Still reeling from the softball sentencing of “affluenza”-suffering teen Ethan Couch announced earlier this week? Well, here’s some news that will fill you with the warm comforting glow that only comes from seeing bad things happen to obnoxiously terrible people: KaloBios Pharmaceuticals Inc. (KBIOS) filed for bankruptcy protection yesterday. Of course, in the volatile biotech industry, smallish pharmaceutical companies go under on a fairly regular basis, but few have had CEOs with such famous (and punchable) faces as Martin Shkreli.
Mr. Shkreli was fired as CEO of the San Francisco-based biotech earlier in December - around the same time he was charged with securities fraud. However, the much-reviled Shkreli is still best known as the former CEO of Turing Pharmaceuticals after making headlines by raising the price of antiparasitic drug Daraprim from $13.50 to $750. Yes, that Martin Shkreli. I’ll understand if you pop your champagne cork early.
The chapter 11 filing by KaloBios was seen as a necessity after Shkreli’s arrest led to a wave of resignations at the company, including by three members of the board of directors and Chief Financial Officer Christopher Thorn, according to court papers. The company claims Shkreli’s arrest led to an “imminent threat” to its liquidity.
Shkreli was arrested on December 17, with charges claiming he misled investors in his hedge funds and raided a public company to cover the losses. Days later, KaloBios received a delisting letter from the Nasdaq Stock Market, which the company is currently looking to appeal.
You Don’t Have to Be a Grinch to Take Joy in Shkreli’s Downfall
Now, it’s always sad to see pink slips handed out - especially around the holidays - but there’s plenty of reason to believe that, Shkreli aside, the fall of KaloBios is probably for the best. Earlier this month, the company announced it had signed a deal to pay $2 million for the rights to sell a treatment for Chagas Disease in the US and Europe. The treatment has been widely used in Latin America for decades, but is becoming increasingly common in the US.
If the FDA were to have approved the drug as provided by KaloBios, a securities filing shows that pricing for the drug was expected to be “similar to hepatitis C antivirals” - in other words, quite possibly upwards of $80,000 per patient.
KaloBios may still move forward with their FDA-approval process, but the high-profile nature of the bankruptcy will be casting a spotlight on highly questionable drug-pricing practices that put many drugs far out of the price range of many suffering from illness. Point being: you don’t have to feel bad if you take extra pleasure in the bad news befalling KaloBios and it’s ethically ambiguous leadership.
And if the guilt is too much for you, well, you can always resolve to be a better person in 2016. Happy New Year!
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