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KaloBios Pharmaceuticals (KBIO) Soars On Martin Shkreli’s Investment

He might be the most hated man in the world, but Martin Shkreli has likely made another enemy, a KaloBios Pharmaceuticals short-seller, Joe Campbell who claims to have lost $106,000 on the trade. At least, Alexander Demling and Anne Seith have some company.

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KaloBios Pharmaceuticals, a biopharmaceutical company that traded as a penny stock surged significantly on the investment of Martin Shkreli, the founder and CEO of Turing Pharmaceuticals.

The stock price of KaloBios Pharmaceuticals increased more than 700% from $1.97 per share to as much as $16 per share during the extended trading on Wednesday.Today, the shares of the company are trading at $11.44 per share, up by 452% at the time of this writing, around 11:51 AM in New York.

 

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Chart via S&P CapIQ

Shkreli’s investment in KaloBios Pharmaceuticals

Based on a regulatory filing with the Securities and Exchange Commission (SEC), Shkreli acquired more than 1.21 million shares of KaloBios Pharmaceuticals worth more than $5.16 million on November 16 and 17.

Shkreli acquired 500,169 shares of KaloBios Pharmaceuticals for $0.61 per share and additions 97,269 shares for $1.43 per share on November 16. The following day, he acquired 606,677 shares for $1.93 per share and additional 7,000 shares for $2.43 per share.

Shkreli’s investment in the company gained more than $130 million based on the current trading price of the stock.

He recently attracted media attention when Democratic Presidential candidates, former Secretary of State Hillary Clinton and Sen. Bernie Sander raised questions regarding the pricing practices of Turing Pharmaceuticals, which raised the price of Daraprim by 5,000% from $15.50 to $750. Daraprim is used to treat patients suffering from parasitical infections

KaloBios decided to wind down operations

Last week, KaloBios Pharmaceutical announced its decision to wind down its operations. The company decided to discontinue its two current development programs—KB004 (Phase 2 study) for certain hematologic malignancies and KB003 (schedule for Phase 1 development) for in chronic myelomonocytic leukemia (CMML).

The company’s CFO and interim CEO Herb Cross explained, “Recent discussions around a number of possible strategic transactions have ended, and as a result, the company believes it is highly unlikely that continuing to explore strategic alternatives could generate a viable transaction within the time frame allowed by our limited cash resources.”

KaloBios Pharmaceuticals engaged the services of Brenner Group, a restructuring firm, to help in its effort to wind down and liquidate its assets. The company repaid all of its outstanding secure loan obligations to MidCap Financial.

Shkreli aims to continue the operations of KaloBios

Today, KaloBios Pharmaceuticals issued a statement indicating that the investor group led by Shkreli acquired more than 50% of its outstanding shares. Shkreli is engaged in discussions with the company regarding the possibility to continue its operations.

Ronald Martell, Executive Chairman of KaloBios Pharmaceuticals, said, “We have received communications from Mr. Shkreli informing us of his group’s ownership position, and a proposal to continue the company’s operations.”

Martell added that the company’s board of directors is ready to entertain any constructive proposals, and will immediately take actions. According to him, “Addressing short-term cash needs is our first priority, and we continue to be open to further dialogue.”

Why would Shkreli seemingly pay a huge premium for KaloBios for these shares? Simple, he needs a stock shell to take his new Turing Pharma company public. So expect to see more of Mr. Shkreli in the coming months. In the meantime, he will likely have to put that money he made to good use on a PR agent and to possibly fund Turing, which lost a whopping $27 million in just the past nine months.

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