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Why Veru Stock Plummeted on Monday

What happened
Veru (NASDAQ: VERU) has found itself the target of a short-seller, and as a result the biotech company’s shares took a more than 12% hit on an otherwise upbeat Monday for the wider stock market. That short-seller didn’t mince words about its concerns with the company, which clearly left investors quite spooked about its future.
So what
Culper Research, an activist short-seller that in its words “seek[s] to expose companies which have misrepresented their operations, failed to disclose significant risks, misappropriated capital, possess accounting irregularities, or otherwise deceived investors,” published a blistering report on its short position in Veru.
Image source: Getty Images.

In a 10-tweet thread digesting the report and posted on Monday, Culper accused Veru of “glaring anomalies” in its phase 3 clinical trial of coronavirus drug sabizabulin. Among its raft of accusations, Culper wrote that the trial is significantly smaller than those conducted for other COVID drug candidates and demonstrated a worryingly high mortality rate.
The researcher is also highly unimpressed with the executives guiding the company. In the tweet thread, Culper wrote that “Veru’s top ranks harbor a history of alleged sham science, failure, and misrepresentation” and are “a team of alleged frauds and failures who now tout a COVID-19 drug.”
The publication of the report and the tweet thread come hot on the heels of the news that the Food and Drug Administration (FDA) has set a pre-Emergency Use Authorization (EUA) meeting date to discuss that phase 3 study data. This is set for next Tuesday, May 10.
Now what
Veru has not yet officially responded to Culper’s accusations, which are worrying. The rather eclectic biotech — it has a female contraceptive product, FC2, on the market, and is developing cancer drugs — has attracted much interest because of the apparently promising sabizabulin. Investors could turn away from the company in droves if the researcher’s allegations have merit, however.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened

Veru (NASDAQ: VERU) has found itself the target of a short-seller, and as a result the biotech company’s shares took a more than 12% hit on an otherwise upbeat Monday for the wider stock market. That short-seller didn’t mince words about its concerns with the company, which clearly left investors quite spooked about its future.

So what

Culper Research, an activist short-seller that in its words “seek[s] to expose companies which have misrepresented their operations, failed to disclose significant risks, misappropriated capital, possess accounting irregularities, or otherwise deceived investors,” published a blistering report on its short position in Veru.

Image source: Getty Images.

In a 10-tweet thread digesting the report and posted on Monday, Culper accused Veru of “glaring anomalies” in its phase 3 clinical trial of coronavirus drug sabizabulin. Among its raft of accusations, Culper wrote that the trial is significantly smaller than those conducted for other COVID drug candidates and demonstrated a worryingly high mortality rate.

The researcher is also highly unimpressed with the executives guiding the company. In the tweet thread, Culper wrote that “Veru’s top ranks harbor a history of alleged sham science, failure, and misrepresentation” and are “a team of alleged frauds and failures who now tout a COVID-19 drug.”

The publication of the report and the tweet thread come hot on the heels of the news that the Food and Drug Administration (FDA) has set a pre-Emergency Use Authorization (EUA) meeting date to discuss that phase 3 study data. This is set for next Tuesday, May 10.

Now what

Veru has not yet officially responded to Culper’s accusations, which are worrying. The rather eclectic biotech — it has a female contraceptive product, FC2, on the market, and is developing cancer drugs — has attracted much interest because of the apparently promising sabizabulin. Investors could turn away from the company in droves if the researcher’s allegations have merit, however.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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