Hedge fund boss Martin Shkreli moved on from a messy split from his first startup, Retrophin, to found a new one called Turing Pharmaceuticals last year. Now he’s taking the lead on a big round of cash to get that startup off the ground.
Turing, a startup with offices in New York City and Zurich, Switzerland, closed a $90 million Series A this morning. The funding was led by Shkreli, Turing’s founder and CEO, and included several other unnamed “preeminent institutional equity investors,” according to a statement. Turing also took on some senior secured debt, though it didn’t specify how much.
Most young biotech startups don’t take on debt; the road to generating the revenue needed to pay off loans in life sciences can be several years long and fraught with failure.
But Shkreli appears to be shaping Turing similarly to Retrophin (NASDAQ: RTRX), the startup he founded in 2012, in that the startup plans to combine in-licensed products to generate revenue in the short term with in-house experimental drugs being developed for rare diseases.
Turing was formed in conjunction with a $3 million licensing deal with Retrophin to acquire nasal spray formulations of oxytocin and ketamine, and a third drug called mecamylamine (Vecamyl). Shkreli engineered deals for these assets while at Retrophin, but the executives who took over for him deemed them “non-core assets” and sold them off.
Mecamylamine is approved to treat certain cases of hypertension. The oxytocin nasal spray is a drug Novartis developed and sold years ago for mothers with trouble breastfeeding, but then shelved it. Turing is continuing Shkreli’s original plan at Retrophin of trying to reintroduce the drug and test it for a variety of other conditions. Turing is also testing the ketamine nasal spray for various mood disorders.
And today, Turing paid Impax Laboratories (NASDAQ: IPXL) $55 million for the U.S. rights to pyrimethamine (Daraprim), a marketed drug used to treat a parasitic infection called toxoplasmosis and some cases of malaria. (Impax, in a separate release, referred to pyrimethamine a non-core drug that it got in a buyout of Tower Holdings).
The company identifies two in-house drug candidates, TUR-003 and TUR-004, as potential rare disease therapies, but doesn’t specify which ones they’d treat.
Shkreli made a name for himself as the manager of MSMB Capital, a New York hedge fund. In that role, he was vocal about “shorting” various stocks—betting that their share prices would drop—and agitating for board changes and criticizing companies he felt were managed poorly. He once offered to buy Amag Pharmaceuticals (NASDAQ: AMAG), for instance, and led a campaign to overthrow its board.
Shkreli founded Retrophin in 2012, took it public through a reverse merger, and had a controversial, short run as its CEO. He was ousted as CEO last September and replaced by Stephen Aselage—reportedly a result of missed development deadlines and a host of other reasons (read this report in TheStreet.com for more). Yet in part because of the foundation Shkreli put in place, including an experimental drug for a rare kidney disorder, Retrophin shares are now worth three times what they were when he left.
Just two weeks after the announcement of Shkreli’s departure, Turing acquired the drugs Shkreli had bought at Retrophin.
“We are very happy with the institutional interest in our first capital raise. It’s a great reflection on our business model and the collective track record of our leadership team developing breakthrough treatments for serious diseases,” Shkreli said of the financing, in a statement.