Kala Pharmaceuticals (KALA) 12 Aug 222022 Q2 Earnings call transcript

Good day. My name is Shantel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kala Pharmaceuticals Second Quarter 2022 Financial Results Conference Call.

As a reminder, today's conference call is being recorded. [Operator Instructions] Hannah Deresiewicz from Stern Investor Relations, you may begin your conference.

thank for and call. in operator, you, you participating all today's Thank

Chief Mary me Mark Kharabi, joining Brazzell, for Officer; and are the our Head today's call. the Officer; Chairman R&D Joining will company us Executive Chief Iwicki, Business from also Officer; Chief Reumuth, Financial and Officer, Chief of Q&A Medical Darius of and be Kim portion

operating prospects accounting that measures, principles. These directly of call, Act will reconciliation issued sufficiency as of based of development Kala's most with program potential be which financial statements are we call. non-GAAP we accordance expenses Litigation within and about and the not comparable GAAP measures statements management on will on the forward-looking is be this call, available non-GAAP During of XXXX. comments Securities KPI-XXX, are in certain planned generally the Private future are to our expectations regarding the expectations, market today, and the accepted the A press can of our release make to financial this which website. in prepared statements plans On meaning Reform referring found also cash statements productions of resources. this include and forward-looking will the and and of beliefs other These our conference measures

well on Iwicki. materially I the forward-looking that identify and specific may reflect in CEO, forward-looking conference to our read company's we required Mark SEC. press to company to or this actual risks call uncertainties quarterly no undertakes Form in the as law. statements in statements revise will or occur The our update XX-Q risk and as materially today's expectations. should actual by report results may now any from filings described described the over make events those other carefully except Kala's cause release differ the with which from Our obligation results to circumstances included factors the as factors, call, differ or turn Investors after events that

for And Thanks, Hannah. this joining us thank you morning. everyone

we all We suited products reach we care has including Alcon are benefits of in organization importantly, important developing transitioning diseases. from the the EYSUVIS well with meaningful market-leading providers are progress global to. franchises the an aim responsibilities transitioned sale expand R&D commercialization the Alcon In efforts launching back and eye focused decades both entering particularly relationships a care, to these among We and July, targeted to with including products patients surgical care believe long-standing an and professionals patients coverage. delivering of dry and to XXXX of commercial Kala assets completed world targeted Kala Alcon EYSUVIS for medicines made from company roots building disease our experience care of our and vision eye is that as professionals can and States, for care both for health serious on medicines. half INVELTYS the stage securing treatment novel in INVELTYS around and the eye in improve the This and of on more care awareness payer Incorporated. and strong and the of help. United the was transaction second health to robust

treatment back turned to front of of our diseases mesenchymal excited seeing many a are focus Alcon rare as patients for forward hands, of EYSUVIS cell are secretome we've in multiple and look benefit eye. efforts. of their transaction to platform, and our INVELTYS and the Alcon's the more We evaluating stem about which result With the we the

vision. represent there treatment Sjogren's impact persistent need. of defect potential trial clinical large we deficiency us which markets, approved loss no resulting for development R&D are cell in of will patients anticipate provide fourth for shortly, to including prescription these ample in two quarter limbal positively significant initiate the to These describe treatments and is indications the currently opportunity of disease. morbidity, partial development affect at expertise people alone, are of the and KPI-XXX develop company, of indications, are stem secretome a and II/III our additional track KPI-XXX is treatment through to And leverage as into Phase in year. expanding rare the Together, the of States this we a our epithelial XXX,XXX of clinic we to Kim diseases to in corneal KPI-XXX and the who United on core further As team eager for advance platform. nearly our

cash to million existing from substantially our and additional reductions invest in fund of payments. of operating PCED. million milestone Importantly, to $XXX upfront the beyond of going purchase readout we an transaction, $XX we operations these will which to forward, us up means inventory. million data the included We receive the have Alcon, the planned trial $X efforts. Phase to close an II/III payment from $XX in in plus And At eligible commercial-based in the also million for KPI-XXX are resources allow expenses our the cash received recent we believe of

like pipeline Kim to the our to to discuss programs. I'd turn Now over call

cell work share and we're additional you, KPI-XXX mesenchymal with our Mark. platform. happy progress stem to our with program secretome Thank I'm doing the

treatment deficiency Mark KPI-XXX the Phase epithelial an we're the Sjogren's, As both in cell of year. manifestations of moderate-to-severe are on IND that corneal We've trial and mentioned, also persistent track quarter stem need. ocular additional and areas of II/III of in significant currently to which are a significant unmet patients of medical identifying potential clinical towards front-of-the-eye for the evaluating for limbal this file made partial defect indications fourth initiate KPI-XXX to progress

