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Format is a Word-style text memo with dense footnotes (58 citations), not a slide deck — classic Carson Block rhetorical pattern: enumerate GAAP violations, triangulate with Chinese credit-report evidence (page 5 screenshot showing SanReno Shanghai has 0 employees and USD 0 paid-in capital), and reinforce with an explicit Reported-vs-Adjusted revenue table (page 8). Author attribution uses 'Director of Research: Carson C. Block' from the cover. No stake size or price target disclosed; campaign outcome: Novartis announced acquisition of Chinook for ~$3.2B on 12 June 2023 (five days after this report), effectively ending the short campaign — consider revisiting campaign_outcome later.", "kpisCited": [ { "detail": "-95.3% (from $51.6M reported to $2.4M adjusted)", "metric": "2021 revenue adjustment" }, { "detail": "-68.5% (from $6.1M reported to $1.9M adjusted)", "metric": "2022 revenue adjustment" }, { "detail": "$41.2M booked as 2021 revenue from SanReno license contribution", "metric": "Non-cash JV revenue" }, { "detail": "$4.2M in 2022", "metric": "Cost reimbursement misclassified as revenue" }, { "detail": "~$8M of $10M recognized in 2021", "metric": "Merck pass-through revenue grossed up" }, { "detail": "Sold 61.5% of Chinook stake since Oct 2020 IPO", "metric": "Versant Ventures share sales" }, { "detail": "50% voting securities + board nomination rights", "metric": "Chinook ownership of SanReno" }, { "detail": "-$102.9M reported; upward adjustment of 49.76%", "metric": "2021 net loss" }, { "detail": "-$187.9M reported; upward adjustment of 2.24%", "metric": "2022 net loss" }, { "detail": "USD 0; 0 employees per 2021 annual filing", "metric": "SanReno Shanghai paid-in capital" } ], "closingAsk": null, "extraction": { "at": "2026-04-22 19:58:19+00", "model": "unknown-legacy", "runId": null, "seconds": 124.33522, "promptVersion": null }, "scqaReward": "Adjusted collaboration/license revenue falls from $51.6M to $2.4M in 2021 and from $6.1M to $1.9M in 2022 (-95.3% and -68.5%), validating the short thesis that Chinook's results are largely accounting fiction.", "thesisTypes": [ "fraud_exposure" ], "top3Reasons": [ "Chinook round-trips $41.2M non-cash JV contribution as 2021 revenue — cuts adjusted revenue 95%", "SanReno JV is a Shanghai shell: zero employees, no office, yet booked $44M revenue", "Fair-value accounting hides 50% of SanReno losses; equity-method test clearly met" ], "scqaSituation": "Chinook Therapeutics is a clinical-stage kidney-disease biotech that went public via a 2020 reverse-merger SPAC, with lead asset atrasentan licensed to AbbVie and a Chinese JV (SanReno) developing the same molecule.", "thesisSummary": "Muddy Waters remains short Chinook Therapeutics (NASDAQ:KDNY), arguing that beyond distorting atrasentan clinical-trial data (covered in the May 2023 initial report), the company has systematically manipulated its financials via its Chinese JV SanReno Therapeutics. Chinook booked $41.2M of 2021 revenue from a non-cash license contribution to SanReno, recognized $4.2M of cost reimbursements as revenue in 2022, and improperly grossed up ~$10M of Merck pass-through revenue — adjusted, 2021 and 2022 collaboration/license revenue falls by 95.3% and 68.5%. The report flags SanReno's lack of substance (Shanghai entity set up December 2021 with zero employees and no real office), the fair-value accounting choice that isolates Chinook from 50% of SanReno's losses, and deep conflicts with Versant, Frazier and Samsara, who co-own SanReno while Versant has already sold 61.5% of its Chinook stake.", "primaryDemands": [ "Restate 2021 and 2022 collaboration/license revenue", "Reclassify SanReno JV from fair-value to equity-method accounting", "Disclose SanReno as a related party" ], "scqaResolution": "Apply proper GAAP: back out the non-cash JV gain, net the Merck pass-throughs, and use the equity method for a JV where Chinook has board seats, 50% economics and technology dependency — most reported revenue disappears.", "thesisOneLiner": "Chinook manipulated 2021-2022 revenues via its Chinese JV SanReno; strip out the accounting tricks and reported revenue collapses by 95% and 68% respectively, reinforcing our short.", "precedentsCited": [ "2020 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Research, acting as a short-seller report.", "elementsJson": [ "headline_text", "paragraph", "footnote" ], "confidence": 1, "extraction": { "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "at": "2026-05-02 20:47:27.651+00", "seconds": 5.104, "promptVersion": "v2-canon-conditioned" } }, "links": { "slide": "/slides/019dd923-622c-750b-8b97-6463cf2ae738/2", "deck": "/decks/019dd923-622c-750b-8b97-6463cf2ae738", "deckAnchor": "/decks/019dd923-622c-750b-8b97-6463cf2ae738#slide-2", "deckJson": "/decks/019dd923-622c-750b-8b97-6463cf2ae738.json" }, "components": [ { "bbox": null, "kind": "callout", "text": "We adjust reported 2021 and 2022 revenues downward by -95.3% and -68.5%.", "attrs": null, "canon": { "kind": { "name": "Callout", "slug": "callout", "status": "active", "canonId": "019de52c-f8d3-761a-8953-7d37080de5e2", "version": 