KaloBios Files for Chapter 11 Bankruptcy


Martin Shkreli, KaloBios's former chief executive, after his arraignment on federal fraud charges on Dec. 17. ---- Lucas Jackson/Reuters

KaloBios Pharmaceuticals, the troubled California biotechnology company that ousted Martin Shkreli this month, filed for Chapter 11 bankruptcy on Tuesday.

The drug maker listed roughly $8.4 million in assets and close to $2 million in debt in filings with the United States Bankruptcy Court in Delaware.

The drug maker had planned to go out of business before Mr. Shkreli took it over. Several of its experimental drugs had not worked, and the company did not have enough money to continue operating.

But in late November, Mr. Shkreli led an investor group that bought 70 percent of KaloBios’s stock on the open market for prices generally short of $2 a share. The stock briefly surged to more than $40 a share once his interest became known.

Mr. Shkreli quickly drew attention after a plan surfaced to sharply increase the price of a decades-old drug that treats Chagas’ disease, a parasitic infection that can cause potentially lethal heart problems.

Mr. Shkreli had already become infamous, as the head of Turing Pharmaceuticals, for raising the price of a lifesaving drug to treat toxoplasmosis, a rare parasitic infection, to $750 from $13.50 a pill.

His ambitions for KaloBios proved short-lived. Mr. Shkreli was arrested on Dec. 17 on securities fraud and wire fraud charges. Federal prosecutors have accused Mr. Shkreli of something akin to a Ponzi scheme related to his first pharmaceutical company, Retrophin. They say he used the drug company’s funds to pay off investors who lost money in his hedge fund, MSMB Capital Management.

KaloBios fired Mr. Shkreli after his arrest. Two days later, Nasdaq informed KaloBios that it would be delisted from the exchange. KaloBios has appealed Nasdaq’s decision. A hearing is scheduled for Feb. 25, the company said Tuesday.

Trading in KaloBios has been halted since Mr. Shkreli was arrested. The last quoted price was $23.59 a share. On Monday, the company announced the resignation of two of its directors, Tom Fernandez and Marek Biestek.

In its bankruptcy filings, the University of Miami and the accounting firm Ernst & Young are listed among KaloBios’s largest unsecured creditors.

Representatives for KaloBios could not immediately be reached for comment.

Article from:- http://www.nytimes.com

 

 

 

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