When Gabriel Grego, the founder of short-selling hedge fund Quintessential Capital Management, launched his first volley at medical device maker Penumbra by claiming the catheters it produces were not safe, the stock didn’t just yawn. It ended the day up almost 8 percent.
But on Tuesday, less than a month later, Grego came back with a second short report with even more shocking accusations: A fake scientist was the author behind Penumbra’s scientific research, Quintessential claimed.
“Antik Bose, the person authoring most of Penumbra’s critical research and clinical studies, is a fake!” the report charged, asserting that Penumbra engaged in a sophisticated effort to create a “fake Internet persona” by doctoring images and making fake employment and research claims.
Penumbra initially shrugged off the report in a statement to CNBC. “This attack by sleazy short sellers QCM reads like an internet conspiracy written by teenagers. It is impossible to dispute the facts, because there are no facts.”
But by the end of Tuesday’s trading, Penumbra — which just last week had fended off a report of another death associated with the specialized catheter — fell as much as 18 percent before closing down about 9 percent. The stock is down 19 percent over the past month.
The deaths of more than a dozen stroke patients had previously been linked to the catheter, which had been approved by the U.S. Food and Drug Administration last year, Bloomberg reported.
Grego believes the allegedly fake doctor may have had something to do with that approval. According to his report, “Antik Bose’s papers may have been used to win FDA blessing for Penumbra’s devices; to promote Penumbra’s stock price in its IPO and elsewhere and to market products to healthcare institutions. According to our legal team these actions could constitute securities fraud and common law fraud.”
The “fake” Antik Bose claims in his LinkedIn profile to be an assistant professor at Washington University and an employee at the Fred Hutchison Cancer Research Center in Seattle as a “senior research scientist,” according to Grego.
“We checked with both institutions: Mr. Bose does not show up on their online directories and in a phone check they deny that anyone with that name has ever worked there. Mr. Bose does not show up in the filings of the companies he claims to own (Antik Hotel and AB Commercial Funding Solutions),” Grego’s report says.
The report also included several pages of doctored photos created to establish Antik Bose’s connection to Fred Hutchison and other entities.
As it turns out, the suspicious Antik Bose has the same last name and first initial of the founder of Penumbra. Grego offers an “educated guess” as to why this is the case.
Just before Antik Bose surfaced online, Dr. Arani Bose, Penumbra’s cofounder and major shareholder, “authored scientific research papers supportive of Penumbra’s activities without disclosing his clear conflict of interest. For example, in the 2009 issue of the Archives of Neurology Arani Bose was caught doing exactly that, leading to this embarrassing exchange with the editor of the journal,” Grego wrote. He was alluding to a letter from the editor of the journal, reprinted in the report, pointing out that Bose had failed to disclose his role at Penumbra.
“In a suspicious coincidence, the first web appearance ever of Antik Bose can be traced back to this paper, soon after the above reprimand of Arani Bose.” (Research papers often only cite the first initial of the authors’ names, he notes.)
Since then, “Dr. Antik Bose is certainly academically prolific, having authored as many as 44 research papers in the last 15 years, according to his fake Researchgate profile,” Grego claimed in his report. He added that this research has been used “multiple times to support FDA applications for its devices clearances and to promote [Penumbra’s] stock before and after its Initial Public Offering.” It has also been used to market Penumbra’s products to healthcare provides, he says.
“This fraudulent character appears to have been fabricated by management in a reckless attempt to hide its involvement with critical research,” asserts Grego.
After the stock was halted for about an hour on Tuesday afternoon, Penumbra, in a statement emailed to Institutional Investor, took credit for the research.
“Penumbra confirms the papers rumored to be attributed to Antik Bose are in fact attributed to Dr. Arani Bose. To imply that Dr. Arani Bose's peer-reviewed research, co-authored with a large cohort of his peers, was ever or would ever be attributed to anyone other than Dr. Arani Bose is inaccurate and conspiratorial.”
In an email to II, Grego responded. “As we correctly guessed in our report, Penumbra now admits that Antik Bose’s is a fake name for Arani Bose, essentially acknowledging its role in perpetrating this extensive deception to investors and to the medical community. We will show further evidence of board involvement in this scheme. We note that only 6 papers authored by Arani Bose show up on Pubmed, the very same publication mentioned by Penumbra, the remaining ones can be found elsewhere on the web, but are falsely attributed to Antik Bose.”
“We find it appalling that a NYSE company would engage in behaviors such as forging photographs, creating fake websites and other nefarious action for the purpose of hiding the authorship of one of its founding shareholders,” he said, adding that Quintessential is calling on board members to resign and authorities to investigate.
Said Grego: “People are literally dying to find out the truth.”