Page 86 - CL Armchair Case

In 2011, Shkreli filed requests with the FDA to reject a new

cancer diagnostic device from Navidea Biopharmaceuticals

and an inhalable insulin therapy from MannKind

Corporation while publicly short-selling both companies'

stocks, the values of which dropped after Shkreli's

interventions. The companies had difficulty launching the

products as a result, although the FDA ultimately approved

both.

Moreover, Shkreli often advertised his short positions on an

investing website called Seeking Alpha, where he

encouraged others to follow his lead. In March 2012 he took

on San Diego-based Cytori Therapeutics, criticizing

“regenerative” treatments it was developing to use stem

cells to rebuild damaged tissue. “Regenerative medicine is a

meaningless and embarrassing buzzword that means

nothing,” Shkreli declared. By early April the company’s

stock had plummeted 30 percent, to about $2.

Shkreli took Retrophin public in late 2012 by means of a

“reverse merger” with an existing shell company called

Desert Gateway.

However, critics argued that Shkreli was intelligent but too

immature and unfocused for the job of CEO.