December 18, 2015
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Martin Shkreli is out as chief executive officer of Turing Pharmaceuticals following his arrest for securities fraud on Thursday.
This morning, Turing announced Shkreli, Turing’s founder, has resigned his position as CEO. Ron Tilles, who has served as chairman of the board of directors for the company, will serve as interim-CEO, the company announced.
“We wish to thank Martin for helping us build Turing Pharmaceuticals into the dynamic research focused company it is today, and wish him the best in his future endeavors. At the same time, I am very excited about the opportunity to guide Turing Pharmaceuticals forward. We remain committed to ensuring that all patients have ready and affordable access to Daraprim and Vecamyl. Research Development on new medications continues to be a priority for the company. With the dynamic leadership of Eliseo Salinas as head of Research and Development and Nancy Retzlaff as head of Commercial Operations, Turing Pharmaceuticals is poised for great success in the coming years,” Tilles said in a statement.
While Shkreli has resigned from Turing, there is no word of whether or not he will resign from his CEO position at KaloBios Pharmaceuticals .
While serving as CEO of Turing, Shkreli was a lightning rod for criticism after the company acquired Daraprim, a treatment for toxoplasmosis, for $55 million, then increased the price of the drug used by about 2,000 people in the United States by 5,000 percent. That move earned him endless amounts of public derision and prompted members of Congress to launch investigations into the high price of prescription drugs, as well as becoming the target of presidential candidates, including Donald Trump referring to Shkreli as a “spoiled brat.”
Shkreli’s arrest predates his controversial Turing acquisition.
Shkreli was charged on Thursday 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.
While chief executive officer of Retrophin Pharmaceuticals, Martin Shkreli used the company as his “personal piggy bank” to pay off investors, U.S. Attorney Robert Capers said in a press conference following Shkreli’s arrest.
When Shkreli was helming MSMB Capital Management, Capers said he made a number of risky investments and then lied to his investors as to how the investments were doing. After founding Retrophin Pharmaceuticals, he used funds from that publicly traded company to pay off his hedge fund investors, Capers said.
“He did that to conceal the lies he told to his investors,” Capers said. “He lied to his investors about how the investments were doing and what he was doing with the money, all the while promising his investors they were receiving good returns.”
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.
Most recently, Shkreli acquired a majority stake in KaloBios and became the CEO of that company. Since news broke of his arrest, shares of KaloBios plummeted in 50 percent in Thursday’s pre-market session. Trading of the stock halted after his arrest.
