Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Controversial biotech CEO Martin Shkreli's latest act of pharma provocation involves yet another legal loophole that could rapidly net him millions of dollars. It also involves a tiny bug that bites people's faces.

His new company KaloBios paid $2 million up front on Thursday, along with undisclosed future payments, for a drug called Benznidazole, which treats Chagas Disease, caused by parasites in bug droppings. The tropical disease, which affects 300,000 people in the U.S. and millions abroad, can lead to heart failure and death. Shkreli seems optimistic about the potential for rapid approval, suggesting on a conference call that the company would not need to conduct clinical trials and could file with the FDA in 2016. The drug is already approved for Chagas treatment in Latin America and was developed 40 years ago by Roche. 

Of course, because Shkreli is involved, this is not just a simple story about a drug for Chagas. The disease was recently added to a small set of neglected tropical diseases for which the U.S. government is pushing firms to develop drugs. Companies that get FDA approval for treating one of them gets something called a "priority review voucher," which guarantees an accelerated FDA ruling on a future application for a different, unrelated drug within six months of its filing. These vouchers can be sold on the open market; AbbVie recently bought one for $350 million. News of KaloBios' deal drove its shares up by as much as 36 percent in premarket trading, though they've cooled down since.

Inevitably, as with most things Shkreli, whose reputation in the industry is not far from that of a face-biting bug, there is controversy. Critics think the voucher program is just another exploitable loophole and want to change the law. They argue that firms shouldn't get vouchers for a drug they didn't develop or for drugs that are already used in other parts of the world. Firms in the program also have no obligation to make their drugs widely available or affordable. Several drugs that have netted their companies vouchers are pricey, even though the tropical disease program is designed to help developing countries. It's not hard to imagine that Shkreli might price his Chagas drug aggressively, given his history. 

Tropical Thunder
KaloBios' purchase of a drug for a tropical disease has juiced the stock
Source: Bloomberg
Intraday times are displayed in ET.

Voucher prices have been rising steadily, though they partially depend on how scarce the vouchers are at a given moment and how much another company might need to rush a drug to market. Eight vouchers have been awarded since the program began in 2007; four remain unsold and unused.

Need for Speed
The sale price of FDA priority review vouchers has steadily increased
Source: FDA Law Blog/Hyman, Phelps and McNamara

Shkreli's not alone in stoking this particular controversy: Novartis got a voucher in 2009 for a malaria drug already widely used elsewhere. Knight Therapeutics got a voucher in March of 2014 for a drug for a parasitic disease called leishmaniasis, despite not having done the research and development to prove it worked. Shkreli's former company, Retrophin, is another example. In October of 2014, just months after firing Shkreli, the company spent $27 million for control of Asklepion Pharmaceuticals, which had a voucher under a slightly different program, for rare diseases affecting children. The company sold the voucher for $245 million, immediately turning a huge profit (though it may owe as much as $42 million in future payments). 

Change in Fortune
Though it's since been hit by a biotech selloff, Retrophin's purchase of Asklepion was a win

KaloBios means to sell any voucher it gets under the tropical-disease program, Shkreli said on the conference call. A former Retrophin employee who negotiated the sale of that company's voucher has joined the KaloBios board. 

Of course, anything involving Shkreli should be approached cautiously. His boldness comes with erratic behavior and the potential for dramatic blowups. On the same day he announced this deal, Shkreli said he only regretted not raising the price of toxoplasmosis drug Daraprim even more, was criticized by the CEOs of some of the world's largest pharmaceutical companies, and publicly antagonized and sparred with one of the top executives of Express Scripts, a company threatening his business model at Turing Pharmaceuticals. Though $2 million seems a low price to pay for a shot at a lucrative voucher, there are unclear regulatory hurdles and undisclosed future payments to Savant, the original owner of the drug, ahead.

But if all goes well, Skhreli could come out with a nice return.

Correction: An earlier version of this story incorrectly said Chagas is spread by beetles. The triatomines that spread the disease are bugs, not beetles.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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