Sen­tenc­ing date loom­ing, a fed­er­al judge's rul­ing could leave Mar­tin Shkre­li in prison for years to come

When the no­to­ri­ous biotech ex­ec Mar­tin Shkre­li was con­vict­ed on three counts of felony fraud last fall, he im­me­di­ate­ly boast­ed that he had skat­ed clear of the worst charges, lim­it­ing him to no more than a light prison sen­tence at Club Fed that he would soon com­plete.

But with his sen­tenc­ing loom­ing on March 9, the judge in the case may be think­ing some­thing en­tire­ly dif­fer­ent.

Judge Kiyo Mat­sumo­to

In a new rul­ing is­sued at the be­gin­ning of the week, Judge Kiyo Mat­sumo­to de­cid­ed that Shkre­li’s ac­tions re­sult­ed in loss­es of more than $10 mil­lion — and fed­er­al sen­tenc­ing guide­lines sug­gest that each of those mil­lions could be pun­ished with a year or more in prison.

In the lengthy de­ci­sion, the judge re­viewed Shkre­li’s push for an ac­quit­tal on the three con­vic­tions he now faces sen­tenc­ing on. And she knocked back each ar­gu­ment, agree­ing with the ju­ry’s de­ter­mi­na­tion that Shkre­li — who aroused a storm of crit­i­cism by his de­ci­sion to jack up the price of an old drug by more than 5,000% — had brazen­ly lied re­peat­ed­ly to his in­vestors about the per­for­mance of his in­vest­ments with their mon­ey, and the amount of cash he had to work with.

The most im­por­tant part was her as­sess­ment of the loss­es that could be at­trib­uted to each of the counts. Shkre­li and his at­tor­ney Braf­man ar­gued that by hand­ing over Retrophin shares to the in­vestors in his funds, there was no loss.

The judge, again, de­cid­ed oth­er­wise.

For the pur­pos­es of sen­tenc­ing, the court will  ap­ply a loss amount of $2,998,000 on Count Three, $3,402,450 on Count Six, and $4,000,000 on Count Eight.

That’s $10,400,450.

Why $4 mil­lion for count 8?

The judge ruled that what­ev­er the ac­tu­al loss, Shkre­li had “in­tend­ed” to in­flict fi­nan­cial dam­age on in­vestors who bought Retrophin stock by schem­ing to in­flate the price. That in­ten­tion the judge de­ter­mined could cost Shkre­li dear­ly. From the rul­ing:

Mr. Shkre­li ar­gues that he did not “in­tend” any loss to the mar­ket (Def. Let­ter at 12).  The court finds, based on the tri­al ev­i­dence, that Mr. Shkre­li con­spired with Mr. Greebel and oth­ers to ma­nip­u­late the price and trad­ing vol­ume of Retrophin stock, and there­by at­tempt­ed to cause the share-buy­ing pub­lic to over­pay for the stock.  The court fur­ther finds that a rea­son­able mea­sure of the loss Mr. Shkre­li sought to in­flict is the dif­fer­ence be­tween the price that the un­sus­pect­ing in­vest­ing pub­lic would have paid for Retrophin stock had the con­spir­a­cy been suc­cess­ful, and the val­ue of the shares ab­sent the fraud.

John Cof­fee

John Cof­fee, di­rec­tor of the Cen­ter on Cor­po­rate Gov­er­nance at Co­lum­bia Uni­ver­si­ty Law School, told CN­BC that the rul­ing ex­posed Shkre­li to a sen­tence of a decade or more — de­pend­ing on her will­ing­ness to go easy or hard on the 34-year-old.

Such a find­ing of loss could jus­ti­fy a 10-year sen­tence — or longer. But fed­er­al judges no longer have to fol­low the guide­lines and they are on­ly ad­vi­so­ry. She has great dis­cre­tion as to the sen­tence she im­pos­es; she could rec­og­nize that he is a first of­fend­er and give him mod­est time. Or she could place more em­pha­sis on the amount of the loss and his un­re­pen­tant at­ti­tude.

Giv­en that the judge tossed Shkre­li in fed­er­al jail af­ter he post­ed a boun­ty of $5,000 for a strand of Hillary Clin­ton’s hair, has re­fused to re­turn his $5 mil­lion bond mon­ey while they cal­cu­late pos­si­ble dam­ages and now cal­cu­lates that the biotech ex­ec was re­spon­si­ble for mil­lions in loss­es, some ob­servers might con­clude that the pre­vi­ous­ly un­re­pen­tant Shkre­li may have the book thrown at him. All those stream­ing videos and caus­tic emails giv­ing the fin­ger to every one of his crit­ics may haunt him for years.

