For most people, the fact that Martin Shkreli was driving the cost of desperately needed drugs to insane levels is what makes him so despicable. But for investors looking to get in on Shkreli’s cash cow, that’s exactly what they liked about him.
[Shkreli] then approached [investor Sarah Hassan] about a business he was starting called Retrophin, to sell so-called orphan drugs to treat rare conditions. His pitch, she said, was “you can make a lot of money on orphan drugs, because the price per patient is quite high.”
And that price became much, much higher once Shkreli was involved. Shkreli sought out situations where people suffered from long term illness where there were few options in medication. Then he gained control of the drugs and sent prices through the roof. It was a system that generated huge profits in a hurry, and kept investors happy.
However, behind the scenes, it turned out the Shkreli was far less of a wizard on most of his investments. Profits generated by holding people ransom for the lives either went into Shkreli’s pocket, or to pay off horribly bad stock decisions that he made on two other funds.
Shkreli, best known for raising the price of Daraprim — a 62-year-old drug primarily used to treat newborns and HIV patients — from $13.50 to $750 a pill, went on trial Wednesday for allegedly defrauding investors.
For investors, it wasn’t Martin Shkreli’s monstrous actions that made them turn away. It was only when those actions stopped hauling in big bucks that he got in trouble.
For someone who had a reputation as a investment whiz-kid, Shkreli’s early funds turned out to be massive losers.
Josiah T. Austin, managing member of El Coronado Holdings LLC, said he invested $4.8 million in Shkreli’s Elea Capital Management in 2006 and 2007 because he liked Shkreli. Austin told the jury he lost it all.
But hey, Shkreli made a nice apology.
"Sorry for all the inconvenience," Shkreli emailed that investor, Josiah Austin, after the steep loss of Austin's entire stake in his fund, Elea Capital.
It appears that only the idea that he could hold sick people hostage and investors would flock to reward him for it, was the one and only genuine discovery that Shkreli made. But he does have regrets. He regrets … that he wasn’t worse.
If anything, the provocative pharmaceutical CEO — who became "the most hated man in America" earlier this year — thinks he didn’t go far enough when he hiked the price of Daraprim by more than 5,000% overnight.
Shkreli says that, given a chance to do it over, he would have raised prices higher, faster.