IN THE UNITED STATES BANKRUPTCY COURT FOR … 01:22864046.1 IN THE UNITED STATES BANKRUPTCY COURT...

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

) In re: ) ) Chapter 11

KALOBIOS PHARMACEUTICALS, INC., ) Case No. 15-12628 (LSS) )

)

Reorganized Debtor.1 ) Hearing Date: Feb. 26, 2018 ) 2:00 pm E.T. ) Obj. Deadline: Feb. 13, 2018

CHEMO RESEARCH, S.L., MUNDO SANO FOUNDATION, AND EXELTIS USA, INC.’S OBJECTIONS TO HUMANIGEN’S RULE 2004 MOTION [D.I. 831]2

Chemo Research, S.L., Exeltis USA, Inc., and Mundo Sano Foundation (collectively, the

“Chemo Objectors”) hereby object to Humanigen’s Motion Pursuant To Rule 2004 Directing

Production Of Documents And Examination Of Witnesses (Dkt. 831) (“2004 Motion”) and

respectfully respond as follows:

PRELIMINARY STATEMENT

Federal Rule of Bankruptcy Procedure 2004 (“Rule 2004”) is designed to “allow the 1.

court to gain a clear picture of the condition and whereabouts of the bankrupt’s estate,” St. Clair

v. Cadles of Grassy Meadows II, LLC, 550 B.R. 655, 659 (E.D.N.Y. 2016), and to assist parties

in “obtaining [information] relevant to the administration of the bankruptcy estate,” In re

1 The last four digits of the Reorganized Debtor’s federal tax identification number are 7236. The Reorganized Debtor’s address is 1000 Marina Blvd, #250, Brisbane, CA 94005-1878. 2 The submission of this Objection (and supporting Declaration and Exhibits included therewith) does not constitute submission to the jurisdiction or authority of this Court for the resolution of any matter. Nor is it an admission that this Court is the appropriate forum for disputes involving these parties.

Case 15-12628-LSS Doc 853 Filed 02/13/18 of 28

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Szadkowski, 198 B.R. 140, 141 (Bankr. D. Md. 1996). Here, however, Humanigen proposes to

conscript this Court into service as a discovery master for an ordinary civil dispute that has no

relationship to the bankruptcy case, is between parties not involved in the bankruptcy, and

involves assets which Humanigen no longer owns. Rule 2004 does not permit this conscription

and Humanigen’s motion should be denied.

Over a year and a half ago, Humanigen successfully emerged from bankruptcy 2.

pursuant to KaloBios’s Second Amended Plan of Reorganization (“Plan”) and purchased, among

other things, what it now claims was a license for the patient-level data underlying a 1998 study

of the effects of benznidazole in pediatric Chagas patients (the “benznidazole assets”).

Humanigen now seeks to use Rule 2004 to conduct an expansive examination of the Chemo

Objectors regarding potential claims related to the benznidazole assets. The benznidazole assets

and potential claims were not assets of the estate, but were the assets and claims of the

reorganized debtor. The reorganized debtor acquired the benznidazole assets through a

transaction which the Plan authorized it to consummate on the Plan’s effective date. The Plan

did not expressly preserve any right of the estate to pursue the claims at issue and any proceeds

from such claims will not impact the recovery of estate creditors under the Plan. Humanigen is,

in short, attempting to use this Court to order and supervise discovery for an ordinary

commercial dispute with the Chemo Objectors lacking any nexus to a claim or cause of action in

the KaloBios bankruptcy case.

As Humanigen has previously represented to this Court, it is a successfully 3.

reorganized, well-functioning company. Its business operations are no longer subject to this

Court’s supervision, it is no longer in need of the bankruptcy court’s protection, and the dispute

over the benznidazole assets “will have little if any effect on ‘the efficient administration of the


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estate.’” The KaloBios bankruptcy case remains open only because a small fraction of claims

have yet to be reconciled. Humanigen therefore has no need to use the extraordinary discovery

device provided by Rule 2004 reserved for the administration of bankruptcy proceedings.

Moreover, although unmentioned in its motion, Humanigen sold to a third-party 4.

purchaser the benznidazole assets and potential claims on which it now seeks Rule 2004

examination. (Humanigen appears to retain at most a thirty percent contingency on any recovery

and the possibility that the purchaser could revert the assets). As part of the bargain it struck

with the purchaser, Humanigen promised to move this Court for Rule 2004 discovery on the

potential claims it had just sold. In other words, Humanigen has effectively auctioned its

potential access to the discovery procedures of Rule 2004—procedures surely unavailable to the

purchaser of Humanigen’s claims—as an inducement to purchase those claims. Rule 2004 is a

rule intended to further the administration of bankruptcy proceedings, not a bargaining chip to be

deployed years later by reorganized debtors that have obtained their assets contemporaneously

with, or after, confirmation of a plan of reorganization. This Court should not permit such

misuse of its process.

In addition to these fatal defects, Humanigen’s motion violates the “pending 5.

proceeding rule” because it seeks to discover information relevant to Humanigen’s already

pending lawsuit regarding the benznidazole assets—a lawsuit this Court correctly refused to

entertain because it is an ordinary commercial dispute between unrelated to the administration of

the bankruptcy. The 2004 Motion is also improper because it asks this Court to compel

discovery before the issuance of a subpoena, a course foreclosed by Rule 2004(c). And finally,

this Court lacks personal jurisdiction to enter an order with regard to two of the three Chemo

Objectors. Humanigen has not established that this Court has jurisdiction over Chemo Research,


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S.L. and Mundo Sano Foundation, entities organized outside of the United States that maintain

their principal places of business outside of the United States. They have no contacts with the

United States relevant to the KaloBios bankruptcy proceedings.

At bottom, Humanigen seeks Rule 2004 discovery over matters that relate not to the 6.

administration of the KaloBios bankruptcy proceedings, but to assets it acquired upon

effectiveness of the Plan—which Humanigen no longer even owns. This Court should not

permit such forum shopping and gamesmanship, and should deny the 2004 Motion.

PARTIES

Chemo Research, S.L. (“Chemo Research”) is a wholly owned subsidiary of Chemo 7.

España, S.L. (“Chemo España”), and is incorporated in Spain, with its principal place of business

in Madrid, Spain. Declaration of Fernando Mateus ¶ 3 (“Mateus Decl.”).

Exeltis USA, Inc. (“Exeltis”), is a New Jersey corporation with its principal place of 8.

business in Florham Park, New Jersey. Id. ¶ 4. It is a wholly owned subsidiary of Exeltis

Pharmaceutical Holdings, S.L. Id.

