Langer’s Kala files for $86M IPO to bring eye drug to market

Nasdaq
Kala is raising money to tackle a market currently fought over by Novartis and Valeant

Kala Pharmaceuticals has filed to list on Nasdaq. The ophthalmic drug R&D shop has penciled in a fundraising goal of $86 million to equip itself to file for approvals of corticosteroid nanosuspension KPI-121 in two indications.
 
Waltham, MA-based Kala is one of the many startups created by MIT professor Bob Langer, Sc.D. Langer and former students set up the company to develop and commercialize nanoparticle-based mucus penetrating particles. The size and coatings of these particles are intended to enable them to pass through mucus without being trapped. Kala applied the technology to the corticosteroid loteprednol etabonate to improve its ability to enter ocular tissues.
 
This work led to various forms of KPI-121, one of which has come through two phase 3 trials as a treatment of post-surgery ocular inflammation and pain. KPI-121 1.0% bested placebo against the trial’s inflammation and pain endpoints, teeing Kala up to file for approval using the 505(b)(2) pathway by the end of the year.
 
Currently, physicians typically use topical steroids to treat postoperative eye pain. If KPI-121 is to claim market share, Kala must persuade physicians to switch from incumbents such as Novartis’ Durezol and Valeant Pharmaceuticals’ Lotemax. And hold off competition from other late-phase hopefuls from Icon Bioscience, Ocular Therapeutix and Valeant.
 
Kala wants the IPO money to support these efforts. The cash will fund work on the regulatory filing, while also leaving Kala with the financial muscle to build out its sales force, manufacture commercial supplies and prepare a submission in a second induction.
 
Work on the second indication is less advanced. Kala is testing KPI-121 0.25% as a treatment for dry eye disease in two parallel, 900-patient phase 3 trials. Top-line data are due by the end of the year. If the trials show KPI-121 has a positive effect on ocular discomfort and bulbar conjunctival hyperemia, Kala will file for approval as a temporary relief of dry eye symptoms in the first half of next year.
 
Back-to-back approvals would continue the fast rise of Kala, which set up shop in 2009 and went on to quickly hustle KPI-121 through the clinic. Kala tapped VCs to fund the work. Most recently, Longitude Capital led a $68 million round with support from a mix of existing and new investors including OrbiMed, Vivo Capital, RA Capital Management and Lux Capital. Kala unveiled that round in April 2016.
 
The round marked a return to private investors after a dalliance with public markets. Kala confidentially filed a draft registration statement with the SEC on September 21, 2015, the same day then-presidential hopeful Hillary Clinton sunk biotech stocks with her “price gouging” tweet. 
 
Kala decided to stick with private markets as the fallout from Clinton's tweet spread to the IPO market but the dynamics are different now. Biotech IPOs are once again getting lift-off and Kala has data to underpin its pitch to Wall Street.