KaloBios Exodus Continues With Two More Board Member Departures

Martin Shkreli Case Holds Mirror to Pharma Business
  • Former CEO Shkreli has denied wrongdoing in fraud case
  • Fernandez, Biestek depart, leaving board with two directors

Two more KaloBios Pharmaceuticals Inc. board members resigned, continuing the exodus from the company previously run by Martin Shkreli after his arrest on securities fraud charges related to another drugmaker.

Tom Fernandez and Marek Biestek stepped down Sunday, according to a filing Monday. The biotech company didn’t give a reason for their departures and said there had been no disagreements with the company. Biestek is a childhood friend and longtime business partner of Shkreli, and Fernandez had worked with Shkreli at drugmaker Retrophin Inc. Fernandez and Biestek both also worked at MSMB Capital, one of the funds named in Shkreli’s indictment, though they haven’t been charged with any wrongdoing.

KaloBios shares plummeted 53 percent on Dec. 17 after Chief Executive Officer Shkreli, 32, was arrested in New York on charges related to Retrophin and to several hedge funds. Shkreli is accused of repeatedly losing money for investors and lying to them about it, as well as illegally taking assets from one of his companies to pay off debtors in another. Shkreli, who was fired by KaloBios after his arrest, has denied wrongdoing.

KaloBios trading was halted the day of the arrest and hasn’t resumed. Last week the company’s chief financial officer and accounting firm resigned, and KaloBios said the Nasdaq stock market plans to delist the stock.

Along with Shkreli, Tony Chase resigned from KaloBios’s board earlier this month. The departures announced Monday leave the drugmaker with two remaining directors: David Moradi and Michael Harrison.

Last month, Shkreli bought a majority interest in South San Francisco, California-based KaloBios and named himself CEO. The company’s stock was trading at less than $1 before he made the move, and it subsequently rose as high as $39.50, giving the company a market value of more than $100 million. Shkreli held more than 50 percent of the company’s shares as of Nov. 24, according to Bloomberg data.