Mundo Sano Foundation (“Mundo Sano”) is a non-profit entity organized under the 9.

laws of Argentina and Spain. Id. ¶ 5. It has principal places of business in Madrid, Spain and

Buenos Aires, Argentina. Id. Mundo Sano is dedicated to combating neglected tropical

diseases, which afflict more than one billion of the world’s poorest people. Id. ¶ 6. Mundo Sano

and Chemo España have partnered on a number of public-health initiatives and charitable

activities.3 Id.

3 Humanigen’s motion is directed to “the Chemo Group” which is defined to include the “subsidiaries and affiliates” listed above. 2004 Motion at 1. But “the Chemo Group” is not a corporate entity. Mateus Decl. ¶ 7. It instead refers to a group of companies that operate under an umbrella brand. Id. Those companies now operate under the INSUD brand. Id.


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BACKGROUND

The Chemo Objectors are Dedicated to Combating Chagas Disease I.

For decades Chemo España and Mundo Sano have been dedicated to helping those in 10.

Spain and Latin America affected by neglected diseases, including Chagas disease. Chagas

disease is “[r]ecognized by [the World Health Organization] as one of the world’s 13 most

neglected tropical diseases [and . . .] has been a scourge to humanity since antiquity.” Anis

Rassi, Jr. et al., Chagas disease, 375 Lancet 1388, 1388 (2010) (Declaration of Benjamin M.

Mundel, hereinafter Mundel Decl., Ex. 1). Although once confined primarily to Latin America,

Chagas “is becoming an important health issue in the [United States] and Canada.” Id. at 1390.

As many as 238,000 people living in the United States are infected with the disease, as well as

millions of others around the globe. Jennifer Manne-Goehler et al., Estimating the Burden of

Chagas Disease in the United States, 11 PLoS Neglected Tropical Diseases 1, 4 tbl.1 (2016)

(Mundel Decl., Ex. 2).

Benznidazole is one of only two drugs that has been proven effective against Chagas 11.

disease, Mundel Decl., Ex. 1, at 1398, but it has not been commercially available in the United

States. Physicians and patients had only limited access to the drug, on a patient-by-patient basis,

from the Centers for Disease Control. See Jonathan D. Alpern et al., Access to benznidazole for

Chagas disease in the United States—Cautious optimism?, 11 PLOS Neglected Tropical

Diseases 1, 3 (2017) (Mundel Decl. Ex. 3).

Chemo Research’s Efforts to Obtain Approval to Market Benznidazole in the U.S. II.

By late 2012, Chemo Research began exploring whether benznidazole could be used 12.

as an affordable treatment for Chagas disease in the United States. In April 2015, the FDA

convened a public meeting and “scientific workshop to explore drug development for Chagas


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disease.” Ctr. for Drug Evaluation & Research, FDA, THE VOICE OF THE PATIENT: CHAGAS

DISEASE 10 (Nov. 2015) (Mundel Decl., Ex. 4). The FDA invited Dr. Sergio Sosa-Estani—one

of the world’s leading Chagas researchers and then-director of the Instituto Nacional de

Parasitología-Dr. Mario Fatala Chaben (INP-Fatala), a state-run medical-research institution in

Argentina—to participate. Id. at 17.

Clinicians, researchers, and FDA officials discussed clinical and regulatory issues 13.

surrounding the development of treatments for Chagas. Id. at 10–11. During the discussion, an

FDA official explained that the FDA would be willing to consider previously performed studies

as evidence of benznidazole’s safety and efficacy if it could review the patient-level data from

those studies. Tr. of Chagas Disease Public Meeting on Patient-Focused Drug Development

203–04 (Apr. 28, 2015) (Mundel Decl., Ex. 5). Dr. Sosa-Estani was the author of a study on the

effects of benznidazole on pediatric Chagas disease. See Sergio Sosa-Estani et al., Efficacy of

Chemotherapy with Benznidazole in Children in the Indeterminate Phase of Chagas’ Disease, 59

Am. J. Tropical Med. & Hygiene 526 (1998) (Kaplan Decl., Ex. 5). A different FDA official

asked Dr. Sosa-Estani whether the patient-level data from his 1998 study “would be available to

be part of a submission” for regulatory approval. Mundel Decl., Ex. 5, at 216:18–20. Dr. Sosa-

Estani answered “Yes.” Id. at 217:2.

Chemo Research then sought the patient-level data from Dr. Sosa-Estani’s 1998 14.

study. Suh Decl. ¶ 6. Chemo Research obtained these data in June 2016 from the public digital

repository at INP-Fatala in Argentina. Id. ¶ 7. One of INP-Fatala’s core missions is to make

data from government-funded studies, like Dr. Sosa-Estani’s 1998 study, publicly available as

required under Argentine law. Id. ¶ 6; see also Law No. 26,899, Dec. 3, 2013 (Arg.).


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Chemo Research reviewed and analyzed the data it received from INP-Fatala as it 15.

prepared to submit a new drug application (NDA) for benznidazole to the FDA. During this

analysis, the company contacted Dr. Sosa-Estani for clarification about a discrepancy between

data in one of the spreadsheets obtained from INP-Fatala and the data reported in the published

study. Suh Decl. ¶¶ 8–9. Dr. Sosa-Estani realized that INP-Fatala had provided a preliminary

version of the spreadsheet and he provided Chemo Research with the final version used for

publication. Id.

Chemo Research apprised the FDA of the sources of the data and the corrected 16.

spreadsheet. Suh Decl. ¶ 12. The FDA reviewed this information during its inspections of

Chemo Research in Madrid and of Dr. Sosa-Estani’s work in Argentina, and it also reviewed

correspondence between Chemo Research and Dr. Sosa-Estani. Suh Decl. ¶¶ 11–13; Kaplan

Decl., Ex. 13, at 4. In approving Chemo Research’s application, the FDA ultimately concluded

that the data presented no problems and that it was properly gathered. Suh Decl. ¶¶ 11–13.

The FDA approved Chemo Research’s NDA on August 29, 2017, and awarded it a 17.

tropical disease priority review voucher (PRV).4 Letter from John J. Farley, Deputy Director,

Office of Antimicrobial Products, to Sandy S. Suh, Head of Regulatory Affairs, Exeltis USA,

Inc., (Aug. 29, 2017) (Mundel Decl., Ex. 6). Chemo is currently preparing to bring benznidazole

to market in the United States. Suh Decl. ¶ 15. In furtherance of its mission to eradicate Chagas

4 Congress has instructed the FDA to award a PRV to any applicant who obtains FDA approval of a drug to treat a “tropical disease,” as defined by statute or the FDA. See 21 U.S.C. § 360n(a)(3). A PRV entitles the bearer to priority review of a subsequent NDA. Id. § 360n(a)(1), (2). The FDA designated Chagas disease as a tropical disease in August 2015. See Order Designating Additions to the Current List of Tropical Diseases in the Federal Food, Drug, and Cosmetic Act, 80 Fed. Reg. 50559, 50562 (Aug. 20, 2015). Chemo Research had been pursuing approval for benznidazole for years before it became eligible for a PRV.


