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July 22, 2004 Contact
Mark Alfenito
KaloBios
(650) 843-1897 ext. 302

KALOBIOS IN-LICENSES RHEUMATOID ARTHRITIS DRUG FROM THE LUDWIG INSTITUTE FOR CANCER RESEARCH

PALO ALTO, Calif. - July 22, 2004 - KaloBios Pharmaceuticals, a therapeutic antibody company, announced today that it has exclusively in-licensed an antibody drug candidate for the treatment of autoimmune diseases. The antibody has been developed by a team of researchers at the Melbourne (Australia) Branch of the Ludwig Institute for Cancer Research (LICR).

The initial clinical trials of this antibody will be in patients with rheumatoid arthritis (RA). One percent of the world's population suffers from RA, an autoimmune disease that leads to painful inflammation and ultimately destruction of bone joints. Disease-modifying-anti-arthritis drugs (DMARDS) are the first line therapies for RA, but patients become unresponsive over time and progress onto treatment with biological agents. The tumor necrosis factor (TNF alpha) blockers Enbrel, Remicade and Humira are now established treatments for patients failing DMARDS. Up to 40% of patients fail to respond to these agents or respond until neutralizing antibodies develop as a consequence of repeated dosing. Therefore new treatments are needed.

Researchers at the LICR have identified a protein target that appears to play a key role in establishing and managing the destructive disease processes. In animal studies, blocking the function of this protein with a neutralizing antibody appears to prevent the induction of arthritis but more impressively, treatment of ongoing disease with the antibody halts the disease's progression. Gene 'knock-out' mice are also resistant to the induction of several autoimmune diseases. Dr. Geoffrey Yarranton, CEO of KaloBios Pharmaceuticals, commented, "Because the function of this protein is well conserved among mammals, we are especially optimistic that the information and first generation antibody developed by the LICR will lead to an effective drug in humans. The in-licensing of another antibody with a strong preclinical data package is further demonstration of the successful implementation of our in-licensing strategy for building a robust therapeutic antibody pipeline."

"The KaloBios team's experience in the development of antibody-based drugs, coupled with their novel engineering technology made them an excellent choice for the placement of this drug candidate," said Dr. Eric Hoffman, Director of LICR's Office of Clinical Trials Management.

KaloBios plans to enter the first generation antibody into human clinical trials by the second half of 2005.

About KaloBios
KaloBios uses its unique and proprietary technologies for the development of a pipeline of in-licensed and novel antibody therapeutics. Such uses include de novo discovery of high-affinity human antibodies, as well as humaneering and optimization of antibodies with respect to many pharmacologically important properties. To fully leverage the value of its technology platform, KaloBios is becoming vertically integrated, with the capability to discover, engineer and develop clinically relevant antibodies and protein therapeutics. For more information, visit www.kalobios.com.

About The Ludwig Institute for Cancer Research
The Ludwig Institute for Cancer Research (LICR) is the largest international academic institute dedicated to understanding and controlling cancer. With ten Branches in seven countries, and numerous Affiliates and Clinical Trial Centers in many others, the scientific network that is LICR quite literally covers the globe. The uniqueness of LICR lies not only in its size and scale, but also in its philosophy and ability to drive its results from the laboratory into the clinic. LICR has developed an impressive portfolio of reagents, knowledge, expertise, and intellectual property, and has also assembled the personnel, facilities, and practices necessary to patent, clinically evaluate, license, and thus translate, the most promising aspects of its own laboratory research into cancer therapies.