Short seller Culper Research said Wednesday it has taken a short position in Tarsus Pharmaceuticals (TARS), alleging the commercialization of Xdemvy relies on a Medicare copay assistance structure that "raises serious Anti-Kickback Statute concerns."

Culper alleged Tarsus funds a charitable foundation that subsidizes Medicare copays for Xdemvy patients and said the arrangement bears "many of the attributes of the arrangements that have been prosecuted" by the US Department of Justice.

The short seller also argued Tarsus' addressable market is "a fraction (~20%) of the Company's claims" and projected Xdemvy revenue would "peak below $800 million at best," compared with the company's long-term target of more than $2 billion.

Culper further argued that analysts underestimate Tarsus' patient assistance costs and said the company's profitability "will never materialize" because those expenses are higher than Wall Street expects.

Tarsus did not immediately respond to MT Newswires' request for comment.

Shares of Tarsus were down more than 6% in Wednesday afternoon trading.

Price: 59.06, Change: -3.88, Percent Change: -6.16