Three days after opioid billionaire John Kapoor was arrested on racketeering charges, fentanyl spray manufacturer Insys Therapeutics, which he founded, announced Sunday that Kapoor had resigned as a member of the company’s board and also plans to move his shares into an independently-controlled trust.
Kapoor currently owns nearly 70% of the embattled company’s shares directly and through trusts and has a net worth of $1.7 billion. His fortune is down only about $100 million since he was arrested and charged with RICO conspiracy, conspiracy to commit mail and wire fraud, and conspiracy to violate the Anti-Kickback law on Oct. 26. As of Monday morning, no forms had been filed with the SEC to signal any sort of share transactions made by Kapoor.
“I am confident that I have committed no crimes and believe I will be fully vindicated after trial,” Kapoor said in the statement on Sunday. “Nevertheless, I realize that my continued involvement with Insys will only serve to draw unnecessary attention to the company and its employees, and distract the management team from my primary goal when I founded Insys—helping patients.”
Kapoor has been steadily removing himself from the company’s operations, as investigations into the company’s sales and marketing practices of powerful fentanyl spray Subsys have mounted. After taking over as CEO in November 2015 from Michael Babich (one of six other former Insys executives who were arrested and charged in December 2016 with conspiring to bribe doctors to prescribe Subsys.) Kapoor himself resigned as both CEO and chairman in January.
Kapoor’s arrest sent Insys’ stock tumbling, though. The day of his arrest the stock fell nearly 23% to $5.74 a share. Trading on the stock was halted by NASDAQ after Thursday’s close requesting “additional information” from Insys. Insys released a statement Monday that it had answered the questions and was awaiting a response from NASDAQ.
The stock is down 87% from its peak in July 2015 when it traded at nearly $45 a share. Insys is expected to report earnings on Nov. 2, just a week after Kapoor’s arrest. Insys makes one other drug, Syndros, which it just began selling in July. It is FDA-approved for treating loss of appetite in AIDS patients and for chemotherapy-induced nausea.
“While we are saddened by the events of the past days, we reaffirm our unwavering commitment to securing a solid foundation for sustainable future growth,” the company’s current CEO Saeed Motahari said in a statement on Sunday.
The company announced in a separate release on Sunday that it would record a minimum liability of $150 million in its third quarter, related to the Department of Justice’s investigation. The $150 million represents the company’s estimate for the minimum liability it expects to pay in a settlement over five years. The statement also noted that the DOJ had not accepted Insys’ $150 million settlement offer.
Kapoor’s Insys shares make up roughly 16% of his total net worth. The bulk of his fortune comes from his stake in Lake Forest-Ill.-based generic drug manufacturer Akorn . Kapoor remains chairman of the board at Akorn, where he is a majority shareholder; he first invested in 1991. Akorn’s shares are down roughly 2% to $32.52 since Kapoor’s arrest. A spokesperson for Akorn said that the company had no comment on Kapoor’s arrest and charges.