If Sahm Adrangi is right, which he tends to be when it comes to predicting failing companies, investors should avoid Proteostasis Therapeutics, Inc. when it comes to traditional investing. Proteostasis is still in its developmental stages and its main medication is for the treatment of cystic fibrosis. Unfortunately, although Proteostasis is touting it as a breakthrough medication for the debilitating disease, Sahm Adrangi believes the drug is ineffective. The medication known as PTI-428 will most likely fail Phase 3 trials according to Sahm Adrangi and his company Kerrisdale Capital Management.
During the Phase 2 studies of the drug, the size of the placebo group was very small and the bad outcomes that came with the natural progression of the disease made the treatment group’s results look much better than they actually were. Sahm Adrangi’s research led him to believe that the company is also omitting negative results of the trial to make it look a lot more useful than it actually is.
Kerrisdale Capital Management’s research has led Sahm Adrangi to arrange a short-selling position for Proteostasis that will lead the company and their investors to make a considerable amount of money if their hypothesis is correct. Adrangi has a long history of calling out companies for pushing bad drugs onto the market in order to gain money from investors. When Proteostasis Therapeutics made the announcement of the new medication that is in development, their stock price almost doubled. This rise is expected to be temporary and will most likely fall dramatically after the results of the Phase 3 trial. While the FDA has granted PTI-428 the Orphan Drug and Breakthrough Therapy designations, Kerrisdale Capital’s experts believe these labels are misplaced.
Sahm Adrangi has predicted the ineffectiveness of several other medications that were in development stages including ones by the companies Sage Therapeutics and Bavarian Nordic. In the earlier stages of his career, he gained attention by exposing fraudulent Chinese based companies that were trading in the United States.