Biotech and Pharma

Retrophin paid pharma bro Martin Shkreli to settle legal claims — won't say how much

Key Points
  • Retrophin revealed that it paid its ex-CEO Martin Shkreli to resolve several legal claims between him, the drug firm, and board members — but won't say how much the "Pharma Bro" received.
  • Shkreli's lawyer told the judge in his criminal case that he will ask the U.S. Supreme Court to hear an appeal of the decision by a federal appeals court to uphold his fraud conviction.
  • Shkreli, who is serving a seven-year prison term, gained notoriety for hiking the price of the drug Daraprim by more than 5,000% while running Turing Pharmaceuticals.
A file photo of Martin Shkreli, former chief executive officer of Turing Pharmaceuticals AG, arriving at federal court in Brooklyn, New York.
Peter Foley | Bloomberg | Getty Images

Retrophin revealed Wednesday that it had paid its notorious and felonious ex-CEO Martin Shkreli to resolve several legal claims between him, the drug firm and board members — but won't say how much the "Pharma Bro" received.

"The Company made an undisclosed cash payment to Mr. Shkreli," Retrophin said in a 10-Q filing with the Securities and Exchange Commission.

Retrophin also said that its 36-year-old founder "agreed to extinguish his rights to future advancement of legal fees and indemnification by the Company (other than for certain pending litigation)."

A Retrophin spokeswoman, when asked how much the company paid Shkreli, said, "Retrophin cannot comment further on this matter beyond what is included in the filing and our previous statement," which had said the company was "pleased" with the outcome from the settlement.

Shkreli's civil lawyer, Edward Kang, said he could not disclose how much Shkreli was paid.

But Kang did say, "Mr. Shkreli is pleased that the case is over so that the parties can move on."

Retrophin's 10-Q filing was made public almost exactly two years after Shkreli was convicted of three counts of securities fraud by a jury in Brooklyn federal court. Last month, the 2nd Circuit Court of Appeals upheld Shkreli's conviction. He is currently serving a seven-year prison term in Pennsylvania.

Last week, Shkreli's lawyer told the judge in his criminal case in a letter that he will ask the U.S. Supreme Court to hear an appeal of his conviction.

The lawyer, Andrea Zellen, cited that plan as she asked Judge Kiyo Mastumoto to deny prosecutors' request that she release more than $463,000 of Shkreli's money to pay restitution to one of his fraud victims, along with a $75,000 court-levied fine.

CNBC reported on June 20 that Shkreli and Retrophin had reached a settlement that covered "all outstanding disputes" between them.

Retrophin had a pending $65 million federal lawsuit alleging Shkreli breached his fiduciary duty to the company while serving as CEO and as a board member, while Shkreli had a pending arbitration claim alleging the company violated his employment agreement in ousting him in 2014.

Shkreli also had sued two Retrophin directors and its ex-general counsel for $30 million in late May, claiming they engaged in fraud to boot him from the company.

The settlement in June came weeks after that latest suit, and around the time an arbitration hearing on the merits of his claim against Retrophin was due to start.

At the time of the settlement, Retrophin refused to reveal the terms of the deal, including whether the company paid Shkreli, or the other way around. But the firm also said then that "additional information about the settlement will be provided in Retrophin's forthcoming quarterly filing."

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Shkreli became infamous in 2015, a year after he was unceremoniously dethroned at Retrophin, by dramatically hiking the price of a decades-old drug, Daraprim, which had been acquired by another firm he founded, Turing Pharmaceuticals. Shkreli raised Daraprim's price by more than 5,000 percent, from $13.50 per tablet to $750. The medication is used to treat a life-threatening parasitic infection that is found in patients with HIV, pregnant women and infants.

Turing is now known as Phoneixus. Shkreli still reportedly retains ownership of the firm, and was transferred from a prison in New Jersey to his new home in a Pennsylvania prison after the Wall Street Journal reported in March that he was using a contraband cellphone to help manage the company while locked up.

Shkreli reveled in the widespread scorn he received on the heels of the price increase, and delighted lashing out at his many critics on Twitter.

But months later he was arrested and charged with fraud.

Prosecutors claimed he had misled investors in two hedge funds he previously ran, used their money without their prior knowledge to fund the creation of Retrophin and then looted Retrophin's assets to pay off the investors for losses he incurred for them through the funds.

Shkreli ultimately was not convicted of ripping off Retrophin, but was convicted on other fraud counts.