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Kala Pharmaceuticals Reports Third Quarter 2019 Financial Results

–Conference Call and Webcast Today at 8:00 a.m. ET–

WATERTOWN, Mass.–(BUSINESS WIRE)–Kala Pharmaceuticals, Inc. (Kala) (NASDAQ:KALA), a biopharmaceutical company focused on the development and commercialization of therapeutics using its proprietary AMPPLIFY™ mucus-penetrating particle (MPP) Drug Delivery Technology, today reported financial results for the third quarter ended September 30, 2019.

“INVELTYS demonstrated growing demand in the third quarter, with positive feedback from physicians and a continued uptick in prescriptions and market share. Additionally, we made important progress in expanding payor coverage,” said Mark Iwicki, Chief Executive Officer of Kala. “Our STRIDE 3 Phase 3 clinical trial for EYSUVISTM (KPI-121 0.25%), our product candidate for dry eye disease, continues to enroll and we are targeting topline data in the first quarter of 2020. We expect that data from this trial will serve as the basis for our resubmission of the EYSUVIS New Drug Application to the U.S. Food and Drug Administration.”

If approved, Kala believes EYSUVIS will be the ideal prescription therapy for treating dry eye flares that affect the vast majority of dry eye patients.

Third Quarter and Recent Highlights:

INVELTYS®: INVELTYS (loteprednol etabonate ophthalmic suspension) 1% was launched in January 2019 as the first and only twice-daily ocular corticosteroid indicated for the treatment of post-operative inflammation and pain following ocular surgery. The unique combination of safety, efficacy and twice-daily dosing of INVELTYS was developed to address a significant unmet need. Kala believes these attributes are being viewed favorably by physicians.

EYSUVISTM (loteprednol etabonate ophthalmic suspension) 0.25% Dry Eye Program: On August 7, Kala received a complete response letter (CRL) from the U.S. Food and Drug Administration (FDA) regarding its New Drug Application (NDA) for EYSUVIS for the temporary relief of the signs and symptoms of dry eye disease. The FDA indicated that efficacy data from an additional clinical trial will be needed to support a resubmission of the NDA. Kala is currently conducting the additional Phase 3 clinical trial, STRIDE 3 (STRIDE – Short Term Relief In Dry Eye), which Kala expects will serve as the basis of its response to the CRL. Kala has identified key factors that contributed to the differences observed in the results from STRIDE 2 compared to those of STRIDE 1 and the Phase 2 trials, and Kala believes that changes made to the inclusion/exclusion criteria of STRIDE 3 based on these analyses will improve the probability of success of STRIDE 3. Kala is targeting topline data from STRIDE 3 in the first quarter of 2020 and resubmission of the NDA in the first half of 2020. The Company believes this resubmission would be subject to a six-month review under the Prescription Drug User Fee Act (PDUFA).

Financial Results:

The financial results below contain both GAAP and non-GAAP financial measures. The non-GAAP financial measures exclude stock compensation, depreciation and non-cash interest expense. See “Non-GAAP Financial Measures” below; for a full reconciliation of our GAAP to non-GAAP financial measures please refer to the tables at the end of this press release.

Cash Position

Third Quarter 2019 Financial Results

Year-to-Date Financial Results

Conference Call Information

Kala will host a live conference call and webcast today, November 7, 2019 at 8:00 a.m. ET to review the third quarter 2019 financial results. To access the conference call, please dial 866-300-4091 (domestic callers) or 703-736-7433 (international callers) five minutes prior to the start of the call and provide the conference ID: 1955939. To access a subsequent archived recording of the call, please visit the “Investors & Media” section on the Kala website at http://kalarx.com.

About Kala Pharmaceuticals, Inc.

Kala is a biopharmaceutical company focused on the development and commercialization of therapeutics using its proprietary AMPPLIFYTM mucus-penetrating particle (MPP) Drug Delivery Technology, with an initial focus on the treatment of eye diseases. Kala has applied the AMPPLIFY Drug Delivery Technology to a corticosteroid, loteprednol etabonate (LE), designed for ocular applications, resulting in the August 2018 FDA approval of INVELTYS® (loteprednol etabonate ophthalmic suspension) 1% for the treatment of inflammation and pain following ocular surgery, and its lead product candidate, EYSUVISTM (loteprednol etabonate ophthalmic suspension) 0.25%, for the temporary relief of the signs and symptoms of dry eye disease.

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 the press release are stock-based compensation expense, non-cash interest and depreciation. 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. 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.

