Full Press Release Details
Kala Pharmaceuticals Reports Third Quarter 2022 Financial Results and Provides Corporate Update
-- Planning to Initiate Phase 2/3 Trial of KPI-012 for Persistent Corneal Epithelial Defect (PCED) in 4Q 2022; Topline Data Expected in 1Q 2024 --
-- Ended Quarter with $52.4 million in Cash; Sufficient for Funding Operations into 2Q 2024 --
ARLINGTON, Mass, November 8, 2022 - Kala Pharmaceuticals, Inc. (NASDAQ:KALA), a clinical-stage biopharmaceutical company dedicated to the research, development and commercialization of innovative therapies for rare diseases of the eye, today reported financial results for the third quarter ended September 30, 2022 and provided a corporate update.
"We continue to advance our proprietary mesenchymal stem cell secretome (MSC-S) platform and expect to submit an investigational new drug (IND) application with the U.S. Food and Drug Administration (FDA) during the fourth quarter of 2022 for KPI-012 for the treatment of PCED," said Mark Iwicki, Chief Executive Officer and Chairman of Kala. "Pending IND clearance, we plan to initiate our Phase 2/3 clinical trial in the fourth quarter of 2022, marking a significant step toward our goal of delivering the promise of MSC-S-based therapies to people living with rare and severe ocular diseases."
PCED is a clinically burdensome condition with high unmet needs. It affects approximately 100,000 people in the United States each year and, if left untreated, can lead to infection, corneal ulceration or perforation, scarring, opacification and significant vision loss. Based on its multifactorial mechanism of action and preclinical and clinical data generated to-date, Kala believes KPI-012 may represent a significant advancement in the treatment of PCED and could become the first approved treatment for PCED across all its various etiologies. Kala also plans to explore the potential of its MSC-S platform for other rare corneal disease indications where it believes its secretome-based approach could deliver benefit.
Third Quarter and Recent Business Highlights:
Development-Stage Pipeline:
KPI-012 is a human mesenchymal stem cell secretome, which contains numerous human-derived biofacters, such as growth factors, protease inhibitors, matrix proteins and neurotrophic factors that can potentially correct the impaired corneal healing that is an underlying etiology of multiple severe ocular diseases. Subject to submission and clearance of an IND, Kala plans to initiate a Phase 2/3 clinical trial of KPI-012 in PCED patients during the fourth quarter of 2022 with topline results expected in the first quarter 2024. The Phase 2/3 trial is designed to evaluate the efficacy and safety of two doses of KPI-012 in PCED patients with a broad range of underlying etiologies.
Kala has received Orphan Drug Designation from the FDA for KPI-012 for the treatment of PCED.
In addition, Kala is evaluating the potential of KPI-012 to treat other rare anterior segment diseases as follow-on indications, such as Partial Limbal Stem Cell Deficiency and ocular manifestations of moderate-to-severe Sj gren's. Kala also plans to initiate preclinical studies for KPI-014, the Company's program evaluating the utility of its MSC-S platform for retinal degenerative diseases such as Retinitis Pigmentosa and Stargardt Disease, with the goal of selecting a retinal indication for development in the second half of 2023.
In November 2022, Kala announced the appointment of Marjan Farid, M.D., to its Board of Directors. Dr. Farid, who is currently Professor of Clinical Ophthalmology, Director of Cornea, Refractive & Cataract Surgery, and Vice Chair of Ophthalmic Faculty at the Gavin Herbert Eye Institute, University of California Irvine (UCI), founded the Severe Ocular Surface Disease Center at UCI and is an industry leader in the care and treatment of corneal diseases.
On October 20, 2022, Kala effected a 1-for-50 reverse stock split of its shares of common stock either issued and outstanding or held by the Company as treasury stock. As a result of the reverse stock split, every 50 shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. No fractional shares were issued as a result of the reverse stock split. Any fractional shares that would otherwise have resulted from the reverse stock split were rounded up to the next whole number.
