Congratulations. Your timing on KBIO was much better than mine. At $11.03, my short is still underwater by $.63. The stock may not reopen before the close of the contest. What price does Elroy recognize? $23.59 or $11.03?
KaloBios Shares Plunge After Martin Shkreli Arrest
By Paul Vigna
Wall Sreet Journal
8:50 am ET, Dec 17, 2015
Martin Shkreli in 2011, when was chief investment officer of MSMB Capital Management Bloomberg
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Shares of a tiny drug company called KaloBios Pharmaceuticals Inc. KBIO 0.00% were halted after losing more than half their value in premarket trading after the company’s high-profile chief executive, Martin Shkreli, was arrested by the FBI.
Shares were trading down 53% at $11.03 when they were halted shortly before 7 a.m. Eastern time.
The arrest wasn’t related to one of the main reasons Mr. Shkreli had been in the news lately: price gouging at another company he runs, called Turing Pharmaceutical. Turing is closely held and not listed on a stock exchange.
Rather, he was arrested Thursday morning and charged with securities and fire fraud related to his former work as manager for hedge fund MSMB Capital Management and as chief executive of biopharmaceutical company Retrophin Inc RTRX -0.89%, the Journal is reporting, citing a person familiar with the matter.
Mr. Shkreli, 32, became a household name overnight–and a four-letter word in some political circles–after Turing raised the price of Daraprim, a drug used by patients with weakened immune systems to fight parasitic infections, from $13.50 to $750.
He founded MSMB Capital in his 20s, and was a hot-shot activist investor, named to Forbes’ 30-under-30 list, which called him a gadfly turned activist. ““I’d like to focus on my life on creating new medicines for people who are suffering from rare disease,” he said in the Forbes piece.
His involvement with KaloBios is much more recent. The company was on the ropes and preparing to shut its doors when Mr. Shkreli started buying up its shares in mid November. Days later, he and an investor group revealed that they had quickly amassed a 70% stake in the firm. Mr. Shkreli assumed CEO duties, and said in a statement that he’d taken his stake in the firm because of a drug called Lenzilumab, saying it had “particular promise” in treating a type of leukemia that has no FDA-approved treatment options.
KaloBios shares had been trading as low as 44 cents. But in the subsequent short squeeze–exacerbated by Mr. Shkreli’s unwillingness to lend his stock–the shares briefly skyrocketed above $40. They closed Wednesday at $23.59, good for a 5261% gain from their mid-November lows.
UPDATE: Nasdaq put out a statement at 10:41 a.m. Eastern time saying KaloBios trading was halted at 6:48 a.m. and that it had asked for “additional information” from the company. It listed the last price for the shares at $23.59, which didn’t reflect the pre-market action. The exchange said trading will remain halted “until KaloBios Pharmaceuticals, Inc. has fully satisfied Nasdaq’s request for additional information.”
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