Kala Pharmaceuticals, Inc. (NASDAQ:KALA), a commercial-stage
biopharmaceutical company focused on the discovery, development and
commercialization of innovative therapies for diseases of the eye,
today announced that it has acquired Combangio, Inc., a private,
clinical-stage company developing regenerative biotherapies for
severe ocular surface diseases. Combangio is developing CMB-012, a
novel investigational secretome therapy, now known as KPI-012, to
address the complex wound healing process in persistent corneal
epithelial defect (PCED) and other severe ocular diseases driven by
impaired corneal healing.
“Today’s acquisition marks a pivotal moment for Kala and a
meaningful acceleration toward our goal of strengthening Kala’s
pipeline for the treatment of front and back of the eye diseases,”
said Mark Iwicki, Chief Executive Officer of Kala. “KPI-012 is a
highly innovative product, which leverages a multifactorial
mechanism of action to address the complex process of healing
severe corneal defects. KPI-012 is currently in development for
PCED, with potential application across a wide range of orphan
diseases of the eye. This product candidate is a natural fit with
our R&D and commercial expertise, and along with our internal
pipeline provides an additional opportunity to leverage our deep
ophthalmic expertise to address substantial, underserved markets.
We are excited to have completed the acquisition of Combangio and
look forward to working alongside their talented team to integrate
KPI-012 into our portfolio and ultimately deliver this therapy to
transform the treatment of rare ocular surface diseases.”
KPI-012 is a novel bone marrow-derived mesenchymal stem cell
(MSC) secretome comprised of biomolecules secreted by MSCs,
including protease inhibitors, growth factors and neurotrophic
factors, processed into a topical ocular solution. KPI-012 is
currently in clinical development for the treatment of PCED, which
is defined as a persistent non-healing corneal defect or wound that
is refractory to conventional treatments. It is a rare disease with
an estimated incidence in the U.S. of 100,000 cases and 238,000
cases in the U.S., E.U. and Japan combined and KPI-012 has received
Orphan Designation for the treatment of PCED by the U.S. Food and
Drug Administration (FDA). PCED can have various etiologies
including neurotrophic keratitis, epithelial debridement,
microbial/viral keratitis, corneal transplant, limbal stem cell
deficiency and trauma, and can lead to corneal ulceration,
perforation, scarring, infection and significant vision loss.
In a Phase 1b clinical trial, seven of eight PCED patients
treated with KPI-012 twice-daily showed improvement in their PCED,
with six of the eight achieving complete healing during the
treatment period, which ranged from one to eight weeks. Four of
eight patients had complete healing within one week of treatment
with the other two that achieved complete healing doing so within
two to four weeks of initiation of treatment with KPI-012. All six
of the healed patients remained healed through the end of
follow-up, which ranged between eight and 19 weeks. There was also
significant pain relief in the six patients who reported pain at
baseline, with all six achieving a zero-pain score within three
weeks of initiation of dosing with KPI-012. KPI-012 was
well-tolerated in the trial with no treatment-related safety issues
observed.
“KPI-012 is an exciting addition to the Kala pipeline and is an
important component of our strategy to develop novel therapies for
significant unmet needs in ophthalmic diseases. People living with
severe ocular surface diseases are in desperate need of new and
better therapeutic options to not only provide symptomatic relief
but to avoid the potential vision-threatening consequences of these
diseases,” said Kim Brazzell, Ph.D., Chief Medical Officer of Kala.
“The Phase 1b clinical data are very encouraging for PCED as well
as for other rare ocular diseases that involve impaired corneal
wound healing. We look forward to working together with our
extensive network of corneal specialists to advance this program
through clinical development and regulatory approval.”
Clinical Development Plan for KPI-012
in PCED
Kala plans to submit an investigational new drug (IND)
application to the FDA and, subject to regulatory clearance,
initiate a Phase 2/3 trial of KPI-012 in the third quarter of 2022.
Kala believes this trial could serve as the first of two required
pivotal trials. The FDA has granted KPI-012 orphan drug designation
for the treatment of PCED and the Company believes KPI-012 should
meet the criteria for fast-track and breakthrough designations.
In addition to PCED, Kala is evaluating other orphan diseases
driven by impaired corneal wound healing, such as thermal/chemical
injury, corneal ulcers, ocular graft vs host disease,
Stevens-Johnson syndrome and limbal cell deficiency, and is looking
to initiate clinical evaluation for an additional indication after
the IND submission and initiation of the PCED trial.
Board and Management Appointments
In conjunction with the acquisition, Mark S. Blumenkranz, M.D.,
Chairman of Combangio, has been appointed to the Kala Board of
Directors, and Darius Kharabi, President and Chief Executive
Officer of Combangio, has been appointed as Chief Business Officer
of Kala, both effective November 15, 2021.
