[Updated, 9:00 am ET] As regular roundup readers know, the continuing saga of Martin Shkreli, the hedge funder-turned-drug price gouger, has a West Coast angle. Now under arrest on fraud charges, Shkreli took over Redwood City, CA-based KaloBios Pharmaceuticals (NASDAQ: KBIO) last month. It soon emerged he aimed to pursue a strategy similar to his Turing Pharmaceuticals plan that drew international outrage: buy a low profile drug that has little to no competition and jack up its price.
KaloBios stock immediately went up, putting short sellers in a precarious situation.
With news this morning that Shkreli and his attorney Evan Greebel have been nabbed on fraud charges —the feds even obliged the press with a perp walk—trading of KaloBios was halted. You can read the SEC complaint here. Shkreli is accused of skimming cash from his MSMB hedge funds, lying to investors about finances and fund performance, then plundering his old drug firm Retrophin to pay off people who felt cheated by Shkreli’s hedge-fund activity.
His own short-selling schemes, which brought him attention before he became a biotech CEO, play a big role in the charges. (Retrophin booted him in September 2014 and filed suit this year. The federal criminal charges line up closely with what the company has alleged.)
Meanwhile, KaloBios had been stung by big trial failures, the sudden departure of its longtime CEO in January, and a series of layoffs. It was on the verge of collapse when Shkreli took over and became CEO last month. Shares, which had been flirting with penny-stock status, immediately took off. From a low of 44 cents on Nov. 16, Kalobios shares briefly topped $40 each before Thanksgiving. Soon after, KaloBios announced it would buy the rights to benznidazole, a treatment for Chagas disease, a potentially deadly parasitic infection spread by the triatomine beetle, or kissing bug.
In 2003, Roche donated rights to the drug to Brazil, which has come under fire in recent years for its stewardship of what the World Health Organization calls one of the world’s essential medicines. The drug isn’t approved in the U.S. Doctors treating Chagas patients can only obtain it from the Centers for Disease Control, at no cost.
Shkreli said he would aim for FDA approval of benznidazole in 2016 without conducting any clinical trials. A company presentation noted benznidazole would be priced “similar to hepatitis C antivirals,” spurring more talk of price gouging. The most recently approved hepatitis C drugs cost upwards of $84,000 per course, although drug-buying agents have negotiated discounts.
KaloBios had just wrapped up an $8 million stock sale—about half of what Shkreli was shooting for—when he and Greebel were collared.
Adam Feuerstein of TheStreet.com reported today that Shkreli was also recently pitching investors a plan to reverse-merge Turing into KaloBios. Whether the drug industry’s biggest bad boy was also planning to move to the Bay Area, perhaps we’ll never know.
While nothing quite lives up to the buzz Martin Shkreli generates with every move, we’ve still got a roundup to produce. Let’s get to it.
—Gilead Sciences (NASDAQ: GILD) has spent some of the cash it’s been raking in from its hepatitis C drugs, as executives hinted it would do recently. The Foster City, CA-based firm is paying Belgian firm Galapagos $725 million upfront for shared rights to filgotinib, a drug with Phase 2 results for the treatment of rheumatoid arthritis and Crohn’s disease. Gilead and Galapagos aim to start Phase 3 trials in both diseases next year. The upfront fee includes a $425 million equity investment, giving Gilead a 15 percent ownership stake in Galapagos. Gilead could also pay up to $1.35 billion more in milestones, plus royalties on eventual sales.
—The University of California is putting $250 million behind a new venture fund that will back startups based on UC research. The fund is overseen by tech entrepreneur Vivek Ranadivé, who also owns the National Basketball Association’s Sacramento Kings franchise. Many details have yet to be worked out, as Xconomy San Francisco editor Bernadette Tansey reported. The as-yet-unnamed fund will operate at arm’s length from the university system, with no veto for the university over the investment choices. While the fund is expected to invest in startups with UC ties, it can also back unrelated businesses, a UC spokeswoman said.
—San Diego-based AltheaDx said it has raised $30 million to advance its suite of diagnostic tests, intended to help doctors select the best treatment for patients with heart disease, neuropsychiatric disorders, pain, and other prevalent conditions. WuXi Healthcare Ventures led the Series C financing.
—[Updated with new item] San Rafael, CA-based BioMarin Pharmaceutical (NASDAQ: BMRN) said that the FDA now expects to decide whether to approve drisapersen, its Duchenne muscular dystrophy drug, in early January. The agency was to make a decision on drisapersen by Dec. 27, but hasn’t completed its review of the drug as of yet. Check out this piece for more on the contentious FDA advisory panel for drisapersen, which took place in late November.
—The U.K.’s drug-price monitor, known by the acronym NICE, said the country’s health service would not pay for Genentech’s breast-cancer drug trastuzumab emtasine (Kadcyla) at its £90,000 price tag. (NICE also nixed nivolumab, or Opdivo, a so-called “checkpoint” immunotherapy treatment from Bristol-Myers Squibb.) Kadcyla, which uses the antibody behind Genentech’s drug Herceptin to guide a tumor-killing chemical right to its target, was developed by Genentech before its acquisition by Roche.
—The FDA approved Genentech’s alectinib (Alecensa), a treatment for metastatic non small cell lung cancer driven by a mutation called ALK, or anaplastic lymphoma kinase. Alectinib is only approved for use when treatment with the drug crizotinib (Xalkori) does not work or no longer works. ALK-positive mutations are found in about five percent of lung cancer patients.
—Redwood City, CA-based PaxVax said the FDA is reviewing its cholera vaccine, Vaxchora, for commercial use. The agency will make its decision by June 15, 2016. PaxVax said the previous week that Cerberus Capital Management had become majority owner of the company with a $105 million investment.
—Regen BioPharma, a suburban San Diego biotech that trades on the over the counter market, said Wednesday the FDA will allow it to move HemaXellerate, an experimental treatment for aplastic anemia, into clinical trials. Regen says HemaXellerate is meant to modulate the immune system and stimulate the production of blood cells. Aplastic anemia is a potentially fatal disease of the bone marrow that leads to inadequate production of blood cells.
—DNA Electronics, a London-based sequencing company, is moving its NanoMR business to San Diego, where it plans to build a manufacturing facility for its specialized clinical diagnostics technology. DNAe acquired NanoMR, an Albuquerque, NM-based startup that specializes in magnetic resonance imaging for infectious disease, for $24 million earlier this year. DNAe’s sequencing technology is licensed to Thermo Fisher Scientific and serves as the core of its Carlsbad, CA-based Ion Torrent next-generation sequencing system.
—San Diego-based Illumina (NASDAQ: ILMN), the world’s leading sequencing company, has invested an undisclosed amount in Desktop Genetics, a London-based developer of software to support CRISPR gene editing.
—Xconomy San Diego editor Bruce Bigelow contributed to this roundup.
—Photo “Juguete” courtesy of Daniel Lobo.