Business Turnaround Progress Update: October 14, 2016 — And A New CFO

kalo-new-old2Okay — I’ll just hop right to it — in a spate of overnight SEC filings (including the long expected SEC Form S-8, for 3 million shares), we see additional disclosures about the transformation of the businesses and prospects of New KaloBios.

I’ll link the whole slide deck here — and encourage PathoPhilia and Billy to call out anything they see as significant, in comments — but below are the few I most enjoyed (love the graphical butterfly metaphor, folks!). Note the new CFO at the second slide.  Click each to enlarge. And note that the company is chasing as many as three separate FDA PRV bonanzas, at present.

ex99_1slide1 ex99_1slide5 ex99_1slide7 ex99_1slide19In what is genuinely just a smallish quibble, I will dutifully note that the legacy Schering-Plough strategy guy might be of a bit of concern, to true “values” investors. At least those who regularly read the older stuff on this (my) site, from 2008 through 2011.


PathoPhilia’s Thoughts On FDA’s Tropical Diseases PRV Monograph

KaloBios-PathoPhilia-Chagas-2016I’ll simply turn it over to her, here — and will return at some point tomorrow afternoon (crazy busy in my shop of late) to offer my thoughts.

“…Okay, I just quickly scanned the monograph. Of course, this FDA guidance says nothing about any possible legislative amendments to the PRV program for tropical diseases — regardless of whether these bills have any chance of moving forward.

Two things jumped out:
1) Although Chagas disease has been added to the neglected diseases list, this concluding paragraph to the list on page 4 jumped out at me: “Any other infectious disease for which there is no significant market in developed nations and that disproportionately affects poor and marginalized populations, designated by order of the Secretary.” There is certainly an already-existing market for benznidazole outside of the United States. However, whether you want to call Brazil or any other Latin American country where Chagas disease is endemic “developed” is a point of argument.

kalo-new-old22) Orphan drug status for benznidazole may be possible, depending on how you define the US market for benznidazole. This is an issue on which Kalobios may have to talk out of both sides of its mouth. For the purposes of engendering longer-term investor interest, is it smartest to say that the potential US market for benznidazole exceeds 200K (by targeting latent disease, for instance)?

Or is the US market much, much tinier (targeting acute, active disease), which would make the case for orphan drug status?. . . .”

Now you know. Back — as time permits.


FDA’s Latest Guidance — On Tropical Disease Priority Review Vouchers: October 2016

KaloBios-Chagas-Benz-2016[UPDATED |10.10.2016: PathoPhilia‘s thoughts are now a new post.]

This fine Friday morning, I link to this new FDA guidance monograph (a 14 page PDF file) primarily to keep a complete record, here. [With a sincere hat tip, to BioPharma Dive, for the alert (near the bottom) — to its recent publication.]

Of course, as we all know, most of the “color” in the guidance reflects only the views and opinions of the US FDA, and may well not be binding law — except insofar as the guidance quotes a rule or statute.

Having said that, it is very likely that New KaloBios’ regulatory folk, and retained outside counsel are reading the above guidance update very closely, indeed.

From my perspective, I see no new wrinkles for the Chagas PRV program, as presently understood by us — via KalBios’ public disclosures about the matter.

pathophilia-logo-newPathoPhila? You’re up. This is your power-alley. I’ll post your thoughts, as an update to mine, above.


Bankruptcy Proceedings Are Now Winding-Down: Nearly Final Hearing To Be Held On November 16, 2016

kalobios-nov-16-2016-omnibusHere is that newly-rescheduled notice of hearing, in full. The old date was October 31, for those of you keeping score at home. Smile.

It must be gratifying to Dr. Durrant to know that this is all firmly in his rear view mirror — and the New KaloBios is in a good position to move forward, sans Shkreli’s “stain.”

I’ll report if anything truly interesting comes out of this omnibus hearing.

KaloBios Chairman/CEO To Speak On His “Responsible Pricing” Model This Thursday — In Manhattan

Here is the bit, from the press release — if you miss him tomorrow, Friday is also an option, I gather:

…Cameron Durrant, MD, chairman and CEO, will speak at the Pharmaceutical Strategy Conference in New York City September 28-30, 2016. Dr. Durrant will discuss how innovative paradigms, such as the company’s Responsible Pricing Model, can make a transformative impact on two critical issues facing the industry: reputation and pricing.

“The Responsible Pricing Model is a leading commitment to operate in a new way, embedding affordability, transparency and reasonable return into our pricing as we execute our strategy to bring needed medicines to patients,” said Dr. Durrant. “We are pleased to be part of the Pharmaceutical Strategy Conference to connect with like-minded stakeholders and lead real progress for our industry.”

Details of the discussion panels follow:

Title: Industry Image Panel: Confronting Pharma’s Reputation Problem
Date: Thursday, September 29, 2016, 2:00 p.m. EDT
Participants: Dr. Cameron Durrant, KaloBios Pharmaceuticals; Dr. Benjamin Cowen, Milestone Pharmaceuticals; Lucy Abreu, Otsuka Pharmaceutical Companies; Gautam Gupta, Pfizer

Title: Reimbursement / Market Access Focus Panel: The Road To Value-Based Drug Pricing
Date: Friday, September 30, 2016, 9:15 a.m. EDT
Participants: Dr. Edmund Pezalla, Aetna; David Gilman, Huron Consulting; Dr. Cameron Durrant, KaloBios Pharmaceuticals; Nathan Dowden, Rubius Therapeutics; Richard Ascroft, Takeda Pharmaceuticals….

