Retrophin Sues Ousted CEO Martin Shkreli for $65 Million
Published: Aug 17, 2015
August 17, 2015
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Retrophin fight with company founder and ousted chief executive officer Martin Shkreli is far from over. This morning the company sued Shkreli for $65 million over his use of company funds while atop Retrophin, Bloomberg news reported this morning.
In its lawsuit, filed this morning in federal court in Manhattan, 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, Bloomberg said. In its filings, 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,” Bloomberg said.
Shkreli told Bloomberg the lawsuit was without merit and said Retrophin still owes him money.
In January Shkreli came under investigation by U.S. prosecutors for possible securities violations and from the U.S. Securities and Exchange Commission for the distribution of stock without letting shareholders know. An internal probe conducted by Retrophin and filed with the Securities and Exchange Commission on Feb. 19 alleged Shkreli used corporate funds to pay off personal legal debts and was hiding company legal matters from public disclosure. Additionally the probe said Shkreli used corporate funds to resolve legal matters with MSMB Capital Management, a hedge fund he managed, as well as disguised legal settlements as consulting agreements with Retrophin, both of which cost the company million of dollars and a transfer of thousands of shares of stock.
Following his ouster, Shkreli defended himself in a post at Investorshub.com. He said the accusations noted in the Retrophin internal investigation are “false, untrue at best and defamatory at worst,” he said in his post.
“Every transaction I've ever made at Retrophin was done with outside counsel's blessing (I have the bills to prove it), board approval and made good corporate sense. I took Retrophin from an idea to a $500 million public company in 3 years—and I had a lot of help along the way," he said in his post.
Since his ouster though, Shkreli has been busy. He went on to launch Martin Shkreli’s Turing Pharmaceuticals in February. Earlier this month, Shkreli said the company netted $90 million in Series A financing for use in advancing the company’s pipeline as well as possible M&A activity.
Turing launched in February with three products in its pipeline that were acquired from Retrophin, Shkreli’s former company. The medications in Turing’s pipeline include an intranasal formulation of ketamine, a compound used to treat severe depression but which currently requires IV-infusion therapy. Turing is developing this medication for psychiatric use. Additionally the company acquired Syntocinon (oxytocin nasal solution) and Vecamyl (mecamylamine HCl tablets). Vecamyl will provide Turing with its first FDA-approved product and revenue stream. The company also announced it had acquired two early-stage compounds to be developed for various orphan drug indications.
Additionally, Turing acquired the U.S. rights to IMPAX Laboratories, Inc. ’ Daraprim for $55 million. Daraprim is an antiparasitic used in the treatment of toxoplasmosis when combined with a sulfonamide.