Ker­ris­dale’s Sahm Ad­ran­gi leads a bru­tal new biotech short at­tack as tri­al re­sults loom

Ker­ris­dale Cap­i­tal’s Sahm Ad­ran­gi has called a cou­ple of re­cent biotech dis­as­ters in ad­vance. Just two months ago his pre­dic­tion that Bavar­i­an Nordic’s can­cer vac­cine would flunk a long-run­ning study proved ac­cu­rate, and that came right on the heels of Sage’s ug­ly mis­fire on SRSE demon­strat­ing that the drug was no bet­ter than a place­bo in get­ting a re­sponse.

Sahm Ad­ran­gi

Now the in­flu­en­tial hedge fund man­ag­er has got a new biotech in his sights, and this morn­ing he’s pulling the trig­ger on an­oth­er short at­tack, blast­ing the com­pa­ny’s lead drug as an ab­solute fail­ure in the mak­ing.

The biotech is Prothena $PR­TA and the drug is NEOD001, an AL amy­loi­do­sis drug which fig­ures promi­nent­ly in a mar­ket cap that has swelled well past the $2 bil­lion mark.

Ac­cord­ing to Ker­ris­dale an­a­lysts, the Phase I/II study for this drug failed to show any promise. Point­ing to ex­pert — though un­named — fig­ures in the field, the da­ta from the loom­ing Phase IIb and Phase III stud­ies will prove the drug’s worth­less­ness be­yond any doubt.

“It’s clear that this has no chance of suc­cess,” Ad­ran­gi tells me. “Both stud­ies are go­ing to flop.”

Any ex­pec­ta­tions of suc­cess, they add, are built on ran­dom re­spons­es for the NT-proB­NP bio­mark­er that are like­ly to hap­pen at any time in any case.

To be sure, Ker­ris­dale’s mis­sion is clear here — and it’s al­so con­tro­ver­sial in a mar­ket that of­ten sin­gles out shorts for crit­i­cism. Hav­ing pre­dict­ed a cat­a­stro­phe in the clin­ic, it’s now bet­ting that Prothena’s shares will tank, and if it does they stand to prof­it enor­mous­ly. But in a field where anony­mous short at­tacks are a dime a dozen, Ker­ris­dale’s Ad­ran­gi goes pub­lic with his gam­bles, and the rea­sons why he’s gone on the of­fen­sive. They rep­re­sent the po­lar op­po­site of the sell-side notes, which of­ten gain wide­spread at­ten­tion for rosy sce­nar­ios.

Prothena’s shares dropped 8% on the re­port this morn­ing.

I’ve queried Prothena ex­ecs for a re­sponse as Ker­ris­dale’s re­port hit Wednes­day morn­ing.

Ker­ris­dale’s short re­ports — they al­so go long on oc­ca­sion — are typ­i­cal­ly harsh and Prothena is no ex­cep­tion. Some key points:

  • “Prothena’s “best re­sponse” is an un­in­for­ma­tive mea­sure that sub­sti­tutes vari­ance for ef­fi­ca­cy, and Prothena pro­vides this in lieu of mean­ing­ful da­ta be­cause NEOD001 does not work.” The re­port cites one pa­tient who had to drop out of the study af­ter a dan­ger­ous de­vel­op­ment, but was still count­ed as a suc­cess. And Ker­ris­dale ac­cus­es Prothena of hid­ing bad da­ta.
  • “Prothena’s car­diac best re­sponse rate is mere­ly a byprod­uct of well-doc­u­ment­ed nat­ur­al vari­ance, and we be­lieve there is no chance of NEOD001 pro­duc­ing sta­tis­ti­cal­ly sig­nif­i­cant re­sults in its cur­rent Phase 2b and Phase 3 tri­als.”
  • There was no dose re­sponse rate tracked and no way the drug can beat the re­spons­es seen in a con­trol arm.
  • The sci­ence is bad. “The pro­teins and amy­loid struc­tures vary be­tween pa­tients and even among amy­loid de­posits with­in a sin­gle pa­tient far too much for a sin­gle cryp­tic epi­tope to work with any con­sis­ten­cy.”

And they even go af­ter Neil Wood­ford, a backer who has al­so in­vest­ed in North­west Bio­ther­a­peu­tics, now trad­ing as a pen­ny stock.

Prothena re­cent­ly wrote off a pso­ri­a­sis drug af­ter a dis­ap­point­ing Phase Ib, blunt­ly call­ing the da­ta a dis­ap­point­ment. But Ad­ran­gi and his an­a­lyst say they had no choice in the mat­ter, call­ing it im­pos­si­ble to mask.

Ker­ris­dale takes no pris­on­ers dur­ing these at­tacks.

In­side Track: Be­hind the Scenes of a Ma­jor Biotech SPAC

Dr. David Hung and Michelle Doig are no strangers to the SPAC phenomenon. As Founder and CEO of Nuvation Bio, a biotech company tackling some of the greatest unmet needs in oncology, Dr. Hung recently took the company public in one of this year’s biggest SPAC related deals. And as Partner at Omega Funds, Doig not only led and syndicated Nuvation Bio’s Series A, but is now also President of the newly formed, Omega-sponsored, Omega Alpha SPAC (Nasdaq: OMEG; oversubscribed $138m IPO priced January 6, 2021).

