Bullish indicating open at $55-$60, IPO prices at $37
On Monday, H.C. Wainwright reaffirmed its Buy rating and $15.00 stock price target for Kala Pharmaceuticals (NASDAQ:KALA), following the company's third quarter financial report earlier in the week. The net loss for the quarter was $9.0 million, or ($1.93) per share, which was below the firm's estimated loss of $10.0 million.
Kala Pharmaceuticals announced that the Phase 2b CHASE trial of KPI-012 for the treatment of persistent corneal epithelial defect (PCED) is on track to deliver topline results in the second quarter of 2025. The enrollment for the trial has been slightly slower than anticipated. To speed up the process, the company has opened five clinical trial sites in Argentina and is currently working on additional sites across Latin America.
KPI-012 is a novel therapy derived from mesenchymal stem cell secretome (MSC-S), which includes a combination of growth factors, protease inhibitors, matrix proteins, and neurotrophic factors. This therapy aims to target various underlying causes of PCED, a condition for which there is currently no FDA-approved drug that addresses all underlying etiologies.
The CHASE trial is expected to potentially act as one of two pivotal trials needed for a Biologics License Application (BLA) submission. Beyond PCED, Kala Pharmaceuticals is also investigating the potential of KPI-012 in treating limbal stem cell deficiency (LSCD) and other corneal diseases.
Kala's second drug candidate, KPI-014, is in the preclinical stage of development for inherited retinal degenerative diseases, including retinitis pigmentosa and Stargardt disease. The company's progress and potential in addressing these unmet medical needs underpin H.C. Wainwright's reiterated Buy rating and price target.
In other recent news, KALA BIO, Inc. has reported several significant developments. The company recently announced the immediate resignation of board member Mark S. Blumenkranz, M.D., from both the board and its committees. The company has not yet named a successor nor disclosed further details regarding the transition of his responsibilities.
KALA BIO also reported a lower than expected net loss of $9.6 million for the second quarter of 2024, compared to the projected $12.0 million loss.
In addition, KALA BIO is making progress with its Phase 2b CHASE trial for KPI-012, with top-line results anticipated in the first quarter of 2025. The company has also secured a private placement deal to raise approximately $12.5 million, led by SR One and ADAR1 Capital Management, to further the clinical development of KPI-012.
Lastly, KALA BIO is developing a second candidate, KPI-014, for inherited retinal degenerative diseases, which is currently in the preclinical stage.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Kala Pharmaceuticals' financial position and market performance. The company's market capitalization stands at $30.87 million, reflecting its current valuation in the biotech sector. Despite H.C. Wainwright's optimistic outlook, InvestingPro Tips highlight that Kala is "quickly burning through cash" and "suffers from weak gross profit margins." These factors may present challenges as the company continues to fund its clinical trials and drug development programs.
Interestingly, while Kala has experienced a "strong return over the last month" with a 28.85% price increase, it has also taken "a big hit over the last week" with a 9.46% decline. This volatility underscores the speculative nature of biotech investments, particularly for companies in the clinical trial phase like Kala.
The company's adjusted operating income for the last twelve months stands at -$40.32 million, aligning with the ongoing investment in research and development for KPI-012 and KPI-014. An InvestingPro Tip notes that analysts do not anticipate the company to be profitable this year, which is consistent with the developmental stage of its drug candidates.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Kala Pharmaceuticals, providing deeper insights into the company's financial health and market position.
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