KaloBios Reports Fourth Quarter 2014 Financial Results

News provided by

Mar 16, 2015, 02:47 ET

SOUTH SAN FRANCISCO, Calif., March 16, 2015 /PRNewswire/ -- KaloBios Pharmaceuticals, Inc. (Nasdaq: KBIO) today reported its financial results for the fiscal year 2014.

Net loss for the fiscal year ended December 31, 2014 was $38.0 million or $1.15 per common share, as compared to $41.9 million or $1.73 per common share for 2013.

Research and development (R&D) expenses were $26.6 million for fiscal 2014 as compared to $32.6 million for 2013. The decrease in R&D expense was primarily due to decreased clinical trial activity compared with the prior period, largely as a result of the completion of the KB003 Phase 2 study in patients with severe asthma in the first quarter of 2014. General and administrative (G&A) expenses were $10.1 million for fiscal 2014 compared to $8.3 million for the full year 2013. The increase in G&A expenses was due primarily to costs resulting from our move into a new facility in 2014, as well as higher legal, accounting and consulting costs.

As of December 31, 2014, KaloBios had cash, cash equivalents and investments totaling $40.7 million, compared to $76.7 million at December 31, 2013.

"Fiscal 2014 was a very busy year for the Company. We advanced our KB004 oncology program into the Phase 2 expansion portion of our study in hematologic malignancies, worked to complete the Phase 2 program of KB001-A in cystic fibrosis patients, and continued our evaluation of potential oncology indications for KB003, our anti-GM-CSF antibody," said Herb Cross, KaloBios' Chief Financial Officer and interim Chief Executive Officer. "We were disappointed with the outcome of our KB001-A CF study. However, our tighter strategic focus in oncology going forward should allow us to focus our efforts and resources in a more efficient way than we have been able to in the past. Notably, we are working on accelerating enrollment in our current KB004 Phase 2 study in myelodysplastic syndrome and myelofibrosis, as well as on evaluating a number of additional potential oncology indications for KB004 where EphA3 is highly expressed. With the possibility of exploring KB003 in chronic myelomonocytic leukemia, an orphan oncology indication, we believe we have the potential for a very exciting oncology pipeline and are looking forward to advancing these programs in the clinic."

About KaloBios

KaloBios Pharmaceuticals, Inc. is developing a portfolio of proprietary, patient-targeted, 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 has advanced three programs to 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 intends to commence clinical evaluation of KB003 in this patient population beginning in the first half of 2015.
KB001-A is an anti-PcrV mAb fragment that was being developed for the prevention and treatment of Pseudomonas aeruginosa (Pa) infection. KaloBios conducted a 183 patient Phase 2 study in cystic fibrosis (CF) subjects with chronic Pa lung infection which did not meet its primary endpoint. As a result, KaloBios has discontinued development of KB001-A in CF patients. KaloBios will continue to seek a partner that may be interested in advancing this program.

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 13, 2014, 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

[email protected]

Media Contact:

Joan E. Kureczka

Kureczka/Martin Associates

Tel: (415) 821-2413

Mobile: (415) 690-0210

[email protected]

Consolidated Balance Sheets
December 31, 2014 and 2013
(in thousands, except share and per share information)

	December 31,	December 31,
	2014	2013
Assets
Current assets:
Cash and cash equivalents	$ 10,923	$ 54,220
Marketable securities	29,790	22,511
Contract receivables	-	44
Prepaid expenses and other current assets	1,532	742
Restricted cash	-	205
Total current assets	42,245	77,722

Restricted cash	193	-
Property and equipment, net	414	276
Other assets	125	706
Total assets	$ 42,977	$ 78,704

Liabilities, convertible preferred stock and stockholders' deficit
Current liabilities:
Accounts payable	$ 1,822	$ 3,197
Accrued compensation	1,400	1,091
Deferred rent, short-term	16	160
Accrued research and clinical liabilities	3,470	3,309
Notes payable, short-term	10,928	3,182
Financing derivative	89	-
Other accrued liabilities	328	443
Total current liabilities	18,053	11,382

Deferred rent, long-term	311	-
Notes payable, long-term	-	6,786
Total liabilities	18,364	18,168

Stockholders' equity:
Common stock, $0.001 par value: 85,000,000 shares and 47,500,000 shares authorized at December 31, 2014, and December 31, 2013, respectively; 32,992,178 shares and 32,931,092 shares issued and outstanding at December 31, 2014, and December 31, 2013, respectively	33	33
Additional paid-in capital	202,801	200,715
Accumulated other comprehensive income	(8)	3
Accumulated deficit	(178,213)	(140,215)
Total stockholders' equity	24,613	60,536
Total liabilities and stockholders' equity	$ 42,977	$ 78,704

Consolidated Statements of Operations
Year Ended December 31, 2014 and 2013
(in thousands, except share and per share information)

	Year Ended December 31,
	2014	2013

Contract revenue	$ -	$ 44

Operating expenses:
Research and development	26,573	32,640
General and administrative	10,145	8,313
Total operating expenses	36,718	40,953

Loss from operations	(36,718)	(40,909)

Other income (expense):
Interest income	88	86
Interest expense	(1,214)	(1,086)
Other income (expense), net	(154)	(39)
Net loss	(37,998)	(41,948)
Other comprehensive income (loss):
Net unrealized gains (losses) on marketable securities	(11)	(1)

Comprehensive loss	$ (38,009)	$ (41,949)

Basic and diluted net loss per common share	$ (1.15)	$ (1.73)

Weighted average common shares outstanding used to calculate basic and diluted net loss per common share	32,979,288	24,270,407

Stock Based Compensation Expense
Year Ended December 31, 2014 and 2013
(in thousands)

Total stock-based compensation expense included in the consolidated statements of operations is as follows:

	Year Ended December 31,
	2014	2013
Research and development	$ 987	$ 709
General and Administrative	1,026	731
Total stock-based compensation expense	$ 2,013	$ 1,440