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throughout the world, Chemo Research has promised to make benznidazole available at an

affordable price through an ambitious access plan. Id.

KaloBios Pursues Benznidazole Approval III.

Lacking cash or research prospects, KaloBios announced on November 13, 2015, that 18.

it would wind down its operations and liquidate its assets. See Disclosure Statement with

Respect to the Second Amended Plan of Reorganization of KaloBios Pharmaceuticals, Inc. under

Chapter 11 of the Bankruptcy Code 20, In re KaloBios Pharma., Inc., No. 15-12628 (Bankr. D.

Del. May 9, 2016) (Mundel Decl., Ex. 7). Five days later, however, an investor group led by

Martin Shkreli purchased a controlling stake in KaloBios, and Shkreli was named the company’s

CEO and board chairman. Id. At the time he made his bid for control of KaloBios, Shkreli had a

reputation for drastically increasing the prices of drugs purchased by his companies—for

example, one Shkreli-run firm purchased the rights to a drug used by AIDS patients and raised

its price from $13.50 per tablet to $750 per tablet. See Andrew Pollack, Turing Moves to Next

Drug, N.Y. Times, Dec. 12, 2015, at B6 (Mundel Decl., Ex. 8).

Shortly after Shkreli took control, KaloBios announced that it had signed a letter of 19.

intent to acquire from Savant “the worldwide rights to Savant’s benznidazole program.”

KaloBios Pharma., Inc., Current Report (Form 8-K), Ex. 99.1, at 6 (Dec. 3, 2015) (Mundel Decl.,

Ex. 9); Mundel Decl., Ex. 7, at 21. The firm declared that it expected to market the drug—then

selling in Latin America for $50 to $100 per course of treatment—at prices similar to those of

Hepatitis C drugs—around $60,000 to $100,000 per course of treatment. See Mundel Decl., Ex.

9, at 15; Mundel Decl., Ex. 8, at B6.

Just days after KaloBios announced the letter of intent, the FBI arrested Shkreli 20.

pursuant to a federal indictment charging him with securities and wire fraud. Mundel Decl., Ex.

7, at 21. KaloBios terminated Shkreli’s employment, ibid., and filed for bankruptcy protection


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under Chapter 11 on December 29, 2015, Pet., In re KaloBios Pharma., Inc., No. 15-12628

(Bankr. Del. Dec. 29, 2015) (Mundel Decl., Ex. 10).

In June 2016, this Court confirmed the Plan, see Findings of Fact, Conclusion of Law, 21.

and Order Confirming Second Amended Chapter 11 Plan of Reorganization of KaloBios

Pharmaceuticals, Inc., In re KaloBios Pharma., Inc., No. 15-12628 (Bankr. D. Del. June 16,

2016) (Mundel Decl., Ex. 11), which became effective on June 30, 2016, see Notice of Entry of

Confirmation Order, Occurrence of Effective Date, and Related Bar Dates, In re KaloBios

Pharma., Inc., No. 15-12628 (Bankr. D. Del. June 30, 2016) (Mundel Decl., Ex. 12). On the

same day, KaloBios entered into the Agreement for the Manufacture, Development and

Commercialization of Benznidazole for Human Use with Savant (“2016 MDC Agreement”)

(Mundel Decl., Ex. 13). The agreement granted KaloBios all of Savant’s ownership in the

benznidazole assets.

Savant purportedly obtained its assets in a 2013 agreement with an Argentinian 22.

organization, Instituto de Efectividad Clínica y Sanitaria (IECS) (“the IECS Agreement”). In the

2016 MDC Agreement, however, Savant disclosed to KaloBios that IECS

Id. sch. 8, § 8.5. Savant further informed Humanigen that it was

Ibid.

KaloBios Sued Savant for Breach of Contract Regarding the Benznidazole Assets IV.

KaloBios’s plans for benznidazole soon ran into problems. In July 2017—before 23.

FDA approved Chemo Research’s NDA—KaloBios sued Savant in Delaware Superior Court,

alleging that Savant had, among other things, falsely represented that it owned sufficient

benznidazole data to obtain swift regulatory approval for the drug in the United States. Compl.

¶¶ 79–108, KaloBios Pharma., Inc. v. Savant Neglected Diseases, LLC, No. N17C-07-068 (Del.


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Super. Ct. July 10, 2017) (Mundel Decl., Ex. 14). As counsel for Humanigen (KaloBios’s new

name as of August 2017) subsequently argued, “[s]ome of the inadequacies [of the benznidazole

assets purchased from Savant] include the fact that [Savant] told us at the time—they represented

at the time that there would be an exclusive license with a company in Argentina as to the

[patient-level] data. . . . Not only was there not exclusivity, but the FDA has determined that the

information was in raw form and not sufficient and adequate data.” Tr. of Hr’g 11:15–21,

KaloBios Pharma., Inc. v. Savant Neglected Diseases, LLC, No. 17-50898 (Bankr. D. Del. Aug.

8, 2017) (Mundel Decl., Ex. 15).

Savant removed the case to district court, which transferred it to this Court. 24.

Humanigen moved to remand, arguing that the bankruptcy court lacked subject matter

jurisdiction. See Opening Brief in Support of Motion to Remand at 12-15, KaloBios Pharma.,

Inc. v. Savant Neglected Diseases, LLC, No. 17-50898 (Bankr. Del. Aug. 1, 2017) (Mundel

Decl., Ex. 16). Humanigen further asserted that, even if the bankruptcy court had jurisdiction, it

should abstain from exercising it because the suit “will have little if any effect on ‘the efficient

administration of the estate’” as “[t]he estate here has been largely administered.” Reply Brief at

15, KaloBios Pharma., Inc. v. Savant Neglected Diseases, LLC, No. 17-50898 (Bankr. Del. Aug.

22, 2017) (Mundel Decl., Ex. 17). Humanigen explained that “‘[m]erely having once been a

debtor in a bankruptcy case is insufficient to require the bankruptcy court to continue to resolve

all disputes involving that party. At some point the debtor has to leave the nest.’ KaloBios is no

longer a fledgling debtor, but is a well-functioning company that has successfully reorganized.”

