KaloBios Pharmaceuticals has taken multiple hits after CEO Martin Shkreli's arrest on December 17. Now it has filed for Chapter 11 bankruptcy.
Martin Shkreli’s arrest related to a Ponzi-like scheme he ran during his hedge fund days continues to impact the connections he made in the pharmaceutical world. KaloBios Pharmaceuticals Inc, which fired Shkreli as chief executive officer after his arrest, has had a particularly rough time in the aftermath.
Following the news of Shkreli’s arrest, KaloBios’ trading was halted, followed by a delisting. A cancer center performing a trial with KaloBios’ main drug halted the study, and now the company is filing for Chapter 11 bankrupcy.
On December 29, KaloBios appealed Nasdaq’s decision to delist its stock. The stock had halted at $23.59 following Shkreli’s arrest and had not traded since. Shortly after, Nasdaq delisted the stock for reasons related to Shkreli’s charges and another company official as well as the fact that KaloBios hadn’t filed a quarterly report for the quarter which ended September 30, reported The Wall Street Journal.
If KaloBios had not appealed, the stock would have been suspended from trading on December 30. Now the appeal hearing is set for February 24.
KaloBios didn’t only suffer from its stock being delisted. Shkreli and a consortium of investors had bought 70% of the company’s shares after taking interest in KaloBios’ drug Lenzilumab, which treats chronic myelomonocytic leukemia, a disease with no FDA-approved treatment options.
The treatment in question had been the focus of a clinical trial at the Moffitt Cancer Center. However, in the wake of Shkreli’s arrest, the cancer center suspended the trial. A spokesman said that even though there is nothing wrong with the drug itself, the center was shelve the trial until the investigation against Shkreli was completed.
Now, KaloBios has filed for Chapter 11 bankruptcy approximately a month after Shkreli had bought a controlling share of the company and saved it from shutting its doors. The company listed $8.4 million in assets and $1.9 million in liabilities in its bankruptcy filing, according to MarketWatch.