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on the money

‘Pharma Bro’ expected to face proxy battle after FTC trial

By
Lydia Moynihan
Published Dec. 9, 2021
Updated Dec. 10, 2021, 1:01 p.m. ET

Martin Shkreli is slated to face off in court next week against the Federal Trade Commission, which has accused him of using anticompetitive tactics to drive up the price of the AIDS treatment drug Daraprim.

If he loses his voting shares in his drug company Vyera as demanded by the FTC, insiders say a proxy battle for control of the company’s board will likely ensue. The aim of the insurgents, sources told On The Money, is to wrest control away from Shkreli, who has been running Vyera from jail.

A significant shareholder and executive at Phoenixus, Vyera’s parent company, is expected to lead the charge, sources said. While the executive’s identity wasn’t immediately revealed, sources said the insider will team up with Jason Aryeh, who unsuccessfully tried to shake up the company’s board last year.

Their aim is to oust Shkreli and get the price of Daraprim back to “pre-Shkreli levels,” as Aryeh put it this week in an interview with On The Money.

“The plan is to remove Martin from the company, right the price of Daraprim to pre-Shkreli levels, and do what’s right first with patients, physicians then shareholders,” Aryeh said.

Shkreli is already serving a seven-year sentence through 2023 for securities fraud he committed while running two hedge funds. The 38-year-old rose to notoriety after he hiked the price of life-saving AIDS treatment Daraprim from $17.50 to $750 a pill after obtaining the exclusive rights to it in 2015.

“Should be a very handsome investment for all of us,” Shkreli wrote in an email to a contact at the time.

shkreli
“Pharma Bro” is already serving a seven-year prison sentence. CQ-Roll Call, Inc via Getty Imag

The increase left some patients facing co-pays as high as $16,000 and sparked an outcry that fueled congressional hearings. The company was sued in federal court in New York by the FTC and seven states: New York, California, Illinois, North Carolina, Ohio, Pennsylvania, and Virginia.

On Tuesday, the FTC filed an order demanding the pharmaceutical company Vyera and its parent Phoenixus make Daraprim “available to any potential generic competitor at list price.” The FTC also ordered Vyera to pay up to $40 million to compensate victims.

Daraprim is used to treat toxoplasmosis, an infection that can be deadly for people with HIV or other immune-system problems and can cause serious problems for children born to women infected while pregnant.