Fired From KaloBios, Shkreli Defends Himself Against Fraud Charges

Xconomy National — 

Four days after his arrest on fraud charges, Martin Shkreli received his second pink slip, this time from KaloBios Pharmaceuticals (NASDAQ: KBIO), a struggling drug maker that Shkreli took over last month.

The KaloBios announcement Monday morning was terse, simply saying Shkreli was terminated and had resigned from the company’s board of directors. Another director, Tony Chase, also stepped down from the board. Chase joined the KaloBios board when the investor group led by Shkreli took over KaloBios in mid-November.

In the month leading up to Shkreli’s arrest last week, KaloBios said it would buy the rights to a treatment for Chagas disease that was not approved in the U.S., ask the Food and Drug Administration for approval, and if successful, sell it at prices similar to hepatitis C drugs. The news brought new accusations of price gouging against Shkreli, who stoked international outrage earlier this year with his plans to jack up the price of Daraprim, an old drug often used to treat parasitic infections in AIDS patients.

Shkreli’s Turing Pharmaceuticals was the vehicle for the Daraprim effort. He was removed from the top post at Turing Friday.

In an interview published this morning, Shkreli told the Wall Street Journal that authorities were going after him because of his drug-price hikes. He said the indictment against him “is lacking rigor.” (The government’s case is available here.)

He also claimed his Twitter account had been hacked over the weekend. He tweeted this morning that he had regained control.

Shkreli has often used Twitter to parry with critics, project what some call a “pharma-bro” persona—which includes a love of hip-hop that led him to buy an unreleased Wu-Tang Clan album for $2 million—and even make industry connections. He famously reached out to San Francisco scientist and entrepreneur Ethan Perlstein on Twitter, which led to Perlstein’s startup receiving early stage backing from Shkreli’s previous company Retrophin.

He admitted to the Journal that his brash public persona had become “a bit of an act” that would be “fun to experiment with.”

KaloBios was on the verge of shutting down last month when Shkreli and colleagues swooped in, bought a majority of shares, and fired the previous board. Nasdaq suspended trading of the company’s shares Thursday upon news of Shkreli’s arrest, and it will remain halted “until KaloBios has fully satisfied Nasdaq’s request for additional information,” according to a statement released by the exchange last week.

His arrest was not related to the dramatic price hike for Daraprim. Federal officials are accusing Shkreli of committing fraud at his hedge funds, which carry the MSMB name, then looting his previous biotech company, Retrophin, to pay off the people he defrauded. Retrophin parted ways with Shkreli in September 2014 then sued him earlier this year.