There is a biotech company on the market that has recently made claims of a new breakthrough drug that can fight cystic fibrosis for patients by improving lung performance drastically. However, Kerrisdale Capital has researched and reviewed these statement by Proteostasis and has found that they are most likely a load of hooey. This market has largely been dominated by Vertex for many years, and Sahm Adrangi suspects this new drug is more of a chemical cocktail that has no real results behind it.
The trial done by proteostasis one consisted of four patients and after some diffing, Kerrisdale found that the increase in performance that this biotech company is claiming their drug provides is actually because of a slight drop in performance among the placebo group. This gap in percentages is most likely due to poor testing procedure says Kerrisdale Capital.
One of the most important questions that Sahm Adrangi poses is what will happen to the company should their drug not be successful like they claim it to be? Currently, the value of the company is mostly derived from their product, which means they stand to drop in share value by upwards of 90 percent should this drug prove worthless. This lets Sahm believe that Proteostasis is willing to fabricate their data and push out a drug cocktail in order to profit or at least maintain their company value.
Sahm Adrangi is hardly wrong with his reports and he always digs deep in order to find the most accurate data when he puts the word out about a company, whether good or bad. This is why so many people follow the words of Sahm Adrangi. The fall in Proteostasis share value after Kerrisdale’s report came out is a testament to this fact. After Kerrisdale took the short position on Proteostasis, the biotech companies share values have dropped upwards of 20 percent, causing them to sell over nine million shares to maintain their funds.