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Tim Sykes Says KaloBios Will Drop 50% Next Week

Henry Kissinger is alleged to have stated during the the Iraq-Iran war “It’s a pity they can‘t both lose.” That Kissinger quote might be apt here as two of the most hated people in the penny stock arena go head to head…  Martin Shrkeli gained notoriety after raising the price of an anti-parasite pill by over 5,000%, now he is involved in another biotech story with KaloBios, but he may have just met his match in another “pharma bro” who is shorting the company, Tim Sykes.

To recap, Turing Pharmaceuticals CEO Martin Shrkreli became the focus of moral outrage after raising the price of the pill to over $750 a dose, but it seems he wasn’t finished there. A group associated with Shrkreli has now bought 70% of the outstanding shares in a tiny biotech company, raising its price by over 9,000%.

Kalobios Tim Sykes
Chart via S&P Capital IQ

Controversial Shkreli continues to make waves with KaloBios

KaloBios Pharmaceuticals was on its death bed before Shkreli swooped in and bought the shares, claiming that “KaloBios’ lenzilumab is a very promising candidate for the treatment of various rare and orphan diseases.”

Suspicions were raised after the stock shot up from 44 cents per share on November 16 to $39.50 per share on Monday. Now renowned short seller Tim Sykes has called out the rise, warning that the huge increase does not change the fact that KaloBios was “a stock in the gutter just days ago.”

Traders who held short positions on the stock before Shkreli made his move have been caught out. “When bio-techs are left for dead, they’re really dead,” Sykes said. Now short-sellers have been forced to cover their bets by Shkreli’s buy.

Short-seller Sykes predicts sharp fall in stock by next week

Under U.S. law investors have just three days to cover their short positions with long shares, fueling a buying panic. 17 million KaloBios shares traded on Monday compared to 1.2 million on average day of trading.

Syjes recalled the story of Cynk Technology, a stock which rose 36,500% in just a month before returning to being a penny stock. He expects that the same thing will happen with KaloBios. “I’m not saying it’s going to crash Tuesday by noon, but I do expect a drop up to 50 percent by early next week,” Sykes told  Richard Morgan of The New York Post.

As reported by ValueWalk, stocks in the company fell over 50% to $20 on Tuesday after the company received a delisting notice from NASDAQ. The company did not satisfy the requirements for continued listing but has six months to comply with regulations and avoid delisting. So will Sykes cover his short as shares have already fallen 50%? Only time will tell.

Not surprisingly, the cat fight between the two has already started on their favorite medium – Twitter

Update – it appears that Sykes may have already covered for a nice and quick 50% profit