great promise and I am looking forward to seeing how this new therapeutic option can benefit patients with CMD.

A Short Squeeze Takes Hold

Yesterday, CLBS stock had a relatively strong day, gaining more than 3% by the closing bell. However, the real action seems to be happening this morning with the stock up more than 150% in the premarket hours. 

So, what’s the deal?

It’s a short squeeze. Prior to the announcement, Caladrius Biosciences stock traded with pretty heavy short interest. When a stock ticks upward, those who short the stock begin to realize losses. 

After yesterday’s 3%+ gain, it seems as though the short sellers are racing to abandon ship, which means buying new shares to return those they borrowed for their short positions. Ultimately, this leads to heavy volume and significant price appreciation. 

At the same time, CLBS stock trades with a public float of about 17.5 million shares. That’s not much of a supply when demand runs high. As a result, this tiny public float is helping to exacerbate the gains created through the short squeeze. 

What Analysts Think About CLBS Stock

According to TipRanks, there aren’t many analysts covering CLBS stock. In fact, there’s only one. However, the strong opinion held by the one analyst covering the stock is enough to cause some serious excitement. 

The analyst set the rating on the stock to a Buy with a price target of $14 per share. According to the price target, there’s potential for the stock to grow more than 700% from yesterday’s close. 

Keep in mind, you should never blindly follow the opinions of any expert, including analysts. However, investors often use these opinions to validate their own, and if you’re bullish on CLBS stock, that’s exactly what this analyst’s opinion does.  

Risks to Consider Before Buying CLBS Stock

Investing comes with risk. Even investing in your savings account comes with inflation risks. An investment in Caladrius Biosciences stock is no different. Before making an investment in the stock, consider the following risks:

  • Penny Stock. CLBS is a penny stock. As a penny stock, it sees quite a bit of volatility. This volatility adds to the level of risk because prices could fall quickly, leading to significant declines before you’re able to sell your shares. 
  • Clinical Stage. Caladrius Biosciences is a clinical-stage biotech stock. In the clinical stage, the company has no approved products to sell, and therefore, doesn’t earn revenue from the sale of its treatments. As such, it must survive on the cash and cash equivalents it has on the balance sheet. Should this funding dry up before a product hits the market and turns profitable, the company may look to capital markets to raise funds, ultimately diluting value for existing shareholders and leading to declines. 
  • Clinical & Regulatory Risks. Finally, for CLBS to be successful, its treatments must do well in the clinic and receive approval from regulatory authorities. If a clinical failure or a regulatory rejection takes place, significant declines will likely be the result. 

Final Thoughts

All in all, Caladrius Biosciences is a stock that’s hard to ignore. As the company moves deeper into Phase 2b trials, it’s coming closer and closer to the day in ventures into the commercial biotech space. Moreover, with ongoing trials, there are plenty of catalysts to look forward to ahead. 

Should all continue to go well, CLBS will be entering a massive market. After all, CLBS16 addresses an indication at the center of a market expected to grow to be worth $22.5 billion annually in the coming years. All in all, CLBS stock is one to watch closely.