☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934 |
Delaware
|
77-0557236
|
|
(State or other jurisdiction of
|
(IRS Employer
|
|
incorporation)
|
Identification No.)
|
Large accelerated filer
☐
|
Accelerated filer
☐
|
|
Non-accelerated filer
☐
(Do not check if a smaller reporting company) |
Smaller reporting company
☒
|
Page
|
|||
3 | |||
3 | |||
3 | |||
4 | |||
5 | |||
6 | |||
20 | |||
26 | |||
28 | |||
28 | |||
29 |
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
6,577
|
$
|
8,431
|
||||
Prepaid expenses and other current assets
|
1,696
|
1,963
|
||||||
Total current assets
|
8,273
|
10,394
|
||||||
Property and equipment, net
|
170
|
288
|
||||||
Restricted cash
|
50
|
193
|
||||||
Other assets
|
-
|
271
|
||||||
Total assets
|
$
|
8,493
|
$
|
11,146
|
||||
|
||||||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
3,211
|
$
|
-
|
||||
Accrued compensation
|
32
|
-
|
||||||
Other accrued liabilities
|
75
|
-
|
||||||
Total current liabilities
|
3,318
|
-
|
||||||
Liabilities subject to compromise
|
4,867
|
5,414
|
||||||
Total liabilities
|
8,185
|
5,414
|
||||||
|
||||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.001 par value: 85,000,000 shares authorized at March 31,
2016 and December 31, 2015; 4,450,994 shares issued and outstanding at
March 31, 2016 and December 31, 2015
|
4
|
4
|
||||||
Additional paid-in capital
|
219,321
|
219,319
|
||||||
Accumulated deficit
|
(219,017
|
)
|
(213,591
|
)
|
||||
Total stockholders’ equity
|
308
|
5,732
|
||||||
Total liabilities and stockholders’ equity
|
$
|
8,493
|
$
|
11,146
|
Three Months Ended March 31,
|
||||||||
2016 |
2015
|
|||||||
Operating expenses:
|
||||||||
Research and development
|
$
|
1,704
|
$
|
5,905
|
||||
General and administrative
|
1,205
|
3,437
|
||||||
Total operating expenses
|
2,909
|
9,342
|
||||||
Loss from operations
|
(2,909
|
)
|
(9,342
|
)
|
||||
Other (expense) income:
|
||||||||
Interest expense
|
-
|
(280
|
)
|
|||||
Interest income
|
-
|
16
|
||||||
Other expense, net
|
-
|
(16
|
)
|
|||||
Reorganization items, net
|
(2,517
|
)
|
-
|
|||||
Net loss
|
(5,426
|
)
|
(9,622
|
)
|
||||
Other comprehensive income:
|
||||||||
Net unrealized gains on marketable securities
|
-
|
6
|
||||||
Comprehensive loss
|
$
|
(5,426
|
)
|
$
|
(9,616
|
)
|
||
Basic and diluted net loss per common share
|
$
|
(1.22
|
)
|
$
|
(2.33
|
)
|
||
Weighted average common shares outstanding used to
|
||||||||
calculate basic and diluted net loss per common share
|
4,450,994
|
4,124,022
|
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Operating activities:
|
||||||||
Net loss
|
$
|
(5,426
|
)
|
$
|
(9,622
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
33
|
48
|
||||||
Gain on lease termination
|
(227
|
)
|
-
|
|||||
Noncash interest expense
|
-
|
56
|
||||||
Financing derivative
|
-
|
3
|
||||||
Amortization of premium on marketable securities
|
-
|
80
|
||||||
Stock based compensation expense
|
2
|
305
|
||||||
Modification of stock options related to executive retirement
|
-
|
389
|
||||||
Modification of stock options related to restructuring activities
|
-
|
414
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
538
|
583
|
||||||
Accounts payable
|
3,211
|
(965
|
)
|
|||||
Accrued compensation
|
32
|
(133
|
)
|
|||||
Accrued research and clinical liabilities
|
-
|
(159
|
)
|
|||||
Other liabilities
|
75
|
(13
|
)
|
|||||
Deferred rent
|
-
|
(1
|
)
|
|||||
Liabilities subject to compromise
|
(235
|
)
|
-
|
|||||
Net cash used in operating activities
|
(1,997
|
)
|
(9,015
|
)
|
||||
Investing activities:
|
||||||||
Purchase of marketable securities
|
-
|
(3,703
|
)
|
|||||
Proceeds from maturities of marketable securities
|
-
|
15,822
|
||||||
Purchases of property and equipment
|
-
|
(108
|
)
|
|||||
Changes in restricted cash
|
143
|
-
|
||||||
Net cash provided by investing activities
|
143
|
12,011
|
||||||
Financing activities:
|
||||||||
Principal payments under notes payable
|
