Saturday, February 21, 2015

The epic Retrophin 8-K filing

Martin Shkreli was formerly a biotech short-seller. I know those people. I am one.

They have their eye out for the inflated claim re the efficacy of a drug and the wheeling and dealing in stock.

Unusually Martin became CEO of a biotech (Retrophin) and became a wheeler-and-dealer himself. Martin also kept a twitter account where he recommended Retrophin stock and suggested (often correctly) that other biotechs were worth shorting.

He is a 31 year old - but all the photos make him look 17. The joke about his hyperactive twitter account was that he would tweet if he had a date.

Anyway eventually - and after a saga you can look up if you want - he was ousted as CEO of his own company.

Today the company released an 8-K explaining what the board found after his ouster - and it is already being described as an epic. Here goes for some of it.

Consulting Agreements. Between September 2013 and March 2014, the Company entered into several consulting agreements and releases with individuals or entities that had been investors in investment funds previously managed by Mr. Shkreli (the “MSMB Entities”), or that otherwise had financial dealings with Mr. Shkreli. The agreements provided for the issuance of a total of 612,500 shares of common stock of the Company, and a total of $400,000 in cash payments by the Company. The Oversight Committee concluded that the Company should not continue to treat these agreements as consulting agreements because their predominant purpose appears to have been to settle and release claims against the MSMB Entities or Mr. Shkreli personally, and not to provide meaningful and sustained consulting services to the Company.
Litigation Settlements. In the second quarter of 2014, the Company settled two lawsuits involving individuals who had formerly performed services for both the Company and the MSMB Entities. The Oversight Committee concluded that approximately $200,000 in cash payments made by the Company as part of these settlements appear to have been made to cause these individuals to transfer 176,388 shares of the Company’s common stock directly to Mr. Shkreli.
Read the whole lot here... 


Disclosure - dumb luck I shorted a little recently. I just figured when he was fired at CEO we were going to find out more. And more.

But the really dumb luck. I got sick, missed the rise when he left, and only read he resigned today - so so only shorted today. I would rather be lucky than good.


Robert in Chicago said...

"Investing based on perceived probabilities rather than certainties" is not the same thing as "dumb luck." As you know. You are not a humble guy, even in print. (Neither am I.) Well done; call it what it is.

Anonymous said...

Stock isn't even down in AH - this is not material for the company but is material for Martin.

Anonymous said...

I heard Sabrina Rubin Erdely was looking for a night out.

Pedrazo said...

Statement from Shkreli:

Hi Guys,

This is Martin Shkreli. The 8-k is completely false, untrue at best and defamatory at worst. I am evaluating my options to respond. Every transaction I've ever made at Retrophin was done with outside counsel's blessing (I have the bills to prove it), board approval and made good corporate sense. I took Retrophin from an idea to a $500 million public company in 3 years--and I had a lot of help along the way.

I am happy to explain any transaction. I am confident that anyone who looked into the transactions would find them perfectly legal, reasonable and quite intelligent (the results of the company speak for themselves). I welcome any scrutiny by any party and have faith any investigation will be resolved without issue--it would not be the first time and it won't be the last that my moves have been looked at--this is not my first rodeo and I have too many scars to do something stupid.

By the way, it is nice to see the rational community here, and I will enjoy joining some of the discourse here on various companies and drugs.

Martin Shkreli

Anonymous said...

The most interesting part IMO is the revelation that the US attorney for the ED of NY has begun a CRIMINAL investigation into these activities (which investigation I assume is directed at the former CEO; i.e., I would presume he is the target of the investigation).

"EDNY Subpoena. In January 2015, the Company received a subpoena relating to a criminal investigation by the U.S. Attorney for the Eastern District of New York. The subpoena requests information regarding, among other things, the Company’s relationship with the MS MB Entities and Mr. Shkreli. The Company has been informed that it is not the target of the U.S. Attorney’s investigation, and intends to cooperate with the investigation."

Susan O said...

Well, this little weasel is back in the news with his raising the price of a life saving drug so fucking high that many lives will be lost. Given his dirty history and a definite conspiracy regarding this drug I was wondering if he might fit the criteria for racketeering charges.

General disclaimer

The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.