Id. at 17 (quoting LaRoche Indus., Inc., 312 B.R. 249, 255 (Bankr. D. Del. 2004)). Shortly after

filing the instant Rule 2004 motion, however, Humanigen withdrew its motion to remand. See

Notice of Withdrawal of Motion to Remand, KaloBios Pharma., Inc. v. Savant Neglected


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Diseases, LLC, No. 17-50898 (Bankr. D. Del. Jan. 24, 2018) (Mundel Decl., Ex. 18). It then

asked this Court to stay the suit against Savant “until the 2004 motion is heard and discovery is

obtained there and then we can have a clearer picture … whether even Savant’s actions … gave

rise to that complaint.” Tr. of Hr’g 12:21–24, KaloBios Pharma., Inc. v. Savant Neglected

Diseases, LLC, No. 17-50898 (Bankr. D. Del. Jan. 29, 2018) (Mundel Decl., Ex. 19).

The Court nonetheless remanded. It explained that Humanigen’s suit is “a simple, 25.

commercial contractual dispute over what monies are due to and from on a contract.” Id. at

26:13–15. The Court reasoned that if it could exercise jurisdiction over KaloBios’s suit, “then

any lease that gets assumed in connection with a plan, all of a sudden, someone wants me to

decide if there’s rent owed, and I don’t think that that’s within the purview of this Court.” Id. at

26:23–27:1.

Humanigen Sold its Potential Claims Against the Chemo Objectors to a Third Party V.

Although not disclosed in its 2004 Motion, Humanigen sold the benznidazole assets 26.

and potential legal claims to a third-party purchaser before filing. See generally 2004 Motion.

According to an SEC filing, Humanigen transferred to an affiliate of Nomis Bay LTD “all of the

assets of [Humanigen] related to benznidazole … including without limitation, all of

[Humanigen]’s rights … pursuant to [the 2016 MDC Agreement] and all causes of action and

claims related to or in connection with benznidazole, including the right to pursue causes of

action and claims . . . related to potential misappropriation of [Humanigen]’s trade secrets by a

competitor in connection with such competitor’s submissions to the FDA.” Humanigen, Inc.,

Definitive Information Statement (Schedule 14C), at 5 (Jan. 30, 2018) (Mundel Decl., Ex. 20).

Nomis Bay also owns one quarter of Humanigen’s stock. See id. at 9.

Nomis Bay has “full control . . . over … the prosecution of the Claims,” and “has 27.

agreed to fund these litigation efforts.” Id. at 6. The agreement required Humanigen to, “as soon


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as practicable,” move this Court “to permit discovery [on] the Claims pursuant to Rule 2004.”

Ibid. Humanigen appears to have retained a contingent right to thirty percent of any recovery on

the claims (less fees and expenses), and the claims and assets could revert to Humanigen if

Nomis Bay declines, in its sole discretion, to keep them after a period prescribed by the

agreement. Ibid.

ARGUMENT

The Court should deny Humanigen’s motion for four separate reasons. First, Rule 28.

2004 does not authorize Humanigen’s proposed examination regarding topics unrelated to the

administration of the bankruptcy estate, particularly when the potential claims were sold to a

third party. Second, Humanigen cannot show good cause for the examination because the

“pending proceeding rule” bars this examination. Third, the request for an order compelling

discovery should be denied because no subpoena has issued. Fourth, Mundo Sano and Chemo

Research are beyond the reach of this Court’s personal jurisdiction.

Rule 2004 Does Not Authorize the Requested Examination I.

Humanigen’s proposed examination fails under Rule 2004 for two reasons. First, 29.

Humanigen does not seek any information from the Chemo Objectors that bears any relation to

the administration of the KaloBios bankruptcy. Instead it seeks an examination regarding assets

that were not assets of the bankruptcy estate and claims that, if successful, will not benefit the

estate or the creditors. Second, it does not seek any information from the Chemo Objectors

relating to any property of the reorganized debtor because Humanigen sold the assets.

Rule 2004 Does Not Authorize This Examination Because It Seeks Information A.Unrelated to the Administration of the Bankruptcy Proceedings

Rule 2004 provides that “the court may order the examination” of a party related to 30.

“the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any


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matter which may affect the administration of the debtor’s estate.” Fed. R. Bankr. P. 2004(a)–

(b).5 The underlying “purpose of a Rule 2004 examination is to discover the nature and extent of

the bankruptcy estate in order to distribute [the] debtor’s assets for the benefit of its creditors.”

In re Millennium Lab Holdings II, LLC, 562 B.R. 614, 626 (Bankr. D. Del. 2016). Rule 2004

thus gives those tasked with administering a bankruptcy estate the means to “quickly gather the

information they need to do their job.” In re J&R Trucking, Inc., 431 B.R. 818, 82, n.2 (Bankr.

N.D. Ind. 2010).

Rule 2004 is subject to an important limitation: it cannot be used for “matters having 31.

no relationship to the . . . administration of [the bankrupt’s] estate.” In re Johns-Manville,

Corp., 42 B.R. 362, 364 (S.D.N.Y. 1984). Rather, examinations must be strictly limited to

“matters which are … relevant to the basic inquiry,” In re Table Talk, 51 B.R. 143, 145 (Bankr.

D. Mass. 1985), that is, matters pertaining to the administration of the estate, see In re Roman

Catholic Church of Diocese of Gallup, 513 B.R. 761, 764 (Bankr. D.N.M. 2014). This limitation

thus excludes non-estate property from the scope of Rule 2004 examinations because the status

of, and rights in, non-estate property are irrelevant to the administration of a bankruptcy estate.

See In re Rosenberg, 303 B.R. 172, 176 (B.A.P. 8th Cir. 2004) (“to the extent [an asset] is not

property of the Debtor’s bankruptcy estate, any examination … does not fall within the scope of

Rule 2004”); In re Hilsen, 2008 WL 2945996, at *4 (Bankr. S.D.N.Y. 2008) (“Rule 2004 may be

used to discover information about estate property, but it is not a proper means to inquire with

respect to non-estate property.”).

5 The Rule also authorizes examination of pre-confirmation matters regarding “the operation of any business and the desirability of its continuance . . . and any other matter relevant to the case or to the formulation of a plan.” Fed. R. Bankr. P. 2004(b).


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Because Rule 2004 examinations are limited to matters relating to the administration 32.

of the bankruptcy estate, the propriety of a Rule 2004 examination necessarily depends on when

it is sought. A Rule “2004 examination is generally a pre-confirmation discovery tool.” In re

Gross, 121 B.R. 587, 595 (Bankr. D.S.D. 1990). Before confirmation of a reorganization plan,

the scope of discovery is broad because the scope of administrative responsibilities is broad. See

11 U.S.C. §§ 1106–1107 (duties of trustees and debtors-in-possession); Fed. R. Bankr. P.

2015(a) (same); cf. Cameron v. United States, 231 U.S. 710, 717 (1914). But after confirmation

and substantial consummation of a reorganization plan, the scope of administrative duties

diminishes. See 11 U.S.C. § 1141(b) (terminating the bankruptcy estate upon confirmation of the

plan). With the scope of administrative duties narrowed, the scope of discovery permitted under

Rule 2004 necessarily narrows as well. Accordingly, courts have long held that post-

confirmation Rule 2004 examinations “must be limited to issues [regarding] ‘the administration

of the case post-confirmation.’” In re Express One Int’l, Inc., 217 B.R. 215, 216-17 (Bankr. E.D.

