Different drug company linked to Martin Shkreli files for bankruptcy

Kalobios, the troubled drugmaker taken over by Martin Shkreli last month, is seeking bankruptcy protection less than two weeks after his arrest on securities fraud.

The San Francisco company was recently informed by Nasdaq that it would be delisted because of Shkreli's indictment.

KaloBios was running out of money and was planning to shut down operations last month when Shkreli took a controlling interest of the company's stock. Its shares soared.

In a Chapter 11 filing late Tuesday with the U.S. bankruptcy court for the District of Delaware, the company listed assets and liabilities in the range of $1 million to $10 million.

Kalobios' largest creditors include the University of Miami, Ernst & Young and Lonza Sales Ltd.

A seven-count indictment unsealed in Brooklyn federal court on Dec. 17 charged Shkreli with conspiracy to commit securities fraud, conspiracy to commit wire fraud and securities fraud. A second defendant, attorney Evan Greebel, of Scarsdale, New York, was charged with conspiracy to commit wire fraud

Those charges are based on events before Shkreli stirred public outrage earlier this fall when his company, Turing Pharmaceuticals, jacked the price of a drug used to treat a life-threatening infection by more than 5,000 per cent.

Turing raised the price on Daraprim, a 62-year-old drug whose patent expired decades ago, from $13.50 to $750 per pill. The drug is the only approved treatment for a rare parasitic infection called toxoplasmosis that mainly strikes pregnant women, cancer patients and AIDS patients.

The uproar over price hikes at Turing and by other companies like Quebec-based Valeant Pharmaceuticals led to government investigations, proposals by politicians to fight "price gouging," heavy media scrutiny and a drop in stock prices for biotech companies.

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