8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2013

KaloBios Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-35798	77-0557236
(State or other Jurisdiction of Incorporation)	(Commission File No.)	(IRS Employer Identification No.)

260 East Grand Avenue

South San Francisco, CA 94080

(Address of principal executive offices, including zip code)

(650) 243-3100

(Registrant’s telephone number, including area code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) On August 5, 2013, the Chief Financial Officer of KaloBios Pharmaceuticals, Inc. (the “Company”), Jeffrey H. Cooper, indicated his intention to retire as Chief Financial Officer of the Company effective December 31, 2013 (the “Retirement Date”). Mr. Cooper’s retirement is solely due to personal reasons and not as a result of any disagreement with the Company.

(e) On August 5, 2013, in connection with the impending departure of Mr. Cooper, the Company entered into a Resignation and Separation Agreement (the “Separation Agreement”) with Mr. Cooper providing for the separation of Mr. Cooper from the Company to be effective on the Retirement Date.

The Separation Agreement provides that (i) Mr. Cooper will continue to remain available for full-time service until November 16, 2013 (the “Part-Time Date”), (ii) Mr. Cooper will provide part-time advisory services to the Company from the Part-Time Date to the Retirement Date for up to thirty hours per week, (iii) the Company will continue to pay Mr. Cooper’s current salary until the Part-Time Date and will then pay a salary of two thousand dollars per week from the Part-Time Date to the Retirement Date and (iv) Mr. Cooper will continue to vest in his unvested stock options until the Termination Date.

The terms and conditions of Mr. Cooper’s separation from the Company are fully defined and set forth in their entirety in the Separation Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.

Item 8.01 Other Events.

On August 5, 2013, the Company issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
10.1	Separation Agreement between KaloBios Pharmaceuticals, Inc. and Jeffrey H. Cooper dated August 5, 2013.
99.1	Press release issued by KaloBios Pharmaceuticals, Inc. on August 5, 2013.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KaloBios Pharmaceuticals, Inc.
By:	/s/ David W. Pritchard
	David W. Pritchard
	Chief Executive Officer

Dated: August 5, 2013

EX-10.1

Exhibit 10.1

August 5, 2013

Jeffrey H. Cooper

8345 Coventry Court

Granite Bay, CA 95746

Re: Resignation and Separation Agreement

Dear Jeff,

You have informed of us of your intent to resign from your position as Chief Financial Officer and retire due to personal circumstances. While we regret your decision to retire, we certainly respect your wishes and appreciate your desire to work with KaloBios in a smooth transition process over the coming months. This letter agreement, when signed by both parties, will constitute your tender and our acceptance of your resignation, to be effective on the Termination Date as defined below, and our agreement on the transition process and the terms of your separation from KaloBios. Again, we appreciate your service to KaloBios and wish you the very best going forward.

1. This Separation Agreement (this “Agreement”) is entered into between KaloBios Pharmaceutical Inc., including its officers, directors, managers, agents, and representatives (collectively, the “Company”) and Jeffrey H. Cooper (“Employee”). The purpose of this Agreement is to accept Employee’s resignation, and to agree upon a separation of Employee’s employment with Company on a basis that is satisfactory both to the Company and to the Employee.

2. Employee’s termination date for all purposes will be December 31, 2013 (the “Termination Date”). Prior to that date, as of November 16, 2013 (the “Part-Time Date”), Employee’s employment shall change from a full time executive officer and Chief Financial Officer to a part time non-executive employee senior advisor available for up to thirty (30) hours per week. From the Part-Time Date to the Termination Date, Employee shall make himself reasonably available by telephone and email, and to the extent practical, in person at a mutually agreeable location, to answer questions and assist the Company in any matters as appropriate. The change in Employee’s full time employment from CFO to senior advisor status may be accelerated to any earlier date that the Company may elect, so long as it provides at least fourteen (14) days advance notice to Employee. Regardless of the timing of that change, the Employee shall continue to be entitled to compensation through November 15, 2013 at the same rate as his current salary as CFO. From the Part-Time Date through the Termination Date, Employee will be compensated as provided in section 4 below.

