He’s become notorious for massively jacking up the prices of old, narrowly focused drugs, but the hedge-fund manager insists he’s plowing the profits into research for newer treatments.
NEW YORK — In the conference room at Turing Pharmaceuticals, the company he heads, Martin Shkreli’s fingers flew across a laptop keyboard and up popped a YouTube video on a large wall screen. It was a heartfelt appeal from three young brothers in North Dakota who suffer from a degenerative and often fatal brain condition. “Only 300 people in the country have this disease,” Shkreli said.
Why show the video? “I invented a new drug,” to treat the disease, he said, shrugging nonchalantly. “But it’s hard to sell a drug for 300 people, to go through the process. You have to charge a lot per person to make it a viable product.”
His point was that new drugs — especially for rare conditions — don’t come cheap and someone has to pay for them. This is more truism than earth-shattering revelation.
Education: Attended Hunter College High School in New York but left before senior year; earned high-school diploma during a Wall Street internship. Took classes at Baruch College but didn’t graduate.
First company: Started hedge fund in his early 20s.
Source: The New York Times
But Shkreli has become a public villain for twisting that notion to apply to a decades-old drug that Turing merely acquired. By raising the price of that drug overnight to $750 a pill from $13.50, Shkreli became a caricature of pharmaceutical-industry greed.
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A former hedge-fund manager, Shkreli drew the wrath of consumers, became a talking point in the presidential campaign and spurred federal and state inquiries as well as a dialogue about how and whether to control rising drug prices. In a sharp slap, Express Scripts, the largest pharmacy-benefit manager, endorsed the use of a compounded alternative to Daraprim, the $750 pill. That treatment will sell for about $1 a pill.
Rather than cower as he takes a beating, Shkreli seems to relish his time in the ring. He taunts his critics on Twitter or wherever he can. Last month, he and a group of investors took a large stake in another drug company. He sparred contemptuously with an executive of Express Scripts at a recent Forbes conference. And he still has time to occasionally post pictures of cats rolling in cash on Twitter.
In Turing’s Manhattan offices, Shkreli, 32, wore a simple black T-shirt and dark jeans and seemed less brash than his public persona but no less boastful. That Shkreli’s elfin features are now the face of pharmaceutical greed is fine with him. While he contended that he receives little compensation from his companies, he proudly noted that he had become quite wealthy, thanks to his investments.
Even before the Daraprim price increase, his business practices had come under scrutiny.
He acknowledged the regulatory and criminal investigations into claims of wrongdoing at hedge funds he once controlled as well as at Retrophin, the public pharmaceutical company he ran — and from which he was expelled. But he was dismissive of their importance.
He also dismissed critics of the Daraprim price increase, saying his biggest duty is to his investors. Besides, he said, returning to his theme: The high price on the drug Turing sells is a way to raise enough revenue to develop new medicines for debilitating illnesses.
Critics say that if Turing wants to develop new drugs, it should use money from investors, like most biotech startups do, not burden existing patients and hospitals.
“This is a stupid investment,” said Dr. Carlos del Rio, a professor at Emory University and chairman of the HIV Medicine Association, referring to Turing’s $55 million purchase of the Daraprim rights. “They paid a fortune for it, and now they have to recover their money.”
For Shkreli, money isn’t the sole motivation. His name is on two patents held by his former company, Retrophin, for drugs to treat the degenerative brain disease afflicting those North Dakota brothers. He says he’s working on “an even better version” of the drug at Turing.
He’s doing this, he added, “partly to spite my old company.”
Then he gave a cheeky grin.
Shkreli was an indifferent student in high school and studied business in college. Yet almost anyone who knows him will remark on his ability to practically memorize medical journals and textbooks, accumulating an encyclopedic knowledge of drugs and diseases that interest him.
Shkreli grew up in a small apartment in Brooklyn with his three siblings and parents, immigrants from Albania who, he said, worked janitorial and other odd jobs.
He was admitted into Hunter College High School, an elite Manhattan public school for the intellectually gifted. But former classmates said he was more interested in chess and playing electric guitar in a band, Coney Island Whitefish, named, he said, after a Joan Jett song. He stopped attending classes and was asked to leave before his senior year.
“I didn’t like the conformity of the school,” Shkreli said, “the expectations.”
Shkreli received the credits needed for his high-school degree through a program that also placed him in an internship at the Wall Street hedge fund Cramer, Berkowitz & Co.
He took classes at Baruch College, worked briefly for a Wall Street investment bank and then, in his early 20s, started his own hedge fund, Elea Capital, using a couple of million dollars he obtained from an investor.
Elea met its demise in 2007, when Shkreli made a $2.6 million bet that the stock market would decline. His timing was wrong, however.
“I made a monster bet that the market would crash, and I was wrong,” he said.
In 2011, while running another, bigger hedge fund, Shkreli started Retrophin, which adopted a business strategy that had been used by other companies like Questcor Pharmaceuticals and Valeant Pharmaceuticals. It acquired old, neglected drugs, usually for rare diseases, and raised their prices to be closer to those of modern drugs.
But on Sept. 30, 2014, Retrophin announced that its board had replaced Shkreli, effective immediately.
A lawsuit filed by Retrophin this summer, seeking $65 million in damages, claims that when his hedge fund ran into trouble on a bad bet in the market, Shkreli began an elaborate shell game, using Retrophin cash and assets to pay off discontented his investors.
Retrophin also disclosed a subpoena for a Justice Department investigation into Shkreli’s transactions.
As with other setbacks, Shkreli’s ouster from Retrophin did not seem to impair his ability to start something new, in this case Turing.
Turing’s first big move was the one that made Shkreli notorious. He paid $55 million for the U.S. marketing rights for Daraprim, a 62-year-old drug for toxoplasmosis, a parasitic infection that can be devastating for babies and people with AIDS.
The immediate price increase brought the cost of a course of treatment for some patients to hundreds of thousands of dollars.
He says the extra money will be used to develop better drugs for toxoplasmosis and other diseases. The company has begun a clinical trial of a drug for severe forms of epilepsy.
“Haters, please tell me about the latest in apicomplexa genetic drift,” Shkreli posted on Twitter to counter skeptics who say that a new drug for toxoplasmosis is not needed.
“You are all Protozoa experts equipped to judge and advise me, right?”