The financial results below contain both GAAP and non-GAAP financial measures. The non-GAAP financial measures exclude stock-based compensation expense, non-cash interest expense, depreciation and amortization,
transaction costs related to the Alcon transaction, gain or loss on fair value remeasurement of deferred purchase and contingent consideration, gain on sale of the commercial business, loss on extinguishment of debt and other non-cash expenses. See "Non-GAAP Financial Measures" below; for a full reconciliation of Kala's GAAP to non-GAAP financial measures, please refer to the tables at the end of this press release.
Third Quarter 2022 Financial Results:
Nine Months ended September 30, 2022 Financial Results:
Non-GAAP Financial Measures:
In this press release, the financial results of Kala are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. The items included in GAAP presentations but excluded for purposes of determining non-GAAP financial measures for the periods presented in this press release are stock-based compensation expense, non-cash interest expense, depreciation and amortization, transaction costs related to the Alcon transaction, acquired in-process research and development expense, gain or loss on fair value remeasurement of deferred purchase consideration and contingent consideration, gain on fair value remeasurement of deferred purchase consideration, gain on sale of the commercial business, loss on extinguishment of debt and other non-cash expenses, transaction costs related to the acquisition of Combangio, and the impact of the termination of the lease for the Company's former corporate headquarters. Management believes this non-GAAP information is useful for investors, taken in conjunction with Kala's GAAP financial statements, because it provides greater transparency and period-over-period comparability with respect to Kala's operating performance. These measures are also used by management to assess the performance of the business. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. A quantitative reconciliation of projected total non-GAAP operating expenses to total GAAP operating expenses is not available without unreasonable effort primarily due to Kala's inability to predict with reasonable certainty the amount of future stock-based compensation expense. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP measures, please refer to the table at the end of this press release.
About Kala Pharmaceuticals, Inc.
Kala is a clinical-stage biopharmaceutical company dedicated to the research, development and commercialization of innovative therapies for rare diseases of the eye. Kala's biologics-based investigational therapies utilize Kala's proprietary Mesenchymal Stem Cell Secretome (MSC-S) platform. Kala's lead product candidate, KPI-012, is in clinical development for the treatment of persistent corneal epithelial defect (PCED), a rare disease of impaired corneal healing, which has received orphan drug designation from the U.S. Food and Drug Administration. Kala is also targeting the potential development of KPI-012 for the treatment of Partial Limbal Stem Cell Deficiency and ocular manifestations of moderate-to-severe Sj gren's and plans to initiate preclinical studies to evaluate the utility of its MSC-S platform for retinal degenerative diseases, such as Retinitis Pigmentosa and Stargardt Disease. For more information on Kala, please visit www.kalarx.com.
Forward Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. Any statements in this press release about Kala's future expectations, plans and prospects, including but not limited to statements about Kala's expectations with respect to potential advantages of KPI-012 and its MSC-S platform; the future development or commercialization of KPI-012; plans to submit regulatory filings; conduct and timelines of preclinical studies and clinical trials; the clinical utility of KPI-012 for PCED; plans to pursue research and development of KPI-012 and its MSC-S platform for other indications; Kala's ability to realize potential milestones payments under the transaction with Alcon; Kala's estimates regarding its projected reduction in non-GAAP operating expenses; the sufficiency of Kala's existing cash resources, and other statements containing the words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project," "target," "potential," "likely," "will," "would," "could," "should," "continue," and similar expressions constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the effect that the reverse stock split may have on the price of Kala's common stock; Kala's ability to realize any milestone payments from Alcon Inc.; the impact of extraordinary external events, such as the current pandemic health event resulting from the novel coronavirus (COVID-19), and their collateral consequences; Kala's ability to maintain its listing on the Nasdaq Global Select Market; Kala's ability to comply with the covenants under its outstanding loan agreement; the uncertainties inherent in the initiation and conduct of preclinical studies and clinical trials; uncertainties regarding availability and timing of data from clinical trials; whether results of early clinical trials or trials in different disease indications will be indicative of the results of ongoing or future trials; whether results of the Phase 1b clinical trial of KPI-012 will be indicative of results for any future clinical trials and studies of KPI-012; uncertainties associated with regulatory review of clinical trials and applications for marketing approvals; Kala's ability to retain and hire key personnel; the sufficiency of cash resources and need for additional financing and other important factors, any of which could cause the Kala's actual results to differ from those contained in the forward-looking statements, discussed in the "Risk Factors" section of Kala's Annual Report on Form 10-K, most recently filed Quarterly Report on Form 10-Q and other filings Kala makes with the Securities and Exchange Commission. These forward-looking statements represent Kala's views as of the date of this press release and should not be relied upon as representing Kala's views as of any date subsequent to the date hereof. Kala does not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Kala Pharmaceuticals, Inc.
