Martin Shkreli led KaloBios Pharmaceuticals, Inc. KBIO was once again in the news. It found a spot in the headlines for three different reasons. First, it entered into agreements to raise $8.2 million through a private placement. Second, the company announced its intention to acquire a treatment for a rare disease. And finally, KaloBios formed a new management team. Shares are already up significantly (approximately 27%) in pre-market trading.
Earlier this week, the company’s shares were up 30.8% after Shkreli tweeted that he would stop lending the company’s shares to people looking to short it.
To Raise $8.2M Through Private Placement
KaloBios announced that it has entered into definitive agreements with institutional and accredited investors to raise approximately $8.2 million through private placement financing. The company will issue 280,170 shares of common stock. While the transaction is expected to occur in the Dec 7, 2015 week, the company may increase the number of shares sold based on additional definitive agreements that may be made.
The company plans to use the proceeds for an acquisition and for advancing its pipeline including its lead candidate, lenzilumab. The candidate is being developed for the treatment of chronic myelomonocytic leukemia.
Set to Buy Treatment for Chagas Disease
Meanwhile, KaloBios announced a deal to acquire a benznidazole program for the treatment of Chagas disease from Savant Neglected Diseases, LLC – a privately held specialty pharmaceutical company. The deal will see KaloBios shelling out an upfront payment of $2 million in addition to regulatory milestones and royalty on product sales. The transaction is expected to close shortly.
KaloBios intends to file for Orphan Drug and Fast Track designations for benznidazole for the treatment of Chagas Disease. If granted, the company expects to receive a neglected tropical disease priority review voucher (PRV). In Aug 2015, the FDA acknowledged that Chagas disease was added to the list of designated tropical diseases whose product applications may result in the award of a PRV.
We are positive on the deal. KaloBios stated in its press release that an estimated 300,000 patients in the U.S. are suffering from Chagas disease with the number growing at an alarming rate. Benznidazole is currently unavailable in the U.S. or Europe. The company aims to be the first to seek FDA approval for the treatment of this rare disease.
Currently, there are only two treatments for Chagas disease: nifurtimox and benznidazole.
New Management Team Announced
In concurrence with the acquisition, KaloBios also announced new additions to the management team. While Patrick Crutcher will be Head of Business Development, Chris Thorn has been appointed interim Chief Financial Officer. Edward Painter has been chosen as Head of Communications and Investor Relations.
We note that KaloBios has come to the limelight and has been on an upswing ever since Shkreli gained control of the company and assumed the position of Chief Executive Officer and Chairman of its board of directors.
We expect investors focus to remain on Shkreli’s next move.
Meanwhile, investors looking for favorably ranked stocks in the health care sector can consider Mylan N.V. MYL, Achillion Pharmaceuticals, Inc. ACHN and Anika Therapeutics Inc. ANIK. All three carry a Zacks Rank #1 (Strong Buy).
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