Seeking Alpha is proud to welcome Michael Meltzer as a new contributor.
Jan 1, 2020 10:57 AM
$KALA $3.69. MC $128M Cash $97.6M runway through 18 months.
Stock High 2019-9+ 2018- 18 2017 25+
Last secondary offering Summer 2019@8.25
Platform:Amplify Delivery Technology (ADT) increases penetration through tissues thereby improving the medicines concentration at site of needed treatment.
Gem of Pipeline:Eysuvis - .25% KPI 121 for Dry Eye Disease(DED)symptom flare ups. The drug is an improved delivery system for Loteprednol through ADT.
Current blockbuster B&L’s .5% Lotemax gel is currently used off label for DED flares as currently approved treatments XIIDRA and Restasis offer lackluster results leaving patients with breakthrough discomfort multiple times per year. At that time Lotemax is used as a ”rescue med” for a 2 week pulse dose to reboot the immune system and lower the inflammatory response causing DED. I and many other doc’s also piggyback Lotemax on top of initiation of treatment to bring faster relief also for 2 weeks. I would use Eysuvis in this role as well.
Lotemax started as a suspension 4x a day and was called a “soft” steroid. It was effective as a general anti-inflammatory for the eye with a far superior safety record then all other steroids. Through use found it was not effective for very difficult to treat uveitis’s and was formulated to a gel with same concentration to improve permeability. B&L also has a .2% Loteprednol called Alrex which is very weak and rarely used for anything more then allergic red eyes.
My concern with KALA is that they went with too weak a concentration and should have gone with .3% MINIMUM and thought might not be strong enough to get the very difficult to treat and pretty miserable dry eye population to admit they were feeling better. First phase 3,Stride1 hit both primary endpoint conjunctival hyperemia(redness of eye) improvement as well as secondary improvement of symptoms in all patients, as well as in difficult to treat one’s. The second Stride2 hit the primary and failed in the symptom relieve though showed significant aid.
The FDA then demanded a third trial to prove effectivity. KALA made the necessary changes to the patient population to have created apassing “p” in Stride 2 for the Stride 3. It will read out Q1 ‘20. If they reach significance in either full population or in the difficult to treat population they will be able to file an NDA. I believe the changes made will achieve success. Eysuvia has blockbuster potential. Lotemax is a key franchise drug for Bausch&Lomb. If approved, B&L will be forced to purchase Eysuvia to defend their franchise. If KALA issues the same $35 copay assistance as Lotemax, every doctor will switch to the approved label as opposed to continuing off label with a Lotemax Gel.
The largest point of deriskment is KALA already has recently launched an approved drug Inveltys, a 1% Loteprednol suspension with the ADT additive. It is approved for post ocular surgeries. It offers the befit of 2x a day dosing as opposed to 3-4x/day with added safety of Loteprednol as opposed to stronger steroids like Durezol or Prednisilone which have many more side issues.
Inveltys Metrics:
WAC price $245 with copay assistance cards available.
57 sales reps. Expect upping to 75 if get Eysuvis approval.
There were 40,000 Rx’s In Q3- a 30% quarterly sequential improvement.
97,000 Total Rx’s so far.
10.1% market share
2700 individual prescribers to date.
Peak sales estimate-$300 M
Cons: could fail Stride 3, though Inveltys mitigates this by establishing a floor value.
Pro’s: Effective changes to trial population increase likelihood of solid data. Hitting endpoints would bring approval and create a massive competitor to B&L’s Lotemax franchise, that B&L would have to buy Eysuvis as it could well be a blockbuster drug.
