A butterfly flaps its wings in China and a tsunami devastates Chile. In the biotech world, a finance-themed version of the butterfly effect is unfolding.
As reported in the New York Times on Sunday, Turing Pharmaceuticals' Daraprim -- a drug used to treat toxoplasmosis -- saw its price raised from $13.50 per tablet to $750. The company's CEO, notable hedge fund manager Martin Shkreli, told the outlet the price increase would be used to pay for research and development to produce a better version of the drug.
"This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business," Shkreli told the Times.
Reddit has erupted as well.
As Fierce Biotech's John Carroll pointed out, Shkreli oversaw a similar thousand-point price hike while he was CEO of Retrophin Inc RTRX.
"Shkreli's extreme sticker shock strategy on an ancient therapy, though, threatens to become the kind of lightning rod for the controversial pricing issue that the industry will find it hard to defend against in the lead-up to a presidential election," Carroll wrote.
On cue, presidential candidate Hillary Clinton tweeted a frustrated response to the price hike:
The iShares Nasdaq Biotech Index Fund IBB has since fallen nearly 4 percent in response, and specific names -- like Biogen Inc BIIB and Valeant Pharmaceuticals Intl Inc VRX -- are falling even further.
Shkreli did not immediately respond to a request for comment. Benzinga has learned Turing's chief communication officer is currently unavailable for comment.
Of note, the hedge fund manager has not commented on any new short positions this Monday.
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