Activist Investors Seek to Steer Control of Phoenixus Away from Jailed "Pharma Bro"
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Although Martin Shkreli has been behind bars for years due to a conviction for investment fraud, the man known as “Pharma Bro” has remained active running the former Turing Pharmaceuticals from his jail cell. However, that could change if some activist investors led by a former Shkreli confidant have their way.
Shkreli maintains a significant interest in Phoenixus, the parent company of Vyera, formerly known as Turing Pharmaceuticals, which Shkreli founded in 2015 after being ousted as chief executive officer of Retrophin the previous year.
Turing is the company that gained infamy after acquiring the decades-old toxoplasmosis drug Daraprim and raising the price by 5,000%. When Shkreli’s Turing Pharmaceuticals acquired Daraprim, the cost of a single pill was about $13.50. Turing increased the price to $750 per tablet, which drastically raises the cost of treatment for patients. Shkreli defended the price increase of the drug and at one point lamented not raising the price even higher.
Despite his incarceration, Shkreli has allegedly continued to call the shots at Turing through the use of an illegal cell phone, as well as intermediaries who have worked with him for years. However, now Kevin Mulleady, one of those intermediaries who worked with Shkreli at Turing and was the recipient of calls from that illegal phone, is leading a revolt against his former boss and confidant.
According to The New York Times, Mulleady, a former CEO of Vyera, and other activist investors are pushing a slate of new company directors who would steer control of Phoenixus and Vyera away from Shkreli. Shareholders are expected to vote on new board members today.
Mulleady and his colleagues want to sever the company’s ties to Shkreli, who remains behind bars until 2023. Jason Aryeh, a hedge fund manager, spearheaded the activist campaign called Shkreli, a “blight” on the industry.
The current Phoenixus board, which the activist group says is too close to Shkreli, issued a letter to shareholders last month calling for the re-election of its current board and insisting that Shkreli is not involved in the company’s management decisions. The letter said the board was making decisions “independently from instructions from Martin Shkreli.”
However, the board noted in the letter that Shkreli maintains voting rights in the company as a shareholder. The incarcerated Shkreli owns approximately 44% of Phoenixus. He has held those shares despite having been ordered by his sentencing to forfeit millions of dollars following his guilty verdict.
Additionally, the Phoenixus board of directors has sought to remind other shareholders of Mulleady’s long history of association with Shkreli. Mulleady is a co-defendant with Shkreli in a federal anti-trust lawsuit.
In that complaint, the Federal Trade Commission accused Shkreli and Mulleady of conspiring to block generic competition to Daraprim.
According to the FTC complaint, Turing “illegally restrained trade through restrictive distribution agreements that ensured that would-be generic entrants could not buy samples of Daraprim” that could be used in the process of trying to develop a generic. Turing also prevented competitors from accessing a critical ingredient used to manufacture Daraprim. A generic version of Daraprim was approved by the U.S. Food and Drug Administration in 2020.