KaloBios and Celscia Therapeutics Announce Merger

Merger creates human antibody therapeutics company, combines rapid human antibody generation technology with experienced product R&D team and expands antibody pipeline.

PALO ALTO, California -- January 12, 2004 - KaloBios and Celscia Therapeutics announced today that the two companies have closed a merger. The new company will be called KaloBios and will employ its proprietary technologies for the discovery, engineering, and development of fully human antibody therapeutics.

"KaloBios is well placed to become a leading therapeutic antibody company. Our proprietary human antibody technology is capable of generating high affinity, fully human antibodies in weeks and provides a novel technology in a highly competitive and crowded field. Our future focus will be on quickly building a clinical pipeline of carefully selected human antibody therapeutics," commented Geoffrey Yarranton, Ph.D. of Celscia.

"This merger creates a team with synergistic skill sets and expertise," commented board member Jim Healy, M.D., Ph.D. of Sofinnova Ventures. "Geoff and his team from Celscia have extensive experience developing antibody-based drugs. Mark and his team from KaloBios have both technical and business development experience in the antibody industry."

"The merger creates a vertically integrated company," remarked Mark Alfenito, Ph.D. of KaloBios. "KaloBios brings antibody discovery and engineering. Celscia brings with it a world-class antibody development team and a pipeline of antibody drugs that expands our own."

The KaloBios technology, which uses bacterial cell selection of human antibody binders, allows rapid generation of high affinity human antibodies to therapeutically useful targets. In a field crowded with intellectual property, KaloBios will use its proprietary platform for the generation of human antibodies for its own internal pipeline and for short-term revenue generation through funded collaborations.

KaloBios will initially focus on clinically validated targets for its pipeline while aggressively pursuing an in-licensing strategy for an advanced development candidate. Products will be developed in three different disease areas, oncology, autoimmunity and infectious diseases. The company already has internal lead antibodies for an anti-infective disease target and an oncology target and will begin IND-track development of these by mid-2004.

KaloBios' board of directors includes Jim Healy, M.D., Ph.D. of Sofinnova Ventures, Doug Kelly, M.D. of Alloy Ventures, Carin Mueller of 5AM Ventures, Geoff Yarranton, Ph.D., and Mark Alfenito, Ph.D. Investors are Sofinnova Ventures, Alloy Ventures, 5AM Ventures and Singapore BioInnovations Pte Ltd, a wholly owned subsidiary of Singapore Economic Development Board Investments.

About KaloBios
KaloBios uses its unique and proprietary technologies for the development of its pipeline of antibody therapeutics. Such uses include de novo discovery of high-affinity human antibodies, as well as optimization of antibodies and other therapeutic proteins 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.