Biotech short-selling analyst Elliot Favus issued a new bear report on Relypsa (RLYP) Tuesday in which he uses a government drug-safety database to claim patients are being seriously harmed and killed by the company's newly launched hyperkalemia drug Veltassa.

Favus' charge against Relypsa is spurious because the database he relies on -- the FDA Adverse Event Reporting System, or FAERS -- consists of voluntarily reported and unconfirmed drug-safety data. The FDA, on its Web site, explicitly warns that adverse events listed in the FAERS cannot be conclusively linked to a drug because information is often incomplete.

"Veltassa has only been on the U.S. market for several months and the Veltassa FAERS database already contains a very large number of unique serious adverse event reports which fit into a clear pattern of death, heart failure, and gastrointestinal side effects," according to a copy of Favus' report obtained by TheStreet.

But none of the FAERS reports cited by Favus say Veltassa caused the reported adverse events or deaths. The reports contain no information on the medical background of the patients or the disease(s) they're diagnosed with. One report notes a patient taking as many as 18 different medications, of which Veltassa is just one.

Relypsa shares are up 3% to $18.56 in midday trading.

Veltassa is approved to treat hyperkalemia, a condition in which potassium levels in the blood become abnormally high, usually due to poorly functioning kidneys or as a side effect from medicines taken by people to manage heart failure and chronic kidney disease. Elevated potassium can cause abnormal heart rhythm and in worse cases, sudden death.

Favus is the sole proprietor of Favus Institutional Research, which publishes closely distributed, short-selling reports on biotech and drug stocks for hedge fund clients. Favus has been stridently negative on Relypsa since last year, in part because of his belief in the superiority of AstraZeneca's (AZN - Get Report) competing hyperkalemia drug ZS-9.

Last Thursday, the FDA rejected ZS-9 -- a big setback for AstraZeneca but a positive development for Relypsa, which secured FDA approval for Veltassa last October and now has the commercial market to itself.

The rejection of ZS-9 was also a negative surprise for investors short Relypsa. More than 30% of Relypsa's tradable shares are sold short.

Favus is trying to bail out his clients.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.