Shares of Company Had Been Flying High Prior to Arrest of Martin Shkreli

Kalo Bios Pharmaceuticals - Corporate logoThe strange journey of KaloBios Pharmaceuticals (previously KBIO on the NASDAQ) continued earlier today after the company announced that it had filed for Chapter 11 bankruptcy.

Let's recap the last crazy couple of months for KBIO:

1) Earlier in the year, KaloBios Pharmaceuticals announced that it would be winding up operations and shutting down in an orderly fashion

2) Shares of the company soared after Martin Shkreli, famous for his involvement with Turing Pharmaceuticals and its decision to hike the price of Daraprim to the moon, announced that he would be taking a majority stake in the company. Shkreli would eventually be named CEO.

3) Shkreli's very large stake, combined with a small float and some trapped short sellers, conspired to send shares of KBIO parabolic. Shares of the company traded from sub $1 to over $45 over the course of just a couple of weeks as KBIO became the favorite plaything of daytraders.

4) Shkreli announced that he would no longer be lending shares of his position out to the public in an attempt to create even more of a short squeeze.

5) Martin Shkreli, who was already known as the "most hated man on the Internet", was arrested and charged with securities fraud. This arrest was in regards to his prior involvement in a hedge fund and another pharmaceuticals company and Shkreli's alleged misrepresentations to investors, amongst other things.

6) Shares of KBIO were halted. Shkreli stepped down as head of Turing Pharmaceuticals and was eventually fired as CEO of KaloBios Pharmaceuticals.

7) The NASDAQ began the process of delisting KBIO.

8) Earlier today, KaloBios Pharmaceuticals announced that it would be filing for bankruptcy and attempting to restructure.


Trading in KBIO was like a game of musical chairs - most everyone knew that the music would end eventually, but nobody wanted to leave the party too soon. Unfortunately, those who elected to hold shares of the company into the halt are now almost certainly going to be left with shares of little to no value.

Short sellers received an early Christmas present in the form of a trade that will almost surely give them close to a 100% return. Workers at both Turing Pharmaceuticals and KaloBios Pharmaceuticals, on the other hand, are left to wonder exactly what happened over the past couple of months. For them, most of the recent events must seem like something out of a nightmare.

Filed under: General Knowledge

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