On Monday, Kala Pharmaceuticals (NASDAQ:KALA) saw its 12-month price target reduced to $18 from $21 by H.C. Wainwright, although the firm maintained a Buy rating on the stock. This adjustment followed the company's first-quarter financial report earlier in the week, which revealed a net loss of $11.8 million, or $4.20 per share, exceeding the anticipated loss of $8.8 million.
The company's management has indicated that the Phase 2b CHASE trial for KPI-012, aimed at treating persistent corneal epithelial defect (PCED), is progressing as planned, with topline results expected by the end of 2024. KPI-012 is an innovative therapy based on mesenchymal stem cell secretome (MSC-S) that combines various biological factors potentially capable of addressing the multiple causes of PCED.
There are currently no FDA-approved treatments that broadly cover all underlying causes of PCED. KPI-012 also has potential applications in addressing Limbal Stem Cell Deficiency (LSCD) and other corneal diseases. Additionally, Kala Pharmaceuticals is conducting preclinical studies on KPI-014 for inherited retinal degenerative diseases, including retinitis pigmentosa and Stargardt disease.
The firm's valuation of Kala Pharmaceuticals stands at $91 million. With an estimated 5.0 million shares outstanding by the end of the first quarter of 2025, the valuation per share is approximately $18. Consequently, while the price target has been reduced, the Buy rating has been reiterated based on these projections.
InvestingPro Insights
Kala Pharmaceuticals (NASDAQ:KALA) presents a mixed financial picture according to recent InvestingPro data. With a market cap of $18.45 million and a concerning negative P/E ratio of -0.43, the company's financial health is under scrutiny. The company's cash position is a notable strength, as it holds more cash than debt, which is a positive sign for investors considering liquidity and solvency. However, the company's cash burn rate is accelerating, which could raise concerns about long-term financial sustainability.
InvestingPro Tips highlight that Kala Pharmaceuticals does not pay dividends, reinforcing the notion that it may not be suitable for income-seeking investors. Moreover, the company's weak gross profit margins and the analysts' consensus that profitability is not on the horizon for this year could be points of caution for potential investors. On a positive note, the company's liquid assets exceed its short-term obligations, suggesting it is well-positioned to cover its immediate liabilities.
For those interested in a deeper dive into Kala Pharmaceuticals, there are additional InvestingPro Tips available, which can provide further insights into the company's financial performance and projections. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and unlock the full spectrum of insights and analytics that InvestingPro has to offer.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.