Kala Pharmaceuticals (NASDAQ: NASDAQ:KALA) saw its price target adjusted by H.C. Wainwright, with the new target set at $15.00, a decrease from the previous $18.00, while the firm maintained a Buy rating on the stock.
The adjustment, which came on Wednesday, followed Kala Pharmaceuticals' report of its second-quarter financials for the year 2024, where the company disclosed a net loss of $9.6 million, or ($3.16) per share, which was notably less than the anticipated $12.0 million loss.
The company also highlighted during the announcement that the Phase 2b CHASE trial for its product KPI-012, aimed at treating persistent corneal epithelial defect (PCED), is expected to deliver topline results in the first quarter of 2025.
KPI-012 is recognized for its innovative approach as a mesenchymal stem cell secretome therapy, incorporating a combination of growth factors, protease inhibitors, matrix proteins, and neurotrophic factors designed to target the various underlying causes of PCED.
The positive outlook is further bolstered by the potential for KPI-012 to enter a second pivotal trial in the second half of 2025 if the CHASE trial data are favorable. Beyond PCED, KPI-012 could also be a treatment option for limbal stem cell deficiency (LSCD) and other corneal diseases.
Kala Pharmaceuticals is also developing a second candidate, KPI-014, which is currently in the preclinical stage for inherited retinal degenerative diseases such as retinitis pigmentosa and Stargardt disease.
H.C. Wainwright's valuation of Kala Pharmaceuticals has risen to $117 million. Based on the assumption of 7.8 million shares outstanding at the end of the second quarter of 2025, the firm's valuation per share stands at approximately $15.
Kala encountered a decrease in its 12-month price target, which was adjusted from $21 to $18 by H.C. Wainwright. This revision was a response to the company's first-quarter financial report which revealed a net loss of $11.8 million, surpassing the projected loss of $8.8 million. Despite the larger-than-expected net loss, H.C. Wainwright has maintained a Buy rating on Kala's stock.
Further developments include the ongoing Phase 2b CHASE trial for KPI-012, a novel therapy for persistent corneal epithelial defect (PCED). The company expects to release topline results by the end of 2024. KPI-012, based on mesenchymal stem cell secretome (MSC-S), holds potential in treating Limbal Stem Cell Deficiency (LSCD) and other corneal diseases, filling a gap as there are currently no FDA-approved treatments that comprehensively address all causes of PCED.
InvestingPro Insights
As Kala Pharmaceuticals (NASDAQ:KALA) navigates through its clinical trials and development phases, financial metrics and market performance provide a glimpse into its current standing. According to InvestingPro data, Kala has a market capitalization of $28.46 million, which is reflective of the market's valuation of the company. Despite the challenges, one of the InvestingPro Tips highlights that the company holds more cash than debt on its balance sheet, indicating a degree of financial stability which could be crucial as it funds ongoing research and trials.
On the flip side, another InvestingPro Tip points out that Kala is rapidly burning through its cash reserves, which is a critical factor for investors to monitor, especially considering that the company is not expected to be profitable this year. Additionally, with a negative P/E ratio (adjusted) of -0.84 for the last twelve months as of Q1 2024, it’s clear that profitability remains a challenge. However, Kala's liquid assets do exceed its short-term obligations, which may provide some reassurance regarding the company's ability to meet its immediate financial commitments.
Investors considering Kala Pharmaceuticals will find additional InvestingPro Tips that delve deeper into the company's financial health and market performance, including insights on gross profit margins, stock price movements, and valuation implications. With a total of 9 InvestingPro Tips available, a more comprehensive analysis can be accessed to inform investment decisions.
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