Shkre­li, though, is sound­ing a re­pen­tant note in a let­ter to the court, which his lawyer Ben­jamin Braf­man cites in a lengthy ap­peal to the judge to go easy. “I caused this en­tire mess to hap­pen,” Shkre­li states at one point. Then he goes on to dis­cuss how his 5 months in a fed­er­al prison has changed him.

Prison has been both the most fright­en­ing ex­pe­ri­ence in my life but al­so an op­por­tu­ni­ty for me to see a side of the world sel­dom seen or dis­cussed. I have tried my best to make a pos­i­tive im­pact on many of the peo­ple I en­counter here. If I have some­thing to teach my fel­low in­mates, I im­plored them to lis­ten and learn. I have com­fort­ed the for­lorn and for­got­ten men fac­ing long sen­tences, many are se­vere­ly de­pressed, and sad­ly, sui­ci­dal. I try my best to set a good ex­am­ple for these in­di­vid­u­als too, know­ing my fame and achieve­ments were some­thing they might know of, and I try my best to ex­plain that in or­der to have a chance to suc­ceed, they had to make a se­ri­ous com­mit­ment to life­long ed­u­ca­tion and move far away from poi­so­nous sur­round­ings and at­ti­tudes that lead to a temp­ta­tion to cut cor­ners and com­mit crimes.

Shkre­li has nev­er been known to pub­licly say any­thing like that, which is one rea­son why he’s fac­ing a tough judge in a few days.

Im­age: Mar­tin Shkre­li leaves fed­er­al court in June, 2017. Shut­ter­stock

UP­DAT­ED: In sur­prise switch, Bris­tol-My­ers is sell­ing off block­buster Ote­zla, promis­ing to com­plete Cel­gene ac­qui­si­tion — just lat­er

Apart from revealing its checkpoint inhibitor Opdivo blew a big liver cancer study on Monday, Bristol-Myers Squibb said its plans to swallow Celgene will require the sale of blockbuster psoriasis treatment Otezla to keep the Federal Trade Commission (FTC) at bay.

The announcement — which has potentially delayed the completion of the takeover to early 2020 — irked investors, triggering the New York-based drugmaker’s shares to tumble Monday morning in premarket trading.

Celgene’s Otezla, approved in 2014 for psoriasis and psoriatic arthritis, is a rising star. It generated global sales of $1.6 billion last year, up from the nearly $1.3 billion in 2017. Apart from the partial overlap of Bristol-Myers injectable Orencia, the company’s rival oral TYK2 psoriasis drug is in late-stage development, after the firm posted encouraging mid-stage data on the drug, BMS-986165, last fall. With Monday’s decision, it appears Bristol-Myers is favoring its experimental drug, and discounting Otezla’s future.

The move blindsided some analysts. Credit Suisse’s Vamil Divan noted just days ago:

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

Fol­low­ing news of job cuts in Eu­ro­pean R&D ops, Sanofi con­firms it’s of­fer­ing US work­ers an 'ear­ly ex­it'

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Suf­fer­ing No­var­tis part­ner Cona­tus is pack­ing it in on NASH af­ter a se­ries of un­for­tu­nate tri­al events

The NASH par­ty is over at No­var­tis-backed Cona­tus. And this time they’re turn­ing off the lights.

More than 2 years af­ter No­var­tis sur­prised the biotech in­vest­ment com­mu­ni­ty with its $50 mil­lion up­front and promise of R&D sup­port to part­ner with the lit­tle biotech on NASH — ig­nit­ing a light­ning strike for the share price — Cona­tus $CNAT is back with the lat­est bit­ter tale to tell about em­ri­c­as­an, which once in­spired con­fi­dence at the phar­ma gi­ant.

Dean Hum. Nasdaq via YouTube

Gen­fit goes to Chi­na with a deal worth up to $228M for NASH drug

Fresh off the high of its Nas­daq IPO de­but, and the low of com­par­isons to Cymabay — whose NASH drug re­cent­ly stum­bled — Gen­fit on Mon­day un­veiled an up to $228 mil­lion deal with transpa­cif­ic biotech Terns Phar­ma­ceu­ti­cals to de­vel­op its flag­ship ex­per­i­men­tal liv­er drug — elafi­bra­nor — in Greater Chi­na.