Tex. 1998) (quoting In re Cinderella Clothing Indus., Inc., 93 B.R. 373, 377 (Bankr. E.D. Pa.

1988)).6

Humanigen seeks to examine how the Chemo Objectors obtained and used patient-33.

level data from Dr. Sosa-Estani’s 1998 study. Humanigen argues that this information is

necessary to determine whether it has claims under state or federal law. Humanigen never

explains, however, how this information relates at all to the administration of the bankruptcy

estate. Nor could it. The potential legal claims that Humanigen wishes to investigate relate

exclusively to assets acquired by a reorganized debtor contemporaneously with, or after, 6 See also In re Gross, 121 B.R., at 595 (“[O]nly in a narrow context[ ] may the 2004 examination be used post-confirmation.”); 9 Alan N. Resnick, COLLIER ON BANKRUPTCY ¶ 2004.02[14], at 2004-11 (2017) (“A Rule 2004 examination may be taken after a plan is confirmed but should be limited to issues which the court can still entertain ….”).


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confirmation of a plan, and thus were not part of the bankruptcy estate. Recovery on those

claims will not benefit creditors of the estate and, in any event, the bankruptcy estate has been

largely administered. Humanigen has not explained how the examination will further the few

administrative tasks remaining. Accordingly, the Rule 2004 examinations are unrelated to the

administration of the bankruptcy.

The Benznidazole Assets and Legal Claims Were Not Assets of the 1.Bankruptcy Estate

When KaloBios entered bankruptcy in December 2015, it had no rights in the 34.

benznidazole assets. Thus, when the assets of KaloBios became the assets of the bankruptcy

estate, no rights to Dr. Sosa-Estani’s study data were included in the bankruptcy estate. See 11

U.S.C. § 541(a) (defining property of the bankruptcy estate). Nor did KaloBios purchase the

benznidazole assets during the bankruptcy. Mundel Decl., Ex. 7, at 90. During the bankruptcy

case, the opportunity to purchase benznidazole assets arose, financing was obtained, and the Plan

authorized “the Reorganized Debtor” to “consummate the” transaction with Savant on the Plan’s

effective date. See Debtor’s Second Amended Plan of Reorganization § 5.7, In re KaloBios

Pharm., Inc., No. 15-12628 (Bankr. D. Del. May 9, 2016) (“Reorg. Plan”) (Mundel Decl., Ex.

21).7 On the effective date, however, the bankruptcy estate ceased to exist. See id. § 10.2, at 41

(providing for revesting of “all property of the” bankruptcy estate in KaloBios on the effective

date); Mundel Decl., Ex. 11 ¶ 57, at 24 (same); see also 11 U.S.C. § 1141(b). Thus, when

KaloBios and Savant executed the 2016 MDC Agreement on June 30, 2016, the rights granted in

the agreement became assets of the reorganized debtor—not the bankruptcy estate. That is, if the

7 See also Mundel Decl., Ex. 11 ¶ 49; 2016 MDC Agreement § 2.7(c)(iv) (setting as a condition precedent to closing that “a court of competent jurisdiction shall have issued a judicial order approving the Contemplated Transactions, and the effective date of KaloBios’ plan of reorganization (the ‘Bankruptcy Exit’) shall have occurred or shall occur contemporaneously with the Closing of the Contemplated Transactions”).


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debtor sought Rule 2004 examinations regarding its pre-confirmation assets, those assets would

not include the benznidazole assets because such assets were only purchased by the reorganized

debtor as the Plan was being consummated on the effective date.

The Creditors Will Not Benefit From Any Recovery of the Claims Under 2.the Plan and the Estate Has Largely Been Administered

The creditors of the estate will not benefit from any recovery on Humanigen’s 35.

putative “misappropriation” claims. The Plan clearly sets forth creditor recoveries and nothing

in the Plan provides for any creditor to recover any proceeds from litigation initiated by the

reorganized debtor after confirmation, much less for litigation regarding assets acquired on the

effective date. See Reorg. Plan art. III, at 20–27.

Further, Humanigen’s concession that the bankruptcy “estate . . . has been largely 36.

administered” demonstrates that its examination will not advance the bankruptcy proceedings.

Mundel Decl., Ex. 17, at 15. Indeed, Humanigen has told the SEC that only $731,000 of more

than $32 million in claims outstanding on the effective date have yet to be reconciled and that,

“[a]lthough the Bankruptcy Case remains open . . . , [Humanigen] is no longer operating under

the direct supervision of the Bankruptcy Court. [Humanigen] anticipates that the Bankruptcy

Case will be closed following the completion of the claims reconciliation process.” Humanigen,

Inc., Quarterly Report (Form 10-Q) at 9–10 (Nov. 17, 2017) (Mundel Decl., Ex. 22). It has

further represented to this Court that “KaloBios is no longer a fledgling debtor, but is a well-

functioning company that has successfully reorganized.” Mundel Decl, Ex. 17, at 17. This

Court has authorized Humanigen to “operate its business,” “use, acquire and dispose of

property,” “retain, compensate and pay any professionals or advisors,” and “compromise or

settle any Claims or Interests without supervision of or approval by [the bankruptcy court], and


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free and clear of any restrictions of the Bankruptcy Code or the Bankruptcy Rules.” Mundel

Decl., Ex. 11 ¶ 59.

A Rule 2004 examination is improper under these circumstances. Humanigen seeks 37.

discovery on non-estate property that will not benefit estate creditors at a time when the debtor

has successfully reorganized and the bankruptcy estate has been largely administered. The rule

“is not intended to give the rehabilitated debtor post confirmation a strategic advantage in fishing

for potential private litigation.” In re Good Hope Refineries, Inc., 9 B.R. 421, 423 (Bankr. D.

Mass. 1981) (discussing Rule 2004’s predecessor). “Merely having once been a debtor in a

bankruptcy case is insufficient to require the bankruptcy court to continue to resolve all disputes

involving that party. At some point the debtor has to leave the nest.” In re LaRoche Indus., Inc.,

312 B.R. 249, 255 (Bankr. D. Del. 2004); accord Pettibone Corp. v. Easley, 935 F.2d 120, 122

(7th Cir. 1991). Nor is Rule 2004 intended to permit inquisitions into the status of non-estate

property. In re Rosenberg, 303 B.R., at 176. With the KaloBios bankruptcy all but concluded

and Humanigen’s business up and running, the discovery Humanigen seeks is not “necessary to

complete the administration of the case.” In re Express One, 217 B.R., at 217. Humanigen must

resort to ordinary civil procedure to obtain information on property and claims it acquired in the

course of its post-confirmation business, not the extraordinary Rule 2004 processes enabled

under bankruptcy law.

