Shkreli’s Retrophin Gets Another Injection Of Capital; Talks Up Clinical Plans
This article was originally published in The Pink Sheet Daily
Executive Summary
The biotech, founded in late 2011 by venture capitalist Martin Shkreli, has yet to make any significant clinical moves with the compounds in its pipeline, but signs show that could change before year-end.
Hedge fund hotshot Martin Shkreli is ready to move his recently founded biotech forward in a big way – announcing an agreement to license a drug from a major pharmaceutical company as well as another injection of capital into Retrophin Inc..
The 30-year-old founder of Retrophin made a slew of announcements Aug. 16, stating that the company is ready to move one of its assets into the clinic and that it has signed an agreement with an undisclosed major pharmaceutical company for a treatment for autism and schizophrenia.
The biotech paid an undisclosed upfront fee and has 120 days to negotiate a licensing fee for exclusive rights to the intellectual property to develop, manufacture and sell the product in the U.S. Details about the product and the company involved in the deal were not revealed; only that “numerous existing studies utilizing this product have shown positive results in autistic people and those suffering from schizophrenia.”
The transaction is expected to close in the third or fourth quarter of this year.
Funding A Fledgling Biotech
In an effort to fund the transaction, Retrophin announced that it has entered into an agreement for a private placement financing. Upon closing the PIPE (private investment in public equity) financing – expected during the week of Aug. 19 – Retrophin will receive $25 million resulting from the sale of approximately 5.6 million shares of Retrophin common stock and warrants.
The company conducted a similar financing in February – issuing 3,333,332 shares of common stock and warrants to purchase an additional 1,530,559 shares of common stock, resulting in $10 million in proceeds. Shkreli has taken an as-needed approach to cash for the company. It initially raised $4 million in a Series A financing in May 2012 led by the hedge fund Shkreli founded, MSMB Capital [See Deal].
Shortly after its Series A, Retrophin conducted a reverse-merger with Desert Gateway in order to trade over-the-counter under the symbol (OTCBB: RTRX). In the past, Shkreli has expressed intentions of listing the company on the NASDAQ.
All of the money that Retrophin has raised to date is going toward the four programs it has in its pipeline – three of which are preclinical. The furthest along is RE-021 for the treatment of focal segmental glomerulosclerosis (FSGS), a type of scarring that forms in the kidney and affects about 50,000 people in the U.S. [See Deal]
Retrophin received exclusive global rights to this candidate, a dual-acting angiotensin/endothelin antagonist, from Ligand Pharmaceuticals Inc. in February 2012. (Formerly known as PS433540, RE021 originally was developed by Bristol-Myers Squibb Co., which licensed the agent to Pharmacopeia Inc., now part of Ligand Pharmaceuticals Inc.) MSMB Capital was one of Pharmacopeia’s largest shareholders prior to its sale to Ligand.
The company intends to move RE-021 into a pivotal Phase II trial, dubbed FONT-3. Timing of that trial is unclear – it was expected to enroll 72 patients and begin in the first half of the year, but enrollment has not yet begun.
Retrophin intends to pursue an IND for RE-024, a treatment for pantothenate kinase associated neurodegeneration (PKAN), in 2014.The company revealed interim preclinical mice data on Aug. 16 that showed that 92% of mice dosed with the drug survived, while all of the mice receiving the placebo died.
Now, the plan is to initiate a Phase I/II trial that will serve as a pivotal trial for the drug. “There is a lot of risk in the program and the drug could fail, but the good thing is we’ll know soon,” Shkreli said on a same-day conference call, referring to the short development timelines the company has planned.
Retrophin also has preclinical programs for treatments of Duchenne muscular dystrophy and spinal muscular atrophy (Also see "Duchenne Muscular Dystrophy: Pipeline And Partnering Snapshot" - Pink Sheet, 15 Oct, 2012.).
All of these diseases are lethal or extremely severe and tend to affect children, as well as posing a high cost burden on the health care system and poor quality of life for the patients. The company uses these criteria to pick which opportunities it’s going to pursue.
Shkreli is best known to the biotech world for the hedge fund he began in 2000 and its activist role at AMAG Pharmaceuticals Inc. MSMB opposed the AMAG-Allos Therapeutics Inc. deal nearly from the start, going so far as to propose its own $18-per-share, or $381 million, buyout of AMAG in August 2011.
MSMB argued then that management was not looking out for the best interest of shareholders (Also see "Hedge Fund MSMB Offers to Buy AMAG For $381M and Thwart Proposed Allos Merger" - Pink Sheet, 3 Aug, 2011.). The bid promptly was rejected by AMAG and Shkreli then sought the removal of company management, but halted his efforts after the AMAG-Allos deal fell through (Also see "Shareholder Revolt at AMAG Squelches All-Stock Merger with Equally Struggling Allos" - Pink Sheet, 21 Oct, 2011.).