| September 30, | December 31, | ||||||
| 2022 | 2021 | ||||||
| Cash and cash equivalents | $ | 52,393 | $ | 92,136 | |||
| Total assets | 85,698 | 139,427 | |||||
| Working capital (1) | 44,431 | 86,944 | |||||
| Longterm debt, net of discounts | 42,642 | 78,929 | |||||
| Other longterm liabilities | 3,783 | 6,272 | |||||
| Total stockholders' (deficit) equity | (968) | 16,804 |
Kala Pharmaceuticals, Inc.
Consolidated Statement of Operations
(In thousands, except share and per share data)
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| Product revenues, net | $ | 420 | $ | 3,067 | $ | 3,892 | $ | 9,384 | |||||
| Costs and expenses: | |||||||||||||
| Cost of product revenues | 11 | 908 | 2,560 | 2,679 | |||||||||
| Selling, general and administrative | 9,549 | 25,349 | 59,204 | 81,034 | |||||||||
| Research and development | 5,391 | 2,881 | 14,330 | 9,101 | |||||||||
| (Gain) loss on fair value remeasurement of deferred purchase consideration | (57) | - | 205 | - | |||||||||
| Loss (gain) on fair value remeasurement of contingent consideration | 95 | - | (952) | - | |||||||||
| Total operating expenses | 14,989 | 29,138 | 75,347 | 92,814 | |||||||||
| Loss from operations | (14,569) | (26,071) | (71,455) | (83,430) | |||||||||
| Other income (expense): | |||||||||||||
| Interest income | 234 | 16 | 310 | 92 | |||||||||
| Interest expense | (1,447) | (2,072) | (5,689) | (6,304) | |||||||||
| Loss on extinguishment of debt | (2,583) | - | (2,583) | (5,395) | |||||||||
| Gain on sale of Commercial Business | 46,995 | - | 46,995 | - | |||||||||
| Other income (expense), net | 443 | - | 443 | - | |||||||||
| Net income (loss) | $ | 29,073 | $ | (28,127) | $ | (31,979) | $ | (95,037) | |||||
| Net income (loss) per share attributable to common stockholders-basic | $ | 19.39 | $ | (21.41) | $ | (21.46) | $ | (73.80) | |||||
| Net income (loss) per share attributable to common stockholders-diluted | $ | 19.25 | $ | (21.41) | $ | (21.46) | $ | (73.80) | |||||
| Weighted average shares outstanding-basic | 1,499,001 | 1,313,466 | 1,490,159 | 1,287,772 | |||||||||
| Weighted average shares outstanding-diluted | 1,510,421 | 1,313,466 | 1,490,159 | 1,287,772 |
Kala Pharmaceuticals, Inc.
