Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) caught an early morning boost after reporting positive results from its obesity drug trials. A mid-stage study of its pramlintide/metreleptin combination product revealed no significant side effects on a cardiovascular or neuropsychiatric level, and patients treated with the highest dose experienced much greater weight loss than those participants treated with a placebo.
AMLN was up more than 2% at its intraday peak, but the equity has since pulled back near the break-even line. The stock settled Wednesday below its 20-day moving average for the first time in more than a month, and it has been unable today to reclaim a foothold above this trendline. Meanwhile, stubborn resistance from the $14 region looms not far overhead.
During the short term, heavy call open interest at out-of-the-money strikes could exacerbate AMLN's struggles on the charts. Directly overhead is the July 12.50 strike, with 10,067 contracts in residence, and the July 15 call carries open interest of 16,282 contracts. With July-dated options set to expire next Friday, these notable call accumulations could exert options-related resistance during the coming week.
Meanwhile, a surge in short-selling activity is also applying pressure. Short interest on AMLN jumped by 17.6% during the most recent reporting period, and now accounts for 10.2% of the equity's available float. If bears continue to sell the stock short, the resulting selling pressure could help stifle the shares' progress.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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