On Tuesday December 29, 2015 Kalobios made an SEC filing whereby the company filed for Chapter 11 Bankruptcy. This does not mean that the company is going bankrupt, instead it signifies that the company needs to put its functions on hold until it can develop a proper restructuring plan. This filing occurred in the Court of Delaware, which is the state the company presides in. This desperately needed to be done, because the company was unsuccessful at its first restructure attempt while operations were continuing. For instance, the company attempted to do an out of court restructuring by slashing 61% of its workforce but it was not successful.
This restructuring plan is being done so that Kalobios can pay back its creditors in a timely fashion. Originally Kalobios was ready to forego its operations and find a way to sell itself as it had no more money to continue the pipeline. Although, Martin Shkreli and other hedge fund investors put in about 70% capital to bring money back into the company to continue operations. Everything seemed to be going fine up until the middle of December when Shkreli was arrested by the SEC on fraud charges.
These fraud charges had nothing to do with the new company he invested in, Kalobios. Instead, the charges go way back to when Shkreli was CEO of Retrophin (NASDAQ:RTRX). The charges claim that Shkreli used money from Retrophin to pay off previous hedge fund investors. It would be nice to see the company restructure its business, but it will also face another uphill battle with the NASDAQ stock exchange. This is because the company received a NASDAQ letter stating that it would de-list its shares from the exchange.
Kalobios is now missing a CEO because of his arrest, a few directors leaving, and not much left in the coffers other than a few drugs in early stages of the clinical pipeline. The company posted an appeal to the NASDAQ, in which it is set to be in a hearing in an attempt to keep its shares listed on the NASDAQ exchange. This hearing will take place on February 25, 2016 where panel members will decide upon whether or not shares of Kalobios should continue to be listed on the NASDAQ.
Chimerix, Inc. (NASDAQ:CMRX)
On Monday December 28, 2015 shares of Chimerix fell 80% after the company announced that their drug failed to meet on the primary endpoint, in a phase 3 clinical trial. The phase 3 trial, known as the SUPPRESS trial, recruited up to 452 patients. These patients undergo hematopoietic cell transplants either due too a genetic defect or blood cancer. Because of these cell transplant treatments the patients get Cytamegalovirus or other forms of infection that are similar.
The phase 3 trial was monitoring how well brincidofovir was able to reduce the Cytamegalovirus compared to a placebo compound within a 24-week period. This all occurs after patients have undergone the cell transplant treatment. The company was able to show a reduction of the Cytomegalovirus compared to placebo in the 10-week period, but from week 10 to week 24 the same efficacy was not achieved. To make matters even worse, the brincidofovir group saw an increase in mortality rate which is definitely not good at all.
The results are definitely not great, but the company will still present them at a medical conference which will be held by in February of this year. Although, Chimerix has chosen to axe its hematopoietic cell transplant trial and continue on in other areas. These other areas include smallpox and other adenovirus infections. I will say that the likelihood of efficacious results in these other areas as slim to none, considering that this phase 3 trial failed miserably. If someone is willing to take the risk it might be good for a small gamble, but I wouldn’t get too carried away with it as an investment.
[Image Courtesy of Wikipedia]