In Wake of Shkreli Arrest, Turing Eliminates Workforce and Begins CEO Search
December 23, 2015
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – In the wake of the arrest of Martin Shkreli, the former chief executive officer of Turing Pharmaceuticals, the company announced Tuesday it will undergo a restructuring that will include the hunt for a new CEO and result in job eliminations.
Turing said the company has “realigned its business priorities” that requires the company to “streamline its operations” that will put the company on a “stronger path to growth.” Turing said the changes will allow the company to “focus on its most promising research and development programs and commercial assets.” Interim CEO Ron Tilles, who assumed the position last week after federal authorities arrested Shkreli, said the staff changes put Turing “in the best position to continue executing on our long-term plan.”
Turing did not specify in its statement how many positions will be eliminated and how many employees will remain with the company. BioSpace reached out to Turing this morning for clarification, but has not yet heard back.
In addition to not specifying the number of employees being terminated, Turing did not elaborate on what its “most promising” research is. Turing lists 13 drug programs on its website, with the majority being in the preclinical stages, including three drugs acquired from Shkreli’s former company Retrophin , which includes an intranasal formulation of ketamine, a compound used to treat severe depression but which currently requires IV-infusion therapy. Turing has zero clinical trials registered with the federal government.
Turing does have one commercialized drug in its arsenal, Daraprim, a 65-year-old treatment for toxoplasmosis the company acquired in August for $55 million. Turing and Shkreli became infamous after increasing the price of the drug 5,000 percent. The medication was available for $13.50 per tablet, but Turing increased the price to $750 per tablet, which drastically raises the cost of treatment for patients. Daraprim is used by about 2,000 people in the United States annually for a period of six to 12 weeks. Not only did Shkreli hike the price as dramatically as he did, he later told a Forbes panel that he should have raised the price even higher.
Shkreli resigned as CEO of Turing on Friday one day after he was arrested on federal securities fraud. Shkreli was charged with seven counts of securities fraud, securities fraud conspiracy and wire fraud conspiracy. According to the indictment against Shkreli, he and his partners, including attorney Evan Greebel, orchestrated three interrelated fraudulent schemes -- a scheme to defraud investors and potential investors in MSMB Capital; a scheme to defraud investors and potential investors in MSMB Healthcare; and a scheme to defraud Retrophin, the company Shkreli founded. The indictment said Shkreli’s scheme, which caused his investors to suffer a loss of more than $11 million, was carried out over a five-year period, from 2009 to 2014.
In August, Retrophin sued Shkreli for $65 million over his use of company funds while helming that company. In its lawsuit, Retrophin said Shkreli breached his duty of loyalty to the biopharmaceutical company and he engaged in self-dealing and also seeks disgorgement of money paid to him. Retrophin said Shkreli used company funds for personal use, enriched himself through false consulting contracts and referred to Shkreli as “the paradigm faithless servant” who “is not entitled to compensation or post-separation benefits.” Retrophin alleges Shkreli struck payoff agreement up to 10 MSMB investors who lost money when the hedge fund collapsed. Shkreli paid some investors through fake consulting agreements and others through unauthorized appropriations of stock and cash, the company alleged in its lawsuit.
The criminal case has been assigned to United States District Judge Kiyo A. Matsumoto. If convicted, Shkreli and Greebel each face a maximum sentence of 20 years’ imprisonment, according to the U.S. Attorney’s Office. In addition to his removal from the helm of Turing, on Monday KaloBios Pharmaceuticals , a company Shkreli acquired a majority stake in in November, terminated his position as CEO.
On his Twitter account, Shkreli said he is confident he will prevail against the allegations, which he called baseless. He released a statement saying the Retrophin lawsuit should have been a private civil affair. Regarding the practices of his former hedge fund, Shkreli said the deals he made involved “complex accounting matters” that federal authorities “fail to understand.”