Kala Pharmaceuticals(US:KALA)2023-03-03 13:16Financial Performance - The company reported a net loss of $44.8 million for the year ended December 31, 2022, compared to a net loss of $142.6 million for the year ended December 31, 2021[530]. - As of December 31, 2022, the company had an accumulated deficit of $587.2 million[530]. - The net loss for the year ended December 31, 2022, was $44.8 million, a significant improvement of $97.8 million compared to a net loss of $142.6 million in 2021[576]. - Product revenues, net for the year ended December 31, 2022, were $3.9 million, a decrease of $7.3 million from $11.2 million in 2021, primarily due to the sale of the Commercial Business to Alcon in July 2022[577]. - Cost of product revenues decreased to $2.6 million in 2022 from $4.1 million in 2021, a reduction of $1.5 million attributed to the sale of the Commercial Business[578]. - Selling, general and administrative expenses were $65.0 million for 2022, down $40.1 million from $105.1 million in 2021, mainly due to workforce reduction and decreased external sales and marketing costs[579]. - Research and development expenses increased to $17.7 million in 2022 from $11.5 million in 2021, an increase of $6.2 million driven by $5.8 million in KPI-012 development costs[582]. - Interest income rose to $0.7 million in 2022 from $0.1 million in 2021, an increase of $0.6 million due to higher interest rates[586]. - Interest expense decreased to $7.3 million in 2022 from $8.4 million in 2021, a reduction of $1.1 million[587]. Business Operations - The company has no commercial products in its portfolio following the sale of its Commercial Business, including EYSUVIS and INVELTYS, to Alcon on July 8, 2022[535]. - The company has ceased development of preclinical pipeline programs unrelated to its MSC-S platform to focus on KPI-012[525]. - The company has initiated preclinical studies under the KPI-014 program for inherited retinal degenerative diseases[525]. - KPI-012 is currently in Phase 2b clinical development, while all other research and development programs are in preclinical development[544]. - The company expects to incur significant expenses and operating losses for the foreseeable future related to the development and commercialization of KPI-012[530]. - The company generated limited revenues from product sales prior to the sale of the Commercial Business to Alcon, with no revenue expected from KPI-012 or other candidates in the near term[536]. - The company is eligible to receive up to $325 million in milestone payments from Alcon based on specified commercial sales milestones for EYSUVIS and INVELTYS[530]. - The company recorded a gain on the sale of its Commercial Business amounting to $47.0 million for the year ended December 31, 2022, after receiving $65.0 million in cash consideration from Alcon[590]. Research and Development - Research and development expenses are anticipated to increase in 2023 as the company advances clinical development of KPI-012 and conducts necessary preclinical studies and clinical trials for other product candidates[542]. - The company expects significant increases in research and development expenses as it advances the clinical development of KPI-012 and other product candidates[614]. - The company expects to incur significant costs for research and development activities, which may not result in approved products due to various uncertainties[542]. - The total potential maximum payout for contingent consideration related to the Combangio acquisition is $105.0 million, with $2.5 million in cash and $2.4 million in stock due upon the first patient dosing in a Phase 2b trial[606]. - The company plans to seek regulatory approval for KPI-012 for PCED and additional indications, which will require substantial funding and resources[618]. Capital and Financing - The company may need to raise additional capital to advance its product candidates, including KPI-012, and may seek collaborations in the future[544]. - The company has incurred significant operating losses since inception, financing operations primarily through the sale of its Commercial Business and various stock offerings[593]. - The company raised approximately $31.0 million through a private placement, issuing 76,813 shares of common stock at $5.75 each and 53,144 shares of Series E Preferred Stock at $575 each[606]. - The company has a remaining $10.3 million of shares available for sale under the Amended and Restated Sales Agreement as of December 31, 2022[596]. - The Loan Agreement with Oxford Finance allows for a total term loan of up to $125.0 million, with specific tranches available based on revenue milestones[598]. - The company has agreed to make partial prepayments of $5.0 million on the term loan by June 30, 2023, and January 31, 2024, as part of the Third Loan Amendment[601]. - As of December 31, 2022, the company had $70.5 million in cash and cash equivalents, down from $92.1 million in 2021, and $43.3 million in indebtedness, reduced from $80.0 million[608]. - Net cash used in operating activities decreased to $78.9 million in 2022 from $108.2 million in 2021, primarily due to a $18.2 million decrease in net loss adjusted for non-cash charges[610]. - Net cash used in financing activities was $7.9 million in 2022, a significant decrease from $42.6 million provided in 2021, largely due to a $40.0 million repayment of principal on the Loan Agreement[613]. Governance and Management - The company assessed the effectiveness of its internal control over financial reporting as of December 31, 2022, concluding that it was effective[634]. - There were no changes in internal control over financial reporting during the fourth quarter ended December 31, 2022, that materially affected the company's controls[636]. - The company believes that the impact of any recently issued accounting pronouncements that are not yet effective will not have a material impact on its financial position or results of operation upon adoption[625]. - The company’s management evaluated the effectiveness of its disclosure controls and procedures as of December 31, 2022, and concluded they were effective at the reasonable assurance level[630]. - The company has no disagreements with accountants on accounting and financial disclosure[629]. - The company is classified as a non-accelerated filer and a "smaller reporting company," which affects the requirements for attestation reports on internal control over financial reporting[635]. Compensation and Benefits - In 2022, the total compensation for CEO Mark Iwicki was $1,868,299, which included a salary of $682,110 and a bonus of $409,266[674]. - Todd Bazemore, President and COO, received total compensation of $1,025,817 in 2022, with a salary of $515,000 and a bonus of $257,500[674]. - Kim Brazzell, Head of R&D and CMO, had total compensation of $993,689 in 2022, including a salary of $500,000 and a bonus of $225,000[674]. - The compensation committee awarded bonuses at 100% of target for 2022, with target bonus percentages of 60% for Iwicki, 50% for Bazemore, and 45% for Brazzell[680]. - In December 2022, the compensation committee increased the base salaries for Iwicki, Bazemore, and Brazzell to $709,394, $535,600, and $520,000, respectively, effective January 1, 2023[678]. - Performance-based stock options were granted to executives, with maximum vesting potential of 150% of target based on performance metrics[686]. - The company utilized independent compensation consultants Aon and Pearl Meyer to guide executive compensation decisions and ensure competitive benchmarking[667]. - The company has transitioned to the 2017 Equity Incentive Plan for stock options and other stock-based awards following its IPO[687]. - All performance-based restricted stock units granted to executives were fully vested as of December 31, 2022[688].