Three years after steep price hike, Martin Shkreli’s drug company is losing money, documents show
Martin Shkreli’s former company is losing money, watching sales of its famously costly medicine slip while considering yet another name change.
Vyera Pharmaceuticals, formerly called Turing Pharmaceuticals, lost more than $1 million in the first quarter of 2018, according to financial documents obtained by STAT. Sales, driven by the $750-a-pill Daraprim, have been on the wane over the past two years, falling more than 14 percent in 2017 and on pace to drop another 7 percent in 2018.
The company gained notoriety in 2015 after Shkreli, then CEO, acquired Daraprim, which treats a rare infection called toxoplasmosis, and raised the price more than 5,000 percent. Despite a public outcry, Shkreli claimed the move would bring in hundreds of millions of dollars a year in profits for the company’s shareholders and fund the development of new, better treatments for toxoplasmosis and other rare diseases.
But audited financial statements obtained by STAT show Vyera is nowhere near meeting either goal. The documents suggest Shkreli’s move was a short-term success: The Daraprim price hike helped Vyera achieve stellar gross margins, but the company’s expenses cut deeply into its net income. After turning small profits in 2016 and 2017, Vyera is now losing money. Daraprim sales are falling, and Vyera has laid off at least a handful of salespeople; expenses remain high.
Having done business as Turing as recently as September, Vyera is now seeking to change its name again. The proposed name is Phoenixus, a reference to the mythic bird that rose from the ashes of its predecessor. The company’s shareholders will vote on it at an annual meeting scheduled for Friday.
The company did not respond to requests for comment.
Shkreli is serving a seven-year federal prison sentence for securities fraud unrelated to Vyera, but he retains a nearly 50 percent ownership stake in the company. He resigned as CEO in 2015, and the company endeavored to move on without him, at one point planning to sell off the rights to Daraprim. But last year, before Shkreli was found guilty and incarcerated, he installed allies on the company’s board, ensuring Vyera would maintain its original mission.
But that mission appears to be running aground. Former employees said the combination of a shrinking patient population and insurers wary of Daraprim’s high price — and Shkreli’s criminal reputation — have put Vyera’s business in danger.
The company’s revenue, which is largely reliant on Daraprim sales, peaked in 2016, reaching more than $78.5 million on the year and helping the company to a profit of $1.3 million. Sales slipped to $67 million in 2017. The company managed a $13.9 million profit thanks to a few one-time benefits and double-digit cuts to expenses and R&D investment.
But Daraprim’s negative sales trends seem to be catching up to Vyera. In the first quarter of 2018, the company booked just $15.7 million in sales. And, for the first time since the price hike, the company’s expenses outpaced its revenue, resulting in a loss of $1.2 million on the quarter.
A former employee said the company’s problems in part reflect a shrinking patient population.
Toxoplasmosis is a rare infection that largely affects patients with HIV. As HIV therapies gain wider use across the country, there are fewer and fewer patients who need Daraprim. That, coupled with the drug’s famously high price, has put a damper on sales, the former employee said.
“It’s a dying disease — which is a good thing — but it’s bad for the company,” said the former employee, who spoke on condition of anonymity so as not to violate an agreement with Vyera.
U.S. prescriptions for Daraprim have consistently fallen over the past two years, from 427 in the first quarter of 2017 to just 107 in the first quarter of 2018, according to IQVIA, a pharma consultancy that tracks drug sales.
The backlash resulting from the Daraprim price increase coupled with Shkreli’s “pharma bro” persona emboldened insurers to place greater restrictions on the use and reimbursement of the drug, according to another former Vyera employee. He asked not be identified due to fear that current Vyera management might interfere with his current business project.
The company appears to have foreseen such problems.
In early 2017, Vyera sought to keep Shkreli’s handpicked nominees off its board, sending an email to shareholders pointing out that one insurance company had “undertaken a corporate initiative not to partner with drug companies that it believes are engaged in inappropriate corporate behavior.” If Shkreli’s allies took control of Vyera, the company warned, it would be “significantly more difficult for [the company] to maintain its relationships with providers and insurers of Daraprim.”
Meanwhile, the company has laid off workers since last year in what one former employee described as an “exodus.” According to LinkedIn, Vyera has parted ways with nine members of its small sales team since 2017, including two chief commercial officers.
In a tacit acknowledgment that Vyera needs fixing, the company is asking its shareholders to approve a new corporate identity — 10 months after the last name change. The upcoming shareholders meeting will take place at the company’s headquarters in Baar, Switzerland, according to an agenda obtained by STAT.
Vyera’s board “is in the process of making a series of changes that will favorably impact the company’s research and patient focus as well as the way it interacts with stakeholders,” according the company’s letter to shareholders. “As the company embarks on a new future, it intends to do so with a new name and identity focused on those that need its attention and expertise.”
The company’s history is baked into the etymology of its proposed new name: The “nixus” in “Phoenixus” comes from the Latin for “having struggled,” according to the shareholder letter.
originally published on Statnews.com