Firstly with around 45 million shorts at a price closing price of $1.67 it is already inbuilt into the price that FDA will reject ARNA.
Secondly at a all time low of $1.51 which it hit on two different days I strongly believe it has built resistance at this price.
Now no one is so stupid that they will short at this price, at the same time if any positive news comes from FDA this stock is heading only North. It will be fast and furious, those who take the risk to hold or to buy at this price will be handsomely rewarded.
Finally there are so many others stocks there to short I don't think the shorts are going to stick to this one too long. Considering a person who has shorted at $8 levels it would be very risky for them to not cover now. So worst scenario this stock is going back to at least $2.50. If good news comes this stock could go back to $8 levels because there will be major players buying and shorts covering at the same time.
I will close by quoting the legendary Warren Buffett be fearful when others are greedy and greedy when others are fearful.