Aduhelm OK 'bit­ter­sweet' for ALS ad­vo­cates; Con­trast­ing Covid-19 vac­cine read­outs; GSK joins TIG­IT bat­tle; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

With the busiest days of June now behind us, we’re starting to think seriously about the second half of the year. In August, we have scheduled a special report where Endpoints will compile a list of the 20 most influential R&D executives in biopharma. Know a luminary who should definitely be included? Nominate them now.

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Who are the lu­mi­nar­ies dri­ving the biggest ad­vances in bio­phar­ma R&D? End­points News is ask­ing for your nom­i­na­tions for a spe­cial re­port

In biopharma, driving a drug to market is the ultimate goal — but none of that happens without a strong research and development program. At the most successful companies, those R&D efforts are spearheaded by true innovators in the field who are always looking for that next novel mechanism of action or breakthrough safety profile.

Now, Endpoints News is asking you to tell us who those guiding lights are.

Leen Kawas, Athira CEO

Biotech founder placed on leave as $400M Alzheimer's start­up idea comes un­der scruti­ny

Athira Pharma, the Alzheimer’s biotech that emerged out of obscurity last year and raised nearly $400 million for a dark-horse approach to treating neurodegeneration, has found itself in sudden turmoil.

On Tuesday evening, the company released a terse statement announcing that CEO and founder Leen Kawas had been placed on administrative leave while an independent review board investigated “actions stemming” from her doctoral research at Washington State University. Mark Litton, who joined the company as COO two years ago, will take over day-to-day operations, they said.

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Bris­tol My­ers breaks the bank on Ei­sai's fo­late re­cep­tor ADC drug, lay­ing out more than $3B+ for rights

For years, innovation in oncology has been a crapshoot with Big Pharma — the whales at the table — dropping the big bucks for the key to the next generation of tumor fighters. Bristol Myers Squibb hasn’t exactly made a name for being an innovator in the space, but that doesn’t mean it won’t splash in when it sees a potential winner.

Now, with a massive check in hand, the drugmaker is willing to put its intuition to the test.

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Michael Chambers (L) and John Ballantyne

Dana­her strikes deal to buy boom­ing next-gen man­u­fac­tur­er Alde­vron for $9.6B

Life sciences conglomerate Danaher Corp. $DHR has struck a deal to buy the fast-growing Aldevron, one of the world’s top manufacturers of hotly sought-after plasmid DNA, mRNA and recombinant proteins for the burgeoning world of vaccine and drugmakers pushing some game-changing technologies.

Buyout talks set the stage for Danaher to settle on a $9.6 billion cash pact to acquire the private Fargo, ND-based company — a key supplier for a disruptive new Covid vaccine as well as a host of gene and cell therapy and CRISPR gene editing players — founded by Michael Chambers and CSO John Ballantyne as a crew of 2 back in 1998.

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FDA's con­tro­ver­sial Aduhelm de­ci­sion leaves ALS pa­tients feel­ing spurned

The FDA’s controversial approval of Biogen’s Aduhelm drug for Alzheimer’s disease has been met with fierce resistance from all corners of the biopharma industry, but few seem to be as upset with the decision as ALS patients and advocacy groups.

For all that’s already been written and discussed about the agency’s announcement, from the drug’s exorbitantly high price of $56,000 per year to criticism over lowered standards, ALS patients see something more. ALS patients and associations say they largely regarded Aduhelm’s approval as a bittersweet double standard: happy that those with Alzheimer’s have a new drug available, but questioning how the FDA evaluated Biogen’s drug compared to the experimental programs being studied for their own disease.

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As drug­mak­ers spend $6B an­nu­al­ly on DTC ads, sen­a­tors re­vive bill to in­clude list prices in ads

A new GAO report on biopharma companies’ $6 billion annual spending on direct-to-consumer advertising is pushing US Senate Majority Whip Dick Durbin (D-IL) and Sen. Chuck Grassley (R-IA) to reintroduce legislation that would require price disclosures in the ads.

The GAO found that drugmakers spent almost half—$8.2 billion of the $17.8 billion from 2016 to 2018—on DTC ads for drugs in three therapeutic categories, including inflammatory conditions (e.g., arthritis, gout), endocrine and metabolic disorders (e.g., type 2 diabetes, hypothyroidism), and conditions affecting the central nervous system (e.g., depression, multiple sclerosis), according to the new report.

Med­ic­aid com­mis­sion to Con­gress: In­crease re­bates for ac­cel­er­at­ed ap­proval drugs

As the FDA continues to approve more new drugs under its accelerated approval pathway, the non-partisan Medicaid and CHIP Payment and Access Commission (MACPAC) is telling Congress to increase the statutory Medicaid rebates for such drugs until their clinical benefits have been verified.

Higher rebates for drugs with accelerated approvals, a move opposed by the biopharma industry, would mean lower net prices, lessening their financial burden on the health care system while incentivizing the companies to speed the verification of the drugs’ clinical benefits in confirmatory trials. Once those benefits are confirmed, the companies would return to the lower rebates when the accelerated approval is converted into a full approval, MACPAC suggests.