3. For the sake of clarity, it is understood and agreed that Employee is voluntarily resigning from his employment in order to retire, and that in no way has Employee been asked to resign or terminate his employment. By entering into this Agreement, Company has accepted his resignation on the terms provided herein, and both parties wish to provide for clarity in his separation. Both Employee and Company are entering into this Agreement as a way of concluding the employment relationship between them. Employee wishes to provide for a smooth transition to his successor, to remain available for full time service until the Part-Time Date, and on a part-time, on call basis thereafter until the Termination Date.

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4. Company agrees to continue Employee’s salary as of the date of this Agreement through the Termination Date, subject to adjustment as of the Part-Time Date. From that date until the Termination Date, Employee will continue to provide services to the Company to assist in the transition of his current responsibilities for a maximum of thirty (30) hours per week at a salary of two thousand dollars ($2,000) per week through the Termination Date. All appropriate payroll taxes will be deducted therefrom. Notwithstanding the foregoing, the Company may in its discretion modify Employee’s title to Senior Advisor at any time and for any reason, including but not limited to the hiring of a successor Chief Financial Officer or equivalent. Regardless of the above, the title change to senior advisor will take effect no later than November 16 or upon the hiring of a new CFO if earlier.

5. Employee will continue to be eligible to participate in the Company’s medical benefits plan from the date hereof through the Termination Date on the same basis on which he participated as of the date hereof. Company agrees to pay Employee’s medical coverage as elected as of the date of this Agreement, through the Termination Date, subject to any employee contribution required of employees electing the same coverage.

6. (a) For the purposes of Employee’s unvested stock options, it is understood and agreed that service in accordance with this Agreement shall constitute Service for the purposes of unvested options, and Employee shall continue to vest according to the applicable vesting schedule through the Termination Date. Nothing in this Agreement is meant either to cancel or to accelerate the vesting of unvested options, or to affect the time for exercise or other attributes of Employee’s stock options. (b) The Company, subject to Compensation Committee approval, will provide an adjusted pro-rata bonus for the period April 1 through November 15, based on all relevant factors, including Employee’s performance before and after the date of this Agreement, his willingness to work through the transition period provided for in this Agreement, and the achievement of Company goals. For the sake of clarity, Employee is eligible for participation in the bonus program subject to potential proration as stated above, but whether the Employee becomes entitled to any bonus under this paragraph remains entirely within the discretion of the Compensation Committee, which will consider achievement by the Company of corporate objectives in addition to Employee’s personal objectives.

7. Employee agrees and understands that after the Termination Date he will no longer be eligible to participate in the Company’s short or long-term disability plans, health insurance plans or other company sponsored insurance, except for COBRA coverage, and that after the Termination Date, he will no longer be eligible to contribute to the Company’s 401(k) Retirement Savings Plan, or participate in any other employee benefit plans. Nothing in this Agreement is intended to affect or prevent Employee’s ability to elect COBRA coverage at his expense for COBRA-eligible health and welfare plans consistent with what the Employee was enrolled in as of the date of this Agreement, provided, however, Employee must timely elect COBRA coverage by completing the COBRA enrollment forms sent by the COBRA Administrator.

8. Employee agrees that he will submit any business expense reports to the Company consistent with Company policy and timing prior to the Termination Date, with any final reports to be submitted within fifteen (15) days after the Termination Date, and the Company agrees to pay all such properly submitted expense reports subject to Company policy in accordance with its customary procedures.

9. Employee agrees that on or before the Termination Date he shall immediately return to the Company all Company property, including but not limited to all computer equipment, mobile devices, keys, key cards, security badges, passwords, tangible proprietary information, documents, books, records, reports, customer and contact lists, computer files and data (and any copies thereof), which exist in any medium, which were prepared or obtained by Employee in the course of or incident to his employment.

