Editors' Pick: Originally Published Friday, Dec. 18.
Martin Shkreli resigned as chief executive officer of Turing Pharmaceuticals Friday following his arrest on charges of securities fraud.
"Turing is a mess," said one investor in the company involved in the talks which led to Shkreli's exit.
Under Shkreli's direction, Turing hired more than 150 people in its New York office and spending, including exorbitant salaries, was out of control.
"This company needs to be cleaned up" like Shkreli's previous drug company, Retrophin (RTRX) , the investor said.
Ron Tilles, Turing's chairman, was named interim CEO, the company said Friday.
Shkreli was arrested and arraigned Thursday on seven counts of securities fraud and conspiracy. Federal prosecutors accuse Shkreli of using Retrophin to repay investors who lost money in his now-defunct hedge fund, MSMB Capital Management. Shkreli pleaded not guilty to the charges and is now out on bond.
Shkreli was also fired from his CEO post at Retrophin in September 2014. Some of the same investors who backed Shkreli in Retrophin also invested in Turing. Once again, they're working to salvage their investments.
Turing was founded in 2014 but gained notoriety -- and heaping piles of criticism -- earlier this year when it bought the rights to a 50-year-old infectious disease drug, Daraprim, and raised its price from $13.50 per pill to $750 per pill. Almost overnight, Shkreli became the poster boy for pharmaceutical industry greed -- a bad-boy image he embraced on social media, the press and during live-streaming video episodes from his New York apartment.
Shkreli claimed that the revenue generated by the higher price of Daraprim would be used to fund research into new drugs, but most of the spending to date at Turing has gone to hiring scores of "business development" employees who sit in front of Bloomberg terminals in the New York office, according to people who have visited.
"He was running Turing like a hedge fund," said one investor.
Turing is a private company and therefore under no obligation to make its financials public. In November, however, Shkreli released partial financial results in an effort to demonstrate that Turing was serious about developing new drugs.