Shkreli's KaloBios buys an old drug with eyes on a lucrative FDA voucher

KaloBios CEO Martin Shkreli

KaloBios ($KBIO), a once-doomed company brought back from the brink by biotech entrepreneur Martin Shkreli, bought the rights to an old antiparasitic drug with hopes of winning FDA approval and securing one of the agency's valuable priority review vouchers.

The drug, benznidazole, is used around the world to treat a parasitic ailment called Chagas disease. KaloBios is paying $2 million to a company called Savant in exchange for the global rights to benznidazole, which is not approved in the U.S. Savant is due as much as $20 million more tied to regulatory milestones, plus single-digit royalties.

KaloBios plans to file for the FDA's fast-track designation in hopes of scoring a quick approval for benznidazole without running any clinical trials of its own. And, because the parasitic disease is on the FDA's list of neglected tropical ailments, winning approval would grant KaloBios a tradable coupon that shortens drug reviews by four months. The market for those so-called priority review vouchers has exploded since the FDA created the program in 2007, with one selling for $350 million earlier this year.

Just last month, KaloBios was prepared to end years of clinical failure by liquidating its assets and ceasing operation. Shkreli, who came into global fame this year by jacking up the price of a different old drug, took up a controlling stake in the company and kept it in business, leading an investor syndicate that deposed KaloBios' management and put him in the CEO role. The company's share price has risen more than 15-fold since Shkreli first disclosed his investment.

KaloBios' value, Shkreli said, stems from an antibody called lenzilumab, which failed a Phase II trial in severe asthma but could have potential as a treatment for the rare cancer chronic myelomonocytic leukemia, or CMML. KaloBios is planning to enroll a Phase I trial in CMML by year's end, Shkreli has said.

Meanwhile, Shkreli remains CEO of Turing Pharmaceuticals, the privately held drug company that sparked international controversy earlier this year when it acquired a little-used drug and raised its price by about 5,000%. Shkreli has said that he has no intention of taking Turing public and dismissed the idea of merging the company with KaloBios.

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