Fentanyl billionaire John Kapoor is set to plead not guilty this morning on charges of racketeering, mail fraud, wire fraud and conspiracy to violate the anti-kickback law.
The founder and former CEO and chairman of Chandler, Ariz.-based Insys Therapeutics, Kapoor became a billionaire in 2013 because of the skyrocketing sales of that company’s Subsys, a form of the powerful opioid fentanyl that is sprayed under the tongue. He was arrested and charged on October 26 for allegedly leading a conspiracy to use fraud and bribes to market the drug and is set to appear in federal court in Boston this morning for his arraignment.
Brian Kelly, an attorney for Kapoor, confirmed to FORBES today that his client intends to plead not guilty to all charges and said that Kapoor plans to “vindicate his good name.”
The day of Kapoor’s arrest in October he appeared in federal court in Phoenix, where he lives, and was ordered to wear a GPS device and to stay in Maricopa County, Arizona, except for his appearance today in Boston. A $1 million bond was posted later that day. Kapoor’s arrest came on the same day that President Trump declared the country’s opioid crisis a “public health emergency.”
Eighty times more potent than morphine, Subsys was approved by the FDA for use only by cancer patients to be used to treat severe breakthrough cancer pain. Prosecutors from the U.S. attorney’s office for the district of Massachusetts allege that Kapoor and six other executives, who were arrested and charged in December 2016 as part of a superseding indictment, offered bribes and kickbacks to doctors and nurses to get them to write large numbers of Subsys subscriptions to patients, most of whom did not have cancer. (The six other former executives pleaded not guilty to all charges in January.)
Kapoor, who has an estimated net worth of $1.74 billion, stepped down as CEO and chairman of Insys in January but stayed on as a board member until resigning from that position 3 days after his arrest. In a statement announcing his resignation Kapoor said, “I am confident that I have committed no crimes and believe I will be fully vindicated after trial.”
In that statement he also announced that he would move his shares into an independently-controlled trust. However, it appears he has yet to do so; no form 4’s have been filed with the SEC since August. He still owns roughly 70% of Insys’ shares, worth about $250 million. The company’s value in the market has fallen considerably. Insys shares peaked at almost $45 a share in July 2015 and have since fallen 88% to about $5.30.
Kapoor was also the chairman of generic drug manufacturer Akorn AKRX +0.25%, but resigned from that position four days after his arrest. He remains a majority shareholder there, with his stake worth nearly $950 million.