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Kala Pharmaceuticals – CRL for KPI-121 0.25% poses a Setback for the Company

03 Sep Kala Pharmaceuticals – CRL for KPI-121 0.25% poses a Setback for the Company

Kala Pharmaceuticals (NASDAQ: KALA) received a Complete Response Letter (CRL) from the FDA, asking for efficacy data from an additional trial, in response to its NDA for KPI-121 0.25%, its lead candidate for the treatment of dry eye disease. The company had filed a New Drug Application (NDA) with the FDA for KPI-121 0.25% aimed at the treatment of dry eye disease, which is made up of nanosuspensions of loteprednol etabonate, or LE, a corticosteroid designed for ocular applications. It was aiming to be the first FDA-approved product for the short-term treatment of dry eye.

The news, a cause for concern, also has an upside. The FDA specifically asked for further data to prove the efficacy of the drug. Kala has already initiated a phase 3 trial named STRIDE 3, which is enrolling patients currently, in July 2018, and expects topline data by the end of 2019. It is aiming for resubmission of the NDA during the first half of 2020. The design of STRIDE 3 incorporated specific modifications to overcome the limitations of its previous trials and improve its chances of success.

Mr. Kim Brazzell, Chief Medical Officer of Kala Pharmaceuticals states

“We remain confident in the potential of KPI-121 0.25% to be the first approved product for the temporary relief of the signs and symptoms of dry eye disease. We look forward to reporting data from STRIDE 3 and resubmitting the NDA with the goal of obtaining approval and being able to offer KPI-121 0.25% to the millions of patients with dry eye disease.”

The company is confident that it will be able to produce satisfactory efficacy data from its ongoing STRIDE 3 trial, a multicenter, randomized, double-blind, placebo-controlled, parallel-arm study, which is assessing KPI-121 0.25% to vehicle (placebo), in a subject size of approximately 900 patients with dry eye disease. The NDA for KPI-121 0.25% included data from one Phase 2 and two Phase 3 efficacy and safety trials, STRIDE 1 and STRIDE 2, studying approximately 2,000 patients with dry eye disease as per a company statement.

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Industry
Dry Eye Syndrome is characterized by the inability to produce sufficient amount or quality of tears, which leads to lack of lubrication and nourishment to the surface of the eye, and manifests as chronic eye irritation, inflammation and damage to the surface. There are over 16 million diagnosed cases of dry eye syndrome in the U.S alone.

Dry Eye leads to discomfort and pain and can greatly impact the quality of life by making it difficult to perform everyday functions such as reading, driving, using computers and performing daily activities. In the U.S the financial implications of dry eye management was estimated to be US$ 11,302 per patient and US$ 55 billion overall according to a report.

Image Source: AOA

There is no cure for dry eye disease currently and treatment options include topical medication, punctal plugs, practitioner visits, and nutritional supplements, these options are highly inadequate and hence the need for novel solutions. The prevalence of dry eye ranged from 5 to 30 % of individuals aged over 50 according to an estimate by The Epidemiology Subcommittee of the 2007 DEWS.

report by Transparency Market Research projects that the industry will be worth $7.78B by 2025 growing at a CAGR of 4.5%. A rising geriatric population, coupled with increased screen exposure, diabetes, environmental factors such as pollution and refractive surgeries are leading to a rise in the incidences of dry eyes, while the lack of adequate therapeutic options, expensive medication along with lack of patient adherence is a challenge for the growth of the market.

However, the market is poised for change with some novel technologies and drug candidates being developed for the treatment of this chronic disorder and KALA is one of them.

The Company
The company is using its proprietary mucus-penetrating particle (MPP) technology to develop novel nano-particle based therapeutic solutions for eye diseases. The technology consists of selective-sized nanoparticles, which have a proprietary coating that enhances the mobility of drug particles and overcomes the limitations of being eliminated by mucus, thereby improving the efficiency of drug delivery to target areas.

Image Source: Company

Its novel MPP technology has shown favorable pharmacokinetics characteristics and the ability to penetrate underlying ocular tissues effectively, thereby overcoming the limitations of the traditional drug particles which are eliminated at the tear film level itself. The company has patented its technology and enjoys a strong intellectual property portfolio.

Image Source: Company

The company has launched INVELTYS a first-in-class topical twice-a-day product candidate for patients with inflammation and pain as a result of cataract surgery. It is the only FDA approved Ocular Steroid with BID Dosing. The company has reported sales of over $2.1 million for INVELTYS, an increase of 50%, from $1.4 million in the previous quarter.

Image Source: Company

Kala has also patented its proprietary AMPPLIFY™ drug delivery technology and will enjoy patent protection through 2033. The company has hired a specialty sales organization to promote the sales of its product to eye care professionals (ECP’s) and payor customers. The company has projected peak net revenues for the U.S to be over $300M.

As per its Q3, 2018 financial results, the company closed a $110M credit facility from Athyrium Capital Management LP, a leading healthcare-focused investment firm. It also made a public offering of 8,625,000 shares of its common stock at $8.25 per share, resulting in total net proceeds of an estimated $66.4 million. The company had cash and cash equivalents worth $118 million as of June 30, 2019.

Risk Assessment

    • Kala can still overcome this setback as it has results from the ongoing STRIDE 3 that can be used to support its efficacy claims for KPI-121 0.25%. The company has already taken steps to ensure that it incorporates all the feedback about the limitations of its previous trials while designing the phase 3 trial, improving its chances for success.
    • The company already has an FDA approved product in the market, INVELTYS, an loteprednol etabonate ophthalmic suspension, which has approximately 6.8% branded new prescription market share in just over six months since launch, as per the company’s Q2, 2019 financial results. Its sales figures stood at $2.1 as compared to $1.4 million for the first quarter of 2019. The product is slowly gaining prescription share as well market share and is proving to be a valuable revenue stream for the company. It is the only corticosteroid with twice-daily administration for postoperative inflammation and pain as against conventional 4-times a day solutions.
    • The company closed the last quarter with cash and cash equivalents of $118 as of June 30, 2019. This coupled with the increasing sales from INVELTYS, will help fund its operations, and advance its clinical pipeline through at least Q3, 2019, offering it operational stability for the time being.
    • The company will not be able to launch its product until the last quarter of 2020, as even if it is able to file a resubmission in the first half of 2020, based on topline data from its trial, the FDA will take at least 6 months to review the data. This will hinder its commercialization plans.
    • Clinical trials are unpredictable and fraught with risk, it is imperative that its Phase 3 clinical trial meet its clinical endpoints, for it to file for a resubmission of its NDA for KPI-121 0.25%. Any failure would mean a setback for the company’s plans and affect the other products in the clinical pipeline.
    • Conclusion
      We believe that though the CRL from FDA is a setback for Kala Pharmaceuticals, it can still make a strong comeback, if its Phase 3 STRIDE is able to meet the clinical endpoints to prove its safety and efficacy. The growing sales and prescription numbers for its INVELTYS, will help the company bolster its revenue and focus on the development of its pipeline.

      Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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      Source:

      http://investors.kalarx.com/news-releases/news-release-details/kala-pharmaceuticals-reports-second-quarter-2019-financial

      https://www.businesswire.com/news/home/20190808005767/en/Kala-Pharmaceuticals-Receives-FDA-Complete-Response-Letter

      https://seekingalpha.com/article/4288667-kala-still-shot-reach-goal-approval-latest-setback

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