Mark S. Blumenkranz, M.D.
“I am delighted to join the Kala Board of Directors and look
forward to working with the team in its ongoing efforts to advance
Kala’s pipeline of innovative therapies for ocular diseases,” said
Dr. Blumenkranz. “As an ophthalmologist, I am acutely aware of the
unmet needs that continue to exist in the treatment of eye diseases
and committed to supporting the development of innovative new
medicines that can deliver better outcomes to patients. I have been
excited about the potential of KPI-012 for many years and I am
eager to partner with the Kala team, both to continue advancing
this asset, and to support the development of Kala’s broader
pipeline of programs for the front and back of the eye
diseases.”
Dr. Blumenkranz is an ophthalmologist and vitreoretinal surgeon
who is Chairman and CEO of Kedalion Therapeutics. He is also H.J.
Smead Professor Emeritus in the Department of Ophthalmology at
Stanford University where he served as Chairman from 1997 to 2015.
He is an internationally known vitreo-retinal specialist, with
notable contributions in the area of new laser systems, novel
pharmaceuticals for macular diseases, ocular gene therapy and
ophthalmic tele-health and technology development. Over the course
of his career, Dr. Blumenkranz held leadership roles at Oculex
Pharmaceuticals (acquired by Allergan), Macusight (acquired by
Santen), Peak Surgical (acquired by Medtronics), Optimedica
(acquired by AMO), and Oculeve (acquired by Allergan), as well as
Adverum, where he served as both co-founder and Chairman of the
Board. He is also co-founder and served as a director of Verana
Health for ten years, and currently serves as Managing Director of
Lagunita Biosciences, a biotechnology and medical investment
company and incubator in Menlo Park California.. Dr. Blumenkranz
received his Undergraduate, Master’s in Biochemical Pharmacology,
and M.D. at Brown University, completed his Ophthalmic residency
training at Stanford University, and his Fellowship in
vitreo-retinal diseases at the Bascom Palmer Eye
Institute.
Darius Kharabi, J.D., M.B.A
“On behalf of my colleagues at Combangio, we are extremely
excited to join forces with Kala to accelerate the development of
KPI-012 and deliver this novel therapy to people living with severe
ocular surface diseases, beginning with PCED. Kala has the R&D
and commercial expertise, as well as the established relationships
with eye care professionals, to advance this program successfully
through development and to market,” said Darius Kharabi, President
and Chief Executive Officer of Combangio. “I look forward to
working with the Kala leadership team in my new role as Chief
Business Officer to help improve outcomes and quality of life for
people suffering from debilitating ocular diseases.”
Mr. Kharabi is the President and Chief Executive Officer of
Combangio, as well as the co-founder of Lagunita Biosciences LLC, a
biotechnology and medical investment company and incubator. He
previously served in executive management for xCella and Kedalion,
two Lagunita portfolio companies, helping to build early value,
raise financing and recruit full-time leadership teams. Prior
to Lagunita, he served as Vice President, Corporate Development and
International Sales at OrthAlign Inc., a commercial stage
orthopedic surgery navigation company, where his responsibilities
included the launch of the KneeAlign® total knee arthroplasty
navigation product line in North America, Europe, Asia and
Australia. Mr. Kharabi started his career as a biotechnology
licensing attorney at Wilson, Sonsini Goodrich & Rosati
PC. He received his B.S. in Biochemistry from Georgetown
University and his J.D. and M.B.A. degrees from Stanford
University.
Transaction Terms
Under the terms of the agreement, Kala acquired all of the
outstanding equity of Combangio, and the former Combangio
equityholders are entitled to receive an upfront payment of an
aggregate of $5.0 million in cash, subject to customary
adjustments, and an aggregate of 7,788,667 shares of Kala common
stock with an aggregate value of approximately $16,122,541,
consisting of (i) an aggregate of 6,815,129 shares of common stock
to be issued on January 3, 2022 and (ii) an aggregate of 973,538
shares of common stock that will be held back by Kala and will be
issuable fifteen months after the closing of the transaction and
will serve as partial security for the satisfaction of
indemnification obligations and other payment obligations of the
former Combangio equityholders. The aggregate value of the
post-closing stock consideration was calculated using the closing
price of Kala’s common stock on the Nasdaq Global Select Market on
November 12, 2021, the last trading day prior to the closing. The
former Combangio equityholders are also entitled to receive up to
an aggregate of $105 million in cash and Kala stock upon the
achievement by KPI-012 of specified development, regulatory and
sales milestones and tiered royalties on worldwide net sales of
KPI-012, if any, at a rate in the mid to high single digits. In
addition, the former Combangio equityholders are entitled to
receive a percentage rate in the high single digits of any income
received by Kala from a commercial out-license of KPI-012.
