The company terminated Martin Shkreli, seen here in 2017, shortly after his 2015 arrest on unrelated securities-fraud charges.
Photo: Seth Wenig/Associated PressShares of Humanigen HGEN 30.15% Inc., a biotech company briefly run by disgraced pharmaceutical executive Martin Shkreli, jumped more than 50% on the over-the-counter market Monday on results from the first human study of its experimental coronavirus-related drug.
The drugmaker is one of a bevy of biotech and pharmaceutical companies world-wide whose share prices have reacted sharply to developments related to the potential progress toward a Covid-19 vaccine or treatment. Such news has led to sharp moves even among big drug companies, contributing to some experienced health-care investors placing only cautious bets on likely winners.
Humanigen’s lenzilumab is a monoclonal antibody therapy that aims to suppress cytokine storms, or a hyperactive immune response that is increasingly believed to be what ultimately kills many Covid-19 patients rather than the virus itself.
Humanigen on Monday said 11 of 12 “high risk” Covid-19 patients with severe pneumonia given lenzilumab had experienced improvement, based on a Mayo Clinic study that included Humanigen executives among its authors. The median age of the patients was 65 and each had at least one “comorbidity associated with poor outcomes,” such as diabetes and underlying lung disease, the study said.
Lenzilumab’s effectiveness in treating Covid-19 is far from proven. The small study hasn’t been peer reviewed and had no control group. Additionally, it is common for drug candidates to fizzle out in larger trials after promising earlier results.
Humanigen Chief Executive Cameron Durrant said data related to compassionate use—or the use of drugs unapproved by the Food and Drug Administration granted individually to very sick patients by the agency—always had limitations. But, “We would hope that we’re able to bring a valuable treatment to patients in the near term,” he said.
Previously known as KaloBios Pharmaceuticals, Humanigen isn’t listed on any stock exchange. It instead trades in the lightly regulated over-the-counter market ever since its January 2016 delisting by the Nasdaq Stock Market.
That delisting occurred in part because of Mr. Shkreli’s December 2015 arrest on securities-fraud charges unrelated to KaloBios.
Mr. Shkreli, widely known as “Pharma Bro”, gained notoriety in 2015 for raising the price of an antiparasitic drug from $13.50 a pill to $750 in his role as chief executive of another company, Turing Pharmaceuticals. He is serving a seven-year prison sentence after a Brooklyn federal jury in 2017 convicted him of securities fraud involving hedge funds he managed and a company he founded.
Shortly before his arrest, Mr. Shkreli led an investor group that acquired a majority stake in the struggling KaloBios.
KaloBios fired him after he was arrested. It filed for bankruptcy protection soon after. KaloBios bought out Mr. Shkreli’s stake, hired new leaders, exited bankruptcy with new backers in 2016 and renamed itself Humanigen.
Mr. Durrant said Mr. Shkreli had no affiliation with Humanigen and that Mr. Shkreli’s “unfortunate history” with the company had spanned roughly three weeks. Mr. Durrant said he hoped the company would apply for listing on a national securities exchange soon.
A group of investors including Venrock Healthcare Capital Partners, Citadel’s Surveyor Capital unit and Valiant Capital Management invested nearly $72 million in Humanigen in a so-called private investment in public equity, or PIPE deal, announced June 2. Mr. Durrant said the capital is meant in part to build capacity for lenzilumab production in the event it receives approval from the FDA.
Humanigen shares closed at $4.08 on Friday, up 72.6% from their $1.12 close on June 1. The company had a market capitalization of about $852 million as of Friday’s close.
—Peg Brickley contributed to this article.
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