Monday, February 2, 2015

Is KaloBios (KBIO) putting itself up for sale?

KaloBios filed the below 8K tonight as the company reels from the trial failure last month of its lead compound KB001-A.  The CEO "retired" shortly after the announcement and it looks like they have lead off their Chief Medical Officer along with 20% of their staff.

Is a sale or reverse merger in the works?  The company has one other product in clinical trials for various cancers but the same compound failed trials in other indications so I feel like they are grabbing for straws at this point on the clinical front.  What they do have is over $48 million in cash as of the end of Q32014, a Net Operating Loss of $168 million, and a market cap of under $13 million.  Between the recent senior leadership exits and the lack of a pipeline, I could see someone buying them for their NOL and/or early pipeline or a private company performing a reverse merger to obtain a Nasdaq listing and liquidity.

I've picked up around 60,000 shares since the recent trial failure in hopes for a quick sale.

Item 2.05      Costs Associated with Exit or Disposal Activities.

On January 6, 2015, KaloBios Pharmaceuticals, Inc. (the “ Company ”) announced that its Phase 2 study of KB001-A for Pseudomonas aeruginosa infections in cystic fibrosis patients failed to meet its primary endpoint, that it would discontinue further development of KB001-A and that it would focus resources and efforts on advancing its oncology programs.

On January 27, 2015, the Board of Directors of the Company approved a restructuring plan involving reductions in headcount in connection with the change in strategic focus. The positions eliminated, which together represent more than 20% of the Company’s workforce, included the Chief Medical Officer position held by Nestor A. Molfino, M.D., a named executive officer of the Company. Dr. Molfino’s employment will be terminated effective as of February 3, 2015.

The Company expects to substantially complete the restructuring efforts in, and related charges will be incurred through, the second quarter of 2015. The Company estimates that it will incur restructuring charges consisting of cash expenses for one-time termination benefits of between $1.6 million and $1.8 million, when combined with expenses associated with the recent retirement of the Company’s former President & Chief Executive Officer described in the Company’s Form 8-K filed on January 8, 2015.

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