KaloBios offered financing in plan to buy drug for Chagas disease

Brooklyn

KALOBIOS Pharmaceuticals Inc, the drug company that plunged into bankruptcy after the arrest of its former chief executive officer Martin Shkreli, is getting some help for its plan to buy a treatment for Chagas disease.

Hedge fund Black Horse Capital LP offered to buy at least 40 per cent of the company for US$10 million on the condition that Shkreli holds no more than 20 per cent of KaloBios' voting shares, according to a filing on Thursday in Delaware bankruptcy court. Shkreli had owned about 50 per cent of the stock before the bankruptcy. At least a substantial portion of his stake was used to secure his US$5 million bail after he was charged with securities fraud in December.

The proposal, which must be approved by a judge, would allow KaloBios to buy rights to the drug benznidazole from Savant Neglected Diseases LLC. Under conditions of the deal, KaloBios must have US$10 million in unencumbered cash when it exits bankruptcy protection. Black Horse's offer would represent the opening bid in a court-supervised auction for a stake in the drugmaker and the right to fund the reorganisation. Bid procedures go up for court approval on Marc…