America’s most hated man, under fire for raising the price of his flagship drug by nearly 6,000%, faces several legal proceedings. And his Swiss company Phoenixus AG is on the front lines.
This content was published on April 08, 2021 – 3:00 PM
08 avril 2021 – 15:00
Marie Maurisse, Gotham City*
The prison will not have muzzled America’s most hated man. Martin Shkreli is known to have increased the price of Daraprim, a drug against toxoplasmosis, from $ 13 to $ 750 per tablet. But it was for fraud with his company Retrophin that he was finally sentenced in 2018 to 7 years in prison.
In May 2020, in the midst of a pandemic, the financier unabashedly calls for a conditional release in order to develop a treatment against covid19 – the justice will refuse him, recalling rightly that he has no scientific or medical degree.
But the troubles are not over for Martin Shkreli, who also founded the Swiss biotech Phoenixus AG, based in Baar, and its subsidiary Vyera Pharmaceuticals LLC, in Delaware. Like Retrophin, it aimed to develop molecules against orphan or rare diseases. In addition to a procedureExternal link conducted by the New York prosecutor’s office and the Federal Trade Commission for anti-competitive practices, as well as a complaint filed last weekExternal link by insurance company Blue Cross, a new legal front has just been opened by Phoenixus shareholders.
Among them is the Swiss Sabine Gritti, who has invested around a million dollars in the company. This Genevan is the founder of the interior design store Bibi GrittiExternal link, present in the city of the water jet but also in Gstaad.
Two French businessmen are also among the complainants. Antoine Verglas is described as a French citizen living in New York, who invested $ 600,000 in 2015 in Phoenixus AG. The second, Bertrand des Pallières, is participating in the proceedings through his fund SPQR Capital (Cayman) Limited, which acquired shares in 2015 for around $ 1.2 million. The latter had made the headlines of the British pressExternal link in 2007 for letting his Maserati languish at the London impound for three months because he was “too busy” to go and retrieve it.
Bertrand des Pallières seems to be more attentive to the smooth running of Phoenixus AG than to the condition of its luxury coupe. Along with the other complainants, he blames Phoenixus (which was called Turing Pharmaceuticals AG before 2018) and four of its executives for lying about the company’s financial situation, and for misappropriating capital to their own benefit. All this was allegedly piloted by Martin Shkreli, who continued to dictate his orders behind bars.External link. Martin Shkreli is, however, presumed innocent of these allegations.
Minority shareholders harmed
The complainants point out that in 2018, the companies invested in the VIES (variable interest entities) Orphan Stars Therapeutics LLC and Dermelix Biotherapeutics. These financial vehicles, independent of shareholder interests in the main company, often allow money to be saved for research and development, for example, even if the performance of the company is not as high than expected.
However, in the case of Phoenixus, this strategy would have been used to shift the company’s capital to the detriment of minority shareholders. In the 2018 and 2019 financial statutes, no details were given on the structure of these LIVES, their objective, or their activities.
In fact, says the complaint, “Shkreli owes the government money, and this also relates to his interest in Vyera (…). As a result, Shkreli had a motive to siphon off Vyera’s assets before his shares were confiscated. As of the date of this document, the government has not yet proceeded with the confiscation ”. The financier owes the federal authorities more than $ 7 million.
The expertise of Peter Nobel
Shortly before filing their complaint, shareholders learned that the composition of Phoenixus’ board of directors had changed, to Shkreli’s advantage. The information probably motivated their legal action. They therefore demand that Phoenixus and Vyera undergo a formal audit and be placed under independent control, that the information on the VIES be published, that the defendants reimburse the salaries and bonuses received from the company and that the latter recover damages, the amount of which will be assessed during the trial.
For its part, the defense notably called on the expertise of Peter Nobel, Swiss lawyer and expert in business law. In its report, it concludes that the Swiss courts would be better able to judge such a dispute insofar as Phoenixus is a company incorporated under Swiss law.
Documents related to this article:
Supreme Court of New York, 23/11/2020External link
Affirmation of Prof. Dr Peter NobelExternal link
* Founded by investigative journalists Marie Maurisse and François Pilet, Gotham CityExternal link is a judicial watch newsletter specializing in economic crime.
Every week, it reports to its subscribers cases of fraud, corruption and money laundering in connection with the Swiss financial center, on the basis of court documents in public access.
Every month, Gotham City selects one of its articles, enriches it and offers it free access to swissinfo.ch readers.
End of insertion
Get the latest news delivered to your inbox
Follow us on social media networks