UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 22, 2015

 

KaloBios Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-35798

 

77-0557236

(State or other Jurisdiction of Incorporation)

 

(Commission File No.)

 

(IRS Employer Identification No.)

 

442 Littlefield Avenue

 South San Francisco, CA 94080

(Address of principal executive offices, including zip code)

 

(650) 243-3100

(Registrant’s telephone number, including area code)

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o               Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On April 22, 2015 (the “Appointment Date”), the Board of Directors (the “Board”) of the Company appointed Ronald A. Martell to serve as a director of the Company, effective as of the Appointment Date. From June 2014 to January 2015, Mr. Martell served as Chief Executive Officer at Sevion Therapeutics, Inc.  From January 2012 through July 2013, Mr. Martell served as President and Chief Executive Officer and director of NeurogesX, Inc., where he sold the assets of the company to Acorda Therapeutics. From February 2010 through December 2011, Mr. Martell served as the Chief Executive Officer of Poniard Pharmaceuticals, Inc. From May 2007 through February 2010, Mr. Martell served as the President and Chief Operating Officer of Poniard Pharmaceuticals, Inc. and director from June 2006 through December 2011. From November 1998 through August 2006, Mr. Martell served as the Vice President, Marketing and then Senior Vice President, Sales, at ImClone Systems Incorporated, where he strengthened and expanded ImClone Systems commercial operations and field sales force in order to market and commercialize Erbitux ® with partners Bristol-Myers Squibb and Merck KGaA. From 1988 to 1998, Mr. Martell worked at Genentech in a variety of positions. At Genentech, Mr. Martell was responsible for the launch of Herceptin ® for metastatic HER-2 positive breast cancer and Rituxan ® for non-Hodgkin’s lymphoma. Mr. Martell began his career at Roche Pharmaceuticals.

 

In connection with his appointment to the Board, Mr. Martell will receive an annual cash retainer in the amount of $40,000 and be granted (i) an option to purchase 30,000 shares of the Company’s common stock, to vest monthly over three years and (ii) 30,000 restricted stock units (“RSUs”), which will vest and settle in three equal annual installments on the first, second and third anniversaries of the Appointment Date. There are no arrangements or understandings between Mr. Martell and any other persons pursuant to which he was elected as a director. There are no transactions between Mr. Martell and the Company that requires disclosure under Item 404(a) of Regulation S-K.

 

A copy of the press release announcing Mr. Martell’s appointment is attached hereto as Exhibit 99.1 .

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
Number

 

Description

 

 

 

10.1

 

Form of Notice of Stock Unit Award under the 2012 Equity Incentive Plan

99.1

 

Press release issued by KaloBios Pharmaceuticals, Inc. on April 22, 2015.

 

2


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

KaloBios Pharmaceuticals, Inc.

 

 

 

 

 

By:

/s/ Donald R. Joseph

 

 

Donald R. Joseph

 

 

Chief Legal Officer

 

Dated:  April 24, 2015

 

3

Exhibit 10.1

 

KALOBIOS PHARMACEUTICALS, INC.
2012 EQUITY INCENTIVE PLAN
NOTICE OF STOCK UNIT AWARD

 

You have been granted Stock Units representing shares of common stock of KaloBios Pharmaceuticals, Inc. (the “Company”) on the following terms:

 

Name of Recipient:

«Name»

 

 

Total Number of Stock Units Granted:

«TotalUnits»

 

 

Date of Grant:

«DateGrant»

 

 

Vesting Commencement Date:

«VestDay»

 

 

Vesting Schedule:

The first «CliffPercent»% of the Stock Units subject to this award will vest when you complete «CliffPeriod» months of continuous Service (as defined in the Plan) after the Vesting Commencement Date. [Thereafter, an additional «IncrementPercent»% of the Stock Units subject to this award will vest when you complete each additional «IncrementPeriod»-month period of continuous Service.] [If the Company is subject to a “Change in Control” (as defined in the Plan) before your Service terminates, then, to the extent the Stock Units have not yet become vested, they will vest with respect to 100% of the unvested shares immediately prior to consummation of the Change in Control.](1)

 

You and the Company agree that these Stock Units are granted under and governed by the terms and conditions of the Company’s 2012 Equity Incentive Plan (the “Plan”) and the Stock Unit Agreement, both of which are attached to, and made a part of, this document.

