Shares of T2 Biosystems (NASDAQ:TTOO) are up by over 20% today on the heels of receiving U.S. Food and Drug Administration (FDA) 510(k) clearance for its T2Biothreat Panel. The panel is a direct-from-blood molecular diagnostic test that has the ability to simultaneously detect six biothreat pathogens.
“The T2Biothreat Panel is the first and only FDA-cleared product able to simultaneously detect these six high-priority biothreat pathogens, and the only FDA-cleared multi-target biothreat product developed and manufactured by a U.S. owned company,” said T2.
T2 disclosed this news on Sept. 19. However, on that date, 10% owner CR Group (CRG) disclosed selling 10.4 million shares at an average per share price of 37 cents, putting a damper on the TTOO stock rally. In total, the transaction was worth $3.8 million.
TTOO Stock: Cost to Borrow Increases 150% During Past 10 Days
That wasn’t CRG’s only sale. From Sept. 20 to Sept. 26, the healthcare investment fund sold an additional 24.81 million shares at average prices ranging between 20 cents and 31 cents. Following the sales, CRG’s stake has fallen to 13.13 million shares. CRG has not commented on the reason for its sales, although the timing in correlation with the FDA clearance is certainly noteworthy.
Meanwhile, the cost to borrow (CTB) fee for TTOO stock has rose significantly in recent days. The fee tallied in at 16.06% on Sept. 18 and has risen to 37.62% as of today, marking an increase of about 134%. The fee signifies the annual rate that short sellers must pay to borrow stock. A high fee indicates strong seller demand, while a low fee indicates the opposite. The average CTB fee for a stock ranges between 0.3% and 3%, meaning that TTOO carries an abnormally high fee.
However, a high CTB fee can also factor into a recipe for a short squeeze. That’s because short sellers may abandon their positions in the face of excessive fees. As of Sept. 15, TTOO had a short interest of 7.61%, equivalent to 23.71 million shares sold short with a value of $6.57 million. A short interest above 10% is viewed as high, while a short interest above 20% is viewed as very high.
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On the date of publication, Eddie Pan did not hold (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.
