Retrophin, which has a market capitalisation of $US281 million ($299 million) and is run by a former hedge fund trader, has proposed a complete takeover. It has offered either 0.175 Retrophin shares for each Clinuvel share, which is equivalent to $2.14 a share, or $2.17 in cash per share.

Shares in Clinuvel, which is developing therapies for rare skin diseases, jumped 28 per cent to $2.15 in mid-morning trading on Monday.

The spike means the stock has more than doubled in value since it hit a 12-month low of 92¢ in January.

Retrophin has bought 4.88 per cent of Clinuvel, the company said in a statement.

The bid comes at a delicate time for Clinuvel, which also on Monday announced the sudden passing of its long time director Jack Wood.

“Jack was a remarkable individual, and a dear friend and colleague,” Clinuvel’s chair, Stan McLiesh, said in a statement. “On behalf of our management and team, we offer our sincere condolences to his wife Yan and family.”

The Melbourne-based biotechnology company is awaiting clearance from the European drug regulator for the use of its drug Scenesse in the treatment of a painful skin disease called erythropoietic protoporphyria. The review process is expected to be completed by October.

The company is also conducting clinical trials investigating the use of Scenesse in skin conditions like vitiligo, which upsets skin pigmentation, and the rare Hailey-Hailey disease, which is a genetic disorder that makes sufferers’ skin extremely fragile.

Retrophin is run by Martin Shkreli, a former hedge fund trader who made his name taking short positions in biotech stocks. Moving into drug development, the 31-year-old set up Retrophin three years ago.

Clinuvel has appointed advisory firm Greenhill in its defence against the bid. It has advised shareholders to take no action.