Key points:
- Kaleido Biosciences stock rallied 140%+ in two days despite liquidation.
- The firm is set to cease operations after a strategic review of its business.
- It makes no sense to buy shares in a business going under.
The Kaleido Biosciences Inc (NASDAQ: KLDO) stock price soared 140%+ in two days despite the company announcing that it was ceasing operations after a strategic review revealed no viable transactions.
Also read: The Best Biotech Penny Stocks Under $5 To Buy Right Now.
The biotech company decided to end its operations after hiring professional advisors, including business strategy consultants and an investment banker, to advise it on the way forward. The firm then decided to start a formal wind-down process.
Kaleido Biosciences is a clinical-stage company focused on creating treatments for inflammatory diseases and conditions and has a drug pipeline focused on ulcerative colitis (UC), psoriasis, COPD and soldi tumor combinations.
Only one of the company’s drug treatments was in clinical trials, and the firm had presented topline data from the phase I clinical trial earlier in January 2022.
The data was promising based on a quote from Kaleido’s CEO, Dan Menichella, “The data show the direct effect of administering KB295 includes enriching diverse, beneficial commensal microbiota and restoring balanced SCFA production while depleting harmful pathobionts to suppress inflammation and restore gut homeostasis,”
Therefore, investors were shocked to hear that the company was winding down its operations shortly after presenting the positive phase I clinical trial data, having transformed into a clinical-stage company.
Trading in Kaleiod Biosciences shares was halted briefly but resumed trading and has attracted significant attention from buyers in the last two days. Over 10.79 million shares had changed hands at the time of writing, and KLDO stock was trading 40% higher.
From a savvy investor's perspective, buying shares in a company that is in the process of liquidating its business is not a smart move unless there is a solid chance that the company can be saved.
Therefore, I wouldn’t touch Kaleido’s shares with a ten-foot pole until we are sure that the company will remain in business. However, as things stand, Kaleido Biosciences shares will be delisted from the Nasdaq on April 28, 2022, unless the situation changes.
The company has terminated the employment of all its executive employees and will terminate all its other employees as part of the cessation of operations.
*This is not investment advice. Always do your due diligence before making investment decisions.
Kaleido Biosciences stock price.
Kaleido Biosciences' stock price rallied 75% yesterday and extended its rally by 40.9% today.
0.1774 to 0.4336
