Page 398 - The Case Lab Book

On November 18th 2015 Martin Shkreli’s investor group made a 1.2 million
share purchase for a 70% stake in KaloBios Pharmaceuticals Inc.

KaloBios, a biopharma company, focused on the development of cancer-
fighting monoclonal antibody therapeutics.

Because so many investors were betting KaloBios was going to go
bankrupt, there was a huge short position in the stock. The purchase by
Shkreli’s group pushed the stock higher, forcing other investors to buy
stock to cover their short positions, thereby pushing the stock even higher.

Immediately after the acquisition Shkreli was appointed to the positions of
Chief Executive Officer and Chairman of the Board. It was further

announced that David Moradi, Tony Chase and Marek Biestek had also
been elected to the Board of Directors.

Liquidation: KaloBios

Earlier, in November (13th) the company had said that "it would wind down
operations and liquidate assets”, because it was running out of cash while

developing two potential cancer drugs, adding that any expectation of
strategic alternatives were "highly unlikely."

Share price at this time, just prior to the acquisition, was at a low of 44

cents per share. Two weeks after the acquisition the share price rose to
$45.82.

Some days after the acquisition Shkreli tweeted that he would no longer
make his shares available for short-sellers to bet against the stock, writing:

"I spoke with my counsel & advisers and decided to stop lending my $KBIO
shares out until I better understand the advantages of doing so," Shkreli