Oppenheimer maintains Outperform on Kala Pharmaceuticals stock

On Tuesday, Oppenheimer reaffirmed its positive stance on Kala Pharmaceuticals (NASDAQ:KALA) shares, maintaining an Outperform rating and a $15.00 price target. Currently trading at $5.66 with a market capitalization of $33.56 million, the pharmaceutical company reported its fourth-quarter earnings for 2024, posting an earnings per share (EPS) of ($1.74), which surpassed both Oppenheimer’s forecast of ($2.47) and the consensus estimate of ($2.28). According to InvestingPro data, while the company maintains a healthy current ratio of 2.15, it is quickly burning through cash.

Kala Pharmaceuticals is currently emphasizing its role as a development-focused company, particularly with its work on KPI-012 for the treatment of rare ocular diseases. The company is making progress with its Phase 2b trial for persistent corneal epithelial defect (PCED), having randomized 87 patients so far. Management has now shifted the expected timeline for the topline readout of this trial to the third quarter of 2025, a slight delay from the previously projected second quarter. The stock’s high beta of -2.2 indicates significant volatility compared to the broader market, with year-to-date returns down 17.44%.

The Phase 1b trial results of KPI-012, which showed complete healing of PCED in 6 out of 8 patients, serve as a strong foundation for the ongoing Phase 2b study. This healing rate is particularly significant as it aligns with the primary endpoint of the current trial. If the Phase 2b trial yields positive results, it is anticipated to be one of two pivotal studies required for a Biologics License Application (BLA) submission to the U.S. Food and Drug Administration (FDA).

Kala Pharmaceuticals has identified a significant market opportunity, with approximately 100,000 cases of PCED occurring annually in the United States and no treatments currently approved by the FDA. The company’s KPI-012 has been granted Fast Track Designation (FTD) by the FDA, which could expedite the review process if the drug’s development continues to show promise. The reiteration of the Outperform rating and the $15 price target by Oppenheimer reflects the firm’s confidence in the potential of KPI-012 and the commercial prospects for Kala Pharmaceuticals. InvestingPro analysis reveals additional insights about the company’s financial health and market position, with over 10 exclusive ProTips available to subscribers.

In other recent news, Kala Bio, Inc. announced a change in its executive leadership following the resignation of CEO Mark Iwicki. Iwicki will remain as the Chair of the Board of Directors, while Todd Bazemore has been appointed as the interim CEO. Bazemore, who joined Kala Bio in 2017, previously held the positions of Chief Operating Officer and President. The leadership change comes as Kala Bio prepares for the release of topline data from the Phase 2b clinical trial of its lead product candidate, KPI-012, expected in the second quarter of 2025. KPI-012, developed for the treatment of persistent corneal epithelial defect, has received Orphan Drug and Fast Track designations from the U.S. Food and Drug Administration. Bazemore’s extensive experience in the pharmaceutical industry includes roles at Santhera Pharmaceuticals, Dyax Corp., and Sunovion Pharmaceuticals. The company continues to explore its proprietary MSC-S platform for potential treatments of other rare corneal and retinal diseases. These developments have been officially communicated through a press release from Kala Bio.

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