FORM 4
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934 or Section 30(h) of the Investment Company Act of 1940
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(Print or Type Responses)
1. Name and Address of Reporting Person *
Chappell Dale
  2. Issuer Name and Ticker or Trading Symbol
KALOBIOS PHARMACEUTICALS INC [KBIO]
5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
__X__ Director __X__ 10% Owner
_____ Officer (give title below) _____ Other (specify below)
(Last)
(First)
(Middle)
C/O CHEVAL HOLDINGS, LTD, P.O. BOX 309G, UGLAND HOUSE
3. Date of Earliest Transaction (Month/Day/Year)
09/13/2016
(Street)

GEORGETOWN, GRAND CAYMAN, E9 KY1-1104
4. If Amendment, Date Original Filed(Month/Day/Year)
6. Individual or Joint/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)
2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code
(Instr. 8)
4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)
5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4)
6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)
7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V Amount (A) or (D) Price
Common Stock, par value $0.001               872,977 I (1) By Black Horse Capital LP
Common Stock, par value $0.001               2,040,463 I (2) By Black Horse Capital Master Fund Ltd.
Common Stock, par value $0.001               2,035,318 I (3) By: Cheval Holdings, Ltd.

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)
2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (Month/Day/Year) 3A. Deemed Execution Date, if any (Month/Day/Year) 4. Transaction Code
(Instr. 8)
5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)
6. Date Exercisable and Expiration Date
(Month/Day/Year)
7. Title and Amount of Underlying Securities
(Instr. 3 and 4)
8. Price of Derivative Security
(Instr. 5)
9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)
10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)
11. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Stock Option (Right to Buy) $ 3.38 09/13/2016   A   100,000     (4)   (4) Common Stock, par value $0.001 100,000 (4) 100,000 D  

Reporting Owners

Reporting Owner Name / Address Relationships
 Director  10% Owner  Officer  Other
Chappell Dale
C/O CHEVAL HOLDINGS, LTD
P.O. BOX 309G, UGLAND HOUSE
GEORGETOWN, GRAND CAYMAN, E9 KY1-1104
  X   X    

Signatures

 /s/ Dale Chappell   09/15/2016
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) Securities owned directly by Black Horse Capital LP (the "Domestic Fund"). Dale Chappell, as the managing member of Black Horse Capital Management LLC ("BH Management"), the managing general partner of the Domestic Fund, may be deemed to beneficially own the securities owned directly by the Domestic Fund. Mr. Chappell disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. The filing of this Form 4 shall not be deemed an admission that Mr. Chappell is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, the beneficial owner of any securities of the Issuer he does not directly own.
(2) Securities owned directly by Black Horse Capital Master Fund Ltd. (the "Offshore Fund"). Mr. Chappell, as the controlling person of the Offshore Fund, may be deemed to beneficially own the securities owned directly by the Offshore Fund. Mr. Chappell disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. The filing of this Form 4 shall not be deemed an admission that Mr. Chappell is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, the beneficial owner of any securities of the Issuer he does not directly own.
(3) Securities owned directly by Cheval Holdings, Ltd. ("Cheval"). Dale Chappell, as the managing member of BH Management, which has been granted by the Board of Directors of Cheval the power to manage the securities of the Issuer owned by Cheval, may be deemed to beneficially own the securities owned directly by Cheval. Mr. Chappell disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. The filing of this Form 4 shall not be deemed an admission that Mr. Chappell is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, the beneficial owner of any securities of the Issuer he does not directly own.
(4) Grant of stock options in connection with Mr. Chappell's service as a director of the Issuer. The options vest and become exercisable in 12 equal quarterly installments beginning on December 13, 2016.

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