On May 19, 2017, the Board of Directors of Kindred Biosciences,
Inc. (the Company) declared a dividend of one preferred share
purchase right (a Right) for each outstanding share of common
stock, par value $0.0001 per share, of the Company (the Common
Stock). The dividend is payable to the stockholders of record at
the close of business on June 1, 2017 (the Record Date). The Rights
will also attach to shares of Common Stock issued after the Record
Date. Each Right initially entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A
Preferred Stock, par value $0.0001 per share, of the Company (the
Preferred Stock) at a price of $25.00 per one one-thousandth of a
share of Preferred Stock (the Purchase Price), subject to
adjustment. The description and terms of the Rights are set forth
in a Rights Agreement dated as of May 19, 2017, as the same may be
amended from time to time (the Rights Agreement), between the
Company and American Stock Transfer Trust Company, LLC, as Rights
Agent (the Rights Agent).

Until the earlier to occur of (i) 10 business days following a
public announcement that a person or group of affiliated or
associated persons has become an Acquiring Person (as defined
below) or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors of the Company prior
to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) following the commencement of,
or public announcement of an intention to make, a tender or
exchange offer the consummation of which would result in any person
or group of affiliated or associated persons becoming an Acquiring
Person (the earlier of such dates being called the Distribution
Date), the Rights will be evidenced, with respect to certificates
representing Common Stock (or book entry shares of Common Stock)
outstanding as of the Record Date, by such certificates (or such
book entry shares) together with a copy of a summary of the Rights
(the Summary of Rights). Except in certain situations, a person or
group of affiliated or associated persons becomes an Acquiring
Person upon acquiring beneficial ownership of 20% or more of the
outstanding shares of Common Stock. No such person or group having
beneficial ownership of 20% or more of such outstanding shares at
the time of the first announcement of adoption of the rights plan
reflected in the Rights Agreement will be deemed an Acquiring
Person until such time as such person or group becomes the
beneficial owner of additional shares of Common Stock (other than
by reason of a stock dividend, stock split or other corporate
action effected by the Company in which all holders of Common Stock
are treated equally).

The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record Date
upon transfer or new issuances of Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for shares
of Common Stock (or book entry shares of Common Stock) outstanding
as of the Record Date, even without such notation or a copy of the
Summary of Rights, will also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby. As
soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (Right Certificates) will be
mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.

The Rights are not exercisable until the Distribution Date. The
Rights will expire on May 18, 2020 (the Final Expiration Date),
unless the Final Expiration Date is extended or the Rights are
earlier redeemed or exchanged by the Company as described below. In
addition, the Company will seek stockholder approval of the Rights
Agreement at the annual meeting of the stockholders of the Company
to be held on July 24, 2017 (or any adjournment thereof). If the
stockholders’ approval of the Rights Agreement is not obtained at
that annual meeting of stockholders (or any adjournment thereof),
the Rights will expire.

The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of
the Rights is subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or
warrants to subscribe for or purchase Preferred Stock at a price,
or securities convertible into Preferred Stock with a conversion
price, less than the then-current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends or dividends payable in Preferred Stock) or
of subscription rights or warrants (other than those referred to
above).

The number of outstanding Rights is subject to adjustment in the
event of a stock dividend on the Common Stock payable in shares of
Common Stock or subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to the Distribution
Date.

Each share of Preferred Stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of
the greater of (a) $10.00 per share, and (b) an amount (subject to
certain adjustments) equal to 1,000 times the dividend declared per
share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will
be entitled to a minimum preferential payment of the greater of (a)
$10.00 per share (plus any accrued but unpaid dividends), and (b)
an amount equal to 1,000 times the payment made per share of Common
Stock. Each share of Preferred Stock will (subject to certain
adjustments) have 1,000 votes, voting together with the Common
Stock. Finally, in the event of any merger, consolidation or other
transaction in which outstanding shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be
entitled to receive 1,000 times the amount received per share of
Common Stock. These rights are protected by customary anti-dilution
provisions.

Because of the nature of the Preferred Stocks dividend, liquidation
and voting rights, the value of the one one-thousandth interest in
a share of Preferred Stock purchasable upon exercise of each Right
should approximate the value of one share of Common Stock.

In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will
thereupon become void), will thereafter have the right to receive
upon exercise of a Right that number of shares of Common Stock
having a market value of two times the exercise price of the Right.

In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets
or earning power are sold, proper provisions will be made so that
each holder of a Right (other than Rights beneficially owned by an
Acquiring Person which will have become void) will thereafter have
the right to receive upon the exercise of a Right that number of
shares of common stock of the person with whom the Company has
engaged in the foregoing transaction (or its parent) that at the
time of such transaction have a market value of two times the
exercise price of the Right.

