Shkreli's former company KaloBios files for bankruptcy
- KaloBios Pharmaceuticals on Wednesday announced it had voluntarily filed for Chapter 11 bankruptcy protection on December 29th.
- KaloBios filed its petition in the U.S. Bankruptcy Court for the District of Delaware. The company will continue to manage and operate its business as a "debtor-in-possession."
- Former CEO Martin Shkreli's arrest for securities fraud was one of the reasons cited by KaloBios as an impediment to restructuring out of court.
The fallout from Martin Shkreli's arrest for securities fraud continues. Although his arrest stemmed from alleged fraud while running his former hedge fund MSMB Capital, Shkreli's legal troubles have damaged his more recent firms Turing Pharmaceuticals and KaloBios. Earlier this month, KaloBios fired Shkreli as CEO.
The ongoing litigation against Shkreli negatively impacted KaloBios' ability to restructure its position out of courts, or otherwise obtain relief for its financial challenges. Additionally, following Shkreli's arrest, NASDAQ halted trading in KaloBios' stock, and notified the firm of its intention to de-list the company from the exchange.
In the court papers, KaloBios stated it hoped to use the relief provided by bankruptcy protection to continue to implement its restructuring plans and preserve its current assets. As of the filing, KaloBios had eight employees.
KaloBios had been working on the development of a monoclonal antibody, KB003, for the treatment of leukemia. UC Davis and Moffitt Cancer Center announced earlier this month the suspension of a phase 1 trial for the KB003 drug, due to the ongoing fallout from Shkreli's legal troubles. KaloBios also has another monoclonal anitbody drug in development to treat hematologic malignancies, although it has paused enrollment for its clinical study.
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