Cronos Group Inc, Antibe Therapeutics Inc Top Short Position Attractions on the TSX-V

Benjamin A. Smith
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Cronos Group Inc (CVE:CRON) (NASDAQ:CRON) and Antibe Therapeutics Inc (CVE:ATE) (OTCMKTS:ATBPF) are the largest short position and largest net increase short position—respectively—on the Toronto Venture Exchange. This, according to new data released by shortdata.ca. We look into recent events and technical take’s of both companies.

Watch Cronos Group CEO Mike Gorenstein outline the many positive milestones that Cronos has achieved in the last year, and how the company plans to become a global competitor in the cannabis export market.

Starting with Cronos Group, some $76,140,561 of short positions have been taken in dollar terms between March 15-March 30. If we take the median close price between those dates, we calculate the average share price to be approximately $7.56/share, or somewhere in the area of 10 million shares short (give or take).

Given that the aggregate float is currently 165.48 million shares, the short position is small in relative terms. But what stands out is that, in dollar terms, Cronos Group’s short position is triple its nearest rival—Cannabis Wheaton Income ($26,888,553)—on an aggregate basis. This isn’t a focus metric given the relatively between share values and float sizes, but it is an interesting statistic nonetheless.

In terms of price action, the company’s slumping stock price has accelerated since the announcement of a $100 million bought deal on March 21. Lead by co-led underwriters GMP Securities L.P. and BMO Capital Markets, Cronos sold 10,420,000 common shares at a price of $9.60 per common share. The deal closing was confirmed last Friday.

Peak-to-trough, the company has shed around ↓45% since the March 5 swing high. That run rate is slightly higher than the ↓39% average the cannabis sector has fallen in general. All in all, bought deal dilution may be playing a small factor in the company’s relative weakness, but the swoon is mainly sector driven. Given that shares are not showing particular relative strength currently—absent company-specific news—expect any rebound to follow-the-leader type buying (not technical).

Antibe Therapeutics

According to the data, Antibe Therapeutics recorded the largest short position net increase in dollar terms ($10,741,522 total; $5,914,348 net increase) between March 15-March 30. It’s hard to estimate the exact median price where shorts are positioned, given the massive gap-up in price on March 20. But if we estimate a $0.50/share median price (some $4,827,174 was short previous to Antibe’s big March 20th announcement when prices were trading below $0.40/share), over 10% of the float is currently short (over 20M shares short; 196,783,912 shares outstanding). With share prices well within penny stock range, the numbers indicate exceedingly active bearish positioning.

Of course, none of this selling happens in a vacuum. Antibe shares had soared six-fold in 2018 alone, climaxing with news that its lead drug, ATB-346, met its primary endpoint in the Phase 2B gastrointestinal (GI) safety study in spectacular fashion. Subjects taking ATB-346 exhibiting an ulceration rate of 2.5% versus an ulceration rate of 42.1% for subjects on naproxen at the end of the 2-week treatment period. Globally, the non-steroidal anti-inflammatory drugs (NSAIDs) is worth about $80 billion annually.

While we’re unsure what happens next, we think bears can’t get too comfortable here. As part of the announcement above, Antibe announced the appointment of Amal Khouri (B.Sc., MBA) to its Board of Directors, effective immediately. The explicit purpose was to leverage her vast pharmaceutical Rolodex as the company prepares to “commence global partnering discussions for our lead drug, ATB-346.”

Should Antibe enter a partnership agreement with a global pharmaceutical giant, one wonders whether shares don’t have more room to run. However, with regards to small pharma, timing is always a finicky proposition.

Short term, I would expect this stock to be catalyst-driven. Volume is simply grinding lower at this point, as new investors wait for guidance. Great pharmaceutical data has moved the needle smartly, but with most momentum plays, more news is needed to keep new money cycling in.

Midas Letter will continue to cover Antibe Therapeutics as new events warrant.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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