KaloBios Pursues Drug Rights
February 24 2016 - 04:00PM
Dow Jones News
KaloBios Pharmaceuticals is seeking bankruptcy court permission
to buy rights to a drug that could be in line for a lucrative
priority review voucher, a ticket for a fast trip through the
regulatory process.
The company filed for bankruptcy protection not long after its
ousted chief executive, Martin Shkreli, was arrested on securities
fraud charges unrelated to KaloBios. At the time of his arrest, Mr.
Shkreli was trying to land the rights to the drug,
benznidazole.
Benznidazole, the drug at issue, is an established treatment for
Chagas disease, which is an parasitic infection designated as
neglected and in need of attention as a public health matter by
U.S. regulators. The designation means benznidazole might qualify
for an FDA voucher of the type that in the past has sold for as
much as $350 million.
And that could mean profits for Mr. Shkreli, who was ousted from
his post as chief executive of KaloBios after his arrest on
securities fraud charges in December, but who remains a major
shareholder. In a bankruptcy court filing Tuesday, KaloBios said it
is "very likely solvent" and is running its affairs to benefit
shareholders.
Peter Ivanick, KaloBios's lead bankruptcy counsel, also said in
an email Wednesday that the company's board "is considering all of
its options in connection with Mr. Shkreli's stock position."
Mr. Shkreli has been widely criticized for increasing the price
of another vital drug, Daraprim, by fifty-fold. Before the criminal
charges, which he denies, he alarmed advocates for rare-disease
treatments when he told investors he intended to price benznidazole
in line with hepatitis C treatments that can cost as much as
$94,000 per course of treatment. In Latin America, where most cases
of Chagas disease are found, benznidazole treatment costs $60 to
$100, according to the Drugs for Neglected Diseases Initiative.
KaloBios's board of directors has told a bankruptcy judge the
ousted CEO has no decision-making power in its affairs. Yet Mr.
Shkreli stands to profit if hopes of the benznidazole deal drive up
the stock price. Mr. Shkreli paid $3.2 million in November 2015 for
a controlling stake in KaloBios, and saw the value of that holding
grow to more than $48 million before his arrest.
The criminal charges, which he denies, involve allegations he
hid losses in hedge funds he managed with the help of money from a
public company.
KaloBios's stock price took a beating after Mr. Shkreli's arrest
and the company's bankruptcy filing. At a court hearing earlier
this month in the criminal case against Mr. Shkreli, prosecutors
said his KaloBios stock makes up much of the E*Trade account
pledged to secure his bail, and its value has shrunk. KaloBios
shares, which reached a high of $39.50 a share in November, were
trading at $1.89 a share on Wednesday on the over-the-counter
market.
The stock was delisted from the Nasdaq Stock Market after Mr.
Shkreli's arrest and KaloBios's chapter 11 filing. However, court
papers reveal KaloBios intends to leverage its planned deal for
benznidazole to climb back into the Nasdaq Stock Market, pledging
"diligent efforts to promptly regain and maintain a Nasdaq listing
for its common stock."
Company lawyers who filed papers in the U.S. Bankruptcy Court in
Wilmington, Del., where KaloBios sought refuge in December, have
blacked out many details of the transaction, including the price
KaloBios is paying for intellectual property associated with the
drug.
KaloBios is seeking to sign a binding letter of intent with
Savant Neglected Diseases LLC, a private Bay Area company that
signed a nonbinding letter of intent with KaloBios when Shkreli was
in charge.
KaloBios is offering to pay $3 million to acquire the regulatory
assets, which includes data, documentation and other materials
relevant to pursuing FDA approval for benznidazole. Additionally,
the company is agreeing to pay an undisclosed amount for an
exclusive license of intellectual property associated with the
drug, in a deal that appears to involve continued participation by
Savant.
Last year, Mr. Shkreli became a target of widespread criticism
for increasing the price of the drug Daraprim from $13.50 a pill to
$750 per pill. A potentially lifesaving treatment, it is in demand
among people with AIDS.
After his arrest, Mr. Shkreli resigned as CEO of Turing
Pharmaceuticals, which owns Daraprim. Earlier this month, Mr.
Shkreli refused to answer questions from U.S. lawmakers about
pharmaceutical pricing. Turing issued a statement at the time
affirming its "commitment to ensure access to Daraprim for every
single patient who needs the drug, regardless of ability to
pay."
The wholesale price of Daraprim remains $750 per tablet, a
Turing spokeswoman said Wednesday.
In court papers, KaloBios offered assurances that, should it
acquire benznidazole, people won't be denied access because of an
inability to pay.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
February 24, 2016 15:45 ET (20:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
E TRADE Financial (NASDAQ:ETFC)
Historical Stock Chart
From Feb 2024 to Mar 2024
E TRADE Financial (NASDAQ:ETFC)
Historical Stock Chart
From Mar 2023 to Mar 2024