1, "description": "Highlighted callout box." }, "tool": { "name": "Visual emphasis", "slug": "visual-emphasis", "status": "active", "bestFor": null, "canonId": "019dd9e1-474b-736b-a8eb-a794dd88241c", "version": 1, "bodyDocId": null, "description": "Drawing the eye to one element above the rest of the slide.", "familyLabel": null }, "subkind": null, "framework": null }, "subkind": null, "groupRole": null, "confidence": null, "extraction": { "at": "2026-04-22 23:34:18+00", "model": "unknown-legacy", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "019dd953-2b61-7647-86f5-25c3d039b110", "parentComponentId": null }, { "bbox": { "h": 0.25, "w": 0.7, "x": 0.15, "y": 0.57 }, "kind": "paragraph", "text": "Chinook uses SanReno to overstate revenues and assets. Chinook recorded a non-cash investment of $41.2 million in SanReno at SanReno’s establishment in 2021. This was almost entirely based on the deemed value of the atrasentan and BION-1301 licenses Chinook contributed to SanReno. Chinook then misleadingly – possibly improperly – recorded revenue from SanReno of $41.2 million. Not only is the $41.2 million revenue figure effectively a round-trip of intangible assets (of suspect value), but it is questionable whether SanReno has substance. A credit report for SanReno, which should be based on mandatory financial reporting to the PRC government, shows that none of the purported investment funds from Chinook’s joint venture partners have actually been contributed to SanReno’s PRC entity. We see no indication that SanReno has an actual office in China, with only a serviced office mentioned in the credit report referenced infra. Even if the $40 million initial valuation of the SanReno investment were accurate (which would imply an $80 million total initial valuation for SanReno), the extra $1.2 million", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:27.651+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "5ec2646a-07c2-48e9-bf03-d772e5b9145d", "parentComponentId": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.13 }, "kind": "paragraph", "text": "Muddy Waters remains short Chinook Therapeutics Inc (NASDAQ:KDNY). In addition to distorting clinical trial data, Chinook has manipulated its financials. The misleading – if not improper – accounting, which seems an attempt to make Chinook appear more substantive than it is, primarily relates to transactions with its Chinese JV, SanReno Therapeutics. We adjust reported 2021 and 2022 revenues downward by -95.3% and -68.5%.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:27.651+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "8e1136f6-bb92-4c3f-ab23-be1474c83815", "parentComponentId": null }, { "bbox": { "h": 0.11, "w": 0.7, "x": 0.15, "y": 0.22 }, "kind": "paragraph", "text": "In our initial report, we focused our concerns about Chinook on atrasentan, which we believe is highly unlikely to be approved by the FDA: We concluded that atrasentan a) is inefficacious for chronic kidney disease, and b) has been shown to be harmful to patients’ cardiovascular health. We also discussed how AbbVie and Chinook seem to have systemically manipulated research findings and presentation on atrasentan to obscure these trial results. This update shows a larger pattern of deception, extending beyond trial data to financial reporting.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:27.651+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "b4bff19c-75af-41e6-a9a1-fad0b28d7acb", "parentComponentId": null }, { "bbox": { "h": 0.22, "w": 0.7, "x": 0.15, "y": 0.34 }, "kind": "paragraph", "text": "Chinook, in our view, combines the odious attributes of 2020 SPACs, dubious accounting for related party transactions, and China shenanigans. Chinook went public via reverse merger with what was essentially a SPAC during the Great Dash for Trash of 2020, in which there seemingly was no exaggeration too great for any supposed growth story going public. Chinook’s largest investor at the time of its reverse merger was Versant Ventures, which is also an investor in SanReno. (Since Chinook went public in October 2020, Versant has sold 61.5% of its Chinook shares.) Chinook’s two largest current investors, Samsara BioCapital and Frazier Life Sciences, are also major investors in SanReno, creating a significant conflict of interest in how Chinook presents and accounts for the joint venture. It is telling that Chinook’s CMO, Alan Glicklich, departed the company in 2022 after having agreed to seemingly harsh confidentiality restrictions. (According to Glicklich’s LinkedIn, he has not gone to work elsewhere.)", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:27.651+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "ff46a5d1-9750-4e8e-86e8-018d253c8492", "parentComponentId": null }, { "bbox": { "h": 0.12, "w": 0.7, "x": 0.15, "y": 0.83 }, "kind": "source-note", "text": "Footnotes 1-11 detailing sources for claims.", "attrs": null, "canon": { "kind": { "name": "Source note", "slug": "source-note", "status": "active", "canonId": "23484952-494b-4a5e-b1ad-550d0d70e948", "version": 1, "description": "Attribution / source / caveat placed at the slide footer. 