 

You further agree to accept by email all documents relating to the Plan or this award (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements).  You also agree that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract with the Company.  If the Company posts these documents on a website, it will notify you by email.

 

You further agree to comply with the Company’s Insider Trading Policy when selling shares of the Company’s common stock.

 

(1)  For outside directors only.

 


 

RECIPIENT

 

KALOBIOS PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Title:

 

 

2


 

KALOBIOS PHARMACEUTICALS, INC.
2012 EQUITY INCENTIVE PLAN

 

STOCK UNIT AGREEMENT

 

Grant of Stock Units

 

Subject to all of the terms and conditions set forth in the Notice of Stock Unit Award, this Stock Unit Agreement (the “Agreement”) and the Plan, the Company has granted to you the number of Stock Units set forth in the Notice of Stock Unit Award.

 

All capitalized terms used in this Agreement shall have the meanings assigned to them in this Agreement, the Notice of Stock Unit Award or the Plan.

 

 

 

Payment for Stock Units

 

No payment is required for the Stock Units that you are receiving.

 

 

 

Vesting

 

The Stock Units vest in accordance with the vesting schedule set forth in the Notice of Stock Unit Award. No additional Stock Units will vest after your Service has terminated for any reason.

 

 

 

Forfeiture

 

If your Service terminates for any reason, then your Stock Units will be forfeited to the extent that they have not vested before the termination date and do not vest as a result of the termination of your Service. This means that any Stock Units that have not vested under this Agreement will be cancelled immediately. You will not receive any payment for Stock Units that are forfeited. The Company determines when your Service terminates for all purposes of your Stock Units.

 

 

 

Leaves of Absence and Part-Time Work

 

For purposes of this award, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by applicable law, the Company’s leave of absence policy, or the terms of your leave. However, your Service terminates when the approved leave ends, unless you immediately return to active work.

 

 

 

 

 

If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Unit Award may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, the Company may adjust the vesting schedule so that the rate of vesting is commensurate with your reduced work schedule.

 


 

Settlement of Stock Units

 

Each Stock Unit will be settled on the first Permissible Trading Day that occurs on or after the day when the Stock Unit vests. However, each Stock Unit must be settled not later than March 15 th  of the calendar year following the calendar year in which the Stock Unit vests.

 

At the time of settlement, you will receive one Common Share for each vested Stock Unit. But the Company, at its sole discretion, may substitute an equivalent amount of cash if the distribution of stock is not reasonably practicable due to the requirements of applicable law. The amount of cash will be determined on the basis of the market value of a Common Share at the time of settlement.

 

No fractional shares will be issued upon settlement.

 

 

 

“Permissible Trading Day”

 

“Permissible Trading Day” means a day that satisfies each of the following requirements:

 

·       The Nasdaq Global Market is open for trading on that day;

 

·       You are permitted to sell Common Shares on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended;

 

·       Either (a) you are not in possession of material non-public information that would make it illegal for you to sell Common Shares on that day under Rule 10b-5 of the Securities and Exchange Commission or (b) Rule 10b5-1 of the Securities and Exchange Commission is applicable;

 

·       Under the Company’s Insider Trading Policy , you are permitted to sell Company Shares on that day; and

 

·       You are not prohibited from Company Shares on that day by a written agreement between you and the Company or a third party.

 

 

 

Section 409A

 

This paragraph applies only if the Company determines that you are a “specified employee,” as defined in the regulations under Code Section 409A at the time of your “separation from service,” as defined in Treasury Regulation Section 1.409A-1(h) and it is determined that settlement of these Stock Units is not exempt from Code Section 409A. If this paragraph applies, and the event triggering settlement is your “separation from service,” then any Stock Units that otherwise would have been settled during the first six months following your “separation from service” will instead be settled on the first business day following the earlier of (i) the six-month anniversary of your separation from service or (ii) your death.

 

Each installment of Stock Units that vests is hereby designated as a separate payment for purposes of Code Section 409A.

 

2


 

Nature of Stock Units

 

Your Stock Units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue Common Shares (or distribute cash) on a future date. As a holder of Stock Units, you have no rights other than the rights of a general creditor of the Company.

