ALIOF

KaloBios Pharmaceuticals, Inc. (KBIO) announced disappointing top line results from a phase II study on KB003 in patients suffering from severe asthma, where the candidate failed to meet the key endpoints. We expect the news to have a significant adverse impact on the shares.

The phase II randomized, double-blind placebo-controlled study failed to meet its primary objective of improvement in FEV1 (a measurement of pulmonary function) in comparison to placebo. KaloBios has decided not to develop KB003 further for the treatment of severe asthma.

KB003 also failed to demonstrate meaningful reduction in exacerbations in the overall study population or in any material subgroup compared to placebo. No significant improvements in questionnaire scores related to asthma control were observed during the study in the overall patient population. KB003 was however generally safe and well tolerated during the study, which was eventually over shadowed by the failure to meet key endpoints.

Following the decision not to develop KB003 further for the severe asthma indication, KaloBios now intends to concentrate on the two other candidates in its pipeline, KB001-A and KB004. The company is currently enrolling patients for a phase II study on KB001-A for the treatment of cystic fibrosis patients suffering from pseudomonas aeruginosa (Pa) lung infections. KaloBios is evaluating KB004 in a phase II expansion study for the treatment of patients suffering from acute myeloid leukemia and myelodysplastic syndrome.

We are highly disappointed by the news on KB003. KaloBios does not have any marketed product. Consequently its pipeline has to deliver. Similar pipeline related setbacks will be catastrophic for the company.

KaloBios carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Actelion Ltd. (ALIOF), Affymetrix Inc. (AFFX) and Gentium (GENT). All these stocks carry a Zacks Rank #1 (Strong Buy).

 
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