Vyera Pharmaceuticals: Daraprim Legacy Ends in Liquidation

When Vyera Pharmaceuticals, LLC and five affiliated entities filed for chapter 11 bankruptcy under Subchapter V on May 10, 2023, the case marked the end of the company Martin Shkreli built around a single price hike. The filing in the District of Delaware followed years of antitrust litigation, a $64.6 million disgorgement judgment against Shkreli, and a decline in Daraprim revenue from $74 million annually to $1.35 million after generic competition entered the market in 2020. With approximately $10.5 million in cash, no secured debt, and less than $7.5 million in noncontingent unsecured claims, Vyera qualified for the streamlined Subchapter V process despite a litigation history involving the FTC, seven state attorneys general, and a lifetime pharmaceutical industry ban for its founder.

The court confirmed a Third Amended Plan on October 3, 2023, creating a dual-track structure: liquidating debtors transferred assets to a trust, while reorganized subsidiary Orpha Labs AG continued pursuing FDA approval for an ultra-rare disease treatment that could generate a Priority Review Voucher worth $150 million or more. Two years later, the Liquidating Trust's inability to fund clinical development led to the sale of Orpha Labs to Baar Therapeutics AG for no upfront payment and a 12.5% share of any future PRV proceeds—leaving creditor recoveries tied to a speculative outcome controlled by a third party.

Debtor(s)	Vyera Pharmaceuticals, LLC
Court	Delaware
Case Number	23-10605
Petition Date	May 9, 2023
Judge	J. Kate Stickles
Subchapter V Trustee	David M. Klauder
Confirmation Date	October 3, 2023
Plan Type	Liquidating Trust with PRV contingency
Claims Agent	Application/Motion to Employ/Retain Epiq Corporate Restructuring, LLC

The Daraprim Price Hike and Revenue Collapse

Vyera's predecessor, Turing Pharmaceuticals, acquired Daraprim from Impax Laboratories in August 2015 for $55 million. Daraprim (pyrimethamine) is the standard treatment for toxoplasmosis, a parasitic infection particularly dangerous for immunocompromised patients including those with HIV/AIDS. The drug had been on the market since 1953. On August 11, 2015, the company implemented a price increase from $17.60 to $750 per tablet—an over 4,000% increase. The price hike drew a Senate investigation into drug pricing practices.

Daraprim generated between $55 million and $74 million in annual gross sales from 2016 through 2019. The FDA approved the first generic Daraprim in February 2020, manufactured by Cerovene. Generic competition reduced net sales to $21.2 million in 2021 and $9.5 million in 2022. By the petition date in May 2023, year-to-date net sales totaled approximately $1.35 million. On a consolidated basis, the debtors reported a $6.3 million net loss.

The First Day Declaration filed by CRO Lawrence R. Perkins of SierraConstellation Partners described the financial position at filing: approximately $10.5 million cash on hand (exclusive of $2.6 million in professional retainers), no secured debt, and less than $7.5 million in noncontingent liquidated unsecured claims. The Daraprim Class Action plaintiffs held a secured claim of $19.27 million, backed by a UCC-1 filing from February 2023 granting a security interest in the debtors' corporate assets. Phoenixus AG carried $68.4 million in preferred stock liquidation preference from a 2015 equity raise of $75 million (4,557,834 Preferred A Shares at $15 per share).

Martin Shkreli and Corporate Governance

Martin Shkreli founded Turing Pharmaceuticals in October 2014 with a strategy of acquiring sole-source drugs for life-threatening diseases with small patient populations, then implementing price increases. As Vyera's largest shareholder with approximately 34.31% of outstanding shares (2,251,923 of ~6,563,818 total), Shkreli directed the Daraprim price hike and the anticompetitive scheme that followed. He served as Chairman of the Phoenixus Board until January 20, 2016, resigning on February 10, 2016.

