Sahm Adrangi is a well-known investor and business executive in the United States who regularly calls out companies that he believes should be avoided or are making false claims. The latest company under attack by Sahm Adrangi is Proteostasis, a biotech company that has been working on a new drug to combat cystic fibrosis for patients. While this sounds like a good thing, there are a lot of concerns surrounding this “breakthrough” drug that they have been developing. Sahm Adrangi did some digging into the company and various analysts at Kerrisdale Capital have found some concerning data as well. Proteostasis actually has very messy data to sort through, which is not a good thing to see when a company making such strong claims.
In Proteostasis’s test period for their drug, CFTR amplifier PTI-428, only four patients were used for their control. Which means results are most likely skewed as the testing sample is much too small. Proteostasis claimed an increase of roughly 5 percent for patient lung performance, which is most likely just placebo according to Kerrisdale. Over the years, Sahm Adrangi has had no qualms facing biotech companies and their claims, including some of the biggest in the industry.
The data provided by Proteostasis is incomplete as well, which indicates poor testing methods and lack of organizations. Another concerning part of these claims being made by Proteostasis is that there is a lot of pressure on them to create a successful product. Should Proteostasis’s new drug prove ineffective, they stand to lose upwards of 90 percent of their company share value, which would basically mean bankruptcy for Proteostasis. Until this biotech company does a larger study that is complete and provides accurate data, Sahm Adrangi is going to take the short position at Kerrisdale Capital and urges his fellow investors to do the same. As long as Proteostasis continues to show transparency in their procedure and data, Sahm Adrangi will push Kerrisdale’s negative report to the public.