Humanigen’s Contrary Argument Is Unconvincing 3.

Humanigen’s argument in favor of a Rule 2004 examination here is that the 2016 38.

MDC Agreement was “central to” Humanigen’s reorganization plan, 2004 Motion ¶ 23, at 7, and

that “pre-confirmation misappropriation activity … impacted the implementation and

consummation of the Court’s” confirmation order., id. ¶ 55 n.9. This reading of Rule 2004—that

post-confirmation examinations may pertain to any subject that was central to the plan, no matter


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how far removed from the post-confirmation administration of the plan—is staggeringly broad.

Under this interpretation, any former debtor whose bankruptcy case remains nominally open

could compel a third party to submit to a Rule 2004 examination relating to any asset that was

contemplated by the reorganization plan merely by asserting that the asset was “central” to the

plan. Thus, a debtor whose reorganization plan included as a “central” element the lease of a

factory could avail itself of Rule 2004 years later to examine the factory’s builder for shoddy,

pre-confirmation workmanship; to examine the factory’s landlord regarding disputes over

repairs; to examine an employee whose post-confirmation negligence may have caused damage

to the factory; or to examine a contractor that failed to properly repair the damage. Humanigen

cites no cases supporting the broad interpretation it posits in its motion. See In re Sunedison,

Inc., 572 B.R. 482, 491–92 (Bankr. S.D.N.Y. 2017) (rejecting broad argument that would permit

Rule 2004 discovery on “any item of information that may have an effect on the value of a

debtor’s asset”). Nor does the assertion of pre-confirmation conduct help Humanigen. Any pre-

confirmation conduct occurred between third parties prior to Humanigen having any rights in the

data.

Rule 2004 is a device for the administration of bankruptcies. It is not a device for 39.

every dispute coincident to a bankruptcy. See In re Good Hope Refineries, 9 B.R. at 422–23

(holding that “once the pressure of [a bankruptcy proceeding] has been reduced,” parties can no

longer avail themselves of bankruptcy’s extraordinary discovery procedures). The nearly

concluded KaloBios bankruptcy is wholly coincident to the dispute for which Humanigen now

seeks information. The Court therefore should deny the 2004 Motion.


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Neither the Benznidazole Assets nor the Litigation Claims Are “Property” of B.Humanigen

Humanigen’s motion violates another important limit on Rule 2004. The plain text of 40.

the rule limits examinations to the “acts, conduct, or property … of the debtor.” Fed. R. Bankr.

P. 2004(b) (emphasis added). Rule 2004 is not a “private collection device” through which non-

debtor entities can “investigate their rights against third parties.” See In re J&R Trucking, 431

B.R. at 822; see also In re DeShetler, 453 B.R. 295, 302 (Bankr. S.D. Ohio 2011) (“The use of a

2004 examination is not permitted for matters not related to the financial condition of a debtor or

a debtor’s estate.”)

As explained, neither the benznidazole assets nor the legal claims were ever property 41.

of the pre-confirmation bankruptcy estate. Nor are they now the property of the reorganized

debtor. Humanigen sold the benznidazole assets and all related legal claims to a third party. See

Mundel Decl., Ex. 20, at 3–4, 6. A reorganized debtor cannot sell its potential claims to a third

party and then seek Rule 2004 discovery to assist the third party’s prosecution of those claims.

Indeed, Humanigen apparently filed this Rule 2004 Motion only because it promised 42.

to do so when it sold the claims. Id. at 6. This Rule 2004 Motion and any subsequent litigation

which may arise, however, are fully funded and controlled by the new owner of the claims, not

Humanigen. Id. And, importantly, none of the proceeds “of any amounts realized from the

successful prosecution” of the claims will benefit the bankruptcy estate or any claimant against

that estate. The proceeds, if any, would go to the third party, and Humanigen may receive a

small portion of the recovery (after expenses and fees). Ibid. Claimants against the bankruptcy

estate will receive nothing. See Reorg. Plan art. III, at 20–27.

This Court denied a Rule 2004 motion under similar circumstances in In re 43.

Millennium Lab Holdings. There, the reorganization created two trusts, one of which—the


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Lender Trust—held claims against third parties contributed by certain consenting creditors. 562

B.R., at 610. These claims did not belong to the bankruptcy estate and recovery on the claims

would benefit only the contributing creditors. Ibid. The trustee moved for post-confirmation

Rule 2004 examinations of third parties relating to the Lender Trust claims. Id. at 619–20. This

Court determined that the trustee could not take the Rule 2004 examinations because they were

“not an investigation into the property or to the liabilities and financial condition of the debtor,”

and would “not further the recovery and distribution of the Debtors’ assets or otherwise assist

with the administration of th[e] case.” Id. at 628.

Like the Lender Trust in Millennium Lab Holdings, Humanigen seeks to examine the 44.

Chemo Objectors regarding claims that did not belong to the bankruptcy estate and that no

longer belong to the reorganized debtor. The reorganized debtor obtained the assets on the

effective date of the Plan and sold the assets and the legal claims almost eighteen months later,

after nearly all of the claims against the bankruptcy estate had been reconciled. Humanigen sold

the property in the ordinary course of business, not pursuant to the Plan or to further

administration of the bankruptcy proceedings. And none of the recovery will benefit creditors of

the bankruptcy estate. Recovery on these claims will go to a third party, less some residual

share. Humanigen thus seeks a Rule 2004 examination to “provide [a] private litigant[ ] … with

a strategic advantage” as it “pursu[es] claims against non-debtor entities.” Id. at 629. That is

precisely what this Court prohibited in In re Millennium Lab Holdings.

Humanigen Has Not Shown Good Cause for a Rule 2004 Examination II.

Humanigen cannot show that its proposed examination falls within the scope of Rule 45.

2004. But even if it could, it would “not have an absolute right to Rule 2004 examinations—the

granting of a Rule 2004 examination is dependent on the discretion of the court.” In re

Millennium Lab Holdings, 562 B.R. at 626. “The party seeking to conduct a 2004 examination


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has the burden of showing good cause for the examination which it seeks. ‘Generally, good

cause is shown if the examination is necessary to establish the claim of the party seeking the

examination, or if denial of such request would cause the examiner undue hardship or injustice.’”