The FTC alleged an anticompetitive scheme involving Shkreli's tactics: implementing a closed distribution system that prevented generic manufacturers from obtaining samples for bioequivalence testing, paying overseas API manufacturers to withhold pyrimethamine from competitors, and using data-blocking agreements with distributors to obstruct generic entry. Court findings revealed that Shkreli continued directing the scheme even from prison using a contraband cell phone and other means.

Shkreli was arrested by the FBI in December 2015 on securities fraud charges unrelated to Daraprim. He was convicted in August 2017 and sentenced to seven years in March 2018. In August 2021, a receiver was appointed to collect and sell Shkreli's Phoenixus stock to satisfy judgments against him. Shkreli was released from federal prison in May 2022 after serving approximately four years.

The reputational fallout from Shkreli's conduct hindered Vyera's ability to maintain business relationships—the company struggled to open bank accounts, faced difficulty commercializing new products, and encountered obstacles to asset sales. In August 2022, shareholders installed a new board of independent directors to eliminate Shkreli's influence. The new board retained SierraConstellation Partners as financial advisors and appointed Lawrence R. Perkins as CRO on September 8, 2022.

FTC Enforcement and Antitrust Judgments

In January 2020, the FTC and New York Attorney General filed suit against Shkreli, Vyera, Phoenixus AG, and then-CEO Kevin Mulleady, alleging an "elaborate anticompetitive scheme to preserve a monopoly" for Daraprim. A bipartisan coalition of state attorneys general including California, Ohio, Pennsylvania, Illinois, North Carolina, and Virginia joined the litigation.

In December 2021, Vyera and Phoenixus settled with the FTC and state attorneys general. The settlement terms required a $10 million upfront payment into a settlement fund, up to $30 million in contingent payments over ten years based on future asset monetization, Daraprim made available to generic competitors at manufacturing cost, and Kevin Mulleady banned from the pharmaceutical industry for seven years. Separately, indirect purchasers represented by BCBSM, Inc. (Blue Cross Blue Shield of Minnesota) settled for up to $28 million drawn from the FTC settlement pool.

Shkreli refused to settle. Following a bench trial, U.S. District Judge Denise Cote found Shkreli personally liable for the anticompetitive scheme. In January 2022, the court issued a $64.6 million disgorgement order and a lifetime ban from the pharmaceutical industry. The FTC's statement confirmed that the Second Circuit affirmed both the disgorgement and lifetime ban in January 2024. The Baker Botts analysis noted that the case created a strict new standard for pharmaceutical company conduct, representing the first lifetime industry ban for antitrust violations.

Subchapter V Strategy and Plan Confirmation

Vyera filed under Subchapter V, created by the Small Business Reorganization Act of 2019. Subchapter V provides a streamlined 90-day plan deadline, presumptive non-appointment of creditors' committees, and the ability for shareholders to retain equity without providing new value under certain conditions. The filing continued a trend of using Subchapter V to address complex contingent liabilities while preserving equity upside. With less than $7.5 million in noncontingent liquidated unsecured claims, Vyera qualified for the expedited process despite its complex litigation history.

Plan structure. The court's Confirmation Order approved the Third Amended Plan on October 3, 2023, under Section 1191(a) as a consensual plan. The Effective Date occurred on October 11, 2023. The plan created a dual-track structure. The liquidating debtors (Vyera, Oakrum, SevenScore, Dermelix) ceased operations, with their assets transferred to a Liquidating Trust administered by David W. Carickhoff as Liquidating Trustee. The reorganized debtor (Orpha Labs AG) continued operations focused on advancing ORL-101 toward FDA approval and PRV eligibility.

