Rare disease deal sends Shkreli's Retrophin soaring

When hedge fund veteran Martin Shkreli debuted Retrophin ($RTRX), his biotech play, more than few market watchers reacted with healthy skepticism and even open mockery. But now, after its second major acquisition, the company's plans to cash in with a rare-disease treatment have made it a hit with investors, with shares skyrocketing more than 40%.

The excitement stems from Retrophin's agreement to pay up to $62.5 million for specialty drugmaker Manchester Pharmaceuticals, maker of Chenodal for gallstone patients and Vecamyl for hypertension. But Shkreli doesn't have much interest in those indications, instead pointing out that Chenodal's active ingredient, chenodeoxycholic acid, is the standard of care for the rare disease cerebrotendinous xanthomatosis (CTX), an inborn error of cholesterol metabolism that can lead to neurodegeneration.

The FDA granted the drug an orphan designation for CTX in 2010, and, once the Manchester deal closes this month, Retrophin plans to pursue an agency approval for the indication, giving it a promising (and probably expensive) rare-disease therapy with no competition.

The news sent Retrophin's shares soaring to around $15 on Thursday morning, a more than 40% leap from their Wednesday close. The once-over-the-counter company made its way to the Nasdaq in January, bagging $40 million in the uplisting.

"We are delighted to have the opportunity to help patients with CTX, an underdiagnosed and deadly disease," Shkreli said in a statement. "Almost all patients have avoidable permanent neurological damage, underscoring the need for earlier diagnosis."

Last year, Retrophin grabbed headlines when it traded $5 million for Novartis' ($NVS) oxytocin nasal spray with hopes of developing the long-shelved drug into a treatment for schizophrenia and autism. The company's pipeline also includes a Phase II treatment for focal segmental glomerulosclerosis and early stage drugs targeting nephrotic syndrome, infantile spasms and neurodegeneration.

For the first time, the biotech is providing a revenue guidance, figuring it can make between $10 million and $12 million this year and anywhere from $19 million to $21 million in 2015.

- read the announcement

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