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10. Employee warrants and represents that he has not and will not improperly disclose any non-public Company materials, documents, or other confidential information (“Confidential Information”) to third parties. Employee acknowledges and agrees that violation(s) of the foregoing shall render this Agreement null and void. Employee further agrees and stipulates that disclosure of Confidential Information may result in irreparable harm to Company for which monetary damages would be inadequate to compensate, and that any such improper disclosure of Confidential Information will entitle the Company to seek injunctive relief. Employee understands and agrees that the provisions of his Proprietary Information and Inventions Assignment Agreement shall remain in full force and affect according to its terms, before and after the Termination Date.

11. For the sake of clarity, it is understood and agreed that Employee is voluntarily resigning from his employment in order to retire, and that in no way has Employee been asked to resign or terminate his employment. Employee agrees that the foregoing payments and benefits (and any expense reimbursements as provided herein) shall constitute all money and benefits owed or payable to Employee, including all amounts due under his employment letter agreements with the Company dated on April 23, 2012 and July 5, 2012, (together, the “Employment Agreement”), and that Employee is not entitled to and will not seek any further compensation from the Company for any other claims, damages, costs or attorneys fees. Company and Employee agree that the terms of this Agreement shall supersede and to the extent necessary to give effect to this Agreement, amend and modify the Employment Agreement. In case of a conflict between this Agreement and the Employment Agreement, this Agreement shall control. To the extent not modified by this Agreement, the Employment Agreement shall control.

12. Employee understands that:

12.1. Employee should carefully read and fully understand all of the terms of the Agreement;

12.2. Employee knowingly and voluntarily agrees to all of the terms set forth in this Agreement;

12.3. Employee knowingly and voluntarily intends to be legally bound by this Agreement;

12.4. Employee was advised and hereby is advised in writing to consult with an attorney of Employee’s choice prior to signing this Agreement; and

13. Employee will cooperate with requests for information or assistance that the Company may make from time to time up until Employee’s Termination Date.

14. Employee agrees that for two (2) years after the Termination Date, Employee will not directly or indirectly solicit, hire or encourage the soliciting or hiring of any individual employed by the Company or any of its subsidiaries. Employee also agrees that for two (2) years after the Termination Date, Employee will not directly or indirectly induce any individual employed by the Company or any of its subsidiaries to leave the Company or subsidiary for any reason whatsoever.

15. In light of his voluntary resignation, Employee will not make a claim for unemployment benefits, and if he does so, Company reserves the right to review and correct or confirm Employee’s reason for termination as a voluntary resignation, if necessary or requested by the Employment Development Department.

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16. Should any provision of this Agreement be determined by any court to be wholly or partially illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions shall not be affected, and said illegal, unenforceable or invalid provisions shall be deemed not to be a part of this Agreement.

17. Employee and Company agree that any prior communications that may have referenced certain notice and termination benefits are superseded by this Agreement, for which good and valuable consideration has been exchanged.

18. Employee and Company agree that this Agreement contains their complete and final agreement and that there are no representations, statements, or agreements that have not been included within this Agreement.

19. Employee and Company acknowledge that in signing this Agreement, they do not rely upon and have not relied upon any representation or statement made by any of the parties or their agents with respect to the subject matter, basis or effect of this Agreement, other than those specifically stated in this written Agreement.

20. This Agreement shall be binding upon Employee and Company, the parties to this Agreement and upon their heirs, administrators, representatives, executors and assigns. Employee expressly warrants that Employee has not transferred to any person or entity any rights, causes of action or claims released in this Agreement.

21. This Agreement shall be interpreted, enforced and governed by the laws of the state of California without regard or giving effect to its conflict of laws principles. Employee and Company agree that any litigation regarding the application and interpretation or alleged breach of this Agreement shall be brought in the state courts of San Mateo County, California or in the United States District Court for the Northern District of California. Employee and Company agree to submit to the exclusive jurisdiction and venue of those courts.

