The Sen­ate dis­sects Mar­tin Shkre­li's scheme to grab a $1B wind­fall

What­ev­er else you may have to say about Mar­tin Shkre­li and his team at Tur­ing, they did their home­work.

They want­ed to find a poor­ly per­form­ing or­phan drug serv­ing a small pa­tient pop­u­la­tion that had a sole-source man­u­fac­tur­er to sup­ply the mar­ket, so dis­tri­b­u­tion could be care­ful­ly con­trolled. And Dara­prim at Im­pax fit that bill per­fect­ly.

Be­cause a “clas­sic closed dis­tri­b­u­tion play” like Dara­prim served a small pa­tient pop­u­la­tion, they not­ed in emails and doc­u­ments cit­ed by the new Sen­ate re­port on drug pric­ing, there weren’t enough peo­ple in­volved to gen­er­ate an ef­fec­tive lob­by­ing cam­paign that might greet a sud­den price hike. Oth­er gener­ic man­u­fac­tur­ers could be barred from get­ting their hands on the prod­uct, keep­ing com­pe­ti­tion at bay. And the price could be set where they want­ed it, tak­ing a drug with lit­tle an­nu­al rev­enue and cre­at­ing an op­por­tu­ni­ty to make hun­dreds of mil­lions of dol­lars in a quick wind­fall.

Shkre­li had this to say to an in­vestor:

I think it will be huge. We raised the price from $1,700 per bot­tle to $75,000. Pre­vi­ous­ly im­pax sold 10,000 bot­tles per an­num (50% is giv­en away, how­ev­er). So 5,000 pay­ing bot­tles at the new price is $375,000,000—al­most all of it is prof­it and I think we will get 3 years of that or more. Should be a very hand­some in­vest­ment for all of us. Let’s all cross our fin­gers that the es­ti­mates are ac­cu­rate

As the deal was com­ing to fruition, he not­ed:

Very good. Nice work as usu­al. $1bn here we come.”

Once they got this drug, the com­pa­ny al­so bent over back­ward to make sure they were ship­ping Dara­prim on­ly to cus­tomers who would use it for pa­tients, and not for any­one — es­pe­cial­ly com­pound­ing phar­ma­cies — who might want to pro­duce a knock­off.

“Re­strict­ed dis­tri­b­u­tion in this case was a de­lib­er­ate part of Tur­ing’s plan to de­fend its shock­ing price in­crease and sub­se­quent in­creased rev­enue against po­ten­tial com­pe­ti­tion,” the Sen­ate re­port on price goug­ing states.

Shkre­li was fol­low­ing a play­book he set up at Retrophin, where he cre­at­ed the busi­ness mod­el with its ac­qui­si­tion of an­oth­er drug named Thi­o­la.

Here’s what he had to say to a Retrophin in­vestor:

The drug com­pa­nies are afraid. Small ones, big ones, etc. Big price in­creas­es are hor­ri­fy­ing be­cause most ex­ec­u­tives over­es­ti­mate changes in de­mand. It comes most­ly from phar­ma’s his­to­ry as qua­si-con­sumer prod­ucts. . . . The next gen­er­a­tion of phar­ma guys (or the smart ones) un­der­stand the in­elas­tic­i­ty of cer­tain prod­ucts. The in­sur­ers re­al­ly don’t care. They just pass it through and fo­cus on man­ag­ing care for physi­cian pay­ments and block­busters. They as­sume some­one will gener­i­cize it if it is mak­ing too much mon­ey, and they’re right.

So I don’t re­al­ly think of it the same way as oth­ers. I think this deal, if we pull it off, is worth $100m-$200m to our com­pa­ny. We’ll see!

I fig­ure this dy­nam­ic may not last for­ev­er, you need to max­i­mize op­por­tu­ni­ties while you can.

Shkre­li was right on some things, and wrong on a few crit­i­cal el­e­ments. The biggest blun­der was that he could hike the price of Dara­prim more than 5000% overnight with­out trig­ger­ing a pub­lic back­lash. Af­ter Andy Pol­lack at The New York Times wrote about it, the con­tro­ver­sy went vi­ral, trig­ger­ing an on­line mob of crit­ics to blast the deal and push law­mak­ers to take ac­tion.

On the oth­er hand, af­ter Shkre­li re­neged on a promise to low­er the price, he re­signed, the con­tro­ver­sy ebbed away and Dara­prim is still sold by Tur­ing with the same stick­er price.

Shkre­li him­self im­me­di­ate­ly re­spond­ed to the re­port with his usu­al blend of out­rage and fin­ger-point­ing.


I queried Shkre­li on Twit­ter, par­tic­u­lar­ly in­ter­est­ed in whether he felt that de­spite all the con­tro­ver­sy, he and Tur­ing es­sen­tial­ly got away with it all, giv­en that the price for Dara­prim re­mains fixed at the in­flat­ed fig­ure. Here’s the ex­change.




Guap, by the way, is slang for much mon­ey. Shkre­li is sched­uled to go on tri­al in June on fed­er­al charges that he was en­gaged in fraud re­gard­ing guap that had noth­ing to do with the prices he charged for drugs.

From left to right: Lilian Kim, Associate Director Business Development; John Moller, CEO; Yooni Kim, Executive Director, Asia Operations; Michelle Park, Director South Korea Operations.

Novotech CRO sees 26% growth in Asia tri­al ac­tiv­i­ty from biotechs, but still plen­ty of ca­pac­i­ty

As the Asia-Pacific clinical trials sector continues to grow rapidly, Novotech the Asia-Pacific-based CRO is seeing biotech clinical activity up by 26%. But says there is still plenty of capacity in the region that features advanced medical facilities, supportive regulatory environments, and more than 2.3 billion people, largely treatment naïve, living in urban areas.

