NEW YORK (TheStreet) -- In the weeks before his ouster as the CEO of Retrophin (RTRX) - Get Report , Martin Shkreli was buying relatively small amounts of the company's shares on the open market and using his personal Twitter account to convince investors to do the same.

"Not selling $RTRX. The stock is very very cheap. The revenue generating assets alone are worth [greater than] $25/share," Shkreli tweeted on Sept. 30, the day his departure from the embattled drug maker was announced. 

But while talking up Retrophin's prospects publicly and buying some of the stock, Shrekli was selling privately a much larger portion of his drug company holdings. Without public disclosure, Shkreli received almost $3 million in gross proceeds by selling "forward contracts" on his Retrophin stock in early September, according to a filing with the Securities & Exchange Commission made public Monday night.

Shkreli's decision to sell Retrophin stock while telling shareholders and the public he was only a buyer contributed to the board's decision to fire him as CEO on Sept. 30, according to a source familiar with the matter.

Publicly, Retrophin's board has never cited specific reasons for its decision to oust Shkreli, although "stock-trading irregularities and other violations of securities rules" were said to play a role, according to a Bloomberg Businessweek story published the day after Shkreli's departure was announced.

Shkreli has not been accused of breaking any securities laws during his time at Retrophin. Last August, Retrophin's board admonished Shkreli for a series of inappropriate Twitter posts and the discovery that company employees were using alias Twitter accounts to promote Retrophin stock and make short-sale recommendations on other biotech stocks.

The new disclosure detailing Shkreli's selling of Retrophin shares comes at a delicate time. The former hedge fund manager has tried to restore his credibility and tamp down talk about his behavior and executive decision-making by blaming Retrophin's problems -- and his exit -- on the company's board and reporting by the media. At the same time, Shkreli is trying to raise outside investor money to finance a new company, Turing Pharmaceuticals.

For its part, Retrophin is trying to move past the turbulent times caused by its founder and former CEO and stop the slide in its stock price, which is down 63% since April. Retrophin's board installed former Chief Operating Officer Stephen Aselage as the new CEO. A Retrophin spokesman, reached Monday night, declined to comment on Shkreli or his sales of company stock. 

Shkreli did not respond to a text seeking comment for this story.

Here's how Shkreli received almost $3 million in proceeds by selling Retrophin shares with delayed public disclosure:

On Sept. 9, Shkreli and an unnamed third party entered into a "prepaid forward contract" under which Shkreli promised to hand over 123,000 shares of Retrophin in two years. In exchange, the third-party buyer paid $1.07 million in cash to Shkreli -- an amount equivalent to 68% of the present value of the pledged Retrophin shares.  

Explained more simply, by entering into this contract with a third-party buyer, Shkreli was able to get cash today for Retrophin shares turned over in the future. Technically, Shkreli still had voting rights over the pledged shares, even though they were secured as collateral in exchange for the cash payment. 

On Sept. 12, Shkreli signed another prepaid forward contract, this time pledging 205,000 Retrophin shares in the future for a present cash payment of $1.8 million. Again, the cash he received was equivalent to 68% of the current value of the Retrophin stock pledged.

Taken together, Shkreli pledged to sell 328,000 shares of his Retrophin holdings in two years, or 11% of his company holdings at that time, according to regulatory filings. For this promise, Shkreli was paid $2.9 million in cash.

The two transactions were not disclosed publicly in September when they were signed. Their first disclosure came in a Form 4 filed by Shkreli with the SEC on Monday night

The two-month lag between when Shkreli signed the contracts to sell his Retrophin holdings and when they were publicly disclosed is important because in that interregnum, Shkreli made multiple, public purchases of small amounts of Retrophin shares. Some of these small insider buys were paired with tweets promoting the value of owning Retrophin stock.

Between Sept. 16 and Oct. 9, Shkreli filed five Form 4s with the SEC disclosing the aggregate purchase of 95,500 shares of Retrophin common stock on the open market. On Sept. 30, the day Shkreli was fired as CEO of Retrophin, he sent out these two tweets to his roughly 4,500 Twitter followers:

On Oct. 1, Shkreli sent out another tweet:

Shkreli's tweets focused on the Retrophin shares he was buying but didn't disclose that those purchases were dwarfed by the size of his earlier, forward sales contracts.

It's not clear why Shkreli is disclosing his September Retrophin stock sales now, although it could be tied to his more recent efforts to raise money to finance Turing Pharma, his new private drug company based in Basel, Switzerland. 

In the same SEC Form 4 filed Monday, Shkreli disclosed the sale of an additional 1.2 million shares of Retrophin shares, representing another 40% of his stake in the company. Shkreli is using the proceeds from these sales as earnest money to entice outside investors to buy into Turing, according to several investors pitched the deal.

Shkreli was seeking to raise $50 million to fund Turing, half of which was supposed to come from his sale of Retrophin stock. Outside investors were being asked to fund the remaining $25 million. A more recent deal book now has Shkreli seeking $12 million from outside investors, reducing the expected financing to $37 million, according to investors familiar with the deal terms.

As of Monday night, the Turing financing had not yet closed. 

Turing will look very much like Retrophin, according to people who've been briefed on the company's operating plans, including the controversial strategy of buying older drugs and raising their price for patients considerably with the hope that insurance will still reimburse the extra cost. Shkreli is negotiating with the German drug giant Bayer to purchase marketing rights to Biltricide, a drug used to treat infections caused by worm-like parasites called liver flukes. A course of treatment with Biltricide typically involves taking six to nine pills in a single day and costs around $100. 

If Shkreli acquires Biltricide from Bayer, he plans to raise the price of the drug to $100,000 for a single-day course of treatment, according to people briefed on Turing's business plans. No other changes or improvements to the drug will be made by Turing. The extra revenue generated by Biltricide is expected to earn Turing a fast profit for its investors and help defray the cost of developing other, experimental drugs, sources said.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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