Hedge Fund Chief Shkreli Juggles Ire for Biotech Missteps With Passion For Rare-Disease Startup Retrophin

Xconomy New York — 

On March 19, Martin Shkreli posted an article on the investing blog Seeking Alpha urging readers to “short” shares of San Diego-based Cytori (NASDAQ: CYTX)—essentially telling them they should bet that the company would falter and its share price would drop. Cytori is developing so-called regenerative treatments, using stem cells from fat, for example, to try to rebuild damaged heart tissue. Shkreli, who manages the MSMB hedge fund in New York, declared, “regenerative medicine is a meaningless and embarrassing buzzword that means nothing.”

Shkreli didn’t stop there. He criticized the company for its “meager sales” and losses, writing, “I believe management had a plan of benefitting from being associated with this growing field, and it backfired.”

Shkreli disclosed up front that his fund has a short interest in Cytori.

Cytori’s stock, which closed at $3.13 just before Shkreli’s post, has since fallen to $2.40, a 23 percent drop. Hedge funds don’t have to disclose details of their short positions, so it’s impossible to estimate how much MSMB has gained by shorting Cytori. Suffice it to say, Shkreli’s fund, which he founded in 2006, probably did all right on that bet.

It’s just such antics that have made 29-year-old Shkreli the target of angry life sciences executives, not to mention Washington watchdogs that are urging the SEC to investigate what they fear might be deliberate stock-price manipulation by an overzealous hedge-fund manager. But Shkreli embodies about as big a dichotomy as you’re likely to find in life sciences. That’s because in the midst of the storm of criticism that seems to follow him everywhere he goes, some physicians and notable Big Pharma veterans are hailing him as a hero for starting his own biotech company, Retrophin, which is pursuing treatments for rare diseases. The company launched earlier this year with $3 million in funding from MSMB and notable private investors, including Fred Hassan, former CEO of Schering-Plough.

In a meeting with Xconomy at his mid-town Manhattan office recently, Shkreli was as eager to talk up Retrophin as he was to sound off on life sciences companies that he thinks are on the wrong track. Shkreli, who raced through college and got his first job in finance at age 17, has been working in hedge funds his entire career. But he believes Retrophin is a better outlet for his skills. “The last 10 years of finance and swashbuckling stuff has been fun,” he says, “but I’m ready for a more interesting way of helping people and making money. Solving the world’s diseases one at a time is my new mission.”

Before we get to Retrophin, though, it’s worth taking a closer look at that swashbuckling. Shkreli, who considers himself to be an amateur biologist, is not shy about criticizing other companies’ scientific pursuits. Witness Cytori. In his 10-paragraph Seeking Alpha post, Shkreli reviews Cytori’s … Next Page »

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10 responses to “Hard-Nosed Hedge Fund Chief Has Soft Spot for Rare-Disease Startup”

  1. dale platt says:

    Shkreli should be incarcerated for trying to manipulate the FDA.

    He should also take handwriting lessons. Have you seen his personal signature! It looks like something a 2nd grader would sign.

  2. Robin says:

    I’ve got an idea: Let’s SHORT this psychopathic, clown’s Retrophin.

    Taste of his own medicine should be good for him and divine retribution for all the desperate diabetics who were hoping Afrezza would have come to market by now.

    Shrekeli may be smart, but if one uses that genius to deliberately harm companies, break the bank accounts of innocent shareholders, and keep vital therapies away from people who need them then you’re the worst human on the planet.

  3. Rich says:

    Marty Shkreli is pathetic. Anyone that would associate themselves with this person has to be questioned based on the pathetic and bad manipulating things he’s done out of greed and selfishness. He’s not to be trusted from what I’ve seen and I believe he’s up to no good yet again! A shame!!

  4. Eric says:

    The pipeline for Retrophin contains the dumbest ideas I have come across in the biotech industry. Trying to deliver recombinant dystrophin to the right subcellular localization in muscle is a pie in the sky. First of all dystrophin is one of the largest proteins known (>400kDa). Trying to deliver that into a cell is like a person trying to swallow a basketball-sized T-bone steak. I’m guessing they’ll try to bilk some ignorant investor on the virtues of the drug by showing that they can deliver this protein to damaged muscle cells. Little will these people know that damaged muscle cells will take up pretty much anything.

    DARA for FSGS? WTF?!? You do not want protein to be excreted in your urine. That is a clear sign of kidney diseseae. This drug is going to increase protein clearance in the kidney?!?!

  5. Duke Layton says:

    hilarious how martin is ripped apart. the service he provides to the imbeciles who invest in the companies he shorts is invaluable but they ignore him. the ONTY dopes are particularly funny. and what’s wrong with voicing an opposing opinion when asses like brozak are spewing egregiously deficient “research”.

    and by the way, i’m not martin. i wish i were.