Martin Shkreli-founded drug company files for bankruptcy

By Dietrich Knauth

NEW YORK (Reuters) – Vyera Pharmaceuticals, which previously settled price-fixing charges that resulted in founder Martin Shkreli being banned from the pharmaceutical industry, filed for bankruptcy late Tuesday to sell its assets.

Vyera said its bankruptcy was the result of declining profits, increased competition for generic drugs, and litigation alleging that Vyera suppressed competition for its most valuable drug, Daraprim.

Daraprim is a life-saving anti-parasitic medicine that Shkreli infamously raised the price on by more than 4000% and worked to choke off generic competition for after the company acquired the drug in 2015. Shkreli even directed Vyera to continue anticompetitive actions while he was serving a prison sentence on securities fraud charges, Vyera said in court papers filed Wednesday.

Vyera, formerly known as Turing Pharmaceuticals, has between $10 million and $50 million in assets and between $1 million and $10 million in liabilities, according to a Chapter 11 petition filed in Delaware bankruptcy court.

Vyera filed a Chapter 11 plan in court on Wednesday, laying out it its intent to repay creditors through asset sales.

Besides Daraprim, Vyera’s assets include a priority review voucher that could be resold to other companies seeking expedited drug approvals in the U.S. and about $5.6 million in shares of Regnum Corp. Vyera said that recently-sold vouchers have fetched prices between $95 million and $120 million in sales that have occurred since 2020.

Vyera is facing multiple lawsuits related to its Daraprim price hike, including a shareholder action, an antitrust complaint filed by a generic drugmaker, and a demand for legal fees from Duane Morris, the law firm that defended Shkreli in an antitrust action brought by the U.S. Federal Trade Commission. Vyera listed Duane Morris as its largest unsecured creditor in its bankruptcy filing, with a $2.1 million asserted debt.

While Vyera settled the FTC charges related to the Daraprim price hike, Shkreli refused to settle. He was hit with a $64.9 million judgment for anticompetitive conduct, which he has appealed to the 2nd U.S. Circuit Court of Appeals.

A federal court in New York court later appointed a receiver to seize Shkreli shares in Vyera’s parent company and used them to pay the FTC judgment.

Shkreli was convicted in August 2017 of defrauding investors in two hedge funds he ran, and scheming to defraud investors in drugmaker Retrophin (NASDAQ:) Inc, where he had been chief executive.