Martin Shkreli is back in the news, and not as the target of critics of high drug prices this time. On Wednesday night, the stock of a tiny biotech company named KaloBios, which had been on the brink of liquidation, shot up 800% on news that he had bought up a majority stake of the company and was planning to keep it open. But saving this company will prove a handful for the rabble-rousing biotech investor.
What’s Shkreli's plan for KaloBios, which has stumbled multiple times trying to develop its pipeline of antibody-based drugs to treat cancer and other diseases? “Just a basic turnaround focused on KB003,” which, he says by email, is “extremely promising for a rare cancer called CMML.” He says KaloBios’ assets will be kept separate from those of Turing Pharmaceuticals, the biotech company at the center of the storm over high drug prices.
Shkreli bought 1.2 million shares of KaloBios earlier this week, at prices ranging from $0.61 to $2.43 a piece.
It was a quick turnaround for KaloBios, which had seen its stock fall from a one-year high of $21 into penny stock territory, before announcing last Friday that it would be winding down its operations. "Our board of directors is prepared to entertain any constructive proposal, which we will act upon promptly,"said Ronald Martell, the company’s executive chairman, in a statement about Shkreli's stock purchase. "Addressing short-term cash needs is our first priority, and we continue to be open to further dialogue."
KaloBios was founded on a technology it calls Humaneered, which was meant to improve the way antibody-based drugs bind to their targets. The company touted its experimental drugs as more economically viable than older antibody technologies, and potentially more tolerable for patients to take over the long run. Investors bought it, pouring $70 million into the company’s initial public offering (IPO) in early 2013.
A year later, everything started to unravel. KB003, which the company was initially developing to treat asthma, failed to improve lung function in a mid-stage trial, prompting the company to abandon its asthma plans.
Then a key Big Pharma partner,
As for the drug that has caught Shkreli’s fancy, KB003, it works in cancer by neutralizing granulocyte-macrophage colony-stimulating factor (GM-CSF), a type of protein that causes some tumors to grow. It is currently being tested in CMML, or chronic myelomonocytic leukemia, a rare cancer that primarly affects the elderly.
In July, KalosBio was given the greenlight by the FDA to start Phase I trials, which means Shkreli is placing a very large bet on a drug that could be years away from market. KalosBio is also in mid-stage trials of another cancer drug, KB004. As of June 30, the company had just $23 million in cash left. It burned $3 million just on research and development in the second quarter alone.
Attempting to turn around KaloBios could be a welcome distraction for Shkreli, who continues to find himself in the crosshairs of drug-price watchdogs ever since Turing raised the price of an old drug called Daraprim by 5,000% to $750 a pill. He vowed to lower the price by the end of the year, but he hasn’t provided enough details yet to say for sure if he’ll appease his critics. And Shkreli continues to be embroiled in a legal dispute with Retrophin, another company he founded that’s alleging financial improprieties related to the biotech entrepreneur’s former hedge fund.
To make matters worse for Shkreli, on November 4 the U.S. Senate launched a bipartisan investigation into drug prices, demanding documents from four companies, including Turing. The issue will likely come to the fore tomorrow, when the White House convenes a full-day forum on high drug prices.
Eager to hear more from Shkreli? Check out the upcoming Forbes Healthcare Summit in December, where the controversial CEO will appear for a sit-down interview.
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