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The increase in revenue was primarily due to $41.2 million of non-cash revenue recognized under our license agreement with SanReno and a development milestone of $10.0 million recognized under our agreement with Merck and Co, Inc., or Merck. The agreement with Merck was acquired through the Merger. 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assets and equity, revenue and profit, thereby preventing Chinook’s investors from seeing that SanReno had little to no operations during the reporting years 2021 and 2022 – while Chinook booked $44.4 million of total revenue from the joint venture.", "attrs": null, "canon": { "kind": { "name": "List", "slug": "list", "status": "active", "canonId": "019de52c-f94b-779b-a53b-fd4904a5f4d2", "version": 1, "description": "Bullet or numbered list." }, "tool": null, "subkind": { "name": "Bullet list", "slug": "bullet", "status": "active", "canonId": "019de52c-fc98-7169-a083-5cab805076ca", "version": 1, "description": null }, "framework": null }, "subkind": "bullet", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:31.198+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "78713bc1-7464-4994-a397-8896c66a1bca", "parentComponentId": null }, { "bbox": { "h": 0.07, "w": 0.7, "x": 0.15, "y": 0.17 }, "kind": "paragraph", "text": "The Sairopa JV, where Chinook holds a 36% stake, stands out in sharp contrast. There, Chinook recognizes it has significant influence and reports the JV as an equity investment, including its share of losses. The benefits of treating SanReno as an unrelated party and valuing the investment at fair value are obvious:", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:31.198+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "6d1de604-4772-4477-8a96-25559a7fc035", "parentComponentId": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.41 }, "kind": "paragraph", "text": "The application of fair value accounting for the SanReno JV is a convenient mechanism by which Chinook can inflate its revenues and decrease its expenses, minimizing its near-term losses and setting itself up for potential future profit inflation. Chinook and its partners on the SanReno board benefit as SanReno’s cash and non-cash transfers to Chinook are counted as Chinook’s income and profit.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:31.198+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "ce4c80f0-4ab6-4790-9143-09b125ff72e0", "parentComponentId": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.09 }, "kind": "paragraph", "text": "f. Extent of ownership by an investor in relation to the concentration of other shareholdings (but substantial or majority ownership of the voting stock of an investee by another investor does not necessarily preclude the ability to exercise significant influence by the investor).", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:47:31.198+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "d9791006-a63a-4e3b-bc46-af80f9d0a18e", "parentComponentId": null }, { "bbox": null, "kind": "quote", "text": "As of December 31, 2022, we own a 36 % interest in Sairopa. We determined that we have the ability to exercise significant influence over Sairopa but do not have a controlling interest. Therefore, the investment in Sairopa was accounted for using the equity method. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, and participation in policy-making decisions. — Chinook 2022 10-K pg. 113", "attrs": null, "canon": { "kind": { "name": "Quote", "slug": "quote", "status": "active", "canonId": "019de52c-f8fb-751e-8bc6-d58e2d59562a", "version": 1, "description": "Pull quote or testimonial." }, "tool": { "name": "Authority citation", "slug": "authority-citation", "status": "active", "bestFor": null, "canonId": "019dd9e1-49ae-7557-89ad-3fca70469b45", "version": 1, "bodyDocId": null, "description": "Quoting an authority figure, study, or precedent to lend weight.", "familyLabel": null }, "subkind": null, "framework": null }, "subkind": null, "groupRole": null, "confidence": null, "extraction": { "at": "2026-04-22 23:34:19+00", "model": "unknown-legacy", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "019dd953-2b61-7647-86f5-aee080b52173", "parentComponentId": null }, { "bbox": { "h": 0.12, "w": 0.7, "x": 0.15, "y": 0.82 }, "kind": "source-note", "text": "57 Chinook 2022 10-K pg. 113, “As of December 31, 2022, we own a 36 % interest in Sairopa. We determined that we have the ability to exercise significant influence over Sairopa but do not have a controlling interest. Therefore, the investment in Sairopa was accounted for using the equity method. Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, and participation in policy-making decisions.”\n58 Chinook 2022 10-K pg. 83", "attrs": null, "canon": { "kind": { "name": "Source note", "slug": "source-note", "status": "active", "canonId": "23484952-494b-4a5e-b1ad-550d0d70e948", "version": 1, "description": "Attribution / source / caveat placed at the slide footer. 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