-
|
(1,295
|
)
|
|||||
Net cash used infinancing activities
|
-
|
(1,295
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(1,854
|
)
|
1,701
|
|||||
Cash and cash equivalents, beginning of period
|
8,431
|
10,923
|
||||||
Cash and cash equivalents, end of period
|
$
|
6,577
|
$
|
12,624
|
||||
Supplemental cash flow disclosure:
|
||||||||
Cash paid for interest
|
$
|
-
|
$
|
233
|
· | Pursuant to the SPA and in repayment of its obligations under the Credit Agreement, the Company issued an aggregate of 9,497,515 shares of its common stock to the DIP Lenders. |
· | The Company became obligated to issue 327,608 shares of common stock to the plaintiffs in litigation related to the Company’s 2015 private financing transaction in accordance with the settlement stipulation discussed in Note 13 below. The Company recorded an obligation in stockholders’ equity to issue the related shares and recorded the related expense of approximately $1.5 million as of December 31, 2015. |
· | The Company reserved 300,000 shares of common stock for issuance to the plaintiffs in class action litigation related to the events surrounding the Company’s former Chairman and Chief Executive Officer. The Company recorded an obligation in stockholders’ equity to issue the related shares and recorded the related expense of approximately $1.3 million as of December 31, 2015. |
· | The Company became obligated to issue 3,750 shares of common stock to a former director in satisfaction of claims against the Company. The Company recorded an obligation in stockholders’ equity to issue the related shares and recorded the related expense of approximately $16,000 as of December 31, 2015. |
· | The Company reserved for issuance shares of common stock in an amount as yet to be determined in connection with the settlement of certain other claims and interests as set forth in the Plan. As of March 31, 2016, management does not believe the issuance of additional common stock for any such claims is probable. As such, no accrual has been made in the Condensed Consolidated Financial Statements. |
· | The Company issued promissory notes in an aggregate principal amount of approximately $1.2 million to certain vendors in accordance with the Plan. The notes are unsecured, bear interest at 10% per annum and will be due and payable in full, including principal and accrued interest, on June 30, 2019. |
March 31,
|
December 31,
|
|||||||
(in thousands)
|
2016
|
2015
|
||||||
Litigation accrual expense
|
$
|
500
|
$
|
500
|
||||
Accounts payable and accrued liabilities
|
4,367
|
4,570
|
||||||
Accrued compensation
|
-
|
32
|
||||||
Deferred rent
|
-
|
312
|
||||||
Total liabilities subject to compromise
|
$
|
4,867
|
$
|
5,414
|
Three months ended
|
||||
(in thousands)
|
March 31,2016
|
|||
Legal fees
|
$
|
2,516
|
||
Professional fees
|
228
|
|||
Gain on lease termination
|
(227
|
)
|
||
Total reorganization items, net
|
$
|
2,517
|
As of March 31,
|
||||||||
2016
|
2015
|
|||||||
Options to purchase common stock
|
397,988
|
502,602
|
||||||
Restricted stock units
|
3,750
|
—
|
||||||
Warrants to purchase common stock
|
131,193
|
11,067
|
||||||
532,931
|
513,669
|
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
||||||||||||||
(in thousands)
|
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Money market funds
|
$
|
245
|
$
|
—
|
$
|
—
|
$
|
245
|
||||||||
Total investments
|
$
|
245
|
$
|
—
|
$
|
—
|
$
|
245
|
||||||||
Reported as:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
195
|
||||||||||||||
Restricted cash, long-term
|
50
|
|||||||||||||||
Total investments
|
$
|
245
|
Gross
|
Gross
|
|||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
||||||||||||||
(in thousands)
|
Cost
|
Gains
|
Losses
|
Fair Value
|
||||||||||||
Money market funds
|
$
|
196
|
$
|
—
|
$
|
—
|
$
|
196
|
||||||||
Total investments
|
$
|
196
|
$
|
—
|
$
|
—
|
$
|
196
|
||||||||
Reported as:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
