KaloBios Pharmaceuticals, based in South San Francisco, Calif., will reduce its workforce as part of a plan to reduce operating costs. The action will reduce the company’s workforce by about 17 employees (or 61%), and will focus the company’s resources on the ongoing development of lenzilumab, also known as KB003, in chronic monomyelocytic leukemia (CMML), while it continues to pursue strategic alternatives for the company.
“While this decision was extremely difficult, aligning and managing our limited resources to maximize the opportunity for continued development of lenzilumab is our most important priority,” said Herb Cross, chief financial officer and interim chief executive officer of KaloBios. “I would like to sincerely thank all of our departing employees and recognize their important and valued contributions to KaloBios.”
As a part of its restructuring, the company also announced that it will pause enrollment in the phase II cohort expansion phase of its ongoing clinical study of KB004 in certain hematologic malignancies. The company also has announced its intent to repay in full its outstanding secured loan obligation to MidCap Financial, secured lender to the company, in the approximate amount of $6.6 million, which will generate significant cash savings when compared to repayment of the debt in the ordinary course of business.
The company currently is evaluating strategic alternatives for the organization, including potentially the sale of the company or its assets, or a corporate acquisition, and may retain an investment bank to assist in those efforts. Since those efforts may not be successful, in light of its limited cash reserves the company is considering all possible alternatives, including further restructuring activities, wind-down of operations and bankruptcy proceedings.
The company will likely not be able to file its Form 10-Q for the third quarter on a timely basis. KaloBios will make that filing as soon as practicable, and intends to file a Form 12b-25 to that effect.