Class	Description	Treatment	Recovery
Unclassified	Administrative/Priority Tax	Paid in full in cash	100%
Class 1	Priority Claims	Paid in full from Trust	100%
Class 2	Convenience Claims (~$6,000)	20% of Allowed Claim from Trust	20%
Class 3(a)	General Unsecured - Trade/Litigation	Pro rata GUC Reserve + Trust Certificates	Contingent on PRV
Class 3(b)	General Unsecured - Antitrust Claims	20% of Net Proceeds per settlements	Capped
Class 4	Equity Interests	Reinstated; PRV upside participation	Contingent
Class 5	Intercompany Claims	Cancelled	0%

Class 3(a) creditors voted to accept: 85.71% by number (12 of 14 votes) and 99.31% by dollar amount ($40.68 million accepting). The plan established a $4 million GUC Reserve for initial distributions, paid by December 15, 2023. Liquidating Trust Certificates were issued to holders of Allowed Claims, entitling them to pro rata distributions from future PRV Sale Proceeds—with any remainder flowing to Phoenixus AG as equity holder.

Shkreli claims disallowed. The court's September 11, 2023 order disallowing Shkreli's claims sustained the objection filed by Cerovene, Inc. and Dr. Reddy's Laboratories, Inc.—the generic manufacturers referenced in the antitrust litigation. The order disallowed Claim Numbers 10045 and 11 in their entirety, estimated them at $0.00 for all purposes, and prohibited Shkreli from voting on the plan or taking any actions to influence the debtors' affairs. Both Shkreli and Kevin Mulleady were explicitly excluded from the plan's release provisions and "Released Parties" definition.

CEO employment resolution. CEO Averill Powers' employment was resolved through an Amended Agreement entered August 10, 2023: $230,208.33 in prepetition compensation cure (for up to 200 hours of service), $261,291.64 in accrued postpetition compensation (administrative priority), and a $1,300,000 allowed unsecured nonpriority claim for termination payments (reduced from three years to one year). Health benefits continued through October 31, 2023. A separate Key Employee Retention Plan totaling $112,000 covered four non-executive employees supporting operations through emergence.

Professional fees. Final professional fee awards totaled approximately $3.2 million:

Alvarez & Marsal's compensation included transaction fees of $65,000 each for the Daraprim/Vecamyl and Nitisinone sales, plus a $370,000 restructuring transaction fee. The Subchapter V Trustee billed at $400 per hour for the period from May 10, 2023 through October 31, 2023, when his service terminated upon substantial consummation of the plan.

Orpha Labs and the Priority Review Voucher

The plan structure centered on Orpha Labs AG, a Swiss subsidiary focused on ultra-rare diseases. Orpha Labs developed ORL-101, a pharmaceutical-grade L-fucose therapy for Leukocyte Adhesion Deficiency Type II (LAD-II). LAD-II is an ultra-rare congenital immunodeficiency disorder affecting an estimated 10-20 patients worldwide. The condition results from defective fucose metabolism and causes recurrent bacterial infections, growth delay, and intellectual deficit. The FDA granted ORL-101 Rare Pediatric Disease Designation, Orphan Drug Designation (providing seven years of market exclusivity upon approval), and Fast Track Designation.

Upon FDA approval, ORL-101 would qualify for a Priority Review Voucher under the Rare Pediatric Disease PRV Program. PRVs entitle the holder to expedited FDA review (six months versus ten months) for any future drug application and are freely transferable. PRVs have sold for between $67 million and $350 million. Recent transactions have reached higher valuations: Ipsen sold a PRV for $158 million in August 2024, and Zevra sold one for $150 million in April 2025. The PRV program, which had expired in December 2024, was extended through September 30, 2029 by the Consolidated Appropriations Act, 2026.

Post-Confirmation Developments

Tilde Sciences sale. In August 2023, Vyera announced the sale of rights to Daraprim and Vecamyl (mecamylamine HCl) to Tilde Sciences LLC for $650,000 plus assumed liabilities—approximately 1% of the $55 million originally paid for Daraprim rights. The Sale Order approved the transaction under Section 363 free and clear of liens on September 14, 2023. Tilde Sciences completed the acquisition in December 2023, partnering with Optime Care to manage the transition and maintain patient support programs.