Reconciliation of GAAP to non-GAAP Financial Measures
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||
| Net income (loss) (GAAP) | $ | 29,073 | $ | (28,127) | $ | (31,979) | $ | (95,037) | |||||
| Add-back: stock-based compensation expense | 1,327 | 3,928 | 6,048 | 13,340 | |||||||||
| Add-back: non-cash interest | 258 | 435 | 1,130 | 1,080 | |||||||||
| Add-back: depreciation and amortization | 151 | 259 | 457 | 763 | |||||||||
| Add-back: transaction costs related to the Alcon transaction | - | - | 758 | - | |||||||||
| Add (gain) loss on fair value remeasurement of deferred purchase consideration | (57) | - | 205 | - | |||||||||
| Add: gain on fair value remeasurement of contingent consideration | 95 | - | (952) | - | |||||||||
| Add-back: gain on sale of Commercial Business | (46,955) | - | (46,955) | - | |||||||||
| Add-back: loss on debt extinguishment | 2,583 | - | 2,583 | 5,395 | |||||||||
| Add-back: other expense | 94 | - | 94 | - | |||||||||
| non-GAAP net loss | $ | (13,471) | $ | (23,505) | $ | (68,651) | $ | (74,459) | |||||
| Cost of product revenues (GAAP) | $ | 11 | $ | 908 | $ | 2,560 | $ | 2,679 | |||||
| Less: stock-based compensation expense | 4 | 38 | 166 | 109 | |||||||||
| Less: depreciation and amortization | 7 | 13 | 33 | 39 | |||||||||
| non-GAAP cost of product revenues | $ | - | $ | 857 | $ | 2,361 | $ | 2,531 | |||||
| Selling, general and administrative expenses (GAAP) | $ | 9,549 | $ | 25,349 | $ | 59,204 | $ | 81,034 | |||||
| Less: stock-based compensation expense | 1,085 | 3,021 | 4,797 | 10,410 | |||||||||
| Less: depreciation and amortization | 101 | 185 | 273 | 553 | |||||||||
| Less: transaction costs related to the Alcon transaction | - | - | 758 | - | |||||||||
| non-GAAP selling, general and administrative expenses | $ | 8,363 | $ | 22,143 | $ | 53,376 | $ | 70,071 | |||||
| Research and development expenses (GAAP) | $ | 5,391 | $ | 2,881 | $ | 14,330 | $ | 9,101 | |||||
| Less: stock-based compensation expense | 238 | 869 | 1,085 | 2,821 | |||||||||
| Less: depreciation and amortization | 43 | 61 | 151 | 171 | |||||||||
| non-GAAP research and development expenses | $ | 5,110 | $ | 1,951 | $ | 13,094 | $ | 6,109 | |||||
| (Gain) loss on fair value remeasurement of deferred purchase consideration | $ | (57) | $ | - | $ | 205 | $ | - | |||||
| Less: (gain) loss on fair value remeasurement of deferred purchase consideration | (57) | - | 205 | - | |||||||||
| non-GAAP gain or loss on fair value remeasurement of deferred purchase consideration | $ | - | $ | - | $ | - | $ | - | |||||
| Loss (gain) on fair value remeasurement of contingent consideration | $ | 95 | $ | - | $ | (952) | $ | - | |||||
| Less: loss (gain) on fair value remeasurement of contingent consideration | 95 | - | (952) | - | |||||||||
| non-GAAP gain or loss on fair value remeasurement of contingent consideration | $ | - | $ | - | $ | - | $ | - | |||||
| Total operating loss (GAAP) | $ | (14,569) | $ | (26,071) | $ | (71,455) | $ | (83,430) | |||||
| Add-back: stock-based compensation expense | 1,327 | 3,928 | 6,048 | 13,340 | |||||||||
| Add-back: depreciation and amortization | 151 | 259 | 457 | 763 | |||||||||
| Add-back: transaction costs related to the Alcon transaction | - | - | 758 | - | |||||||||
| Add: (gain) loss on fair value remeasurement of deferred purchase consideration | (57) | - | 205 | - | |||||||||
| Add: gain on fair value remeasurement of contingent consideration | 95 | - | (952) | - | |||||||||
| non-GAAP total operating loss | $ | (13,053) | $ | (21,884) | $ | (64,939) | $ | (69,327) |
Kala Pharmaceuticals, Inc.
