On April 28, 2016, Pomerantz LLP was appointed Lead Counsel in In Re KaloBios Pharmaceuticals, Inc. Securities Litigation. The class action, filed in United States District Court, Northern District of California, and docketed under 15-cv-06331, is on behalf of a class consisting of all persons or entities who purchased KaloBios securities between November 19, 2015 and December 17, 2015 inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
KaloBios, a biopharmaceutical company, develops monoclonal antibody therapeutics for the treatment of cancer in the United States. The Company’s product candidates include KB004, which is in a Phase II clinical trial for the treatment of myelodysplastic syndrome and myelofibrosis; and KB003, which completed a Phase II clinical trial for treatment of chronic myelomonocytic leukemia.
On November 19, 2015, KaloBios announced that an investor group led by defendant Martin Shkreli (“Shkreli”) had acquired 70% of the Company’s outstanding shares and that Shkreli had been appointed KaloBios’s Chief Executive Officer (“CEO”) and elected Chairman of the Company’s Board.
On this news, KaloBios’s stock rose from $2.07 to close at $10.40 on November 19, 2015, an increase of $8.33, or more than 400%.
Prior to acquiring KaloBios, Shkreli co-founded and managed the now-defunct hedge fund MSMB Capital Management (“MSMB”).
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) Shkreli had misled prospective investors in MSMB with respect to the extent of the funds’ assets in order to induce them to invest; (ii) Shkreli had deceived investors in MSMB about the fund’s performance, leading them to believe they had earned profits when in fact they had lost money; (iii) Shkreli had committed securities and wire fraud in an effort to illicitly pay back MSMB investors; (iv) KaloBios lacked the capacity to meet its financial obligations and (v) as a result of the foregoing, KaloBios’s public statements were materially false and misleading at all relevant times.
On December 17, 2015, pre-market, Shkreli was arrested by federal agents on securities and wire fraud charges. Federal prosecutors charged Shkreli with misleading prospective MSMB investors with respect to the extent of the fund’s assets in order to induce them to invest, as well as deceived investors in MSMB about the fund’s performance, leading them to believe they had earned profits when in fact they had lost money; further, prosecutors charged Shkreli with seeking to pay back MSMB’s investors via a “shell game” that constituted securities and wire fraud. On this news, KaloBios’s stock fell as much as $12.04, or more than 50%, before trading was halted pre-market on December 17, 2015.
On December 29, 2015, KaloBios filed for Chapter 11 bankruptcy in United States Bankruptcy Court for the District of Delaware.