Id. at 627 (quoting In re Metiom, Inc., 318 B.R. 263, 268 (Bankr. S.D.N.Y. 2004)). “Courts deny

requests for leave to conduct Rule 2004 examinations when the movant seeks discovery into

matters that are not relevant to its basic inquiry or if the movant seeks the examination ‘for

purposes of abuse or harassment.’” In re China Fishery Grp. Ltd., 2017 WL 3084397, at *5

(Bankr. S.D.N.Y. July 19, 2017) (quoting In re Mittco, Inc., 44 B.R. 35, 36 (Bankr. E.D. Wisc.

1984)).

“The use of Rule 2004 to further [a] case in state court constitutes an abuse of Rule 46.

2004.” Snyder v. Soc’y Bank, 181 B.R. 40, 42 (S.D. Tex. 1994), aff’d sub nom. 52 F.3d 1067

(5th Cir. 1995) (per curiam). Such use is abusive because it violates the “pending proceeding

rule,” pursuant to which parties may not use Rule 2004 examinations to benefit their pending

litigation. See In re Wash. Mut., Inc., 408 B.R. 45, 50 (Bankr. D. Del. 2009). In the absence of

this limitation, Rule 2004 could be “used as a tactic to circumvent the safeguards of the Federal

Rules of Civil Procedure.” In re Enron, 281 B.R. 836, 841 (Bankr. S.D.N.Y. 2002); see also In

re Bennett Funding Grp., Inc., 203 B.R. 24, 28 (Bankr. N.D.N.Y. 1996) (courts are “wary of

attempts to utilize [Rule] 2004 to avoid the restrictions of the Federal Rules of Civil Procedure”);

In re Szadkowski, 198 B.R. at 142 (“The Court will not allow litigants to utilize Rule 2004 as a

substitute for discovery under the Federal Rules of Civil Procedure, especially where to do so

would compromise the rights of parties subject to discovery requests.”). “[D]iscovery of

evidence related to [a] pending proceeding must be accomplished in accord with more restrictive

provisions of” the Federal Rules of Civil Procedure, not Rule 2004. In re Bennett Funding Grp.,


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203 B.R., at 29; see also In re Blinder, Robinson & Co., 127 B.R. 267, 275 (D. Colo. 1991)

(permitting Rule 2004 examination of “[e]ntities not affected by the adversary proceeding”)In re

Comdisco, Inc., 2006 WL 2375458, at *7 (N.D. Ill. Aug. 14, 2006) (forbidding Rule 2004

production that would be used to advance pending litigation in state court).

Humanigen is violating this rule and trying to avoid the ordinary discovery process in 47.

civil litigation. It has a pending lawsuit against Savant in Delaware state court related to the

issues on which it seeks discovery here. It has conceded that its Rule 2004 motion is calculated

to discover evidence relevant to that pending case, and that it intends to “amend th[at]

complaint” in light of the “full picture of the scope of all claims” which Rule 2004 discovery

would provide. See Mundel Decl., Ex. 19, at 9:7–11. That admission makes clear that this

motion violates the pending proceeding rule. See In re Snyder, 52 F.3d at 1067.

To be sure, the pending proceeding rule applies typically to Rule 2004 examinations 48.

of entities that are party to a pending proceeding. See generally In re Wash. Mut., 408 B.R., at

50–51. But Humanigen’s request violates the pending proceeding rule even though Humanigen

has not yet named the Chemo Objectors as defendants in that litigation. First, Humanigen has

informed this court of its intent to amend its complaint after Rule 2004 discovery to include a

“misappropriation” claim, which involves the Chemo Objectors. See Mundel Decl., Ex. 19, at

11:1–8; see also 2004 Motion ¶ 59. It thus seeks information related to its pending suit. Second,

Humanigen has already sent to Chemo a demand letter threatening suit. See Letter from Howard

J. Kaplan to Sandy S. Suh (Sept. 22, 2017) (Mundel Decl., Ex. 23).

Courts have rejected similar efforts. In Good Hope Refineries, the reorganized debtor 49.

sought a post-confirmation examination of a firm which had sold goods to the debtor in

possession, alleging that the sales may have violated antitrust laws. 9 B.R. at 421–22. The


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bankruptcy court denied the motion and explained that the Rule 2004 “is not intended to give the

rehabilitated debtor post confirmation a strategic advantage in fishing for potential private

litigation…. [E]qual protection and due process should require all litigants to use the same

discovery and procedural rules when not directly engaged in those activities that call for the

bankruptcy umbrella, namely, that collection of activities characterized as the administration of

the estate.” Id. at 423. Similarly, in GHR Energy, the debtor sought pre-confirmation Rule 2004

examinations of third parties to whom the debtor had previously assigned some rights, alleging

that those third parties were “spiriting away” assets of the debtor. 35 B.R. 534, 536 (Bankr. D.

Mass. 1983). The bankruptcy court denied the motion, reasoning “that the debtors are now in a

position to file an action against certain of the individuals and entities if they so choose. It

appears the debtors are attempting to use Rule 2004 to circumvent the procedural safeguards

provided a litigant by the Federal Rules of Civil Procedure (or where appropriate any other

similar state discovery rules).” Id. at 538. This court should deny Humanigen’s motion for the

same reasons.

Humanigen’s Request for an Order Compelling Production of Documents Is III.Procedurally Improper

Humanigen asks this court to order the Chemo Objectors to produce all requested 50.

documents within 30 days of the entry of the order. See 2004 Motion, Ex. A, at 2. But Rule

2004 does not permit this Court to compel the Chemo Objectors to comply with Humanigen’s

discovery requests because no subpoena has been issued or served.

Rule 2004 contemplates a two-step process to obtain discovery from an entity other 51.

than the debtor. Rule 2004(c) provides that “[t]he attendance of an entity for examination and

for the production of documents … may be compelled as provided in Rule 9016 for the

attendance of a witness at a hearing or trial.” Fed. R. Bankr. P. 2004(c). Rule 9016 simply


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incorporates Rule 45 of the Federal Rules of Civil Procedure. Id. 9016. Under these rules, it is

well established that the party seeking the Rule 2004 examination of a non-debtor entity must

first obtain an order for the examination and then must serve that order with a subpoena to the

non-debtor entity consistent with the requirements of Rule 45. See Wm. L. Norton, Jr. & Wm. L.

Norton III, 8 Norton Bankruptcy Law and Practice § 163:72, at 163-92–163-93 (3d ed. 2016)

(“Pursuant to these rules, when a party in interest obtains an order compelling an entity other

than the debtor to be examined, the party should obtain a subpoena and serve it with the order.”).

In the absence of a properly issued, signed, and served subpoena, a non-debtor party need not

submit to a Rule 2004 examination. In re Sheetz, 452 B.R. 746, 748 (Bankr. N.D. Ind. 2011);

see also In re Patel, 2017 WL 377943, at *2 (Bankr. N.D. Ga. Jan. 26, 2017); Raynor v.

Greenlight Capital Qualified, L.P., 2008 WL 2224897, at *4 (Bankr. D. Neb. May 23, 2008).

