Investment banking usually means hoping for the success of a business you are investing in, but for hedge fund investor Sahm Adrangi nothing could be further from the case. Sahm Adrangi is one of the new types of investors that practice activist investment, a type of investing based on personal values. Typically Adrangi focuses his energy on certain industries where he has obtained a sort of expertise and lately his focus has been on the biotech industry.
Within weeks of each other in 2017, two companies saw their heavily promoted drugs fail completely during Phase III trials. Sam Adrangi foresaw this outcome at least a year before each and had presented his research through various media to the let the world know his findings.
Prostvac, a drug in development to vaccinate against prostate cancer that was being developed by Bavarian Nordic, had already received $60 million in licensing from Bristol-Myers Squibb with $80 million at the ready upon conclusion of Phase III testing. Upon failure in testing, Bavarian Nordic saw their shares’ value drop by half. Sahm Adrangi had predicted this failure in 2015 and had led a very successful short selling attack on the company to discourage them from pushing the drug and incidentally profit when they chose to continue with testing the doomed medication.
The second medication was to real a form of epilepsy and was being developed by Sage Therapeutics. The initial test groups for Phase I and II trials were extremely small, meaning the statistics for success were more likely to be inaccurate. At the completion of Phase III, it was shown that the response rate was only 43.9% compared to the 42.4% rate in placebo. This 1.4% variance led to yet another successful short selling attack by Sahm Adrangi that began in 2016. View Related Info Here.
Sahm Adrangi is a Yale graduate and the Chief Investment Officer of Kerrisdale Capital Management LLC, a New York-based boutique investment firm that he also founded in 2009 with less only around one million dollars. Throughout the company’s existence, they have managed hundreds of millions of dollars and are known around the world for their bets against bad business.