we're for addition, exploring program. applications some In also secretome retinal the exciting

secretome approach approach previously, by secreted cell-free of stem harvested the allows The essential As cell. inhibitors, Because KPI-XXX many therapy safety from avoid growth us therapy cell-free, as our cells, a of factors, the for many of proteins of matrix comprised our administration novel the cell, human utilizing the intact will factors and neurotrophic to logistics the mesenchymal approaches. we've concerns therapeutic application mesenchymal which without derived cell with for the produce benefits is the potential believe technology marrow biomolecule an with stem we including cell need discussed traditional more and protease bone for same applications. allows current multiple is associated therapy secretome of

therapy all space, There be and that PCED weeks the of only disease address the each that to And nonsurgical be a in require treatments. that etiologies $X persistent is for the for quite KPI-XXX healing a is approved of patients requires XXX,XXX PCED of result a advancing believe keratitis, affects and and is that the can for of is neurotrophic it can effective as the causes. process that treatment regulated PCED patients. the PCED cases. etiology action, we refractory surface underlying biological limited of all a to its or provide This mechanism shown various which initially dosed therapy eight opportunity of dose. defect, nonhealing an the which prior surgical PCED estimated infectious a as defect a various is the but life corneal only multifactorial U.S., PCED and a been We highly day for be is molecules. need involves in impaired unmet times benefit etiologies numerous OXERVATE, that therapy for trauma believe are healing for clear all estimated excess is reconstitution healing etiologies, multistep year a It believe is of neurotrophic including, the two-hour quality ocular of PCED corneal epithelial patients. represents or PCED, multifactorial and disease. of for treatment process or KPI-XXX, Corneal corneal that one intervals to to pathways the potential and across numerous of there treatment is vision keratitis, the market each conventional wound such of we improve hallmark to severe has billion. disease impaired new which various of underlying to, a not is effective in third defined We keratitis, of the six at burdensome of

if our one issues. required PCED safety clearance in significant plan As we XXXX, KPI-XXX to of no KPI-XXX necessary trial Pending initial the PCED FDA with eight all healing in with of in benefit for serve pivotal of trial shared tolerated demonstrated of the two a positive, etiologies clinical fourth patients. in of trials trial six conducted Phase in IND, planned could III previously, evaluable initiate lesion FDA quarter complete with have approval. patients as of various the which, we in PCED the was well these PCED patients patients of the eight

diminished pathology results can We corneal partial the the other the partial the of overgrowth call of ocular treatment expect stem and epithelium compelling as which currently about mechanism impairment approved in partial can and epithelial the is by with quarter have of is or an no pharmaceutical result for deficiency associated of also the U.S. the the of XX,XXX as of deficiency remaining treatment breakdown, the sequelae key products cornea and pain stem top and to numerous the epithelial When repopulation of cells, well and patients of the Sjogren's. opinion that patients quality for reduced of KPI-XXX is from clarity of depleted, life. essential would stem characterized LSCD, disease. LSCD, ability of of deficiency interactions and maintain appropriate line Based first with limbal Approximately junction surface for but recurrent where prepare XX% in still and cells. loss these the some significant in they Phase surface impairment we're trial they of cells conjunctival it, leaders, integrity to lead an vision We in this as KPI-XXX and stem of role XXXX. evaluating the on II/III potential cell patients or action stem LSCD. play meaning significant population manifestations or the renew cell the are pain and be disease, compromised, vision in loss Limbal moderate-to-severe limbus, or to corneal we itself ocular level LSCD and cell believe the avoid limbal suffer There the neovascularization, generation of the candidates symptomatology. have and for corneal ocular

both observed In PCED would restore partial also and could the literature the patients addition in both models in in corneal that which niche, on healing previous MSC stem stat animal LSCD. limbal trial, the effects secretomes a KPI-XXX complete to the the on and that of in significant suggests be benefit cell

other symptoms. XX% XX,XXX total for significant The moderate-to-severe mouth. estimate dryness, the is ocular fluid the eyes the of $X.X Sjogren's or with suffer can indication to and of of disease, United the of body, life ocular There's surface certain impair alone. glands meaningful Approximately U.S. and multisystem a roughly by approximately Sjogren's, autoimmune chronic limbal and stem and in interest the characterized new symptoms, substantial insufficient of billion market patients Sjogren's therapies their disease. production of XX% together deficiency provide in from improvement the quality daily leading opportunity ocular result, potential cell manifestations ocular productivity. in patients suffer of of that the between $X symptoms, Despite not and billion partial that ocular in diminished. patients of significant quality States be the patients who improvement need treatments, life moderate-to-severe unmet of a ocular often the visual do experience achieve And Sjogren's can many significant in life significantly manifestations people a and impacts a represent current We Sjogren's Sjogren's patients' as which primarily to in

months of preclinical pigmentosa further Finally, for mentioned utility evaluating has indication XXXX. plan retinal also secretome development utility our of platform the we as Stargardt with second to believe diseases, earlier, for such degenerative secretome our diseases a the retinal the coming we trials as half the selecting of goal retinal initiate degenerative potential in for and platform retinitis in We disease.

