Microbiome therapies could have a big year as several biotech companies are preparing for key regulatory and clinical benchmarks in 2022. Kaleido Biosciences will not be among them. The company is shutting down, a last resort move that follows setbacks to the firm and the inability to find the financial footing to support its clinical-stage programs.
In a Friday regulatory filing, Kaleido said its board of directors earlier that day voted to immediately cease the company’s operations. The decision was made after a strategic review failed to find a path forward.
“Unfortunately, the strategic process did not result in the identification of any viable transactions, and given its limited resources, the company cannot continue operations and believes that the best alternative is an orderly wind-down process,” Kaleido said in the filing.
The microbiome approach of Kaleido was different than other biotechs. Instead of therapies comprised of live microorganisms added to the microbial environment of a patient, Kaleido developed microbiome metabolic therapies (MMTs), which it described as collections of molecules that affect the microbiome and drive the function and composition of a patients’ existing microbes. The company aimed to treat disorders with a connection to the microbiome; its pipeline spanned immune-mediated diseases, respiratory disorders, and immuno-oncology. The company landed one research partnership, a preclinical alliance with Johnson & Johnson subsidiary Janssen that focused on childhood allergy among other conditions.
Kaleido was formed in 2015 by Flagship Pioneering, a venture capital firm whose other microbiome portfolio companies include Seres Therapeutics and Evelo Biosciences. Flagship-founded startup Senda Biosciences, analyzes the interaction between humans and bacteria but does not call itself a microbiome company. After incubating within Flagship, Kaleido emerged from stealth in 2017, then went public two years later, raising $75 million by selling shares priced at $15 apiece—well below the $20 to $22 per share range that the biotech had planned. Flagship is Kaleido’s largest shareholder, owning 45.9% of the company’s shares, as of the end of March, according to regulatory filings.
Kaleido’s stock price closed at 26 cents on Friday, down more than 81% from Thursday’s closing price. In its three years as a public company, Kaleido shares mostly slid down from their IPO price, with the exception of early last year. At that time, few therapeutic options were available for Covid-19 and Kaleido’s stock spiked after the company reported encouraging interim clinical data for an MMT it was testing as a potential treatment. The Kaleido drug, KB109, was initially developed for preventing infections from multi-drug resistant bacteria. The company had said it could offer a non-antibiotic approach that selectively enhances the growth of beneficial gut bacteria at the expense of pathogens. For Covid, the company theorized that its experimental therapy could help limit the cascade of inflammatory responses caused by the viral infection.
The early encouraging data for KB109 were the last positive signs for that therapeutic candidate and Kaleido. Last August, the FDA sent the company a warning letter raising concerns about a study evaluating the microbiome therapy as a medical food, not as a drug. The FDA said Kaleido was testing KB109 in Covid-19 without meeting clinical trial requirements for a drug.
Red flags waved around Kaleido well before the FDA warning letter. For more than a year, the biotech’s financial statements disclosed dwindling cash and doubts about the company’s ability to continue as a going concern. In its annual report filed at the beginning of April, Kaleido said it had just $38.5 million in cash as of the end of 2021—not enough money to support the company for another year. The company added that it expected to raise more capital through equity or debt financings, or through collaborations or licensing deals. None of those options materialized.
Kaleido said in the regulatory filing that it laid off its entire workforce on Friday. The company’s headcount totaled 76 at the end of 2021, according to the annual report; 58 of those employees were in research and development. The company said it will file paperwork with the Securities and Exchange Commission for a delisting of its shares, which it expects will become effective around April 28.
Photo: Warchi, Getty Images
