Short Sellers Circle ImmunityBio After Monday’s Devastating Stock Slump

The morning following a regulatory bombshell, message boards for biotech stocks experience a certain kind of silence. In January, when ImmunityBio shares were tripling over the course of three weeks and short sellers were suffering paper losses of almost half a billion dollars, the happy retail traders who had been posting price targets went silent.

The doubters, who have never been convinced that the rally was firmly established, become more vocal. On March 24, the U.S. Food and Drug Administration issued a warning letter accusing ImmunityBio and its billionaire founder, Dr. Patrick Soon-Shiong, of making false or misleading claims about their bladder cancer drug Anktiva. This dynamic was made uncomfortably clear. That morning, shares fell by about 21%. They had fallen an additional 9% by March 30.

The FDA’s particular complaint is worth considering because it isn’t a manufacturing technicality or a dispute over paperwork. Regulators claimed that Anktiva could “cure” or “prevent” all cancers in a television commercial and a prominent podcast appearance. This claim has no clinical support and, if true, would indicate that the company was purposefully misleading the public about the approved indication of its product.

Anktiva is authorized for bladder cancer that is not muscle-invasive and does not respond to BCG. That is a significant and valid endorsement. The FDA doesn’t use the term “misleading” lightly, and expanding it—verbally and without proof—into something that resembles a universal cancer treatment is a whole other story.

The timing is what makes this especially difficult for ImmunityBio. The business had experienced tremendous momentum for the majority of the first part of 2026. Due to Anktiva’s quick commercial adoption in the US market, net product revenue for 2025 was $113 million, a 700% increase from the previous year. The analysts were optimistic. IBRX had a consensus rating of “strong buy,” with a mean price target close to $15. For a few bewildering weeks, Wall Street appeared to have completely embraced the narrative Soon-Shiong had been promoting for years: that ImmunityBio was creating something truly unique in oncology. The stock was not simply cut by the FDA letter. It damaged the credibility of that story, which is more difficult to fix.

As this develops, it’s hard not to consider other well-known biotech entrepreneurs who have discovered that the discrepancy between scientific aspirations and regulatory language can be costly. Companies that conflate approved indications with aspirational science often find themselves in a situation similar to the one ImmunityBio is currently in. The FDA has a very specific relationship with promotional claims. This isn’t Theranos; Anktiva’s inclusion in the 2026 NCCN guidelines for bladder cancer treatment is true clinical validation, and the underlying science isn’t being questioned. However, it takes time and intentional action to rebuild trust once regulators have identified it as compromised.

An additional level of complexity is introduced by the financial picture. In 2025, the business lost about $351 million. Most credit analysts would be alarmed by its Altman Z-Score of -5.91, which is a gauge of financial distress risk. Even after the recent declines, the price-to-sales ratio is still high at 85.31. This type of valuation functions well when a growth narrative is unbroken and is very challenging to defend when it is. When you consider the recent $1.78 million share divestment by director Barry Simon, you have a series of signals that the more cautious segment of the market is unlikely to overlook.

It’s likely that short sellers, who suffered greatly in January when the stock’s sharp rise forced many to cover their positions at a loss, are watching the current situation with a mix of fresh appetite and vindication. What ImmunityBio does next will largely determine whether or not they pile back in. After receiving approval in Macau, the company now operates in 33 countries and has submitted a supplemental Biologics License Application to the FDA to expand Anktiva’s authorized use. These are not the actions of a fully retreating company. Despite everything else, insider ownership is still remarkably high at almost 70%, which at the very least indicates that the people who founded this business have faith in it.

Whether the FDA warning is a game-changer or a difficult but manageable detour is still genuinely unclear. There is a plausible case that the underlying commercial momentum could reappear if ImmunityBio promptly and credibly addresses the agency’s concerns by removing the offending materials, tightening its marketing procedures, and clearly informing investors about its compliance path.

For the approved indication, the medication is effective. There are significant gaps in the bladder cancer treatment market. These facts remain the same. What has changed is the level of scrutiny the business will now face and the extent to which regulators, attorneys, and short sellers will analyze each and every future promotional statement.