On Tuesday, Kala Pharmaceuticals (NASDAQ:KALA) shares saw its 12-month price target adjusted by H.C. Wainwright, with the firm setting a new target of $21, down from the previous $22, while reiterating a Buy rating on the stock.
The company reported a net loss of $42.2 million for the full year of 2023, which equates to a loss of $17.35 per share. The fourth quarter of 2023 alone accounted for an $8.6 million loss, or $3.18 per share, which was in line with projections.
The financial update from Kala Pharmaceuticals last week included details on the progress of their ongoing Phase 2b CHASE trial for KPI-012, a treatment aimed at persistent corneal epithelial defect (PCED). Management has indicated that the trial is on track and expects to present topline results by the end of 2024. The successful outcome of the CHASE trial could potentially lead to a second pivotal trial that would support a Biologics License Application submission.
KPI-012 is a part of Kala Pharmaceuticals' proprietary mesenchymal stem cell secretome (MSC-S) platform. The therapy is designed to combine growth factors, protease inhibitors, matrix proteins, and neurotrophic factors to target the multiple underlying causes of PCED. This condition is estimated to affect about 100,000 patients in the United States.
The valuation of Kala Pharmaceuticals by H.C. Wainwright stands at approximately $105 million, which translates into the revised price target of $21 per share. The firm's reiteration of the Buy rating and price target adjustment reflects their continued confidence in the company's potential.
InvestingPro Insights
As Kala Pharmaceuticals (NASDAQ:KALA) navigates through its clinical trials and strives to manage its finances, real-time data from InvestingPro provides a detailed snapshot of the company's current financial health. With a market capitalization of $21.52 million, Kala holds more cash than debt on its balance sheet, which is a positive sign for investors looking for financial stability. However, the company's P/E ratio stands at -0.46, reflecting its lack of profitability over the last twelve months, and analysts do not expect Kala to be profitable this year.
InvestingPro Tips suggest that while Kala's liquid assets exceed its short-term obligations, providing some financial cushion, the company is quickly burning through cash, which raises concerns about its cash flow sustainability. Additionally, Kala's valuation implies a poor free cash flow yield, and it suffers from weak gross profit margins, which could be potential red flags for investors. It's also noteworthy that Kala does not pay a dividend, which might be relevant for income-focused investors.
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