Martin Shkreli’s other pharma company is dramatically collapsing

Following arrest of CEO, KaloBios loses CFO, accountants, is delisted from NASDAQ.

Beth Mole – Dec 23, 2015 7:50 pm | 101

Martin Shkreli, chief executive officer of Turing Pharmaceuticals LLC, exits federal court in New York, US, on Thursday, December 17, 2015. Shkreli was arrested on alleged securities fraud related to Retrophin Inc., a biotech firm he founded in 2011. Credit: Louis Lanzano/Bloomberg via Getty Images

In a swift set of blows, KaloBios Pharmaceuticals, Inc., a biotech company formerly headed by Turing’s Martin Shkreli, announced that it is being delisted from the NASDAQ stock exchange and that the company’s interim CFO and accounting firm have both resigned.

The series of events follows the company’s Monday announcement that it had fired Shkreli, former CEO and chairman. On December 17, Shkreli was arrested on securities fraud charges relating to another biotech company he headed, Retrophin, as well as two hedge funds he managed. He pled not guilty and was released on a $5 million bond.

In a press release dated Wednesday, KaloBios reported that the NASDAQ informed the company in a letter sent December 18 that it would be delisted from the exchange. The letter cited a number of reasons for the delisting, including Shkreli’s indictment plus the simultaneous indictment of Evan Greebel, the company’s former outside counsel.

In November, Shkreli bought a majority stake in KaloBios, a South San Francisco-based biopharmaceutical company that was failing at the time. His first move at KaloBios was to license the rights to a version of the drug benznidazole, which is used to treat Chagas Disease in Latin America. The disease, caused by a parasitic infection that can lead to deadly heart problems, is rare in the US but common in Latin America.

The move struck fear in health experts, who expected Shkreli to dramatically raise the price of the decades-old drug. In September, Shkreli gained notoriety as the head of Turing pharmaceuticals for dramatically raising the price of another drug that treats parasitic infections, Daraprim. He stepped down from Turing following his arrest.

Health experts were also concerned that Shkreli would use the Chagas drug license to exploit a regulatory voucher system set up by the Food and Drug Administration. That voucher system is intended to encourage companies to develop drugs to treat neglected diseases, such as Chagas. But some pharmaceutical companies have instead sold the vouchers to other companies for hundreds of millions of dollars.

The day of Shkreli’s arrest, trading halted on KaloBios shares, and it has not resumed. The company’s stock is set to be removed from NASDAQ on December 30.