KaloBios Enters Deal to Buy Back Former CEO Martin Shkreli's Shares

July 7, 2016
By Alex Keown, BioSpace.com Breaking News Staff

BRISBANE, Calif. – Following its emergence from Chapter 11 bankruptcy protection last week, KaloBios is now in the process of reacquiring company shares owned by its disgraced former chief executive officer Martin Shkreli.

This morning the company said it has signed a definitive agreement with Shkreli to buy back his shares of the company and restrict his investor involvement with the company in a move to cut ties with Shkreli, who faces federal charges of investor fraud. Under terms of the agreement, Shkreli may not sell his shares to a third-party below a price agreeable to the company, nor will Shkreli have the right to nominate directors to the board of directors of the company. The deal also prohibits Shkreli or anyone acting on his behalf from purchasing any company stock for two years or participating in any discussions regarding potential mergers, the company said.

"This agreement is another step in the company's pursuit of revitalizing its reputation," Cameron Durrant, chairman and current CEO of KaloBios said in a statement. "KaloBios is building a company committed to transformational ideas, like transparent and responsible pricing, to drive change. This agreement combined with our recent emergence from bankruptcy helps to hit the ‘re-set' button and move forward."

Shkreli, who is usually vocal about his life on Twitter, has remained mum about the deal, instead posting about mixed martial arts and the lack of women willing to date him. In a Twitter message to BioSpace, Shkreli said he did not have any comment regarding the deal.

At the end of December, following Shkreli’s indictment, KaloBios filed for bankruptcy protection in U.S. Bankruptcy Court in Delaware, estimating assets of $8.37 million and debts of $1.94 million. By filing Chapter 11 bankruptcy, KaloBios will have time to reorganize its now shaky leadership structure, restructure its debt, or possibly look at divesting itself of its assets—a move it was about to make earlier this year before Shkreli and his partners acquired hundreds of thousands of shares of common stock.

KaloBios emerged from bankruptcy on July 1 with $14 million in equity financing. The company said it also acquired the rights from Savant Neglected Diseases to develop benznidazole for the treatment of Chagas disease, a deal the company was working on under the leadership of Shkreli right before his December indictment.

Chagas disease is a parasitic disease transmitted to animals and people by insect bites. Chagas disease is common in South America, Central America and Mexico, but sometimes appears in the United States, according to the Mayo Clinic. Symptoms of Chagas disease include fever, fatigue, rash, aches, swelling of the eyelids, headache, nausea or diarrhea and an enlargement of the liver or spleen.

In January, KaloBios’ stock was delisted from the NASDAQ and plummeted in value. Following Shkreli’s acquisition of KaloBios in late 2015, the stock shot up to $39.50 before dropping back, and then ultimately crashing after his indictment and the company’s bankruptcy filing. KaloBios is now trading under the ticker symbol KBIOQ. Shares of KaloBios are up more than 6 percent this morning, trading at $4.28 per share.