Since moving to Allenwood Low Security Prison, Mr. Shkreli has communicated with the outside world largely through collect calls. He “maintained his influence over Phoenixus and Vyera through associates as well as his position as the largest shareholder of Phoenixus,” FTC and New York prosecutors said in their complaint.
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Phoenixus suffered a huge blow last year when Daraprim’s generic competitors hit the market: it lost nearly $ 20 million, saw sales drop by almost half, and severely downsized. (The company blamed the pandemic for the layoffs in a letter to investors.) It also reported an operating loss of $ 5.5 million in the first quarter of this year, according to an investor presentation.
Among the plans of activist investors for Phoenixus, should they gain control, is the unwinding of the Daraprim price hike. Other possibilities include paying out more of the company’s cash, which stood at 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 worked with Mr. Aryeh on the challenge to existing directors.
The group had called for a special election of the board of directors by the shareholders of Phoenixus, which had been set for June 7. It was called off at the last minute, with the group suspecting that Mr Shkreli had garnered enough support from shareholders to make their challenge unsuccessful.
Initially, Mr. Mulleady was among the candidates nominated by activists for election to the board of directors, a group that also includes Mr. Aryeh and several healthcare executives and investors. He then withdrew from the review, acknowledging that his history with the company and Mr. Shkreli was an easy point to criticize.
If activist investors lose the vote, they plan to ask for another special shareholder vote. Mr. Shkreli’s shares are in a sort of legal limbo, with a creditor from another Shkreli company fighting to get them removed and sold. At a hearing last week in the 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.
This could lead to Mr. Shkreli’s loss of influence in the company, regardless of the shareholder vote, Mr. Mulleady said: “Martin is pretty high and dry here.”