The deal comes weeks af­ter Gen­fit $GN­FT is­sued a fiery de­fense of its dual PPAR ag­o­nist elafi­bra­nor, when com­peti­tor Cymabay’s PPARδ ag­o­nist, se­ladel­par, fiz­zled in a snap­shot of da­ta from an on­go­ing mid-stage tri­al. The main goal at the end of 12 weeks was for se­ladel­par to in­duce a sta­tis­ti­cal­ly sig­nif­i­cant im­prove­ment in liv­er fat con­tent, but da­ta showed that pa­tients on the place­bo ac­tu­al­ly per­formed bet­ter.

Alex­ion wins pri­or­i­ty re­view for Ul­tomiris' aHUS in­di­ca­tion; FDA ex­pands ap­proval of Ver­tex's Symdeko

→ Alex­ion $ALXN has scored a speedy re­view for Ul­tomiris for pa­tients with atyp­i­cal he­molyt­ic ure­mic syn­drome (aHUS) af­ter post­ing pos­i­tive da­ta from a piv­otal study in Jan­u­ary. The drug is the rare dis­ease com­pa­ny’s shot at pro­tect­ing its block­buster blood dis­or­der fran­chise that is cur­rent­ly cen­tered around its flag­ship drug, Soliris, which is a com­ple­ment in­hibitor typ­i­cal­ly ad­min­is­tered every two weeks. Ul­tomiris has a sim­i­lar mech­a­nism of ac­tion but re­quires less-fre­quent dos­ing — every eight weeks. The de­ci­sion date has been set to Oc­to­ber 19. Late last year, Ul­tomiris se­cured ap­proval for noc­tur­nal he­mo­glo­bin­uria (PNH) pa­tients.

Bet­ter than Am­bi­en? Min­er­va soars on PhI­Ib up­date on sel­torex­ant for in­som­nia

A month af­ter roil­ing in­vestors with what skep­tics dis­missed as cher­ry pick­ing of its de­pres­sion da­ta, Min­er­va is back with a clean slate of da­ta from its Phase IIb in­som­nia tri­al.

In a de­tailed up­date, the Waltham, MA-based biotech said sel­torex­ant (MIN-202) hit both the pri­ma­ry and sev­er­al sec­ondary end­points, ef­fec­tive­ly im­prov­ing sleep in­duc­tion and pro­long­ing sleep du­ra­tion. In­ves­ti­ga­tors made a point to note that the ef­fects were con­sis­tent across the adult and el­der­ly pop­u­la­tions, with the lat­ter more prone to the sleep dis­or­der.

Gene ther­a­py biotech sees its stock rock­et high­er on promis­ing re­sults for rare cas­es of but­ter­fly dis­ease

Shares of Krys­tal Biotech took off this morn­ing $KRYS af­ter the lit­tle biotech re­port­ed promis­ing re­sults from its gene ther­a­py to treat a rare skin dis­ease called epi­der­mol­y­sis bul­losa.

Fo­cus­ing on an up­date with 4 new pa­tients, re­searchers spot­light­ed the suc­cess of KB103 in clos­ing some stub­born wounds. Krys­tal says that of 4 re­cur­ring and 2 chron­ic skin wounds treat­ed with the gene ther­a­py, the KB103 group saw the clo­sure of 5. The 6th — a chron­ic wound, de­fined as a wound that had re­mained open for more than 12 weeks — was par­tial­ly closed. That brings the to­tal so far to 8 treat­ed wounds, with 7 clo­sures.

Ab­b­Vie gets a green light to re­sume re­cruit­ing pa­tients for one myelo­ma study — but Ven­clex­ta re­mains un­der a cloud

Three months af­ter reg­u­la­tors at the FDA forced Ab­b­Vie to halt en­rolling pa­tients in its tri­als of a com­bi­na­tion us­ing Ven­clex­ta (vene­to­clax) to treat drug-re­sis­tant cas­es of mul­ti­ple myelo­ma, the agency has green-light­ed the re­sump­tion of one of those stud­ies, while keep­ing the rest on the side­lines.

The CANO­VA (M13-494) study can now get back in busi­ness re­cruit­ing pa­tients to test the drug for a pop­u­la­tion that shares a par­tic­u­lar ge­net­ic bio­mark­er. To get that per­mis­sion, Ab­b­Vie — which is part­nered with Roche on this pro­gram — was forced to re­vise the pro­to­col, mak­ing un­spec­i­fied changes in­volv­ing risk mit­i­ga­tion mea­sures, pro­to­col-spec­i­fied guide­lines and an up­dat­ed fu­til­i­ty cri­te­ria.