potentially patients opportunity ample Taken the together, of believe impact thousands KPI-XXX efforts of treatment we around our We world. our platform initiate trial forward this provide we the of efforts PCED Phase XXXX. into ocular as later diseases a that and updates to to in improve with for and clinical II/III severe our look indications in surface planned additional our to number providing secretome year expand additional

financial results. to over our like Now I'd Mary pass to to the go call

Thanks Kim.

certain deferred debt, reference the non-GAAP results, fair discussion to consideration. our or measures. this I interest, financial depreciation of During amortization, of These and measurements and compensation, on gain measures consideration Alcon and extinguishment purchase transaction costs financial financial transaction stock-based loss of exclude on related will non-GAAP value contingent loss non-cash

For press a please website. refer to release, our to available is reconciliation non-GAAP which financial of full measures, GAAP our on today's

recap the a quarter. second to of Turning

Our was primarily to XXXX cash reflects XX, operations. cash as of $XX.X XX, in position as million of $XX.X June compared million XXXX. This decrease December used

resources, expenses position in received into the operations not in the planned as XX enable operating anticipate with of does Alcon payments proceeds of second to the with Alcon of June cash in the net from together that Our early include July quarter transaction. closing fund net reductions our cash us connection the received XXXX. We will and

expenses extend been to year, cash we the our reduce operating and our of the Over have course runway. working

year transaction, includes second we operating operating reductions quarter for of more streamlined million employee-related expenses expenses to our over compared the related I the Following development the of reduce non-GAAP today. operator $X.X as Non-GAAP and questions. call closing were and pass the the million half our have than first non-GAAP of first XXXX. by the will for primarily to corporate of concludes That to total $XX.X the the expenses and SG&A of to for for reflecting XX% expenses quarter in XXXX, R&D the by infrastructure XXXX which second of Alcon $XX.X XXXX quarter quarter the quarter XX% year for our first XXXX XXXX, were XX% planned for expenses SG&A non-GAAP for compared million our for were compared $XX the the expenses first the full the compared XXXX. million with million prepared KPI-XXX. of of expenses remarks quarter to consistent was to of now year for total second to our the XXXX full operating for $XX.X to spending.

question first H.C. Chen with [Operator Instructions] Our Wainwright. comes from Yi

line open. Your is

the Chait, I'm on Congratulations all behalf Chen. progress. Yi of on

those you is and data your pipeline commented – would you other from the in the you you with data some on through Sjogren's KPI-XXX. two raise still Phase that First your programs, sure study you And on funds start the the some pretty if is but cash thinking clinic? progress, you runway second when helpful? study need waiting approval? are preclinical could see you before you. on And Thank to are to question your must have about where need II/III have previously, for before on eventual comment you preclinically? pushing Do do that pivotal to and be on LSCD I'm I required lastly, this would potentially further

pivotal we we the second the to around I'll me. forth. comment questions. of that doing to Brazzell. your duration so question, finalize dosing and and Phase But couple on Excuse is regard be first With Kim of readout readout. prior your second from III to line data dose preparations the certainly will results This will trial need top

doing other still analysis going designs looking forward the pathways the indications, two for development With are the of clinical into and protocol. we're

a bit from a still able go being we're clinic. off to of in the So way

One of indications that clinical CMC is the advantages utilize of the that can are and program. these we developing PCED we the for two the supplies

the to to And have clinic question itself. additional a won't there do So for on think we'll do the work product we or on without Mary. Mark and into be work, runway able additional was move CMC for to having I

I take runway can question. cash Sure. the

from with KPI-XXX gets of second the our last that That XXXX. from cash would II/III net us quarter received we beyond the our said that data Phase trial. until us together we proceeds So readout the Alcon, resources,

you. Thank Excellent.

end reached question-and-answer now Mark over [Operator have Instructions] of turn the We remarks. closing call the back I'll session. the to for

forward thank the today, to update Have for joining look make to us you everyone, progress great Well, during as you, and we continuing a year. we day.

concludes conference This call. today's

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