3
|
||||||||||||||
Restricted cash, long-term
|
193
|
|||||||||||||||
Total investments
|
$
|
196
|
Fair Value Measurements as of
|
|||||||||||||||
March 31, 2016
|
|||||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||
Investments:
|
|||||||||||||||
Money market funds
|
$
|
245
|
$
|
—
|
$
|
—
|
$
|
245
|
|||||||
Total assets measured at fair value
|
$
|
245
|
$ |
$
|
—
|
$
|
245
|
Fair Value Measurements as of
|
|||||||||||||||
December 31, 2015
|
|||||||||||||||
(in thousands)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||
Investments:
|
|||||||||||||||
Money market funds
|
$
|
196
|
$
|
—
|
$
|
—
|
$
|
196
|
|||||||
Total assets measured at fair value
|
$
|
196
|
$
|
—
|
$
|
—
|
$
|
196
|
Fair Value Measurements
of Level 3 Liabilities
|
||||
(in thousands)
|
||||
Balance as of December 31, 2014
|
$
|
89
|
||
Loss on re-measurement of the financing derivative liability
|
3
|
|||
Balance as of March 31, 2015
|
92
|
|||
Loss on re-measurement of the financing derivative liability
|
135
|
|||
Balance as of June 30, 2015
|
227
|
|||
Loss on re-measurement of the financing derivative liability
|
114
|
|||
Balance as of September 30, 2015
|
341
|
|||
Loan payoff
|
(341
|
)
|
||
Balance as of December 31, 2015 and March 31, 2016
|
$
|
—
|
Weighted
|
||||||||
Average
|
||||||||
Exercise
|
||||||||
Options
|
Price
|
|||||||
Outstanding at December 31, 2015
|
465,401
|
$
|
19.29
|
|||||
Granted
|
—
|
—
|
||||||
Exercised
|
—
|
—
|
||||||
Cancelled (forfeited)
|
(3,416
|
)
|
5.86
|
|||||
Cancelled (expired)
|
(63,997
|
)
|
33.51
|
|||||
Outstanding at March 31, 2016
|
397,988
|
$
|
17.12
|
Three Months
|
|||||||
Ended March 31,
|
|||||||
(in thousands)
|
2016
|
2015
|
|||||
General and administrative
|
$
|
1
|
$
|
142
|
|||
Research and development
|
1
|
163
|
|||||
$
|
2
|
$
|
305
|
(in thousands)
|
Contract
termination costs - R&D |
Salaries and
benefits - R&D |
Salaries and
benefits - G&A |
Total
|
||||||||||||
Balance as of December 31, 2014
|
$
|
1,185
|
$
|
—
|
$
|
—
|
$
|
1,185
|
||||||||
Accrued
|
—
|
522
|
82
|
604
|
||||||||||||
Paid
|
(479
|
)
|
(257
|
)
|
—
|
(736
|
)
|
|||||||||
Balance as of March 31, 2015
|
706
|
265
|
82
|
1,053
|
||||||||||||
Accrued
|
—
|
57
|
122
|
179
|
||||||||||||
Paid
|
(135
|
)
|
(142
|
)
|
—
|
(277
|
)
|
|||||||||
Balance as of June 30, 2015
|
571
|
180
|
204
|
955
|
||||||||||||
Accrued
|
—
|
—
|
—
|
—
|
||||||||||||
Adjustments
|
(78
|
)
|
—
|
—
|
(78
|
)
|
||||||||||
Paid
|
(493
|
)
|
(148
|
)
|
(136
|
)
|
(777
|
)
|
||||||||
Balance as of September 30, 2015
|
—
|
32
|
68
|
100
|
||||||||||||
Accrued
|
—
|
588
|
807
|
1,395
|
||||||||||||
Paid
|
—
|
(620
|
)
|
(864
|
)
|
(1,484
|
)
|
|||||||||
Balance as of December 31,2015
|
—
|
—
|
11
|
11
|
||||||||||||
Accrued
|
—
|
—
|
—
|
—
|
||||||||||||
Paid
|
—
|
—
|
—
|
—
|
||||||||||||
Balance as of March 31, 2016
|
$
|
—
|
$
|
—
|
$
|
11
|
$
|
11
|
· | $3,000,000 (the “Initial Payment”) payable as soon as practicable but in no event later than the Company emerging from its Chapter 11 bankruptcy pursuant to a plan of reorganization (the “Bankruptcy Exit”); |
· | a five-year warrant from the date of the Bankruptcy Exit to purchase up to 200,000 shares of common stock at a per share price of $2.25, exercisable for 25% of the shares immediately and exercisable for the remaining shares upon reaching certain milestones related to regulatory approval of the Compound ; and |
· | certain additional payments to be further specified in the definitive agreements. |
· | purchasing any stock or assets of the Company; |
· | participating in any proposal for any merger, tender offer or other business combination, or similar extraordinary transaction involving the Company or any of its subsidiaries; |
· | seeking to control or influence the management, the Company’s Board or the policies of the Company; or |
· | submitting any proposal to be considered by the stockholders of the Company. |
