Hey all. Im typically a long term trader and am new to short squeeze trading. I was drawn in a couple weeks ago with LFVN (still holding). It has been a fun trade so far, so I’m starting to think ahead to what may come next.
SLS seemed interesting to me, so I figured I’d float it with the community to get some thoughts.
The Basics:
Market Cap: \~$1,500M
Shares sold short: 57M
% of Float: 30.81%
Short Shares Available: 50K-500K
CTB: 10-26% over the last 10 days
DTC: 7.68
Volume: 13.4M/7.9M (10/30 day)
Cash: $107M, which is about 3 years worth at their current burn rate.
Total Debt: 871k
Where are the shorts:
Looking at short interest build up over time suggests three cohorts of shorts.
$1.50-$3.00. Baseline group from early 2025. Represent around 11% of float.
$5.00-$6.00. From second half 2025x Represent around 16%.
$7.50-$8.25. This is from the current run up. Represent around 4%.
A good portion of these are already feeling the pain.
Upcoming catalyst:
This is a binary catalyst situation. SLS will soon report top line data for their phase 3 trial of a leukemia drug.
Timing is a bit uncertain because it is dependent on hitting 80 events (which are patient deaths, morbid I know). They were at 78 events in mid-May. Once they hit 80 the data is unblinded, which starts a clock of a couple weeks before they report out the results.
What makes this interesting is that although leukemia phase 3 success rates are low (28-33%), there are some positive signs for this one.
First, the approach used employs two elements associated with higher success rates. It is targeted via biomarkers and combined with an existing therapy.
Second, the length of the trial and pacing of events is encouraging. The trial is about comparing how long patients live vs a standard of care control. The expectation going in was for the drug to be 12.6 months vs. 8 months survival time for the control. The study has been going for 25 months. That seems to indicate success well beyond the original projections.
The rate of event reports also seems to signal divergence between the two study groups. It started in March 2024 with 126 patients. By January 2025 60 events had happened. Then there was a big slowdown with only 72 total events by December 2025 and 78 by May. Even without seeing the unblinded version of the data this seems to be pretty promising.
Stock Price:
Currently at $8.23. Mid 2025 it was holding around $1.50-$2.00. From late ‘26 to May this year it steadily climbed to $5.00 then popped to over $9 before pulling back a bit.
The recent jump seems long term based, not shorts being pushed out. If anything the daily metrics seem to indicate the shorts are doubling down.
Why didn’t it squeeze earlier:
SLS was discussed on the sub earlier this year and the outstanding stock warrants were mentioned. That can be a material risk for capping a short squeeze. When shares climbed earlier this year there were outstanding stock warrants at $2 and $1.88. Those were all exercised which capped the previous squeeze potential. The upside is that those warrants provided the current strong cash base. The books are now clear. No more outstanding warrants.
Trade in consideration:
80% shares
20% in 7/17 $9 calls
Targeting $7.20-$7.50 buy-in if it retraces a bit. I’m waiting on liquidity from LFVN anyway so will be patient.
What do you think?
What am I missing?
Are the calls crazy given the timing uncertainty?
I’d normally find this interesting as a straight value play, but it seems like the short element may be here as well.
Some closing thoughts on risk:
In addition to the standard risks, as a pre-commercialization biotech, SLS will either dilute after good study news to secure the funding needed for commercialization or sign a joint venture agreement. The joint venture would be a boon for the short term. But if they dilute obviously that’s a value risk. To play it safe I’d plan to close out my position within a couple days of the squeeze.
Lastly, I am only using a small portion of my high risk sleeve to do this kind of trade. Make sure you consider your own risk tolerance and do your own DD. NFA.