FBI arrests Turing Pharmaceuticals CEO Martin Shkreli

Martin Shkreli, a lightning rod for growing outrage over soaring prescription drug prices, was arrested by the FBI on Thursday after a federal investigation involving his former hedge fund and a pharmaceutical company he previously headed.

The securities fraud probe of Shkreli, who is now chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc, stems from his time as manager of hedge fund MSMB Capital Management and CEO of biopharmaceutical company Retrophin Inc, a person familiar with the matter said.

Reuters witnessed the arrest at the Murray Hill Tower Apartments in midtown Manhattan. Law enforcement including Federal Bureau of Investigation agents could be seen escorting Shkreli, who was wearing a hoodie, into a car.

FBI spokeswoman Kelly Langmesser confirmed Shkreli's arrest.

Shares of KaloBios fell 53 percent to $11.03 in premarket trading.

Lawyers for Retrophin and Shkreli did not immediately respond to a request for comment. Turing and KaloBios declined to comment.

A privately held startup, Turing sparked controversy earlier this year after news reports that it had raised the price of Daraprim, a 62-year-old treatment for a dangerous parasitic infection, to $750 a tablet from $13.50 after acquiring it.

Shkreli, 32, was expected to be charged on Thursday for illegally using Retrophin assets to pay off debts after MSMB lost millions of dollars, the source said.

The probe, by federal prosecutors in Brooklyn, dates back to at least January when Retrophin said it received a subpoena from prosecutors seeking information about its relationship with Shkreli.

MSMB Capital Management was founded in 2009, and Shkreli announced its closure in 2012. Retrophin was founded in 2012, and Shkreli was its CEO until the company fired him in September 2014.

Retrophin in August sued Shkreli in federal court in Manhattan for $65 million, claiming he had used his control over Retrophin to enrich himself and pay off claims of investors in MSMB, which he had also defrauded.

Shkreli has denied the allegations.

At least two separate Congressional probes have been launched since September on the pricing issues of Daraprim, which had long been available as a generic drug used to treat toxoplasmosis in AIDs patients. Turing is under investigation by the New York state attorney general for antitrust concerns.

At a Senate hearing on drug pricing last week, a doctor who treats babies with life-threatening toxoplasmosis testified that a course of treatment with Daraprim went from about $1,200 to no less than $69,000.