Shkreli's stake in KaloBios cut after judge OK's bankruptcy plan
- KaloBios has been granted court approval of a reorganization plan that could see the company return to business, months after filing for bankruptcy following the arrest of former CEO Martin Shrkeli last year.
- Under the agreement, Shkreli's stake in the company would be decreased from 47% to 14%, according to Bloomberg.
- KaloBios has staked its future on acquiring rights to an old treatment for Chagas disease,a type of parasitic infection common in Latin America. The company hopes to gain FDA approval for the drug, which would qualify it for a valuable priority review voucher.
A lot has happened since Martin Shkreli bought control of KaloBios back in November 2015. His arrest on charges of securities fraud a month later precipitated a bankruptcy filing by KaloBios, which tumbled off the Nasdaq stock exchange.
Bankruptcy left KaloBios unable to complete its plans to acquire the Chagas treatment, called benznidazole, from Savant Neglected Diseases. Moving the drug through regulatory approval would give KaloBios a priority review voucher from the FDA, which the company could in turn sell. Vouchers expedite FDA review of new drugs by 4 months and have commanded prices over $200 million.
But left without funds, KaloBios needed bankruptcy court approval of a reorganization plan. U.S Bankruptcy Judge Laurie Silverstein on Wednesday agreed to KaloBios' proposal, which includes new funding from Black Horse Capital and Nomis Bay, reports Dow Jones.
Black Horse Capital had reportedly demanded Shkreli's stake be reduced to below 20% of common stock for it to agree to fund KaloBios.
With Skhreli's stake now reduced to 14% and the potential for KaloBios to buy back the remainder of his shares, it seems that the company may soon have the capital it needs to gain rights to benznidazole.
KaloBios has worked hard to distance itself from Shkreli. In April, the company vowed to refrain from "predatory pricing" and pledged to make benznidazole, if acquired, available at or near cost in developing countries.