Sahm Adrangi’s company, Kerrisdale Capital, released a unfavorable report on some of the recent findings of the Proteostasis Therapeutics, Inc. company. Proteostasis Therapeutics, Inc. (PTI) is a biopharmaceutical company that works to develop new drugs and test them clinically. PTI’s lead drug in development is called PTI-428. This drug is intended to treat the effects of cystic fibrosis by boosting the messenger RNA and proteins to the CFTR gene that is believed to cause these debilitating effects, effects which are eventually fatal.
In December, PTI released results from a trial that seemed to show the drug was working. The stock market responded to these findings with approximately a 100% jump in the company’s stock prices. The FDA even granted the drug a “breakthrough therapy” designation based on the report. Sahm Adrangi’s firm decided to take a closer look at the results of the trial. The trial seemed to show the effectiveness of the drug when it compared the test group and a placebo/control group. The report released by Sahm Adrangi’s firm, Kerrisdale Capital, said that the the test group didn’t exactly do unusually well, but that rather the control group under-performed. When compared to proper benchmarks, the drug actually had little to no effect. The unbalanced report issued by PTI is Phase 2 of testing. Their Phase 1 report showed much the same that Kerrisdale Capital found: no statistically-proven improvement.
Sahm Adrangi founded Kerrisdale Capital in 2009 and remains its Chief Financial Officer. In the past, his firm has exposed fraudulent findings from several Chinese medical companies. Sahm Adrangi’s reports have to lead to those companies receiving enforcement actions from the Securities and Exchange Commission.
Sahm Adrangi’s report concerning PTI said the company had “little value” and that there was a 70% – 90% downside to purchasing their stock. As seen with other companies in the past, PTI may become subject to enforcement and loss of stock value due to Kerrisdale Capital taking a second look.