22. This Agreement may be executed in several counterparts, including by facsimile, .pdf file, or photocopied signature, each of which shall be an original, but all of which together shall constitute one and the same agreement.

Jeff, again I want to wish you the very best in your retirement and express my appreciation for your service to KaloBios. I look forward to working with you on transition matters prior to your departure from the Company.

Sincerely,
KALOBIOS PHARMACEUTICALS INC.
By:	/s/ David Pritchard
David Pritchard, President and CEO Date: August 5, 2013

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AGREED TO AND ACCEPTED as of the 5^th day of August, 2013, including without limitation tender of resignation to be effective as of the Termination Date:

/s/ Jeffrey H. Cooper

Jeffrey H. Cooper

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EX-99.1

Exhibit 99.1

KALOBIOS ANNOUNCES RETIREMENT OF CHIEF FINANCIAL OFFICER

SOUTH SAN FRANCISCO, August 5, 2013 — KaloBios Pharmaceuticals, Inc. (Nasdaq: KBIO) today announced the retirement of Jeffrey H. Cooper, the company’s Chief Financial Officer, effective as of December 31, 2013. Mr. Cooper has decided to retire in order to dedicate more time to family and personal interests. Mr. Cooper has committed to stay at the company in a full-time role until mid-November, and as a part-time advisor until the end of the calendar year, and will assist the company in locating and transitioning to a successor.

“Jeff has made outstanding contributions to KaloBios in our initial public offering and finance and accounting management,” said David Pritchard, President and Chief Executive Officer of KaloBios. “We regret Jeff’s decision to retire, but appreciate his desire to work with KaloBios to ensure a smooth transition by the end of the year.”

“I am fortunate to be able to retire and spend more time with my family and renew my focus on my personal activities,” Mr. Cooper commented. “My decision in no way reflects upon the bright future for KaloBios, its pipeline of clinical programs and its outstanding management team, whom I have enjoyed working with over the past year. I look forward to working with the team during the transition process in the coming months.”

Mr. Cooper joined KaloBios in July, 2012 as Chief Financial Officer. He was previously Senior Vice President and Chief Financial Officer of BioMarin Pharmaceutical, Inc., a publicly traded pharmaceutical company. At BioMarin, Mr. Cooper started in 2003 as Vice President, Controller, and then served as its Chief Financial Officer from 2005 to May 2012.

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 clinical focus on severe respiratory diseases and cancer.

Currently, KaloBios has three drug development programs:

• KB003, an anti-GM-CSF mAb with potential to treat inflammatory diseases, is being developed for the treatment of severe asthma. Enrollment of 160 patients has been completed in a planned 150 patient Phase 2 study in the United States, Europe and Australia.

• KB001-A, an anti-PcrV mAb fragment, is partnered exclusively with Sanofi and is being developed for the prevention and treatment of Pa infection. KaloBios has retained rights for the CF indication and has initiated a 180 patient Phase 2 study in CF subjects with chronic Pa lung infection in the United States. Sanofi is pursuing a ventilator associated pneumonia prevention indication in the intensive care setting, an indication which has received U.S. FDA Fast Track Designation.

• KB004, an anti-EphA3 mAb, has potential in treating hematologic malignancies and solid tumors. KaloBios is currently testing this drug in a Phase 1 study in subjects with hematologic malignancies.

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, including statements regarding the company’s clinical development of KB001-A, KB003 and KB004. 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 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 dependence on Sanofi Pasteur for the development and commercialization of KB001-A; the company’s ability to successfully 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; the company’s ability to attract and retain key personnel; and other factors listed under “Risk Factors” in the company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013, the quarterly report on Form 10-Q filed on May 14, 2013 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.

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Contact:

David Pritchard

President and CEO

KaloBios Pharmaceuticals, Inc.

(650) 243-3101

dpritchard@kalobios.com

Media Contact:

Joan E. Kureczka

Kureczka/Martin Associates

Tel: (415) 821-2413

Mobile: (415) 690-0210

Joan@Kureczka-Martin.com