H.C. Wainwright Maintains Buy on Kala Pharmaceuticals (KALA) Ahead of Upcoming PDUFA Date

H.C. Wainwright analyst Ram Selvaraju is out this morning with another bullish note on shares of Kala Pharmaceuticals (NASDAQ:KALA), reiterating a Buy rating and price target of $35, which represents a potential upside of 197% from where the stock is currently trading.

Selvaraju continues to see a favorable risk/reward profile on Kala heading into the August 24 PDUFA date for lead candidate, INVELTYS. If approved, INVELTYS would be the first FDA-approved corticosteroid eye drop with a twice daily dosing regimen for the treatment of post-operative ocular inflammation and pain.

Selvaraju wrote, “We project INVELTYS to be launched in 1H19 and generate $36M in revenue during 2019. In our view, the combination of LE’s safety profile and dosing convenience should allow INVELTYS to seize market share from branded eye drops such as Lotemax and Durezol, as well as generic prednisolone. INVELTYS would also hold a competitive advantage vs. Dextenza (PDUFA date December 28, 2018) and DEXYCU (FDA-approved), if the latter two were also to enter the market in 2019. We note that, at commercial launch, Dextenza would only be indicated for ocular pain, and DEXYCU would only be indicated for ocular inflammation. In addition, dexamethasone (the API in both Dextenza and DEXYCU) is known to induce increased intraocular pressure (IOP) more often than LE.”

“Our 12-month price target is derived from a market value of the firm at $1.0B, which includes a discounted cash flow-based asset value of $1.1B for INVELTYS (85% probability of success) and KPI-121 0.25% (65% probability of success), with a 15% discount rate and 0.5% terminal growth rate,” the analyst added.

When it comes to Wall Street’s bet, the odds are on this biotech player, with TipRanks analytics showcasing KALA as a Strong Buy. Out of 4 analysts polled in the last 12 months, all 4 are bullish on Kala stock. With a return potential of nearly 188%, the stock’s consensus target price stands at $34.


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