NEW YORK, N.Y. – Shares of cancer drug developer KaloBios Pharmaceuticals rocketed higher Thursday after controversial investor Martin Shkreli led a group that took a majority stake in the company just after it had decided to wind down its operations.
KaloBios shares surged as high as $14.72 Thursday after the company said an investor group including Shkreli had acquired most of its stock. It made that announcement after the market closed on Wednesday.
The shares closed at $2.07 Wednesday and finished the trading day at $10.30, up about five-fold.
In January KaloBios said a drug it was developing to treat lung infections in cystic fibrosis patients had failed in clinical testing. Its shares plunged 70 per cent after that announcement and continued to decline after that. This month it said it would eliminate most of its jobs, leaving it with just 11 employees as it looked for strategic options. Last Friday, the company said it would wind down its operations.
KaloBios said it is talking to Shkreli about ways to continue operating. The South San Francisco, California company owns several drug candidates, including potential treatments for leukemia and blood cancers.
Shkreli is a former hedge fund manager and the head of privately-held Turing Pharmaceuticals. Turing was criticized in September for buying the rights to a parasitic infection treatment called Daraprim, then raising its price to $750 per pill from $13.50 a pill. Daraprim has been on the market for more than 60 years and it did not have any competition when Turing bought it. Turing has said it will lower the price, although that hasn’t happened yet. The company said it capped copayments for patients at $10. In October a San Diego company later said it would make a version of Daraprim available for about $1 a pill.
Shkreli and Turing Pharmaceuticals did not immediately respond to a request for comment.
Turing was not the first company to buy an old, inexpensive medicine and hike the price. The uproar over its actions and similar moves by other companies helped start government investigations, proposals by politicians to fight “price gouging,” heavy media scrutiny and a drop in stock prices for biotech companies.