clinical-trial program in excruciating detail, comparing it with that of other companies pursuing cell therapies, before coming to a rather blunt conclusion: “Despite some diehard faith from Cytori investors and seemingly, management, there is limited clinical proof of concept for Cytori’s approach.”
Tom Baker, Cytori’s director of investor relations, isn’t amused. “I wonder how one could so summarily dismiss an entire field,” he says. “We’re very bullish on the whole stem cell sector. We don’t dwell on someone’s doubts.”
Some of Shkreli’s sparring has extended far beyond his blog posts, however. On Christmas Day 2010, Shkreli wrote a letter to 10 FDA officials urging them to reject an inhaled insulin product made by MannKind (NASDAQ: [[ticker:MKND]]), a Valencia, CA-based company founded by billionaire octogenarian and medical-device veteran Al Mann. A few weeks later, at the JP Morgan Healthcare Conference in San Francisco, Shkreli went to an investors’ meeting led by Mann and “asked a lot of questions that I think annoyed him,” Shkreli says.
Shkreli’s main problem with the product, he says, was “a very, very deficient clinical trial program.” Specifically, he says, the company redesigned the inhaler but didn’t run trials to prove it worked.
On January 20 of this year, the FDA issued a “complete response” letter to MannKind, requesting that the company run two trials of the new inhaler. The company’s stock has lost half its value in the past year and has been trading recently at about $2.45.
And yes, Shkreli freely admits he was shorting MannKind’s stock at the time of his battle with the company. “I thought it was important to bring attention to this idea that the company hadn’t done its trials in the way it should have. So I shorted the stock and made my position clear,” Shkreli says. “I think the short is one of the greatest investments we’ve ever made.”
MannKind declined to comment.
A more recent FDA correspondence has gotten Shkreli in hot water with a Washington, DC, outfit called Citizens for Responsibility and Ethics in Washington (CREW). After blasting Dublin, OH-based Neoprobe (AMEX: [[ticker:NEOP]]) in four Seeking Alpha postings, Shkreli wrote a petition to the FDA last June requesting that the agency not consider approving the company’s product, which is a radioactive agent used to detect lymph nodes. Shkreli suggested that the FDA should require the company to test its drug against another radioactive product that’s currently used in combination with blue dye for lymph node mapping.
On January 26, after months of collecting supporting documents from the FDA—and some from Shkreli himself—CREW sent a letter to the SEC asking the commission to open an investigation into Shkreli’s short-selling activities. The 60-page letter includes multiple examples of Shkreli’s correspondences with the FDA, and requests that the SEC require Shkreli to disclose MSMB’s holdings. CREW suggests in its letter that the SEC then compare Shkreli’s trading patterns with his attempts “to influence the outcome of the FDA’s approval process.”
Anne Weismann, chief counsel for CREW, says in an interview with Xconomy that her organization isn’t alleging Shkreli engaged in collusion, but rather demanding further investigation into his trading activities. “With hedge funds, there’s limited information publicly available,” Weismann says. Comparisons of Shkreli’s FDA petitions to his trades “should be done by someone who has greater access than we do.”
Shkreli was more than happy to help CREW with its investigation, sending the organization copies of some of his FDA correspondences, all the while contending that shorting stocks is