Orpha Labs sale to Baar Therapeutics. In May 2025, unable to fund ORL-101's remaining clinical development (estimated at $7.8 million over 2-3 years), the Liquidating Trust sold Orpha Labs to Baar Therapeutics AG, a Swiss pharmaceutical company. A planned rights offering to obtain additional funding was not viable because ORL-101 had not achieved sufficient milestones. The court's Orpha Labs Sale Order entered May 27, 2025 approved the transaction following shortened notice and objection periods; no competing bids were received. The transaction provided no upfront payment but entitled the Liquidating Trust to 12.5% of net proceeds from any future PRV sale or asset monetization. Baar Therapeutics agreed to use commercially reasonable efforts to obtain a PRV, subject to sufficient capital, and to provide semi-annual progress updates to the Liquidating Trustee.

RL Fine Chem adversary proceeding. In January 2024, Liquidating Trustee David Carickhoff filed an adversary proceeding seeking to recover approximately $9.6 million in fraudulent transfers paid to RL Fine Chem Pvt. Ltd., an Indian API manufacturer. The complaint alleges RL Fine entered into sham Supply and Collaboration Agreements in December 2017, agreeing to shut off pyrimethamine supply to generic competitors in exchange for $1 million upfront under each agreement, 7.5% royalties with a $3 million minimum guarantee, and a $750,000 termination fee. Neither agreement required RL Fine to seek FDA approval, conditioned payments on RL Fine actually supplying any pyrimethamine, or obligated RL Fine to fill a single order. RL Fine never paid the $57,795 FDA filing fee despite receiving $1 million for that purpose. The Liquidating Trustee alleges RL Fine received approximately $9.5 million to supply no pyrimethamine, while the actual supplier, Fukuzyu Pharmaceutical Company, delivered all pyrimethamine for $500,000 total. RL Fine filed a motion to dismiss in September 2024.

Amneal/Impax adversary proceeding. In May 2025, the Liquidating Trustee filed a second adversary proceeding seeking to recover approximately $55.4 million in fraudulent transfers paid to Impax Laboratories, LLC (now Amneal Pharmaceuticals, Inc.) for the original Daraprim purchase. The complaint alleges the $55 million purchase price exceeded the drug's fair value of at most $19 million by over $36 million. The inflated price was allegedly paid because Shkreli planned the anticompetitive scheme before the acquisition closed in August 2015, and Impax knew or should have known of Shkreli's intentions. Claims were brought under the New York Uniform Fraudulent Conveyance Act via Section 544(b) and Section 550 of the Bankruptcy Code.

Claims administration. The Liquidating Trustee distributed the initial $4 million GUC Reserve to creditors in December 2023 and resolved numerous claims through settlements, including: ANI Pharmaceuticals (original $621,731 reduced to $435,000 allowed secured, with ANI paying $365,000 to the Trust from an $800,000 holdback), Praxgen Pharmaceuticals ($9,408 administrative plus $113,608 allowed general unsecured), and Aucta Pharmaceuticals (stipulated resolution). The claims objection deadline has been extended to May 8, 2026, with approximately 126 proofs of claim filed and multiple omnibus objections resolved.

As of early 2026, the combined adversary proceedings seek to recover over $65 million in alleged fraudulent transfers. Future creditor distributions beyond the initial $4 million GUC Reserve depend on the outcome of those proceedings and on Baar Therapeutics advancing ORL-101 through clinical trials, obtaining FDA approval, and monetizing any resulting PRV.

Frequently Asked Questions

What led to Vyera Pharmaceuticals' bankruptcy filing?

Vyera's bankruptcy resulted from generic competition reducing Daraprim revenue from $55-74 million annually to $1.35 million by filing, the $40 million FTC settlement creating ongoing payment obligations, reputational damage from Martin Shkreli's conduct hindering business operations, and a $6.3 million consolidated net loss. Cash on hand of $10.5 million was insufficient to fund operations and pay both liquidated and unliquidated claims.