 

 

 

No Voting Rights or Dividends

 

Your Stock Units carry neither voting rights nor rights to cash dividends. You have no rights as a stockholder of the Company unless and until your Stock Units are settled by issuing Common Shares.

 

 

 

Stock Units Nontransferable

 

You may not sell, transfer, assign, pledge or otherwise dispose of any Stock Units. For instance, you may not use your Stock Units as security for a loan.

 

 

 

Beneficiary Designation

 

You may dispose of your Stock Units in a written beneficiary designation. A beneficiary designation must be filed with the Company on the proper form. It will be recognized only if it has been received at the Company’s headquarters before your death. If you file no beneficiary designation or if none of your designated beneficiaries survives you, then your estate will receive any vested Stock Units that you hold at the time of your death.

 

 

 

Withholding Taxes

 

No stock certificates (or their electronic equivalent) or cash will be distributed to you unless you have made arrangements satisfactory to the Company for the payment of any withholding taxes that are due as a result of the vesting or settlement of your Stock Units. If withholding obligations apply, you may satisfy these withholding obligations by paying cash to the Company. At the discretion of the Company, these arrangements may also include (a) payment from the proceeds of the sale of shares through a Company-approved broker, (b) withholding Common Shares that otherwise would be issued to you when the Stock Units are settled with a fair market value no greater than the minimum amount required to be withheld by law, (c) surrendering Common Shares that you previously acquired with a fair market value no greater than the minimum amount required to be withheld by law, or (d) withholding cash from other compensation. The fair market value of withheld or surrendered Common Shares, determined as of the date when taxes otherwise would have been withheld in cash, will be applied to the withholding taxes.

 

To the extent you fail to make satisfactory arrangements for the payment of any required withholding taxes, you will permanently forfeit the applicable Stock Units.

 

 

 

Restrictions on Resale

 

You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify.

 

3


 

Retention Rights

 

Your award or this Agreement does not give you the right to be retained by the Company, a Parent, Subsidiary, or an Affiliate in any capacity. The Company and its Parents, Subsidiaries, and Affiliates reserve the right to terminate your Service at any time, with or without cause.

 

 

 

Adjustments

 

In the event of a stock split, a stock dividend or a similar change in Company stock, the number of your Stock Units will be adjusted accordingly, as the Company may determine pursuant to the Plan.

 

 

 

Effect of Significant Corporate Transactions

 

If the Company is a party to a merger, consolidation, or certain change in control transactions, then your Stock Units will be subject to the applicable provisions of Article 9 of the Plan, provided that any action taken must either (a) preserve the exemption of your Stock Units from Code Section 409A or (b) comply with Code Section 409A.

 

 

 

Recoupment Policy

 

This award, and the Common Shares acquired upon settlement of this award, shall be subject to any Company recoupment or clawback policy in effect from time to time.

 

 

 

Applicable Law

 

This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions).

 

 

 

The Plan and Other Agreements

 

The text of the Plan is incorporated in this Agreement by reference.

 

The Plan, this Agreement and the Notice of Stock Unit Award constitute the entire understanding between you and the Company regarding this award. Any prior agreements, commitments or negotiations concerning this award are superseded. This Agreement may be amended only by another written agreement between the parties.

 

BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE
TERMS AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.

 

4

Exhibit 99.1

 

 

442 Littlefield Avenue

 

South San Francisco, CA 94080

 

 

KaloBios Elects Ronald A. Martell to Board of Directors

 

SOUTH SAN FRANCISCO, CA (April 22, 2015): KaloBios Pharmaceuticals, Inc. (Nasdaq: KBIO) today announced the election of experienced biopharmaceutical industry executive, Ronald A. Martell, to the KaloBios Board of Directors.

 

“Ron is a seasoned biotechnology industry executive with significant expertise in clinical development companies, garnered from numerous leadership positions in the life sciences industry at both large pharmaceutical and biotechnology companies,” said Ted W. Love, Chairman of the KaloBios Board of Directors. “We are very excited to have Ron joining the board at this time as his extensive knowledge and experience in the development and commercialization of oncology therapeutics makes him an excellent resource for KaloBios as the company continues to refine its strategic focus in oncology.”

