Sahm Adrangi’s private investment company Kerrisdale Capital has issued another negative report on a pharmaceutical company that is banking on a drug that is currently in development stages. In the past, he has issued reports on the development stage companies Bavarian Nordic, Unilife, Sage Therapeutics, and Pulse Biosciences. This time Sahm Adrangi and Kerrisdale have their sites set on Proteostasis Therapeutics and their new drug that is known only as PTI-428. Proteostasis’ PTI-428 is a drug that is said to treat cystic fibrosis. Cystic Fibrosis affects many organs of the body, but the most deadly is the lungs. Thick mucus builds in the lungs and is highly detrimental to lung function.
The Food and Drug Administration of the United States recently granted PTI-428 “orphan drug” and “breakthrough therapy” status. This status allows the drug to be fast-tracked for approval based on the lack of other viable treatment options for the disease. After this announcement, Proteostasis saw their stock prices double. After Sahm Adrangi and Kerrisdale announced their plans to short the company based on the research that was performed, their stock price dropped.
Sahm Adrangi believes that the data published by Proteostasis following the Phase 2 trials of the drug was purposely skewed to make it seem far more effective than it actually is. This is based on the very small sample size of the placebo group and the difficulty in testing for the biomarkers that were mentioned in their research. Sahm Adrangi and Kerrisdale Capital have their doubts on whether Proteostasis actually knows how their medication is actually supposed to work.
Sahm Adrangi was a student activist during his time at Yale University, unhappy with the methods of his peers he went about it a different way after graduation. Known as a value investor, when Adrangi makes the decision to perform a short attack on a company as he is with Proteostasis, it is many times based on his moral judgment of their dishonesty and bad business practices. With his long history of success in investing, his predictions on Proteostasis is making others take notice.