Shares of Spanish drugmaker Grifols plunged more than 40% on Tuesday after investment fund Gotham City Research alleged that its debt ratios are roughly double those officially stated.

Gotham City claimed that Grifols, which makes drugs from human plasma, "manipulates" its reported debt and earnings before interest, taxes, depreciation and amortization (EBITDA) artificially, thereby reducing its leverage ratio through a "misleading and incorrect" treatment of financial statements.

Grifols "categorically" denied the allegations in a statement sent Tuesday to Spanish stock market regulator CNMV. Grifols said the Gotham City report contained "false information" and "speculation" and insisted that it has disclosed all information on all transactions reported by Gotham City "with the highest level of integrity and transparency".

KPMG, which audited Grifols' 2022 accounts, did not respond to requests for comment. Spain's National Securities Market Commission (CNMV) said it was analyzing Gotham's report and was in contact with Grifols, from whom it would collect "the necessary data."

The investment fund said it believes the leverage ratio is close to 10 to 13 times EBITDA, rather than the six times officially reported by the company.

Gotham City Research is an investment fund focused on "due diligence-based investing." On its website, it says it has long or short positions in the companies it reports on.

In the past, the fund has targeted online advertising company Criteo and Apple vendor AAC Technologies and, most recently, French smart tag maker SES Imagotag.

Short sellers are controversial as they bet on falling share prices and in doing so can wipe out huge values of the companies they are targeting.

One of the most high-profile recent cases involved Hindenburg Research, which last year triggered a massive $150 billion sell-off in India's Adani Group, even though the company denied wrongdoing and was cleared of any wrongdoing by the Indian Supreme Court. Subsequently, Adani's shares partially recovered.

Grifols shares have swung wildly in recent years, as the company was severely affected by the pandemic when plasma procurement was restricted, causing its stock value to fall by two-thirds.

The company tried to reassure investors with cost-cutting measures and a change in leadership, which sent its shares up 43% in 2023. At the end of the year it sold a 20% stake in a Chinese unit, Shanghai RAAS, for $1.8 billion in an attempt to reduce its debt.

(Report by Inti Landauro; edited in Spanish by Benjamín Mejías Valencia)