Investor Sued Former Martin Shkreli's Pharmaceutical Company for $5.4 Million

January 12
8:56 AM 2016

Group of investors whose money was used by Martin Shkreli to acquire KaloBios Pharmaceuticals Inc. sued the company to return their money. The investors filed a court file on Monday, January 11.

The investors were brought in by Martin Shkreli in November 2015 to acquire majority share of KaloBios Pharmaceuticals, a biopharmaceutical company that research in specific drugs for cancer patient. Following the purchase, Martin Shkreli owned 47 percent of the company, while the groups of five investor owned 26 percent. Shkreli was named CEO after the acquisition.

According to Reuters, the group of investors consist of three individuals and two funds. All of them: Gregory Rea, Edward Painter, Nancy Retzlaff,RTAT LLC, and Armistice Capital Master Fund Ltd have filed a court paper to U.S. Bankruptcy Court in Wilmington, Delaware to sue KaloBios for returning their money.

In the paper, the investor said that KaloBios lied when it told them it and its officers were not subject to any pending investigation that could have a material impact on its business. "KaloBios, through Shkreli, its outside counsel and potentially others, knew or should have known about the FBI investigation, the gravity of the potential charges, and the fact that Shkreli's and its outside counsel's arrest was imminent."

On the other hand, KaloBios said the investors were all friends and associates of Shkreli. They are well aware and have a full knowledge of the investigation of Shkreli.

Federal authorities arrested Martin Shkreli because of alleged Ponzi Scheme in MSMB Capital Management. SFist reported that per the indictment, Shkreli is faced with seven counts of villainy including two counts of securities fraud, two counts of conspiracy to commit securities fraud, and three counts of conspiracy to commit wire fraud. If convicted, Shkreli could do 20 years I prison.

KaloBios fired Martin Shkreli as CEO after the arrest and immediately filed for bankruptcy. Yesterday, according to Market Watch, Kalo Bios Pharmaceutical announced Dr. Cameron Durrant as its chairman of the board. KaloBios board elected the former physician to replace Shkreli on January 7.

The new CEO of KaloBios Pharmaceutical, Cameron Durrant is famous figure in pharmaceuticals industry as a company builder and turnaround specialist. He is the founder of PediatRX Inc in 2010 and developing Granisol, a medicine to prevent nausea and vomiting associated with emetogenic cancer therapy. Previously, Durrant served as senior executive position for private and public pharmaceutical and biotech companies in Merck, Pharmacia, Prism Pharmaceuticals, Johnson & Johnson, and GlaxoSmithKline.

Cameron Durrant first duty in in KaloBios Pharmeaceuticals is to deal legal charges from its investor related to the notorious Martin Shkreli.

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