Wedbush analyst Liana Moussatos is out today with a bullish note on shares of Kala Pharmaceuticals (NASDAQ:KALA), following the drug maker’s announcement that it plans to submit a New Drug Application (NDA) to the FDA for its dry eye treatment KPI-121 0.25% during the second half of 2018, while initiating an additional Phase 3 trial (STRIDE 3) in the third-quarter of this year, as per FDA suggestion.
Moussatos commented, “We view clinical risk for STRIDE-3 as reduced. Kala anticipates initiation of an additional Phase 3 trial (STRIDE 3) for KPI-121 0.25% in dry eye in Q3:18. The STRIDE 3 trial is expected to carry similar design characteristics as STRIDE 1 & 2 and a comparable sample size (around 900 subjects) with what we anticipate to be tighter inclusion/exclusion criteria to limit baseline variability and reduce clinical risk seen in STRIDE-2 resulting in the symptom miss. Top-line data for STRIDE-3 is anticipated in Q4:19, whereas the potential PDUFA date for KPI-121 0.25% is likely to occur in H2:19, by our estimates. Because regulatory review can begin while clinical trials are ongoing, the developmental timeline has not been extended beyond our expectation and KPI-121 0.25% could potentially be approved in the U.S. in H2:19 and launched in Q1:20.”
Meanwhile, Kala continues to prepare for the potential approval and launch of INVELTYS, which, if approved, is expected to be the first twice-daily ocular corticosteroid indicated for the treatment of post-operative ocular inflammation and pain. The FDA set a target action date under the Prescription Drug User Fee Act (PDUFA) of August 24, 2018.
Moussatos sees good chances for FDA approval, noting, “Based on the favorable safety and tolerability profile, and statistically significant Phase 3 results, we anticipate FDA to approve INVELTYS on or by the August 24, 2018 PDUFA deadline and conservatively have a U.S. launch date in January 2019 with peak sales of about $271 million in 2027.”
Net net, Moussatos reiterates an Outperform rating on Kala shares, with a price target of $47, which implies an upside of nearly 240% from current levels.