A Biotech Company Escalates the War Against Its Own Founder

In stepping up a bizarre legal battle with its own founder, the biotech company Retrophin has made a most unusual allegation: that it was created in 2011 and taken public shortly thereafter merely to provide shares for the founder and former chief executive, Martin Shkreli, to hand out to aggrieved investors in an insolvent hedge fund.

Shkreli, 32, first gained public notice as a short-selling trader whose hedge fund MSMB Capital speculated on small biotech stocks to fall. He surprised many investors by then turning around and placing the ultimate long bet—forming a biotech of his own to develop drugs for rare diseases. Controversy followed Shkreli in his new role as Retrophin's chief executive, and the board of directors accused him of misusing assets, an accusation he denied.