· | the uncertainties inherent in the development and launch of any new pharmaceutical product; |
· | our ability to successfully and timely complete clinical trials for our drug candidates in clinical development; |
· | our ability to obtain the necessary U.S. and international regulatory approvals for our drug candidates and to qualify for or benefit from various regulatory incentives; |
· | the scope and validity of intellectual property and other competitive protection for our drug candidates; |
· | our ability to identify, in-license and acquire additional product candidates or to form partnerships for the sale, licensing, collaborative development or marketing of our existing product candidates; |
· | our ability to maintain or engage third-party manufacturers to manufacture, supply, store and distribute supplies of our drug candidates for our clinical trials; |
· | our lack of profitability and the need for additional capital to operate our business; and |
· | the success of any product. |
· | expenses incurred under agreements with contract research organizations, investigative sites, and consultants that conduct our clinical trials and a substantial portion of our preclinical activities; |
· | the cost of acquiring and manufacturing clinical trial and other materials; and |
· | other costs associated with development activities, including additional studies. |
For the Period from
|
||||||||||||
Three Months Ended March 31,
|
January 1, 2008 to
|
|||||||||||
(In thousands)
|
2016
|
2015
|
March 31, 2016
|
|||||||||
External costs:
|
||||||||||||
KB001
|
$
|
5
|
$
|
1,014
|
$
|
33,761
|
||||||
Lenzilumab
|
77
|
313
|
40,580
|
|||||||||
Ifabotuzumab
|
115
|
2,011
|
36,954
|
|||||||||
Benznidazole
|
847
|
-
|
847
|
|||||||||
Internal costs
|
660
|
2,567
|
74,742
|
|||||||||
Total research and development
|
$
|
1,704
|
$
|
5,905
|
$
|
186,884
|
Three Months Ended March 31,
|
Increase/ (Decrease)
|
|||||||||||||||
(in thousands)
|
2016
|
2015
|
in thousands
|
%
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
$
|
1,704
|
$
|
5,905
|
$
|
(4,201
|
)
|
-71
|
%
|
|||||||
General and administrative
|
1,205
|
3,437
|
(2,232
|
)
|
-65
|
%
|
||||||||||
Loss from operations
|
(2,909
|
)
|
(9,342
|
)
|
(6,433
|
)
|
-69
|
%
|
||||||||
Interest expense
|
-
|
(280
|
)
|
(280
|
)
|
-100
|
%
|
|||||||||
Interest income
|
-
|
16
|
(16
|
)
|
-100
|
%
|
||||||||||
Other expense, net
|
-
|
(16
|
)
|
(16
|
)
|
-100
|
%
|
|||||||||
Reorganization items, net
|
(2,517
|
)
|
-
|
2,517
|
100
|
%
|
||||||||||
Net loss
|
$
|
(5,426
|
)
|
$
|
(9,622
|
)
|
$
|
(4,228
|
)
|
-44
|
%
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
(in thousands)
|
2016
|
2015
|
||||||
Net cash used in operating activities
|
$
|
(1,997
|
)
|
$
|
(9,015
|
)
|
||
Net cash provided by investing activities
|
143
|
12,011
|
||||||
Net cash used in financing activities
|
—
|
(1,295
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
$
|
(1,854
|
)
|
$
|
1,701
|
· | the type, number, timing, progress, costs, and results of the product candidate development programs that we are pursuing or may choose to pursue in the future; |
· | the scope, progress, expansion, costs, and results of our pre-clinical and clinical trials; |
· | the timing of and costs involved in obtaining regulatory approvals; |
· | our ability to establish and maintain development partnering arrangements and any associated funding; |
· | the emergence of competing products or technologies and other adverse market developments; |
· | the costs of maintaining, expanding, and protecting our intellectual property portfolio, including potential litigation costs and liabilities; |
· | the resources we devote to marketing, and, if approved, commercializing our product candidates; |
· | the scope, progress, expansion and costs of manufacturing our product candidates; and |
· | the costs associated with being a public company. |
KALOBIOS PHARMACEUTICALS, INC.
