LONDON (Reuters) -Shares of Chinook Therapeutics Inc tumbled 18% and then pared losses on Tuesday after short-seller Muddy Waters said it was “highly unlikely” that the company’s treatment for chronic kidney disease would receive U.S. regulatory approval.
The stock was last down 6.77% at $21.815 a share. But immediately after Muddy Waters announced its short position, a bet the stock would decline, Chinook shares fell as low as $19.20, down 18% from the $23.40 close on Monday. Other healthcare stocks also fell.
Muddy Waters said Chinook’s drug atrasentan has been shown to be harmful to patients’ cardiovascular health and that is was not producing the desired effect on chronic kidney disease.
There are six analysts with “buy” recommendations for Chinook, according to Refinitiv data. Antonia Borovina, an analyst at Bloom Burton Securities in Toronto, declined to comment as she had not yet fully read the Muddy Waters report.
Previously, Bloom Burton had said previously there was a 70% probability the FDA approves Chinook’s atrasentan. The firm has a “buy” recommendation and a price target of $51 on the stock.
There was no immediate comment from Seattle-based Chinook.
The company earlier on Monday announced a partnership with Ionis Pharmaceuticals Inc to develop and commercialize a therapy for antisense oligonucleotide (ASO), a rare, severe chronic kidney disease.
(Reporting by Herbert Lash, additional reporting by Nell Mackenzie; Editing by David Gregorio)