December 17, 2025

What Is a “Short Report” and How Common Are They in Biotech?

This blog was inspired by Culper Research’s short report on Praxis Precision Medicines, Inc., (Nasdaq: PRAX) (“Praxis”) published on November 20, 2025. First, let’s define what we mean by “short report.”

What is a short report?

A “short report” (not to be confused with the biweekly short interest reports mandated by FINRA Rule 4560) is a publication written by a third-party research house/fund, not by one of your covering equity analysts.

The reports – often sensationalist in tone – typically claim to have uncovered/discovered a material weakness in a publicly traded company (sometimes even fraud), which their research report publicly exposes.

Authors typically seek to profit by:

• Shorting the underlying equity once they have completed their research, but before publishing their actual report.
• Then making their report as widely available as possible – with panic-selling often ensuing, usually sending the equity in question materially lower.
• Covering their short at the lower price and making a nice profit.

Firms known to write short reports include Muddy Waters, Citron, Kerrisdale, Culper Research, and more.

How is this practice legal?

While it’s illegal to “front-run” research reports written by traditional equity analysts, short report authors are protected in the U.S. under the First Amendment (freedom of speech), as well as anti-fraud laws and market manipulation rules. Moreover, short reports contain a disclosure stating that the authors are short the underlying stock.

That being said, short reports may not knowingly contain false statements or omit critical information with an intention to mislead.

A great example of a short report:

One of the greatest examples of a short report relates to Sino-Forest Corporation (TSX: TRE). Sino-Forest was a Toronto-listed Chinese forestry company that became the subject of a short report by Muddy Waters’ Carson Block in June 2011.

Before Block’s report, the firm had boasted a market capitalization of $4.2 billion and had a shareholder roster that included the likes of John Paulson. Notably, the firm was audited by Ernst & Young.  

Blocks’ allegations can be summarized as follows:

• That Sino-Forest vastly overstated its timber assets, especially in Yunnan, China. Moreover, the company’s investments and output were far too large to match local forestry production, GDP, or tax records.
• That Sino-Forest used intermediaries to create sham or circular sales that produced fake revenue with no real timber business behind it.
• Block concluded that Sino-Forest was a multi-billion-dollar, long-running fraud with massively inflated assets and essentially worthless shares.

Following the short report, shares in Sino-Forest fell 82%.

Most importantly, Block’s allegations turned out to be true.

In August, trading in Sino-Forest’s shares was halted after regulators concluded the company had engaged in practices it “knew or should have known” were fraudulent. By March 2012, Sino-Forest had filed for bankruptcy protection. Ernst & Young subsequently resigned as auditor.

How rare are short reports on biotechs?

Short reports on biotechs are rare, but not unknown. While there is no exhaustive database for short reports, one can get a feel for their regularity by looking at the research output to date for Culper Research (the firm that recently published on Praxis).

Date	Target	Ticker	Title	GICS Industry	~Mkt Cap Before Report
20-Nov-25	Praxis Precision Medicines Inc.	NASDAQ: PRAX	“Mined the Gap – How PRAX Twisted Dropouts into a Phase 3 ‘Win’ with Make-Believe Data and Half-Baked Analysis”	Biotechnology	$4B
23-Oct-25	DoorDash, Inc.	NASDAQ: DASH	“Unauthorized Dasher ‘Backdooring’ Scheme Props Up Delivery Operations”	Internet & Direct Marketing Retail	$95B
21-Aug-25	Tecnoglass Inc.	NYSE: TGLS	“From Barranquilla to Sinaloa”	Building Products	$2.2B
12-Jun-25	AppLovin Corp.	NASDAQ: APP	“Behind the Red Curtain”	Interactive Media & Services	$174B
20-May-25	Archer Aviation Inc.	NYSE: ACHR	“When You Can’t Earn Airtime in the Sky, Buy it on Late Night Television”	Aerospace & Defense	$6B
4-Apr-25	Gorilla Technology Group Inc.	NASDAQ: GRRR	“Fake Products, Fabricated Contracts, Fraudulent Partners”	Software	$375M
13-Mar-25	OSI Systems, Inc.	NASDAQ: OSIS	“SEDENA Unwinds, DoJ Subpoenas Fly, Execs Wave Goodbye”	Electronic Equipment & Instruments	$4.0B
26-Feb-25	AppLovin Corp.	NASDAQ: APP	“Force-Feeding Users with Silent Backdoor Installs and Copying Meta’s Homework”	Interactive Media & Services	NA
4-Feb-25	Applied Optoelectronics, Inc.	NASDAQ: AAOI	“Another Optical Illusion”	Communications Equipment	$1.2B

Source: Culper Research, New Street Investor Relations.