 

Mr. Martell has more than 25 years’ experience building and managing unique businesses in the biotech industry, and most recently served as Chief Executive Officer at Sevion Therapeutics, prior to which he held similar roles at NeurogesX and at Poniard Pharmaceuticals.  Earlier in his career Mr. Martell served as Senior Vice President of Commercial Operations at ImClone Systems, where he built ImClone Systems’ worldwide commercial operations and field sales force to market and commercialize Erbitux® with partners Bristol-Myers Squibb and Merck KGaA. Prior to joining ImClone Systems, Mr. Martell worked for more than 10 years at Genentech in a variety of leadership positions, the last of which was Group Manager, Oncology. At Genentech, he was responsible for building the company’s oncology franchise including the launch of Herceptin® for metastatic HER-2 positive breast cancer and Rituxan® for non-Hodgkin’s lymphoma.  Mr. Martell began his career at Roche Pharmaceuticals.

 

About KaloBios

 

KaloBios Pharmaceuticals, Inc. is developing a portfolio of proprietary first-in-class monoclonal antibodies designed to treat severe life-threatening or debilitating diseases for which there is an unmet medical need, with a focus on cancer.

 

Currently, KaloBios is focused on the advancement of the following oncology programs in clinical development:

 

·                   KB004 is an anti-EphA3 mAb with the potential to treat hematologic malignancies and solid tumors. KaloBios is running an ongoing Phase 1/2 study evaluating KB004 in hematologic malignancies. The Phase 1 dose escalation portion of the study in subjects with hematologic malignancies is fully enrolled, and KaloBios has initiated the Phase 2 expansion portion of the study. The Phase 2 study, which is screening patients for EphA3 expression, is currently focused on patients with myelofibrosis (MF) and myelodysplastic syndrome (MDS). KaloBios is evaluating other potential oncology indications for KB004, including additional hematologic malignancies as well as solid tumors.

 


 

·                   KB003 is an anti-GM-CSF mAb that KaloBios intends to evaluate in oncology indications where GM-CSF may play a key role such as chronic myelomonocytic leukemia (CMML). KaloBios is working with clinical investigators to commence clinical evaluation of KB003 in this patient population by the second half of 2015.

 

All of the company’s antibodies were generated using its proprietary Humaneered ®  technology, a method that converts nonhuman antibodies (typically mouse) into recombinant antibodies that have a high binding affinity to their target and are designed for chronic therapeutic use. The company believes that antibodies produced using its Humaneered ®  technology offer important clinical and economic advantages over antibodies generated by other methods in terms of high binding affinity, high manufacturing yields, and minimal to no immunogenicity (inappropriate immune response) upon repeat administration in humans.

 

For more information on KaloBios Pharmaceuticals, please visit our web site at http://www.kalobios.com.

 

Forward Looking Statements

 

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and statements regarding the company’s clinical development of KB004 and KB003. Forward-looking statements reflect management’s current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such statements are reasonable, they give no assurance that such expectations will prove to be correct and you should be aware that actual results could differ materially from those contained in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties including, but not limited to, the potential timing and outcomes of clinical studies of KB004 undertaken now or in the future; the ability of the company to timely source adequate supply of its development products from third party manufacturers on whom the company depends; the potential, if any, for future development of KB003 and KB001-A; the company’s limited cash reserves and its ability to obtain additional capital on acceptable terms, or at all, including the additional capital which will be necessary to complete the clinical trials that the company has initiated or plans to initiate; the company’s ability to successfully progress, partner or complete further development of its programs; the uncertainties inherent in clinical testing; the timing, cost and uncertainty of obtaining regulatory approvals; the company’s ability to protect the company’s intellectual property; competition; changes in the regulatory landscape or the imposition of regulations that affect the company’s products; and other factors listed under “Risk Factors” in the company’s most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 6, 2014, the Annual Report on Form 10-K filed on March 16, 2015, and the company’s other filings with the Securities and Exchange Commission.

 

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this release. The company has no obligation, and expressly disclaims any obligation to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise.

 

For more information, visit http://www.kalobios.com.

 

# # #

 

Contact:

 

Herb Cross
Chief Financial Officer
KaloBios Pharmaceuticals, Inc.
(650) 243-3114

ir@kalobios.com

 

Media Contact:

 

Joan E. Kureczka
Kureczka/Martin Associates
Tel:  (415) 821-2413

Mobile:  (415) 690-0210
Joan@Kureczka-Martin.com