Clues to the Black Box That Is Turing Pharmaceuticals: The Forbes Interview With its R&D Head
This is a belated examination of an August 24th Forbes interview with the head of R&D at Turing Pharmaceuticals, Dr. Eliseo Salinas. Clearly Dr. Salinas is attempting, in this soft-pedeled interview, to bolster the public perception of Turing* as an R&D enterprise, and not merely an extortive drug company—as is its prevailing public image. Turing, being a private company, is an unknown; however, Salinas does provide a few clues in this Forbes interview as to how the company has been surviving (not robustly, it seems) and how it plans to survive.
1) First, let’s examine the title of the Forbes article, “Life After Martin Shkreli,” which implies that the former Turing CEO and notorious Twitter troll is no longer involved with the company in any substantive, executive-leadership way. However, in a recently filed EEOC complaint (a whole ‘nother story; for background, go here), current Turing CCO Nancy Retzlaff claims that Shkreli is still very much involved in running the company. Moreover, recent tweets from Shkreli (IF he is to be believed) indicate that he is in the process of looking for a new CEO of Turing on the basis of some kind of implied betrayal by its current CEO, Ron Tilles. Furthermore, Shkreli claims that he has “over 50% of the votes for Turing,” in which case, he is the majority shareholder and therefore has a financial lock on the company.
I'm installing a new CEO at Turing – DM me if you know qualified candidates (10+ years pharmaceutical management experience required)
— Martin Shkreli (@MartinShkreli) September 15, 2016
I have over 50% of the votes for Turing so "if young Shkreli don't trust you imma replace you"
— Martin Shkreli (@MartinShkreli) September 15, 2016
So whatever direction Turing takes, whether it’s related to its R&D efforts or otherwise, Shkreli appears to have a major, if not controlling, influence on the company (again, IF he is to be believed). So “Life After Martin Shkreli,” really appears to be “Life With Martin Shkreli (Still).”
2) According to the Forbes interview, Turing suffered a “dwindling budget,” after the company became an industry pariah owing to its shocking price hike of Daraprim last year. The Forbes article further claims that, after Shkreli was arrested on charges of securities fraud at his previous company, Retrophin, in December 2015, “Any hopes for Turing to raise more money needed to fund clinical trials had evaporated.” This statement indicates that Turing, like most R&D drug companies, relies on investors (in Turing’s case, private investors) to fund its R&D efforts. Yet this admission directly contradicts Shkreli’s often-repeated rationale for raising the price of Daraprim: To use the net revenues from Daraprim to fund R&D to find a “better” Daraprim.
The Forbes statement also makes a related implication: That the net revenues from Daraprim, despite the price hike, aren’t sufficient to fund Turing’s original R&D efforts.** Indeed, in the Forbes interview, Salinas reveals that Turing has given up on developing its acquired drugs in development (ie, intranasal ketamine, TUR-004), which were either in early clinical phases and/or had received fast-track status from the FDA. Instead, Turing is focusing on the development of computer-generated candidate molecules for anti-toxoplasmosis drugs (the disease target of Daraprim) or alternative formulations of pyrimethamine. It’s a curious (if not irrational) business choice, to say the least, because the candidate molecules, from what I can tell, are barely in the preclinical stage (if at all).*** If this is the case, Turing has foregone earlier income from its drug candidates in the clinical phase in exchange for the slim and distant promise of in-house NMEs for toxoplasmosis that are barely in preclinical testing.**** Whose decision was that? I suspect it wasn’t Salinas’s.
So, for the foreseeable future, Turing appears to be relying solely on Daraprim revenues to sustain itself, unless it can partner with another company (eg, license out TUR-004—but see also footnote ****). Furthermore, the revenues from Daraprim might not be as substantial as Turing (read, Shkreli) had expected 1 year ago.
3) Salinas reveals that he has gotten criticism at home for working at Turing—specifically from his daughter in medical school. That’s gotta hurt.
*Which, if you’ve been a cave dweller for the last year, bought the US marketing rights to the 60+-year-old antiparasitic drug Daraprim (pyrimethamine) from Impax Laboratories in August 2015 and raised its per-pill cost from $13.50 to $750 (AWP).
**If they are, indeed, used to fund Turing’s R&D at all. Without access to Turing’s books, it’s impossible to gauge the annual net revenues from Daraprim. If Turing is to be believed, it only collects full price or near-full price on one-third of its Daraprim sales/prescriptions. If that’s the case, and assuming that there are approximately 2000 Americans who receive Daraprim prescriptions each year for toxoplasmosis at an average cost of $100K per treatment, then the annual gross revenues from Daraprim are approximately $67 million. How much of that is net?
***My search of the usual databases for Turing-related patents on anti-toxo candidate drugs came up negative. So I have no idea how far along Turing really is in its development of these drugs (or what these drugs are, for that matter).
****New molecular entity. Moreover, I suspect that many drug companies are averse to doing business with Turing—either by selling the US marketing rights to their already-approved drugs (see Impax v. Turing, for instance) or because of the general “ick” factor of being associated with Turing, and by extension, Martin Shkreli.
9/19/2016 update: In a May 3rd press release, Turing announced that it was selling its intranasal ketamine program to Washington-based Marina Biotech.
The assets to be acquired will include all patents and intellectual property rights, clinical development plans, regulatory documents and existing product inventories. As per the term sheet, Marina will pay to Turing up to $95 million in success- and sales-based milestones plus a mid-single digit royalty on net sales. Further terms of the proposed transaction were not disclosed.
The deal was expected to close on July 1st; however, neither company publicized news of the deal’s closure. Marina’s last posted press release at its website, on June 2nd, reported the resignation of its chairman, president, and CEO, J. Michael French. Turing’s most recent press release, on May 16th, announced the FDA’s acceptance of a second IND application for intranasal ketamine (in suicidality). Marina’s latest form 10-Q, filed on August 15th, suggests that the company is having serious funding issues; although it has enough cash to support “intended operations through October 2016.” The company’s latest share price is $0.13, and its market cap is less than $4M. The 10-Q further advises,
If the Turing Transaction is not consummated and we are unable to either find a viable purchaser for our assets or to obtain sufficient capital to continue our current operations or any other business that we may acquire, we may be forced to file bankruptcy as we will have minimal capital and operating assets to continue the business.