Martin Shkreli, who was arrested last week on securities fraud charges, has been ousted from his second pharmaceutical company.
KaloBios Pharmaceuticals, a California biotechnology company that Mr. Shkreli gained control of in November, announced on Monday that he had been terminated as chief executive and had resigned from his seat on the board on Thursday, the day he was arrested.
KaloBios, which had been in severe financial straits before Mr. Shkreli's involvement, did not name a replacement, not even on an interim basis.
Last week, Mr. Shkreli was removed as chief executive of Turing Pharmaceuticals, a privately held company in New York that he co-founded late last year.
The charges against Mr. Shkreli predate his management of either Turing or KaloBios.
He is accused of using money from his first pharmaceutical company, Retrophin, to pay off money-losing investors in hedge funds he operated. He is also accused of misleading investors in the hedge funds.
Mr. Shkreli, 32, who is free on $ 5 million bail, maintains that he is not guilty and that he will be vindicated. Since his release, he has live-streamed himself playing online chess and guitar on YouTube. On Monday morning, he tweeted that he had regained control of his Twitter account, which had been reportedly hacked over the weekend.
KaloBios, a publicly traded company, announced last month that it was planning to go out of business. Some of its experimental drugs had not worked in clinical trials, and it was running out of cash and options.
Within days, Mr. Shkreli led an investor group that scooped up 70 percent of KaloBios's shares on the open market, at prices generally under $ 2 a share. Once his involvement became known, shares shot up briefly to more than $ 40 each. Trading in the stock has been halted since Thursday. The last quoted price was $ 23.59 a share.
That Mr. Shkreli was terminated by KaloBios so quickly after his arrest was somewhat surprising since the KaloBios board of directors now consists solely of Mr. Shkreli's supposed allies. One board member who came in with Mr. Shkreli, Tony Chase, also resigned, the company said.
Given its precarious situation before Mr. Shkreli came in, KaloBios might be in jeopardy, though Mr. Shkreli did organize a private funding round for it that raised $ 8.8 million.
The private placement, in which outside investors paid $ 24.855 per share, was consummated on Wednesday, one day before Mr. Shkreli was arrested, according to a regulatory filing. It is not clear if the investors will now try to rescind the deal, especially if shares of KaloBios plunge when trading resumes.
Mr. Shkreli said he saw promise in one of KaloBios's drug candidates as a possible treatment for a rare form of leukemia. But Bloomberg News reported on Sunday that at least two of the medical centers participating in a clinical trial of that drug had suspended their work after Mr. Shkreli's arrest.
An agreement KaloBios made to license a drug for Chagas disease might also be in jeopardy now, since the deal had not closed. A spokeswoman for Savant Neglected Diseases, which licensed the rights to the drug to KaloBios, declined to comment.
Mr. Shkreli had said that KaloBios would be able to get the Chagas drug approved for use in the United States without having to do clinical trials and then would be able to charge tens of thousands of dollars for the treatment. He said KaloBios would also be eligible to receive a voucher from the Food and Drug Administration that could be sold to another drug maker for hundreds of millions of dollars.
The plan raised alarm among doctors who treat Chagas disease. They said the drug, benznidazole, costs only $ 50 to $ 100 for a course of treatment in Latin America, where the disease is most common. In the United States, the drug is given to patients free of charge by the Centers for Disease Control and Prevention on an experimental basis. About 300,000 Americans, virtually all of them immigrants from Latin America, have Chagas disease, which is caused by a parasite and can lead to severe heart and digestive tract damage decades after the initial infection.
The plans for the Chagas disease drug called to mind what made Mr. Shkreli the target of public outrage to begin with. In August, his other company, Turing, acquired the American rights to a 62-year-old drug used to treat a different parasitic infection, toxoplasmosis, and immediately raised the price more than 50-fold, to $ 750 a pill.
Turing is now being run by an interim chief executive, Ron Tilles. Investors in Turing said that they expected cuts in staff and of at least some drug development programs because Turing needed to trim expenses.
The judge presiding over the case against Mr. Shkreli, Kiyo Matsumoto of Federal District Court in Brooklyn, granted a request to allow Evan Greebel, a co-defendant of Mr. Shkreli, to travel to Cancun, Mexico, on Wednesday for a long-planned vacation with his family.
Mr. Greebel, who was also arrested on Thursday, was an outside lawyer for Mr. Shkreli's first drug company, Retrophin. Mr. Greebel is now a partner in the law firm Kaye Scholer and helped handle the legal matters for the recent fund-raising effort by KaloBios.
Mr. Greebel, 42, is free on $ 1 million bail secured by his home in Scarsdale. His travel is generally restricted to the Southern and Eastern Districts of New York, as is Mr. Shkreli's travel. A letter to the judge from Mr. Greebel's lawyer said the trip would help "preserve as great a sense of normalcy as possible" for Mr. Greebel's three young children. The letter said prosecutors would not object as long as the confession of judgment on his house was filed before his departure.
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