Martin Shkreli’s former pharmaceuticals company files for bankruptcy

KaloBios Pharmaceuticals Inc (KBIO.O) filed for Chapter 11 bankruptcy on Tuesday, less than two weeks after Shkreli’s arrest on securities fraud.

The drugmaker listed both its assets and liabilities in the range of $1 million to $10 million in its filing with the US bankruptcy court for the District of Delaware.

The San Francisco company was recently informed by Nasdaq that it would be delisted because of Shkreli’s indictment. KaloBios appealed the decision and a hearing has been scheduled for February 25.

The company also said two of its directors, Tom Feandez and Marek Biestekhad, had resigned in the wake of Shkreli’s arrest.

Downfall ... Martin Shkreli could spend up to 20 years in jail if he is convicted. Picture: AP Photo/Seth WenigSource:AP

Last month, KaloBios was running out of money and was planning to shut down operations when Shkreli and a consortium of investors bought about 70 per cent of its shares. Its shares soared. The drugmaker named Shkreli as its CEO on November 20.

However, Shkreli went from an egotistical pharmaceutical boy wonder to “the most hated man in America” when, as the chief executive of Turing Pharmaceuticals, he jacked up the price of lifesaving Daraprim from $13.50 to $750 per pill.

Daraprim is the only approved drug for a life-threatening parasitic infection that mainly strikes pregnant women, cancer patients and AIDS patients.

Fury ... AIDS activists protest Martin Shkreli’s decision to jack up the price of Daraprim. Picture: AP Photo/Craig RuttleSource:AP

Amid mounting criticism from patients, doctors and politicians, the 32-year-old pledged to lower Daraprim’s price, but later reneged and instead offered hospitals a 50 per cent discount — still amounting to a 2500 per cent increase.

Patients normally take most of the weeks-long treatment at home, so they still face the 5000 per cent price increase, though Turing is offering financial aid to those who can’t afford the drug.

On December 17, Shkreli was arrested for allegedly engaging in a Ponzi-like scheme.

Federal prosecutors allege that from 2009 to 2014, Shkreli made bad trades that lost money of some investors in his hedge fund, MSMB Capital Management, then looted a pharmaceutical company called Retrophin, where he was then CEO, for $US11 million to pay back his disgruntled clients.

The charges carry a sentence of up to 20 years in prison if he’s convicted.

Former drugs boss ... Martin Shkreli is considered “the most hated man in America.” Picture: TwitterSource:Twitter

On Saturday, Shkreli tweeted: “I am confident I will prevail. The allegations against me are baseless and without merit.”

KaloBios could not be reached immediately for comment outside regular business hours.

Shares of Califoia-based KaloBios have not traded since last Thursday.

KaloBios’ largest creditors include the University of Miami, Est & Young and Lonza Sales Ltd.