At any time after any person or group becomes an Acquiring Person
and prior to the earlier of one of the events described in the
previous paragraph or the acquisition by such Acquiring Person of
50% or more of the outstanding shares of Common Stock, the Board of
Directors of the Company may exchange the Rights (other than Rights
owned by such Acquiring Person which will have become void), in
whole or in part, for shares of Common Stock or Preferred Stock (or
a series of the Companys preferred stock having equivalent rights,
preferences and privileges), at an exchange ratio of one share of
Common Stock, or a fractional share of Preferred Stock (or other
preferred stock) equivalent in value thereto, per Right.

With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of
at least 1% in such Purchase Price. No fractional shares of
Preferred Stock or Common Stock will be issued (other than
fractions of Preferred Stock which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts), and
in lieu thereof an adjustment in cash will be made based on the
current market price of the Preferred Stock or the Common Stock.

At any time prior to the time an Acquiring Person becomes such, the
Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $0.0001 per Right (the Redemption
Price) payable, at the option of the Company, in cash, shares of
Common Stock or such other form of consideration as the Board of
Directors of the Company shall determine. The redemption of the
Rights may be made effective at such time, on such basis and with
such conditions as the Board of Directors of the Company in its
sole discretion may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the
Redemption Price.

For so long as the Rights are then redeemable, the Company may,
except with respect to the Redemption Price, amend the Rights
Agreement in any manner. After the Rights are no longer redeemable,
the Company may, except with respect to the Redemption Price, amend
the Rights Agreement in any manner that does not adversely affect
the interests of holders of the Rights.

Until a Right is exercised or exchanged, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends.

The Rights Agreement and the Certificate of Designations of Series
A Preferred Stock are attached hereto as exhibits and incorporated
herein by reference. The foregoing description of the Rights does
not purport to be complete and is qualified in its entirety by
reference to such exhibits.

As of April 28, 2017, there were 23,310,559 shares of the Companys
Common Stock issued and outstanding. 100,000 shares of Preferred
Stock have been reserved for issuance upon the exercise of the
Rights.

Additional Information and Where to Find It

The Company intends to file a proxy statement with the U.S.
Securities and Exchange Commission (the SEC) with respect to its
2017 Annual Meeting. The Company stockholders are strongly
encouraged to read any such proxy statement, the accompanying white
proxy card and other documents filed with the SEC carefully in
their entirety when they become available because they will contain
important information. Stockholders will be able to obtain any
proxy statement, any amendments or supplements to the proxy
statement and other documents filed by the Company with the SEC
free of charge at the SECs website at www.sec.gov.>Copies also
will be available free of charge at the Companys website at
www.KindredBio.com or by contacting the Companys Investor Relations
at (650) 701-7904. The Company, its directors, executive officers
and other employees may be deemed to be participants in the
solicitation of proxies from the Companys stockholders in
connection with the matters to be considered at KindredBios 2017
Annual Meeting. Information about certain current directors and
executive officers of the Company is available in the Companys
proxy statement, dated April 8, 2016, for its 2016 Annual Meeting.
To the extent holdings of the Companys securities by such directors
or executive officers have changed since the amounts printed in the
2016 proxy statement, such changes have been or will be reflected
on Statements of Change in Ownership on Form 4 filed with the SEC.
More detailed information regarding the identity of potential
participants, and their direct or indirect interests, by security
holdings or otherwise, will be set forth in the proxy statement and
other materials to be filed with the SEC in connection with the
Company’s 2017 Annual Meeting.

The information set forth in Item 1.01 of this Current Report on
Form 8-K is incorporated into this Item 3.03 by reference.

On May 19, 2017, the Company and Denise Bevers, the Company’s
Chief Operating Officer, entered into Amendment No. 3 to Ms.
Bevers’s employment agreement dated June 20, 2013 as amended by
Amendment No. 1 on November 11, 2013 and Amendment No. 2 on June 4,
2015 (the Amendment).

The Amendment provides for an increase in the payment to Ms. Bevers
upon termination by the Company without cause or by Ms. Bevers with
good reason, as defined in the employment agreement, from twelve
(12) months of Ms. Beverss then current base salary to eighteen
(18) months of her then current base salary.

In connection with the adoption of the Rights Agreement described
in Item 1.01 above, the Board of Directors approved a Certificate
of Designation of Series A Preferred Stock (the Certificate of
Designation). The Certificate of Designation was filed with the
Secretary of State of the State of Delaware and became effective
on May 23, 2017. The Certificate of Designation is attached
hereto as Exhibit 3.1 is incorporated herein by reference. The
description of the rights and preferences of the Series A
Preferred Stock in Item 1.01 is incorporated herein by reference.

(d) Exhibits