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, including statements regarding INVELTYS for the treatment of inflammation and pain following ocular surgery, including progress of commercial launch, status of insurance coverage and the availability of reimbursements under Medicare Part D, the Company’s lead product candidate, EYSUVIS, for the temporary relief of the signs and symptoms of dry eye disease, including the Company’s belief that changes made to the inclusion/exclusion criteria of STRIDE 3 will improve the probability of success, the Company targeting topline results for STRIDE 3 in the first quarter of 2020, and the Company’s expectations regarding its use of cash, cash runway and projected revenues. All statements, other than statements of historical facts, contained in this Press Release, including statements regarding the Company’s strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements, and you should not place undue reliance on such forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements as a result of various risks and uncertainties, including but not limited to: whether the Company will be able to successfully implement its commercialization plans for INVELTYS; whether the market opportunity for INVELTYS and EYSUVIS is consistent with the Company’s expectations and market research; uncertainties inherent in the availability and timing of data from ongoing clinical trials, and the results of such trials, including STRIDE 3; whether any additional clinical trials will be initiated or required for EYSUVIS prior to approval of the NDA, or at all, and whether the NDA will be approved; the Company’s ability execute on the commercial launch of EYSUVIS, if and when approved, on the timeline expected, or at all; whether the Company will be able to generate its projected net product revenue on the timeline expected, or at all; whether the Company’s cash resources will be sufficient to fund the Company’s foreseeable and unforeseeable operating expenses and capital expenditure requirements for the Company’s expected timeline; other matters that could affect the availability or commercial potential of INVELTYS and the Company’s product candidates, including EYSUVIS; and other important factors, any of which could cause the Company’s actual results to differ from those contained in the forward-looking statements, discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K, most recently filed Quarterly Report on Form 10-Q and other filings the Company makes with the Securities and Exchange Commission. These forward-looking statements represent the Company’s views as of the date of this release and should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof. The Company 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.

Financial Tables:

Kala Pharmaceuticals, Inc.
Balance Sheet Data
(in thousands)
(unaudited)
 
 September 30, December 31,

2019

2018

Cash

$

            97,556

$

          170,898

Total assets

          161,013

          220,966

Working capital (1)

            94,490

          160,018

Long‑term debt, net of discounts

            70,935

            70,226

Other long‑term liabilities

            29,026

            28,752

Total Stockholders’ equity

            43,056

          104,978

 

(1) The Company defines working capital as current assets less current liabilities. See the

Company’s  condensed consolidated financial statements for further information regarding

its current assets and current liabilities.

Kala Pharmaceuticals, Inc.
Condensed Consolidated Statement of Operations
(In thousands, except share and per share data)
(Unaudited)
 
Quarter Ended Nine Months Ended
September 30, September 30,

2019

 

2018

 

2019

 

2018

       
Product revenues, net

$

           1,451

$

                —

$

           4,894

$

                —
 
Costs and expenses:
Cost of product revenues

668

                —

1,261

                —
Selling, general and administrative

15,280

8,469

50,523

21,102

Research and development  

7,070

   

7,027

   

21,137

   

20,051

 
Total operating expenses  

23,018

   

15,496

   

72,921

   

41,153

 
Loss from operations

(21,567)

(15,496)

(68,027)

(41,153)

Other income (expense):
Interest income

571

325

1,973

848

Interest expense  

(2,180)

   

(432)

   

(6,335)

   

(1,214)

 
Net loss  

(23,176)

   

(15,603)

   

(72,389)

   

(41,519)

 
Net loss per share attributable to common
stockholders—basic and diluted

$

(0.68)

 

$

(0.63)

 

$

(2.13)

 

$

(1.69)

 
Weighted average shares
outstanding—basic and diluted
 

34,168,282

   

24,600,080

   

33,977,477

   

24,570,081

 
Kala Pharmaceuticals, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
(Unaudited)
 
Quarter Ended Nine Months Ended
September 30, September 30,

2019

 

2018

 

 

2019

 

2018

               
Net loss (GAAP)

$

(23,176)

$

(15,603)

$

(72,389)

$

(41,519)

Add-back: stock-based compensation expense

2,572

2,265

7,666

6,417

Add-back: Non-cash interest 

237

75

709

75

Add-back: depreciation 

226

70

614

243

Non-GAAP Net loss

$

(20,141)

$

(13,193)

$

(63,400)

$

(34,784)

               
Cost of product revenues (GAAP)

$

668

$

 — 

$

1,261

$

 — 
Less: stock-based compensation expense

60

 — 

101

 — 
Less: depreciation 

2

 — 

2

 — 
Non-GAAP Cost of product revenues

$

606

$

 — 

$

1,158

$

 — 
               
Selling, general and administrative expenses (GAAP)

$

15,280

$

8,469

$

50,523

$

21,102

Less: stock-based compensation expense

1,599

1,581

5,250

4,353

Less: depreciation 

140

13

376

16

Non-GAAP Selling, general and administrative expenses

$

13,541

$

6,875

$

44,897

$

16,733

               
Research and development expenses (GAAP)

$

7,070

$

7,027

$

21,137

$

20,051

Less: stock-based compensation expense

913

684

2,315

2,064

Less: depreciation 

84

57

236

227

Non-GAAP research and development expenses

$

6,073

$

6,286

$

18,586

$

17,760

               
Total operating loss (GAAP)

$

(21,567)

$

(15,496)

$

(68,027)

$

(41,153)

Less: stock-based compensation expense

2,572

2,265

7,666

6,417

Less: depreciation 

226

70

614

243

Non-GAAP total operating loss

$

(18,769)

$

(13,161)

$

(59,747)

$

(34,493)

 

Contacts

Investors:
Hannah Deresiewicz

hannah.deresiewicz@sternir.com
212-362-1200

Media:
Kari Watson

kwatson@macbiocom.com
781-235-3060

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