With hardly any warning, Allena Pharmaceuticals (NASDAQ:ALNA) stock shot out of the gate this morning, tripling in price on heavy trading volume. Yet, there doesn’t appear to be any company-specific news surrounding Allena Pharmaceuticals. Could there be a massive short squeeze afoot?
It’s a valid question, as traders on social media sites like Reddit have been known to target low-priced stocks. And shares of Allena Pharmaceuticals are super-cheap, even after today’s 200%-plus move. Besides, Reddit traders sometimes like to focus on under-the-radar companies, and Allena Pharmaceuticals is definitely under the radar, with its sub-$50 million market capitalization.
Before you go chasing the ALNA stock rally, it’s important to know what the company is all about. Tiny but ambitious Allena Pharmaceuticals focuses on addressing hard-to-treat metabolic disorders by leveraging the power of oral enzymes.
The company’s flagship product candidate is ALLN-346, an orally administered enzyme that breaks down urate in the gastrointestinal tract. Among the beneficiaries of ALLN-346 could be patients suffering from hyperuricemia and gout.
Making Sense of the Move in ALNA Stock
Trying to figure out exactly why ALNA stock soared 200% today might prove to be an exercise in futility. For one thing, Allena’s news releases page doesn’t show any updates on ALLN-346 since Jan. 4. At that time, Allena’s Phase 2a Study 201 yielded promising results for ALLN-346 in some hyperuricemia and gout patients, with a well-tolerated safety profile.
That’s great, but it’s ancient history in the fast-moving world of cheap-stock trading. For more recent news, a registered direct offering (i.e., a share sale) should provide Allena Pharmaceuticals with pre-fees aggregate gross proceeds of around $2.8 million. However, that’s also old news, as the announcement is from May 4.
Finally, there’s a Form 8-K from yesterday, though this might also be a big “nothing burger.” Apparently, Allena Pharmaceuticals terminated a sales agreement with B. Riley Financial (NASDAQ:RILY), which had previously provided for at-the-market share issuance and sales.
Perhaps Allena’s investors were relieved that the company wasn’t necessarily going to continue issuing and selling as many shares as previously anticipated. Still, this shouldn’t be grounds for a stock-price tripling. But then, Wall Street isn’t always rational.
Just maybe, we can chalk it up to social media shenanigans and the influence of a handful of Reddit users. Either way, the bulls are definitely in control of ALNA stock, at least for the time being.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.