|
|||
Date: September 23, 2016
|
By:
|
/s/ Cameron Durrant
|
|
Cameron Durrant
|
|||
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
|||
Date: September 23, 2016
|
By:
|
/s/ Dean Witter, III
|
|
Dean Witter, III
|
|||
Interim Chief Financial Officer
|
|||
(Principal Financial and Accounting Officer)
|
Exhibit No.
|
Description
|
||
10.1
†
|
Binding Letter of Intent, dated February 29, 2016, between the Registrant and Savant Neglected Diseases, LLC.
|
||
10.2*
|
Letter Agreement, dated March 1, 2016, between the Registrant and Cameron Durrant, M.D.
|
||
31.1
|
Certification of Chief Executive Officer of the Registrant, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
31.2
|
Certification of Interim Chief Financial Officer of the Registrant, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
32.1
**
|
Certification by the Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 36 of Title 18 of the United States Code (18 U.S.C. §1350).
|
||
32.2
**
|
Certification by the Interim Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 36 of Title 18 of the United States Code (18 U.S.C. §1350).
|
||
101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
†
|
Confidential Treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
|
|
*
|
Indicates management contract or compensatory plan.
|
|
**
|
The Certifications attached as Exhibits 32.1 and 32.2 that accompanies this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of KaloBios Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
Savant Neglected Diseases, LLC
|
|
Attn:
|
Stephen L. Hurst, JD
|
[***]
|
Mailing Address:
|
Street Address:
|
P.O. Box 620732
|
740 Bair Island Road #106
|
Woodside, CA 94062
|
Redwood City, CA 94063
|
1. | Basic Terms. |
A. | Structure . |
B. | Development Matters . |
C. | Drug Pricing Matters . |
D. | Consideration for the Regulatory and Other Assets . |
E. | The IP Assets . |
2. | Deposit. |
3. | Definitive Agreement. |
4. | Conditions. |
5. | Due Diligence. |
6. | Closing and Termination. |
7. | Public Announcement. |
8. | Expenses. |
9. | Representations and Warranties of the Purchaser; Covenants of the Purchaser. |
10. | Binding Agreement. |
11. | Arbitration. |
12. | Governing Law. |
Very truly yours,
|
||
KALOBIOS PHARMACEUTICALS, INC.
|
||
By:
|
/s/ Cameron Durrant
|
|
Dr. Cameron Durrant, MD, MBA
|
||
Chairman of the Board
|
By:
|
/s/ Stephen L. Hurst
|
|
Stephen L. Hurst
|
||
Managing Member
|
Sincerely,
|
||
KaloBios Pharmaceuticals, Inc
.
|
||
/s/ Dean Witter, III
|
||
Name: Dean Witter, III
|
||
Title: Interim CFO
|
||
Acknowledged and Agreed:
|
||
/s/ Cameron Durrant
|
||
Dr. Cameron Durrant
|
||
Date: March 1, 2016
|
/s/ Cameron Durrant
|
||
Cameron Durrant,
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
/s/ Dean Witter, III
|
||
Dean Witter, III
|
||
Interim Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
By:
|
/s/ Cameron Durrant
|
|||
Name:
|
Cameron Durrant
|
|||
Title:
|
Chief Executive Officer
|
|||
(Principal Executive Officer)
|
||||
Date:
|
September 23, 2016
|
By:
|
/s/ Dean Witter, III
|
||
Name:
|
Dean Witter, III
|
||
Title:
|
Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
|||
Date:
|
September 23, 2016
|