Adrangi mounts short attack on 'worthless' drugs of Sanofi ally

Kerrisdale argues perceptions of Principia are skewed by a "massive confounding factor." (Getty Images)

Sahm Adrangi's Kerrisdale Capital has trained its sights on Principia Biopharma, arguing the pipeline of the Sanofi partner is “worthless.” The short seller thinks Principia’s approach to the treatment of autoimmune diseases is “misguided” and likely to lead to clinical failures. 

Principia’s pipeline is built upon the idea of using BTK inhibitors to curb B-cell attacks against healthy tissues. BTK inhibitors have already established themselves in the treatment of B-cell malignancies, driving interest in whether they work in autoimmune diseases driven by the same cell type. Principia thinks they can, and, after getting a look at early phase data last month, more investors have bought into the idea, sending the stock up sharply.

Kerrisdale, a short seller that has previously attacked Bavarian Nordic and Proteostasis Therapeutics, thinks Principia and the investors that back it are wrong. That position is partly based on analyses of the clinical data generated to date that, in Kerrisdale’s view, paint a bleak picture of the prospects of Principia’s pipeline. 


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“Those small trials included no placebo groups and allowed patients to continue taking other medications that are known to be effective in treating their conditions. Examined with this massive confounding factor in mind, Principia’s BTK inhibitors appear to add no value to the traditional standard of care and to pale in comparison to newer therapies,” Kerrisdale wrote in its report.

Kerrisdale backed up its dissection of Principia’s data with an analysis of the broader concept of using BTK inhibitors to treat autoimmune diseases. The analysis details the failed attempts of companies including Bristol-Myers Squibb, Gilead and Roche to develop BTK inhibitors for use in autoimmune diseases. The failures led Kerrisdale to conclude BTK inhibitors are ineffective in autoimmune diseases as they fail to reduce the existing B-cell populations that attack healthy tissues in sufferers.

The Kerrisdale report also addresses Principia’s prospects in multiple sclerosis, an indication in which it is closing in on midphase data. As Kerrisdale sees it, Principia’s Sanofi-partnered multiple sclerosis drug has “a mode of action that seems irrelevant to the etiology of MS,” again citing the failure to tackle existing B cells to explain its reasoning.

Principia has readouts coming up that could shed light on the merits of Kerrisdale’s arguments. Yet, Kerrisdale expects the phase 2 multiple sclerosis trial to offer few firm conclusions, claiming the study “seems almost designed to be confusing and inconclusive.”

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