How Much Longer Can Martin Shkreli Control a Pharma Firm From Prison?


Since moving to the low-security prison, in Allenwood, Mr. Shkreli communicates with the outside world in large part through collect calls. He “has maintained his influence over Phoenixus and Vyera through associates as well as his position as Phoenixus’s largest shareholder,” the F.T.C. and New York prosecutors said in their complaint.

Phoenixus took an enormous hit last year when generic competitors to Daraprim hit the market: It lost nearly $20 million, saw sales drop nearly by half and sharply reduced its staff. (The company blamed layoffs on the pandemic in a letter to investors.) It also reported a $5.5 million operating loss in the first quarter of this year, according to an investor presentation.

Among the activist investors’ plans for Phoenixus, should they win control, is unwinding the Daraprim price increase. Other possibilities include paying out more of the company’s cash holdings, which stood around $56 million at the end of March.


Mr. Mulleady was ousted from the board in December, a move proposed by Mr. Shkreli. From that point on, Mr. Mulleady has worked with Mr. Aryeh on the challenge to existing directors.

The group had called for a special board election by Phoenixus shareholders, which had been set for June 7. It was called off at the last minute, with the group suspecting that Mr. Shkreli had drawn away enough shareholder support to make their challenge unsuccessful.

Initially, Mr. Mulleady was among the candidates the activists put up for election to the board, a group that also includes Mr. Aryeh and several health care executives and investors. He later withdrew from consideration, acknowledging that his history with the company, and Mr. Shkreli, was an easy point of criticism.

If the activist investors lose the vote, they plan to call for another special shareholder vote. Mr. Shkreli’s shares are in a sort of legal limbo, with a creditor of another Shkreli company fighting to have them taken away and sold. At a hearing last week in that case, the judge granted a request to appoint a receiver to take Mr. Shkreli’s shares, with the aim of selling them to pay off debts.

That could lead to Mr. Shkreli losing his influence in the company regardless of the shareholder vote, Mr. Mulleady said: “Martin’s kind of high and dry here.”


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