Martin Shkreli, the pharmaceutical executive who became the public face of greed in the industry and who was arrested this week on securities fraud charges, has been replaced.
His company, Turing Pharmaceuticals, announced Friday that Shkreli will resign as chief executive and be replaced by Ron Tilles, the chairman of the board, who will serve as interim CEO. Tilles will also continue as Turing’s chairman.
“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,” Tilles said in the statement.
The announcement marks a swift and stunning fall for the 32-year-old Shkreli.
Last summer, Turing bought a decades-old, life-saving medicine and quickly raised the price 5,000 percent, from $13.50 to $750 a tablet. The move was widely derided amid an escalating national debate over the cost of prescription drugs. But Shkreli defiantly mocked his critics on social media and recently said that he only regretted not raising the price still higher.
More serious trouble was heading his way, however, concerning his tenure running MSMB Capital Management, a financially troubled hedge fund. This week, federal prosecutors charged Shkreli with illegally using stock from Retrophin (RTRX), a different drug maker that he launched in 2011, to pay debts to MSMB investors, according to the indictment.
In remarks yesterday, Robert Capers, the US attorney for the Eastern District of New York, said that Shkreli “essentially used his companies like a Ponzi scheme” and “used Retrophin like a personal piggy bank.” Retrophin ousted him late last year and then filed a lawsuit charging he defrauded shareholders.
Tilles, by the way, was one of the founders of Retrophin and worked there from 2011 through 2014.
Shkreli is also chief executive of KaloBios Pharmaceuticals, a publicly traded company in which he and other investors recently acquired a controlling stake. But his status there is now tenuous, one analyst said.
“If he’s resigned from Turing, it’s likely he’ll have to resign from KaloBios, as well,” said Stephen Brozak, an analyst who heads WBB Securities and tracks the pharmaceutical industry. “As a public company, you have to observe some fiduciary responsibilities to shareholders. Given the allegations of Ponzi-like behavior, how can he go out there [and] maintain those responsibilities?”
Trading in KaloBios shares was halted yesterday on the news of Shkreli’s arrest and has not yet resumed.
Meanwhile, Turing is scrambling to reassure the medical community that Daraprim, the drug for which the price was raised by 5,000 percent, will remain available. The company is sending letters to doctors to reiterate that patient assistance programs are intact and “distribution partnerships” with hospitals and clinics are being expanded. We asked for more information about this move and will update you accordingly.