Reconciliation of GAAP to non-GAAP Financial Measures
| Year Ended December 31, 2021 | |||||
| Net loss (GAAP) | $ | 142,605 | |||
| Add-back: stock-based compensation expense | 16,088 | ||||
| Add-back: non-cash interest | 1,519 | ||||
| Add-back: depreciation and amortization | 975 | ||||
| Add-back: loss on extinguishment of debt | 5,395 | ||||
| Add-back: acquired in-process research and development | 26,617 | ||||
| Add-back: gain on fair value remeasurement of deferred purchase consideration | (5,805) | ||||
| Add-back: gain on fair value remeasurement of contingent consideration | - | ||||
| Add back: transaction costs related to acquisition of Combangio, Inc. | 1,179 | ||||
| Add-back: impact of lease modification | (2,467) | ||||
| non-GAAP net loss | $ | (99,104) | |||
| Cost of product revenues (GAAP) | $ | 4,097 | |||
| Less: stock-based compensation expense | 169 | ||||
| Less: depreciation and amortization | 52 | ||||
| non-GAAP cost of product revenues | $ | 3,876 | |||
| Selling, general and administrative expenses (GAAP) | $ | 105,061 | |||
| Less: stock-based compensation expense | 12,774 | ||||
| Less: depreciation and amortization | 693 | ||||
| Less: transaction costs related to acquisition of Combangio, Inc. | 1,179 | ||||
| Less: impact of lease modification | (1,156) | ||||
| non-GAAP selling, general and administrative expenses | $ | 91,571 | |||
| Research and development expenses (GAAP) | $ | 11,515 | |||
| Less: stock-based compensation expense | 3,145 | ||||
| Less: depreciation and amortization | 230 | ||||
| non-GAAP research and development expenses | $ | 8,140 | |||
| Acquired in-process research and development expenses (GAAP) | $ | 26,617 | |||
| Less: acquired in-process research and development expenses | 26,617 | ||||
| non-GAAP acquired in-process research and development expenses | $ | - | |||
| Gain on fair value remeasurement of deferred purchase consideration | $ | (5,805) | |||
| Less: gain on fair value remeasurement of deferred purchase consideration | (5,805) | ||||
| non-GAAP gain on fair value remeasurement of deferred purchase consideration | $ | - | |||
| Gain on fair value remeasurement of contingent consideration | $ | - | |||
| Less: gain on fair value remeasurement of contingent consideration | - | ||||
| non-GAAP gain on fair value remeasurement of contingent consideration | $ | - | |||
| Total operating expenses (GAAP) | $ | 141,485 | |||
| Less: stock-based compensation expense | 16,088 | ||||
| Less: depreciation and amortization | 975 | ||||
| Less: transaction costs related to acquisition of Combangio, Inc. | 1,179 | ||||
| Less: impact of lease modification | (1,156) | ||||
| Less: acquired in-process research and development expenses | 26,617 | ||||
| Less: gain on fair value remeasurement of deferred purchase consideration | (5,805) | ||||
| Less: gain on fair value remeasurement of contingent consideration | - | ||||
| non-GAAP total operating expenses | $ | 103,587 | |||
| Total operating loss (GAAP) | $ | (130,245) | |||
| Add-back: stock-based compensation expense | 16,088 | ||||
| Add-back: depreciation and amortization | 975 | ||||
| Add-back: acquired in-process research and development | 26,617 | ||||
| Add-back: gain on fair value remeasurement of deferred purchase consideration | (5,805) | ||||
| Add-back: gain on fair value remeasurement of contingent consideration | - | ||||
| Add-back: transaction costs related to acquisition of Combangio, Inc. | 1,179 | ||||
| Add-back: impact of lease modification | (1,156) | ||||
| non-GAAP total operating loss | $ | (92,347) |