KaloBios Pharmaceuticals has signed an agreement with its former CEO, the embattled drug executive Martin Shkreli, to potentially buy back remaining stock Shkreli owns and to restrict his ability to sell his shares to others.
The news comes a week after KaloBios—the Brisbane, CA-based biotech that was acquired by Shkreli shortly before his arrest on fraud charges and eventually filed for bankruptcy—emerged from Chapter 11 with $14 million in financing and a new drug candidate.
For $3 million upfront and additional milestone payments, KaloBios has purchased Savant Neglected Diseases, the San Francisco-area rare disease drug developer that Shkreli said in December he planned to purchase to help turn around KaloBios from its previous struggles. Shkreli had eyed the company because of its drug benznidazole, a treatment for Chagas disease, a potentially deadly parasitic infection.
Shkreli, who in December purchased a controlling stake in KaloBios with a group of investors and installed himself as CEO, had hoped that benznidazole would be priced similarly to hepatitis C antivirals—a class of drugs that cost upwards of $90,000 per course, as Xconomy’s Alex Lash previously reported. Shkreli is best known for his time at Turing Pharmaceuticals, where he hiked the price on a pill that helps treat an infection that can afflict people with HIV to $750 from $13.50 each.
In a release, KaloBios said today’s agreement puts restrictions on Shkreli’s ability to sell his shares and gives the company rights to buy back his shares, among other measures. (Shkreli was fired from his KaloBios position after his arrest.) The company’s new CEO and chairman, Cameron Durrant, said the agreement is an attempt to revitalize KaloBios’s reputation and that the company is committed to transparent and responsible pricing.
The new financing, in the form of $11 million in equity and $3 million in debtor-in-possession loan, came from Black Horse Capital LP, Black Horse Capital Master Fund, Cheval Holdings, and Nomis Bay.
