KDNY - Short seller still believes Chinook's lead drug won't be approved amid Novartis deal

2023-06-12 15:26:54 ET

Short seller Muddy Waters still doesn't expect that Chinook Therapeutics ( NASDAQ: KDNY ) lead drug will ever be sold despite Novartis' ( NYSE: NVS ) agreement to purchas e the company for $3.2 billion . Chinook shares skyrocketed 58% on the deal Monday.

Carson Block, the founder of Muddy Waters, released a short report on May 16 on Chinook ( KDNY ) that argued the company's lead candidate, atrasentan for chronic kidney disease, will never win U.S. FDA approval. The report sent Chinook shares tumbling as much as 18% that day, the stock ended up closing down 4.5%.

Block last week released a follow-up piece , again arguing that the atrasentan was unlikely to be approved. On Monday, Block said his view hadn't changed even after Novartis ( NVS ) agreed to buy the company for $40 a share and $4 a share in contingent value rights upon certain milestones relating to the lead product candidate, atrasentan. The price represented a 68% premium to Chinook's ( KDNY ) closing price on Friday.

"We are confident that the drug is inefficacious and will never be brought to market in the US." Carson Block told Bloomberg i n an interview on Monday.

Block didn’t say if any changes were made to his short position in Chinook ( KDNY ).

Chinook ( KDNY ) short interest is 7.5%.

More on Chinook Therapeutics

• Novartis deal to buy Chinook rallies Vera Therapeutics
• Chinook defended at Guggenheim following short report
• Chinook Therapeutics: Travere's Pain Is Chinook's Gain

For further details see: