Martin Shkreli, the chief executive of Turning Pharma and KaloBios Pharmaceuticals Inc (NASDAQ:KBIO), has been arrested on securities fraud charges. In September, he raised the price of a life-saving drug called Daraprim by 5000% from $13.50 to $750. Shkreli was arrested this morning in New York, according to Bloomberg. However, the federal case against him has nothing to do with the price of Daraprim.
KaloBios stock bites dust after Shkreli’s arrest
Martin Shkreli is accused of illegally taking stock from Retrophin, a company he founded in 2011, and using it to pay off hedge funds from unrelated business dealings. Retrophin board later ousted and sued him. Federal prosecutors are currently probing Retrophin’s claims. Shkreli has repeatedly denied any wrongdoing, including allegations in the lawsuits.
Following his arrest, KaloBios shares tumbled 50.19% to $11.75 in pre-market trading Thursday. Shkreli became the CEO of KaloBios in November. Notably, KaloBios was a penny stock before Martin Shkreli made his first investment in the company in mid-November. Soon after reports of Shkreli’s investment, KaloBios shares skyrocketed 700% from $1.97 to $16 per share.