IMHO, major part of the reduction in short interest is related to the departure of a number of the market-making algos. This occurred contemporaneously with the drop in trading volume.
All market makers, including the algo shops ( they are the only ones left in NNVC and many microcap stocks) carry some short position.
NNVC trading volume has picked up over the last month but most of that can be explained by an increase trading volume in general and in the biotech sector in particular. If the increased volume persists then the algo shops will come back and short interest is likely to pick up again.
I am also of opinion that very little of the short interest has to do with bearish bets. The stock is very hard to borrow. It's mostly professional position to back market-making. If someone wanted to bet on a fall in the stock price and OTC option would be the most economical way to do it. It would also have the advantage of not being vulnerable to a call in on the borrowed stock.
Market Data 
Markets 
AI
