What happened
Veru's (VERU 3.15%) stock dipped by 5.5% on Friday as of 10:49 a.m. ET after the short-selling group Culper Research published a new report criticizing the company's latest clinical trial results. Culper claims Veru's phase 3 trial data regarding its drug sabizabulin, which was published July 6 in the New England Journal of Medicine, is seriously flawed because the patients in the trial's placebo group were significantly more ill and at a higher risk of death than the patients in the treatment group.
Culper also claims some of the investigators working on the trial are associated with other recent biotech failures to develop therapies for coronavirus infection.
So what
Sabizabulin is an antiviral that's intended to treat severe COVID-19, which typically results in patients experiencing insufficient oxygenation of their blood. The short-seller pointed to the blood oxygen saturation levels of the patients in the study's placebo group, stating that some of the patients there had lower saturation than the treatment group before it received treatment.
If true, that would imply the trial results finding a beneficial impact of sabizabulin are exaggerated, incorrect, or otherwise methodologically unsound.
Now what
Veru submitted its request for an Emergency Use Authorization (EUA) to the Food and Drug Administration (FDA) on June 7. Before that, on May 11, regulators said the company wouldn't need any additional studies or data to shore up its EUA application.
If everything goes as planned, sabizabulin could get its emergency approval as soon as later this month. But because sabizabulin is Veru's most advanced pipeline program, a rebuff from regulators at the FDA this late in the game could be disastrous for its stock price. Either way, the short-seller's thesis will be put to the test quite soon.
