KaloBios Pharmaceuticals Inc (OTCMKTS:KBIOQ) Is Back

KaloBios Pharmaceuticals Inc (OTCMKTS:KBIOQ) has taken shareholders on a roller coaster of a ride. The company has been left for dead more times than I can count and still manages a comeback. The federal indictment of former CEO Martin Shkreli and bankruptcy could not stop KaloBios. Will the new KaloBios be a microcap runner like before?The new KaloBios is emerging from bankruptcy protection perhaps stronger than ever. The new company emerges with $14 million in equity financing from investors Black Horse Capital LP, Black Horse Capital Master Fund Ltd., Cheval Holdings Ltd. and Nomis Bay Ltd. The company says the funding is enough to support operations and the $3 million debtor-in-possession loan converted into shares of KaloBios common stock. Chairman and CEO Dr Cameron Durrant said:

“The Company has risen from the ashes with a great deal of hard work and new thinking on how a biopharmaceutical company can operate and a clear vision to move forward as a successful, positive leader in our industry. As one of the few companies solely focused on neglected and rare diseases, KaloBios will continue to move swiftly and apply itself to the real task of bringing patients crucial treatments they need, but to which they may not have access. We also see a unique opportunity to bring new ideas to address concerns, such as drug pricing, for all stakeholders in healthcare - with our Responsible Pricing Model as just the beginning.”

KaloBios also acquired the rights from Savant Neglected Diseases LLC to develop benznidazole for the treatment of Chagas disease. Under the terms of the agreement with Savant, the KaloBios made an upfront payment of $3 million and issued to Savant a warrant to purchase 200,000 shares of KaloBios common stock. The agreement includes milestones and royalties in connection with the development and potential approval and commercialization of benznidazole. If approved, the company may receive a Priority Review Voucher.Benznidazole is an oral anti-parasitic medication used in the treatment of Chagas disease. According to the Centers for Disease Control and Prevention (CDC), an estimated 300,000 people in the United States are infected with Chagas disease, which, if left untreated, can lead to serious and potentially life-threatening cardiovascular, gastro-intestinal and neurological complications. Benznidazole is the standard of care for Chagas disease but is not currently approved by the U.S. Food and Drug Administration (FDA) and is available in the United States only from the CDC under investigational protocols. If approved, it would be the first commercially available benznidazole product for U.S. patients with Chagas disease.The new KaloBios leaves former CEO Martin Shkreli with a 14% stake in the company, down from 47% prior. The settlement resolves Shkreli’s claim for legal costs stemming from his involvement with the company. KaloBios has the right to repurchase his shares at a discount, which could further reduce his holdings. In exchange, the company released Shkreli from “all demands, claims, liabilities, damages, actions, causes of action, fines, penalties, expenses,” and other costs arising before or during the bankruptcy.Currently trading with a market cap of $21 million, KBIOQ is getting a new lease on life with a new drug, new funding, and a new management team and board members. While KaloBios had nothing to do with the charges facing Shkreli, his involvement left a cloud hanging over the company. According to the Wall Street Journal, "court papers said “potential investors, service providers (including significant potential hospital sponsors of future drug trials) and potential sources and partners for other drugs that the reorganized debtor might wish to develop” told KaloBios they would be reluctant to do business with the company as long as Mr. Shkreli was in a position to influence the company’s affairs." With this chapter resolved, KBIOQ might become a microcap runner yet again. We will be updating Insider Financial as soon as we know more. For continuing coverage on KBIOQ, sign up for our free newsletter today and get a free ebook as an added bonus!Disclosure: We have no position in KBIOQ and have not been compensated for this article.