November 19, 2015
By Alex Keown, BioSpace.com Breaking News Staff
SOUTH SAN FRANCISCO – of KaloBios Pharmaceuticals, Inc. soared after Turing Pharmaceuticals’s chief Martin Shkreli acquired 1.2 million shares of the company that was near to closing its doors.
Shkreli, who has seen his share of negative press this year after his company increased the price of a newly acquired drug by 5,000 percent, now controls 39 percent of KaloBios and more than 50 percent when combined with shares controlled by his partners. Shkreli and his group acquired the stock at prices ranging between 61 cents and $2.43 each on Monday and Tuesday, according to Reuters. Following the acquisition, the stock jumped 900 percent in afterhours trading on Wednesday from about $2 per share to nearly $19 per share, according to Seeking Alpha. Although Shkreli, a former hedge fund manager, has been under fire for dramatically increasing the price of Daraprim, it’s unlikely he will face criticism over the surge in KaloBios stock.
This is the second big pharma stock deal in recent weeks Shkreli has been part of. Earlier this month he announced on his Twitter account that he had taken a long position in embattled Valeant Pharmaceuticals International Inc. . However, Shkreli has since announced he sold the stock and was forced to take a loss.
With a fresh infusion of cash, the question now is what will happen to the once promising KaloBios. On Nov. 16, KaloBios announced the company would shut down its operations and liquidate its assets. That decision came just days after the company announced it was slashing 61 percent of its workforce in order to shift resources to development of lenzilumab, or KB003, toward treatment of chronic monomyelocytic leukemia (CMML). The compound is an anti-GM-CSF mAb originally tested for asthma, but was not effective in clinical trials. The company’s IND in CMML, an orphan oncology indication, has been cleared by the U.S. Food and Drug Administration (FDA), and had been initiating a Phase I trial and expects to start dosing patients before the end of the year.
Additionally, KaloBios had planned to pause enrollment in its Phase II trial of KB004 in certain hematologic malignancies. KB004 is a non-fucosylated mAb that targets EphA3 in hematologic cancers and solid tumors. KB004 is designed to kill tumor cells through multiple mechanisms, including antibody-directed cellular cytotoxicity (ADCC), direct apoptosis or disruption of the tumor stem cell environment and the vasculature that feeds it.
After Shkreli’s group acquired the shares, KaloBios said the company is now in discussion with Shkreli “regarding possible direction for the company to continue in operation.” Ronald Martell, chairman of KaloBios, said in a statement that Shkreli and his partners have provided KaloBios with a proposal to continue company operations.
“Our board of directors is prepared to entertain any constructive proposal, which we will act upon promptly. Addressing short-term cash needs is our first priority, and we continue to be open to further dialogue,” Martell said.
When KaloBios indicated it was ceasing operations and looking to sell off its assets, the company announced it had hired The Brenner Group, a restructuring firm, to bring things to a close and sell off assets.
KaloBios was founded in 2000 and over the course of the first decade had several equity rounds and deals with Novartis and Sanofi . In July 2014, Sanofi walked away from their deal. Citing low single digit royalties on net sales of KB001-A, subject to a $40 million cap on the aggregate royalties. Sanofi was also entitled up to 10 percent of certain sub-license payments or other milestone payments.
KaloBios went public on the NASDAQ in 2013, with shares trading at $60 per share. Shares traded for $64 on Feb. 2, 2013, spiked briefly on Jan. 17, 2014 to $43.28 after a falloff, and dropped steadily to $14.88 on Jan. 2, 2015. Shares dropped to $1.93 on Nov. 5, 2015, then plunged to $0.92 on Nov. 6.