Why did Vyera file under Subchapter V rather than regular chapter 11?

Vyera qualified for Subchapter V because its noncontingent liquidated unsecured debt was less than $7.5 million, excluding contingent litigation claims. Subchapter V offered streamlined procedures including a 90-day plan deadline, presumptive non-appointment of creditors' committees, and the ability for shareholders to retain equity without providing new value—features that allowed Vyera to preserve potential PRV upside for equity holders while liquidating operating assets.

What was the Daraprim price hike controversy?

In August 2015, Vyera's predecessor Turing Pharmaceuticals raised the price of Daraprim from $17.60 to $750 per tablet—an over 4,000% increase—after acquiring the drug for $55 million. The price hike for this toxoplasmosis treatment prompted a Senate investigation and FTC antitrust litigation. The FTC found that Shkreli's company also implemented a closed distribution system and paid overseas API manufacturers to withhold pyrimethamine from generic competitors.

What happened to Martin Shkreli in the bankruptcy?

The court sustained objections to Shkreli's claims (Claim Numbers 10045 and 11), filed by generic manufacturers Cerovene, Inc. and Dr. Reddy's Laboratories, disallowing them in their entirety and estimating them at $0.00. Shkreli was prohibited from voting on the plan or participating in the debtors' affairs and was explicitly excluded from plan releases and the "Released Parties" definition.

What is a Priority Review Voucher and why was it important to this case?

A Priority Review Voucher entitles the holder to expedited FDA review (six months versus ten months) for any future drug application and is freely transferable. Recent PRVs have sold for $150-158 million. Vyera's Orpha Labs subsidiary had ORL-101 in development for an ultra-rare disease (LAD-II, affecting 10-20 patients worldwide) that would qualify for a Rare Pediatric Disease PRV upon FDA approval. The plan tied all creditor recoveries beyond the $4 million GUC Reserve to potential PRV proceeds.

What was the treatment of general unsecured creditors?

Class 3(a) general unsecured creditors received pro rata distributions from a $4 million GUC Reserve (paid December 2023) plus Liquidating Trust Certificates entitling them to future distributions if PRV proceeds materialize. Class 3(a) creditors voted 85.71% by number and 99.31% by dollar amount to accept the plan. Class 3(b) antitrust claimants receive 20% of net proceeds per their settlement caps.

What happened to the Daraprim and Orpha Labs assets?

Daraprim and Vecamyl rights were sold to Tilde Sciences LLC for $650,000 plus assumed liabilities in September 2023—approximately 1% of the $55 million originally paid. Orpha Labs was sold to Baar Therapeutics AG in May 2025 for no upfront payment and 12.5% of future PRV or asset sale proceeds, after the Liquidating Trust could not fund the estimated $7.8 million in remaining clinical development costs.

What adversary proceedings were filed?

The Liquidating Trustee filed two adversary proceedings: (1) in January 2024, seeking ~$9.6 million from RL Fine Chem Pvt. Ltd. for sham supply agreements that paid RL Fine to block generic competition while the actual supplier received only $500,000; and (2) in May 2025, seeking ~$55.4 million from Amneal/Impax for the allegedly fraudulent Daraprim acquisition price. Combined, these proceedings target over $65 million in alleged fraudulent transfers.

What is the current status of the Vyera bankruptcy?

The case remains in post-confirmation administration. The $4 million GUC Reserve was distributed in December 2023. The claims objection deadline has been extended to May 8, 2026, with approximately 126 proofs of claim filed. Future distributions depend on the outcome of two adversary proceedings (totaling over $65 million in claims) and on Baar Therapeutics obtaining FDA approval for ORL-101 and monetizing any resulting PRV.

Who is the claims agent for Vyera Pharmaceuticals?

Epiq Corporate Restructuring LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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