Milestone Pharmaceuticals Plummets 33%: What's Behind the Sharp Selloff?

Summary
• Milestone Pharmaceuticals (MIST) plunges 33.22% to $1.97, hitting an intraday low of $1.61
• 52-week high of $3.06 now 48% above current price; turnover surges to 12.8M shares
• Upcoming FDA PDUFA decision on December 13, 2025, looms as key catalyst

The pharmaceutical sector is in turmoil as Milestone Pharmaceuticals (MIST) experiences a historic intraday collapse. With the stock trading at 66% of its 52-week high and facing a critical regulatory decision in just two weeks, investors are scrambling to decipher the trigger. This sharp selloff coincides with heightened volatility in the options market and a flurry of recent institutional activity, signaling a pivotal moment for the biotech stock.

Regulatory Uncertainty and Short-Seller Pressure
The 33.22% intraday drop in MIST is driven by a confluence of factors: 1) Heightened anxiety over the December 13 FDA PDUFA decision for its lead candidate, CARDAMYST (etripamil) nasal spray for PSVT; 2) A recent 31M share offering at $1.50 diluting existing shareholders; and 3) Aggressive short-selling activity, with short float at 7% and a short ratio of 3.7. The stock's collapse follows a CRL response in March 2025 related to manufacturing compliance issues, which, while resolved, has left lingering skepticism. Recent insider buying and a $75M strategic financing with RTW Investments in March 2025 have failed to quell concerns about post-approval commercialization risks.

Pharma Sector Volatility Amid Regulatory Crossroads
The pharmaceutical sector is experiencing mixed momentum, with Johnson & Johnson (JNJ) up 0.27% despite MIST's collapse. However, MIST's selloff is more pronounced than sector peers, reflecting its high-risk, high-reward profile. While JNJ benefits from diversified revenue streams, MIST's fate hinges entirely on the December FDA decision. The broader sector faces headwinds from recent FDA rejections, including Capricor Therapeutics' Deramiocel denial in July 2025, amplifying risk aversion among biotech investors.

Options Volatility and ETF Positioning in a High-Risk Environment
• 200-day MA: $1.74 (below current price)
• RSI: 84.04 (overbought)
• MACD: 0.195 (bullish), Signal: 0.178, Histogram: 0.017
• Bollinger Bands: $1.999 (lower), $3.001 (upper)

The technical picture suggests extreme short-term overbought conditions, with RSI at 84.04 indicating potential mean reversion. However, the 200-day MA at $1.74 provides a critical support level. Options traders are pricing in massive volatility, with the MIST20260116C2 call option trading at 324.99% implied volatility and a 6.26% leverage ratio. This contract offers 62.50% turnover and a delta of 0.67, making it a high-leverage play if the stock recovers. Conversely, the MIST20260320P2 put option (62.50% turnover, 153.66% IV) provides bearish exposure with a 2.89% leverage ratio. Both contracts exhibit strong gamma (0.187 and 0.251) and theta decay (0.010 and 0.002), suggesting time-sensitive positioning. A 5% downside scenario to $1.87 would yield a put payoff of $0.10 per contract, while the call would expire worthless. Aggressive bulls may consider MIST20260116C2 into a bounce above $2.00, while bears should watch for a breakdown below $1.75.

Backtest Milestone Stock Performance
The performance of MIST after a significant intraday plunge of -33% from 2022 to the present has been the subject of a backtest, which reveals a mixed outlook.1. Intraday Plunge: MIST experienced a dramatic premarket drop of 25.47%, plummeting to $7.93 from $10.64, which is a clear indication of bearish momentum.2. Q3 Earnings Report: The Q3 earnings report was disappointing, with a collapse in net income to $62,000 from $1.3 million year-over-year and a revenue decline to $9.7 million, missing analyst forecasts by 12.9%. This report exacerbated the selling pressure on the stock.3. Geopolitical Factors: The CEO attributed the downturn to geopolitical uncertainties causing delays in large system orders. These factors, coupled with a sharp revenue decline, contributed to the bearish sentiment surrounding MIST.4. Technical Indicators: The stock's technical indicators, such as RSI (52.1) and MACD, suggest bearish momentum, reinforcing the negative outlook.5. Investor Sentiment: The sharp decline in MIST's stock price reflects broader market skepticism about the resilience of micro-cap companies, which is influencing investor behavior and pricing in the near term.In conclusion, the backtest indicates that while MIST has faced significant challenges, including a dramatic intraday plunge and disappointing earnings, the company's long-term marine tech ambitions remain intact. However, immediate concerns over order delays and margin compression dominate the narrative, and traders must weigh the potential of the current selloff being a buying opportunity against the risks of deeper trouble.

Critical Catalyst in Two Weeks: Act Now or Miss the Window
MIST's 33% selloff has created a high-risk, high-reward scenario with the FDA PDUFA decision on December 13, 2025, as the ultimate arbiter. While the stock trades near 200-day support at $1.74, the options market is pricing in a 300%+ volatility event. Investors must weigh the 75% return potential post-approval against the 44% intraday drop risk if the FDA rejects CARDAMYST. Sector leader Johnson & Johnson's 0.27% gain highlights the contrast between diversified pharma giants and high-risk biotechs. Positioning now with options like MIST20260116C2 or MIST20260320P2 allows participation in the impending volatility. Watch for a $1.75 breakdown or a $2.00 retest to dictate next steps.