China, South Korea and Australia have the most studies registered as recruiting or about to recruit according to ClinicalTrials.Gov.

Pfizer, South San Francisco — Jeff Rumans for Endpoints News

UP­DAT­ED: Pfiz­er takes aim at a flag­ship fran­chise at Sanofi and Re­gen­eron — and scores a few di­rect hits

Count Pfizer in as a top player in the blockbuster game of JAK1 inhibitors.

Over the weekend the pharma giant posted some stellar Phase III efficacy data for their heavyweight contender abrocitinib in atopic dermatitis (eczema) that lines up ahead of a booming Dupixent (dupilumab), a blockbuster in the portfolios of Regeneron and Sanofi. And they put some real distance ahead of Eli Lilly’s trailing Olumiant, which made a delayed initial arrival on the market for rheumatoid arthritis after the FDA hobbled it with some additional hurdles on safety concerns.

JADE-MONO-1 scores well for Pfizer, teeing up what will be an intensely followed breakdown of the JADE MONO-2 data, which the pharma giant recently top-lined as “similar” to the first Phase III when tested against a placebo — a control group that has been easily outclassed by all the drugs in this market niche.

As of now, Pfizer looks to be equipped to run into the review stage — advantaged by a breakthrough therapy designation that is intended to speed up the regulatory process.

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A preda­tor's world? Top an­a­lyst sees the 'haves' and the 'haven't­s' di­verge as biotech bub­bles form — and col­lapse

Josh Schimmer

We’ve all seen the deluge of cash that’s been pouring into biotech from every angle: VCs, IPOs and follow-ons have generated billions in capital for new and emerging drug developers with ready access to some powerful new tech. But Evercore ISI’s Josh Schimmer is asking where we’re headed from here.

His answer is neither apocalyptic nor universally blissful, but if he’s right — and this is a discussion we’re hearing much, much more about at a time of growing economic and industry uncertainty — we may well be at a crossroads that could affect valuations, M&A and the entire global industry that has formed over the past 5 years.

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US mulls tar­iffs on Swiss drug ex­ports, weigh­ing on No­var­tis and Roche –  re­port

The leading Swiss newspaper has reported that the US is considering placing tariffs on pharmaceuticals from Switzerland. Roche and Novartis stock each fell 1% after the news broke.

Neue Zürcher Zeitung reported that US Trade Representative Robert Lighthizer told pharmaceutical representatives the Trump administration was considering the move. Tariffs do not appear to be in the immediate offing, but they would potentially affect Swiss giants Novartis and Roche along with other companies that manufacture in Switzerland, including Merck KGaA and US biotech Biogen, which is currently constructing a new facility in the country.

Neil Kumar, Endpoints

Bridge­Bio drops bid to re­claim Ei­dos af­ter di­rec­tors spurn 3 of­fers

A couple of months ago a newly public BridgeBio turned some heads by disclosing that it had made a bid for subsidiary Eidos Therapeutics in hopes of gobbling up the 34% stake that it doesn’t already own. Two offers later, the parties are calling it off.

A special committee of independent directors at the smaller biotech led by RA Capital’s Rajeev Shah and ex-Portola CEO William Lis first rejected the parent company’s initial offer — which would swap 1.3 BridgeBio shares for each Eidos share — on September 12. In the latest announcement, BridgeBio revealed that it eventually raised the offer to 1.5 shares and made $110 million available for all-cash or mixed consideration options, but Eidos still wasn’t interested.

Mark Foley, Revance

HR vi­o­la­tion push­es Re­vance co-founder out, vault­ing for­mer Zel­tiq chief to the helm

Months after Revance amended the terms of its Botox biosimilar collaboration with Mylan, the Newark, California-based drug developer disclosed its co-founder Dan Browne is stepping down, in what appears to be mysterious circumstances.

The company — which is also developing a rival to Allergan’s formidable Botox franchise — on Monday said Browne is departing “due to misjudgment in handling an employee matter,” that has also culminated in his resignation from Revance’s board of directors.

In-house FDA re­view flags a sus­pi­cious im­bal­ance in deaths as Sh­iono­gi hunts an OK for an­tibi­ot­ic

Shionogi has some big questions to answer if they plan to win an FDA panel’s backing for their new antibiotic.

While investigators have provided positive efficacy data for their new product to treat cases of complex urinary tract infections, an FDA review has flagged an imbalance of deaths between the antibiotic and a control arm. And they want the agency’s outside advisers to take a good hard look at that when they meet on Wednesday.

Cell ther­a­py start­up rais­es $16 mil­lion to fund its quest for the Holy Grail in re­gen­er­a­tive med­i­cine

In 2006, Shinya Yamanaka shook stem cell research with his discovery that mature cells can be converted into stem cells, relieving a longstanding political-ethical blockage and throwing open medical research on everything from curbing eye degeneration to organ printing.

But that process still has pitfalls, including in risk and scalability, and some researchers are exploring another way first hinted at years ago: new technology to convert mature cells directly into other mature cells without the complex and time-consuming process of first making them into stem cells.

Eye­ing $86M, Galera leads a pack of three mod­est biotech IPOs push­ing past high pro­file stum­bles

Exactly one year after kicking off a pivotal Phase III study for its lead drug — a companion for cancer patients receiving radiotherapy — Galera is looking to the Nasdaq for some new cash to complete the clinical work and fuel its commercial drive.

CEO Mel Sorensen has penciled in an $86 million ask, which was filed on the same day as liver disease company 89bio and rare disease diagnostics shop Centogene. The trio marks the first batch of IPO filings in the wake of two highly anticipated but ultimately disappointing public debuts by BioNTech and Vir, signaling dwindling biotech fervor on Wall Street. 89bio and Centogene are seeking $70 million and $69 million, respectively.