Short Seller Alleges Praxis Precision's Potential $3 Billion Drug 'A House Of Cards'

Core Viewpoint - A short seller is challenging Praxis Precision Medicines Inc. regarding the validity of its Phase 3 trial results for ulixacaltamide, suggesting that the data may not withstand regulatory scrutiny [1][2]. Group 1: Trial Results and Claims - Praxis reported a statistically significant 4.3 point mean improvement in the mADL11 score at Week 8 of the Phase 3 Essential3 program for essential tremor, with all key secondary endpoints achieving statistical significance [3]. - The short seller claims that Praxis manipulated the trial data by changing the primary endpoint without FDA approval and using optimistic assumptions for patients who discontinued the trial [5][6]. Group 2: Regulatory and Approval Concerns - The short seller argues that the issues raised could jeopardize ulixacaltamide's approval prospects ahead of a key FDA meeting later this year [4][7]. - The report suggests that the FDA will recognize the problems with the trial data, leading to significant downside risk for the stock [7]. Group 3: Valuation and Market Concerns - Nearly all of Praxis's market value is tied to ulixacaltamide, which was acquired for only $1 million in 2018, raising concerns about the drug's potential [8]. - The short seller describes ulixacaltamide as having "virtually no path forward" and labels the expectations surrounding it as resting on an unstable foundation [6][12]. - Following the release of the "positive" Phase 3 results, Praxis raised $567 million in new capital, with analysts valuing ulixacaltamide near $3 billion, constituting the majority of Praxis's market capitalization of approximately $4.5 billion [11].