Capricor Stock Plummets 22% After Martin Shkreli Reveals Short Position
The controversial investor, known as 'Pharma Bro,' targeted the biotech on the same day it released positive platform data, creating a new challenge for the embattled drugmaker.
Shares of Capricor Therapeutics (NASDAQ: CAPR) plunged as much as 22% in Monday trading after controversial investor Martin Shkreli announced he had taken a short position in the biotechnology company.
The sell-off began after Shkreli, who gained notoriety as the “Pharma Bro” for aggressively hiking the price of a life-saving drug, publicly questioned the efficacy of Capricor’s lead drug candidate. The move wiped out nearly $60 million in market capitalization, reducing the company's value to approximately $262 million by the close of trading.
Capricor’s stock closed down 21.57% at $4.51 per share, marking a dramatic turn on a day the company had attempted to build positive momentum. Earlier Monday, Capricor announced new data on its exosome technology platform, highlighting a potential framework for loading therapeutic molecules to treat a range of diseases. However, that news was quickly overshadowed by Shkreli's bearish campaign.
This new pressure from a high-profile short-seller comes at a critical time for Capricor. The company is developing deramiocel (CAP-1002), a cell therapy aimed at treating Duchenne muscular dystrophy (DMD), a severe genetic disorder characterized by progressive muscle degeneration. The treatment has been a focal point of investor hopes, but has faced a challenging regulatory path.
In July, the U.S. Food and Drug Administration (FDA) issued a Complete Response Letter for deramiocel, declining to approve the therapy and requesting additional data. While Capricor held a meeting with the agency in September that clarified a path forward using its ongoing Phase 3 trial, the initial rejection created significant uncertainty and contributed to a 66% year-to-date decline in its share price even before Shkreli’s involvement.
Capricor is expecting to release top-line data from its pivotal Phase 3 HOPE-3 clinical trial in the fourth quarter of 2025, an event that is now fraught with heightened tension. Shkreli's public campaign appears timed to exploit investor anxiety ahead of these crucial results.
The company's stock has been volatile, trading in a 52-week range of $4.51 to $20.75. Despite the recent setbacks and precipitous fall, some Wall Street analysts have maintained a more optimistic outlook. The consensus analyst rating remains a 'Moderate Buy' with an average price target of $20.70, according to market data, suggesting a significant disconnect between current market sentiment and long-term valuation models.
Shkreli's re-emergence as a market-moving voice follows his release from prison after being convicted of securities fraud in 2017. His strategy often involves taking public short positions while using social media to cast doubt on a company's science or business model, leveraging his large following to amplify the message and intensify selling pressure.
For Capricor, the immediate challenge will be to maintain investor confidence as it approaches its most significant clinical data readout. The company must now navigate not only a complex regulatory environment but also a potent, public, and bearish campaign from one of the pharmaceutical industry's most infamous figures.