Neuren Pharmaceuticals Faces Share Plummet Amid Short-Seller Allegations

Highlights:

• Neuren Pharmaceuticals' shares plunged up to 15 percent following allegations by short seller Culper Research targeting its US partner, Acadia, over misrepresentations regarding the efficacy of Trofinetide.
• Culper's report labeled the drug's launch as a "total flop," citing data from the FDA and caregiver comments, while Neuren defended the drug's performance with analyst reports and recent data from Acadia.
• Despite a previous surge in Neuren's shares, fueled by a licensing agreement with Acadia, the company faced a sharp decline, reflecting market uncertainty amid the allegations.

Neuren Pharmaceuticals (ASX: NEU), an Australian biotech firm, experienced a significant drop of up to 15 percent in its shares following accusations from short seller Culper Research targeting its US partner, Acadia. The report accused Acadia of misrepresenting the safety and efficacy of Trofinetide, Neuren's drug for treating Rhett syndrome. Acadia's Nasdaq-listed shares initially fell by 7.9 percent in reaction to the news.

Allegations and Responses

Culper Research labeled the launch of Trofinetide under the brand name Daybue as a "total flop," contradicting expectations of substantial revenue. The report cited data from the FDA Adverse Event Reporting System and comments from caregivers expressing dissatisfaction with the drug's outcomes. Neuren, however, defended the drug's performance, citing reports from analysts and recent data from Acadia suggesting a favorable patient retention rate.

Market Reaction

Neuren's shares, which had surged over 1000 percent since December 2021, plummeted amid the allegations. Despite a previous rally following a licensing agreement with Acadia, the company faced a sharp decline. ASIC-disclosed short positions on Neuren dropped to 0.5 percent, reflecting the market's confidence in the company's prospects.

Conclusion

The allegations from Culper Research have caused significant turbulence for Neuren Pharmaceuticals, raising concerns about the future of its flagship drug. The company's response and the subsequent market reaction underscore the volatility inherent in the biotech sector and the importance of transparent communication in maintaining investor trust.

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