Now you know — but as my commenters have been correctly pointing out — this (even taken along with all the new company’s other new initiatives) may well not be enough, to sustain new KaloBios, longer term.

Finally! The Last — And Latest — Missing SEC Forms 10-Q Have Been Filed, Tonight

KaloBios-SEC-Forms-2016But even before those — here finally is the full Savant agreement, as Exhibit 10.9 to the June 30, 2016 (Q2 2916) SEC Form 10-Q. [Prior to tonight, we only has a summary of the binding LoI — as of March 2016.]

So this is welcome — even if it is partially redacted for some trade secrets, and pricing terms — Huzzah! Here it is, just the same.

I’ll be back with more later tonight, or more likely in the morning, over coffee — after I’ve read through both the March 31 (Q1) and June 30 (Q2) SEC Forms 10-Q.

Happy hunting, one and all!

Board Ups Dr. Durrant’s Compensation, And Mega-Grants A 1,043,022 Share “Founder’s Option”

kalo-new-durrant-09-19-16Updated: good long read — covering the Chagas deal, from the perspective of the CEO of Savant. Do go read it. I think Hurst was snowed by Shkreli, but it all turned out okay in the end: Shkreli got perp walked, and bounced.

Additional update: I will cross post the very cogent comments below, by PathoPhila, related to the story above, on the Shkreli sub-site.

[End, updated portion.]

First, don’t misunderstand: the newly disclosed agreement for Dr. Durrant, along with his over a million share incentive stock option — vesting in 12 equal  quarterly (not monthly — thanks, Anon. commenter below!) installments, beginning in December 2016, makes sound business sense. It is not out-sized in any sense, given the risks he takes, by trying to bring that ever-elusive PVR to New KaloBios, via the Savant Chagas partnership. [The related SEC Form 4, on it is here.]
It was also disclosed that Morgan Lam will move to chief science officer, from chief commercial officer.

Now, we wait for the current Forms 10-Q, which are required to disclose the full text of Dr. Durrant’s new agreement, and change of control provisions.

The SEC Form 8-K filed overnight contains only the running text summary, below:

Designation of Morgan Lam as Chief Scientific Officer

On September 13, 2016, the Board of Directors (the “Board”) of KaloBios Pharmaceuticals, Inc. (the “Company”) appointed Morgan Lam, formerly the Chief Operating Officer of the Company, as the Company’s  Chief Scientific Officer.  The change in Mr. Lam’s position was in recognition of Mr. Lam’s role in the Company’s scientific efforts in pursuit of its product candidates.
Employment Agreement with Dr. Durrant
KaloBios-PathoPhilia-Chagas-2016Also on September 13, 2016, the Company entered into a new employment agreement with Cameron Durrant, MD, the Company’s chairman and chief executive officer (the “Agreement”).  The Agreement provides for an initial annual base salary for Dr. Durrant of $600,000 as well as eligibility for an annual bonus targeted at 60% of his salary based on the achievements of objectives set and agreed to by the Board. For 2016, Dr. Durrant’s bonus opportunity will be pro-rated for the period commencing July 1, 2016 and ending on December 31, 2016. Dr. Durrant is entitled to participate in the Company’s benefit plans available to other executives, including its retirement plan and health and welfare programs. The Agreement also provides for an award of stock options to purchase 1,043,022 shares of the Company’s common stock, which option was granted on September 13, 2016.  Dr. Durrant’s option will vest and become exercisable in 12 equal quarterly installments beginning on December 13, 2016. 
Under the Agreement, Dr. Durrant is entitled to receive certain benefits upon termination of employment under certain circumstances.  If the Company terminates Dr. Durrant’s employment for any reason other than “Cause”, or if Dr. Durrant resigns for “Good Reason” (each as defined in the Agreement), Dr. Durrant will receive twelve months of base salary then in effect and the amount of the actual bonus earned by Dr. Durrant under the agreement for the year prior to the year of termination, pro-rated based on the portion of the year Dr. Durrant was employed by the Company during the year of termination.
KaloBios-SEC-Forms-2016The Agreement additionally provides that if Dr. Durrant resigns for Good Reason or the Company or its successor terminates his employment within the three month period prior to and the 12 month period following a Change in Control (as defined in the Agreement), the Company must pay or cause it successor to pay Dr. Durrant a lump sum cash payment equal to two times (a) his annual salary as of the day before his resignation or termination plus (b) the aggregate bonus received by Dr. Durrant for the year preceding the Change in Control or, if no bonus had been received, at minimum 50% of the target bonus.  In addition, upon such a resignation or termination, all outstanding stock options held by Dr. Durrant will immediately vest and become exercisable….

So now we wait, again. Three Q’s will soon be overdue. Two already are. Onward — Namaste.