KaloBios Pharmaceuticals Inc. had been left for dead. Now it’s the talk of Wall Street.
Shares of the tiny pharmaceutical company are up more than 4000% over the past six trading days, thanks to a high-profile former hedge-fund manager who teamed up with a group to take a majority stake in the firm. The stock traded at 90 cents on Nov. 13, and was above $40 in recent trading Monday.
Shares started their climb Nov. 16, when the stock dropped to as low as 44 cents a share before rocketing to $1.72 as 3.53 million shares traded hands. For KaloBios, that counts as extremely heavy volume; it was more than the number of shares that had traded in the prior 36 trading sessions combined.
Then they jumped to $2.17 the next day on even heavier volume of 5.36 million shares.
It was a strange move for the stock, since the firm had announced on Nov. 13 that it was winding down its operations. The South San Francisco-based company said that it had been exploring “strategic transactions,” but those efforts had come to naught. Since it had “limited cash resources” remaining, it said it had brought in a restructuring firm and would “phase out” all of its remaining employees over the next month or two.
The reason for the rise in the stock became clearer on Nov. 18. Martin Shkreli, the chief executive of Turing Pharmaceuticals AG, had been snapping up KaloBios shares on Nov. 16 and 17, according to filings with the Securities and Exchange Commission that landed after the market closed. And late on Nov. 19, KaloBios announced some big news: The company was no longer closing, Mr. Shkreli was the company’s new chairman and CEO, and Mr. Shkreli and other investors were chipping in an equity investment of at least $3 million.
Mr. Shkreli has been in the news lately, but not because of KaloBios. His Turing Pharmaceuticals gained notoriety in September for raising the price of an anti-parasite tablet more than 50-fold, a move that attracted the ire of Hillary Clinton, turned drug pricing into a campaign issue and prompted Democrats in Congress to launch investigations.
The Journal reported last week that Turing is now drawing up plans to discount the drug by as much as 50% to hospitals. The same story noted that there are no plans to merge Turing and KaloBios.
In the statement from KaloBios, Mr. Shkreli indicated that he’d taken his stake in the firm because of a drug called Lenzilumab, saying it had “particular promise” in treating a type of leukemia that has no FDA-approved treatment options.
Written by Moneybeat Blog of The Wall Street Journal
(Source: The Wall Street Journal)