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When short sellers began raising questions about New York-based Applied Therapeutics’ treatment for a rare metabolic disorder, the company could have ignored the investors. Or tried to prove them wrong. Instead, I’ve learned, the company deployed heavy-handed legal tactics to scare them into silence.

In July 2020, Applied was worth more than $1 billion when an anonymous short seller posted an online research report that pointed out misrepresentations in the company’s presentations of data on the drug called AT-007 — making the therapy appear more effective than it really was. The report warned investors that Applied stock price was “wildly overvalued” and that the company had a “zero chance” of securing FDA approval based on biomarker data. 

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