Humanigen is trying to cut Rule 2004’s two-step process short by obtaining an 52.

order compelling discovery directly from this Court, thereby depriving the Chemo Objectors of

the important protections afforded by Rule 45. See In re Buccaneer Res., LLC, 2015 WL

8527424, at *6 (Bankr. S.D. Tex. Dec. 10, 2015). If this Court does grant an order authorizing

Rule 2004 discovery, it should confirm that all objections “under Bankruptcy Rule 9016, other

applicable Bankruptcy Rules, the Local Bankruptcy Rules or applicable non-bankruptcy law,”

including foreign law, “are expressly preserved.” In re Enron Corp., 2002 WL 32156064, at *3

(Bankr. S.D.N.Y. Sept. 12, 2002).


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The Court Lacks Personal Jurisdiction Over Mundo Sano and Chemo Research8 IV.

Personal jurisdiction is a constitutional prerequisite to the exercise of judicial 53.

authority over any party. Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S.

694, 701–02 (1982). Accordingly, a court must have personal jurisdiction over a third party to

impose discovery obligations on it under Rule 2004. In re Automotive Refinishing Paint, 229

F.R.D. 482, 487 (E.D. Pa. 2005) (“court must have personal jurisdiction over a nonparty witness

to compel it to comply with a valid discovery request”); cf. In re China Fishery Grp., 2017 WL

3084397, at *5 (requiring personal jurisdiction before enforcing a Rule 2004 subpoena). This

Court cannot authorize discovery as to either Mundo Sano or Chemo Research because neither

nonresident entity is subject to this Court’s personal jurisdiction.

The Due Process Clause permits a court to exercise personal jurisdiction over a 54.

nonresident defendant only “if the defendant has ‘certain minimum contacts with [the forum]

such that the maintenance of the suit does not offend traditional notions of fair play or substantial

justice.’” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011) (quoting

Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Courts may exercise one of two types

of jurisdiction depending on the type and intensity of the contacts. A court with general

jurisdiction over a defendant may hear any claim against the defendant irrespective of the claim’s

link to the defendant’s forum contacts. Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014).

Courts may exercise general jurisdiction only over defendants whose contacts with the forum

“are so continuous and systematic as to render them essentially at home in the forum.” BNSF

Ry. v. Tyrrell, 137 S. Ct. 1549, 1558 (2017). A court may exercise specific jurisdiction over a

8 Although Exeltis does not object to the Court’s personal jurisdiction for the purpose of an order authorizing a Rule 2004 examination, Exeltis does, like the other the Chemo Objectors, reserve the right to object to a subpoena on personal jurisdiction or other grounds.


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nonresident defendant with fewer contacts with the forum, but that jurisdiction is limited to

causes of action “arising from or related to” the defendant’s forum-specific contacts. Bristol-

Myers Squibb Co. v. Super. Ct. of Cal., 137 S. Ct. 1773, 1780, 1781–82 (2017). This motion

should be dismissed against Chemo Research and Mundo Sano because Humanigen does not

argue, much less show, that this Court can constitutionally assert either type of personal

jurisdiction over them.

The Court Lacks General Jurisdiction Over Chemo Research and Mundo Sano A.

Neither Chemo Research nor Mundo Sano is subject to general jurisdiction in 55.

Delaware or anywhere in the United States. “The ‘paradigm’ forums in which a corporate

defendant is ‘at home’ … are the corporation’s place of incorporation and its principal place of

business.” BNSF Ry., 137 S. Ct. at 1558 (quoting Daimler, 134 S. Ct. at 760). Humanigen does

not allege that either entity is at home in the United States. Nor could it. Chemo Research is

incorporated in Spain and its principal place of business is there as well. Similarly, Mundo Sano

is organized under the laws of Argentina and Spain with its principal places of business in those

two countries. And neither entity is “so heavily engaged in activity” in the United States such

that either would qualify as the “exceptional case” in which a corporation is otherwise “at home”

in the forum. Id., at 1559.

The Court Lacks Specific Jurisdiction over Chemo Research and Mundo Sano B.

A nonresident defendant is subject to specific jurisdiction only if the defendant has 56.

“purposefully avail[ed] itself of the privilege of conducting activities within the forum,”

Goodyear, 564 U.S. at 924 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)), and only

with regard to claims which “arise out of or relate to” that specific conduct, Bristol-Myers

Squibb, 137 S. Ct. at 1781. The exercise of jurisdiction must also be reasonable under the

circumstances. Burger King Corp. v. Rudzewicz, 471 U. S. 462, 477–78 (1985).


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Mundo Sano plainly is not subject to specific jurisdiction anywhere in the United 57.

States. It conducts no activities in the United States. It sells no products here and all of its

charitable efforts take place in Europe and Latin America. Mateus Decl. ¶ 5. It has not availed

itself of the privilege of conducting business in any state of the United States. It thus has no

forum contacts which could relate to this bankruptcy.

The same is true of Chemo Research. This bankruptcy proceeding does not “arise out 58.

of or relate to” Chemo Research’s lone contact with the United States—the filing of an NDA

with the FDA nearly six months after confirmation of KaloBios’s reorganization plan. Mateus

Decl. ¶ 3. Even if this court were to look through the Rule 2004 proceeding to the substance of

Humanigen’s putative causes of action—a purely hypothetical undertaking at this juncture—

Chemo Research’s isolated contact with the U.S. does not give rise to those causes of action.

Humanigen intends to investigate alleged “misappropriation activity prior to the Court’s June 30,

2016 Confirmation Order.” 2004 Motion ¶ 1, at 2. But every single pre-confirmation act

undertaken by Chemo Research with regard to its acquisition of the data underlying Dr. Sosa-

Estani’s study took place outside of the United States. Requiring Chemo Research to submit to

this Court’s authority on the basis of such scant contacts with the United States is inconsistent

with due process.


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CONCLUSION

For the forgoing reasons, the Court should deny Humanigen’s motion. 59.

Respectfully submitted,

Dated: February 13, 2018 Wilmington, Delaware

YOUNG CONAWAY STARGATT & TAYLOR LLP /s/ Edmon L. Morton Edmon L. Morton (No. 3856) Erin Edwards (No. 4392) 1000 North King Street Wilmington, Delaware 19801 Telephone: (302) 571-6552 Facsimile: (302) 571-1253 SIDLEY AUSTIN LLP Mark D. Hopson* Benjamin M. Mundel* Andrew N. Ferguson* 1501 K Street N.W. Washington, D.C. 20005 Tel: (202) 736-8000 Fax: (202) 736-8711 Counsel to Chemo Research, S.L., Mundo Sano Foundation, and Exeltis USA, Inc.

*Pro hac vice application pending


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