As you can see, of the eight companies Culper published on (to date) in 2025, only one (Praxis) was in biotech.

What did Culper Research say about Praxis?

While Culper Research’s full report can be found on their website at www.culperresearch.com, we reproduce here a paragraph from the conclusion section of their executive summary (which can be found on page 4 of their PDF).

“We recognize that ET is a serious and undertreated condition that demands safe and effective therapies. That is exactly the problem, we believe, for ulixacaltamide – an ineffective drug with tolerability issues dressed up with make believe data and statistical games. The drug has already failed in Phase 2 and was recommended to be halted for futility in Phase 3. Now, its miraculous “success” rests on a last-minute endpoint change, aggressive imputation of discontinued patient data amid an alarming, highly imbalanced dropout rate; and a blatantly misapplied tipping point analysis. Each of these fall apart under scrutiny. Taken together, they damn ulixa’s FDA hopes entirely.”

What happened to Praxis’ stock and what did the company do?

• On the day Culper’s short report was published (November 20, 2025) the stock opened at $191.00 and closed at $164.09, down 14.1%.
• That same day, Praxis (not coincidentally) announced a lunchtime fireside chat with H.C. Wainwright’s Doug Tsao titled “Deep Dive into Praxis’ Ulixacaltamide Data” featuring statistician Prof. Chuck McCullogh, University of California, San Francisco, with Praxis’ CEO Marcio Souza, in attendance.
• Following the fireside chat on November 24, the stock closed (up) at $192.70.
• Then on December 4, Praxis issued a press release titled “Praxis Precision Medicines Announces Positive Pre-NDA Meeting with FDA for Ulixacaltamide in Essential Tremor” which included the following quote from the company’s CEO:

“We are very pleased with the collaborative discussions we recently had with the FDA and remain on track to submit Praxis’ first NDA in early 2026. Building on the strong momentum from the positive Essential3 program, where ulixacaltamide demonstrated statistically significant and clinically meaningful improvements in daily functioning, the FDA feedback moves us closer to delivering a much-needed therapy to the millions of people living with essential tremor who currently lack effective and safe treatment options.”

• By the next day’s market close (December 5), Praxis stock was up to $247.99.

Conclusions:

I would highlight the following takeaways for biotech CEOs and CFOs from this example:

• Short reports in biotech are rare. Moreover, targets in other industries tend to be larger, more liquid and less tightly held, thus making them easier to short.
• Where there is smoke, there isn’t necessarily fire. While the Praxis story has yet to conclude, to date this looks like an example of a short report NOT exposing a material weakness or wrongdoing.  Note: Viceroy Research and Fuzzy Panda Research’s 2024 respective short reports on insurer Globe Life (NYSE: GL) are another example of this.
• If a biotech becomes the subject of a short report, management shouldn’t panic but should promptly address the concerns raised: Praxis did a great job of addressing the short report without publicly mentioning it or the research firm behind it.
  • They identified the underlying allegations and addressed them using credible third parties at a near term event, to build confidence in management’s already stated position.
  • They then provided the market with a regulatory update, again refuting concerns raised by the short report without again directly mentioning them.
• Avoid knee-jerk reactions. Trying to discredit a short report’s author in a directed response (e.g., a press release, website or social media post, letter to investors), threatening to sue, or announcing a committee to report back in the medium-to-long-term, do nothing to immediately suppress the allegations (and all of these have been done by “guilty” short report targets in the past). If anything, these actions only drive more attention to the report. Treat a short report much as you would an activist investor – except note that in this instance any attempt at engagement with the short report author would be futile.