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KaloBios Regains Global Rights To KB001-A, Ends Deal With Sanofi Pasteur

Shares of KaloBios Pharmaceuticals, Inc. (KBIO) tumbled almost 12 percent in extended trades Monday after the company said that Sanofi Pasteur has agreed to terminate their collaboration and licensing agreement and handed the full global rights to the KB001-A development program back to the company. Sanofi Pasteur is the vaccines division of French drug maker Sanofi (SNY).

San Francisco, California-based KaloBios said it will now seek to identify a partner who can accelerate and financially support the pivotal studies for KB001-A. The company added that it has completed enrolment in KB001-A Phase 2 Cystic Fibrosis study.

Under a collaboration agreement entered into by the companies in 2010, Sanofi Pasteur was developing KB001-A, a patented monoclonal antibody that targets Pseudomonas aeruginosa (Pa), for Pa pneumonia prevention in the intensive care setting. Meanwhile, KaloBios was developing KB001-A for chronic treatment of Pa lung infections in cystic fibrosis or CF patients.

David Pritchard, President and Chief Executive Officer of KaloBios said, "We continue to believe in the potential of this innovative therapy as a means to address Pa infections in a variety of settings. This negotiated termination not only provides us with full unencumbered rights to our cystic fibrosis indication, but will enable us to seek a partner with established capabilities in additional indications as well as in territories outside of the United States."

Pritchard added, "We will immediately embark on a process to identify a partner with a focus on infectious disease, hospital pharmaceuticals, or cystic fibrosis who can accelerate and financially support the pivotal studies for KB001-A."

KaloBios noted that Sanofi Pasteur agreed to terminate the collaboration and licensing agreement in consideration of low single digit royalties on net sales of KB001-A, subject to a $40 million cap on the aggregate royalties to be paid.

Sanofi Pasteur will also be entitled to receive up to 10 percent of certain sub-license payments or other milestone payments received in the event KaloBios successfully re-partners KB001-A. This is subject to a separate $40 million cap on the aggregate amount of sub-license payments to be shared with Sanofi Pasteur.

KaloBios has received Orphan Drug designation from both the U.S. FDA and the European Medicines Agency for KB001-A for the treatment of Pa lung infection in CF patients. KB001-A has also received Fast Track Status from the U.S. FDA for the prevention of ventilator associated pneumonia or VAP.

KaloBios also said it has achieved full enrollment in the 180 patient Phase 2 study evaluating KB001-A in CF subjects with chronic Pa lung infection. The company now expects to release top-line data on this study in early first quarter of 2015.

KaloBios had previously completed a Phase 1/2 study with KB001 in 35 patients colonized with Pa, which demonstrated approximately a 50 percent reduction in VAP in patients treated with KB001. The study also showed a dose-dependent increase in bacterial event-free survival relative to placebo.

KBIO closed Monday's regular trading session at $1.93, down $0.02 or 1.03 percent on a volume of 388,842 shares. In after-hours, the stock further declined $0.23 or 11.92 percent to $1.70.

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