The Board of both companies have approved the transaction and
the transaction closed simultaneously with execution of definitive
agreements on November 15, 2021.
Conference Call Information
Kala will host a live conference call and webcast today at 10:30
a.m. ET to discuss its acquisition of KPI-012, as well as its third
quarter 2021 financial results, which were announced in a separate
press release this morning.
To access the live conference call, please dial 866-300-4091
(domestic) or 703-736-7433 (international) and refer to conference
ID 7298039. To access a live webcast including a slide presentation
and subsequent archived recording of the call, please visit
“Events” in the “Investor” section on the Kala website at
http://kalarx.com/.
About Kala Pharmaceuticals
Kala is a commercial-stage biopharmaceutical company focused on
the discovery, development, and commercialization of innovative
therapies for diseases of the eye. Kala has applied its AMPPLIFY®
mucus-penetrating particle (MPP) Drug Delivery Technology to two
ocular therapies, EYSUVIS® (loteprednol etabonate ophthalmic
suspension) 0.25% for the short-term (up to two weeks) treatment of
signs and symptoms of dry eye disease and INVELTYS® (loteprednol
etabonate ophthalmic suspension) 1% for the treatment of
post-operative inflammation and pain following ocular surgery. The
Company also has a pipeline of development programs including a
clinical-stage secretome product candidate initially targeting
persistent corneal epithelial defects (PCED) and multiple
proprietary NCE preclinical development programs targeted to
address unmet medical needs, including both front and back of the
eye diseases. Kala plans to submit an investigational new drug
application with the FDA for KPI-012 and, subject to regulatory
clearance, commence a Phase 2/3 clinical trial for PCED in the
United States in third quarter of 2022. For more information on
Kala, please visit www.kalarx.com.
About Combangio
Combangio is a clinical-stage biotechnology
company focused on developing regenerative biotherapeutics based on
mesenchymal stem cell (“MSC”) secretomes. Combangio’s lead product
candidate, CMB-012 (which has been renamed KPI-012), for the
treatment of persistent corneal epithelial defect (“PCED”),
received orphan drug designation from the U.S. Food and Drug
Administration (FDA). PCED is a disease of impaired corneal healing
and is a rare disease with an estimated incidence in the United
States of approximately 100,000 cases per year. Normal healing
after a corneal injury follows a highly regulated process,
involving growth factors, cell signaling, proliferation, migration
and extracellular matrix remodeling. KPI-012 is a novel
secretome-based therapy derived from bone-marrow MSC composed of
biologically active components secreted from the MSCs, including
protease inhibitors and growth factors, that have been shown to
facilitate epithelial healing. KPI-012’s multifactorial mechanism
of action offers promise for the treatment of PCED and other ocular
surface diseases across various etiologies.
Kala’s Forward Looking Statements:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that involve substantial risks and uncertainties. Any statements in
this press release about Kala’s future expectations, plans and
prospects, including but not limited to statements about Kala’s
acquisition of Combangio and the other transactions contemplated by
the acquisition of Combangio and any other statements about future
expectations, prospects, estimates and other matters that are
dependent upon future events or developments, including statements
related to Kala’s expectations with respect to the potential
financial impact and benefits of the acquisition of Combangio,
expectations with respect to potential advantages of KPI-012, the
future development or commercialization of KPI-012, conduct and
timelines of clinical trials, the clinical utility of KPI-012 for
PCEDs, plans for regulatory filings, the market opportunity for
KPI-012 for PCEDs and other indications, plans to pursue research
and development of KPI-012 for other indications, the sufficiency
of Kala’s existing cash resources and other statements containing
the words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “plan,” “predict,” “project,” “target,” “potential,”
“likely,” “will,” “would,” “could,” “should,” “continue,” and
similar expressions constitute forward-looking statements. Actual
results may differ materially from those indicated by such
forward-looking statements as a result of various important
factors, including: the impact of extraordinary external events,
such as the current pandemic health event resulting from the novel
coronavirus (COVID-19), and their collateral consequences, Kala’s
ability to realize the anticipated benefits of the acquisition of
Combangio, including the possibility that the expected benefits,
synergies and growth prospects from the acquisition of Combangio
will not be realized or will not be realized within the expected
time period or at all, negative effects of the announcement of the
acquisition of Combangio on the market price of Kala’s common
stock, significant transaction costs, unknown liabilities, the risk
of litigation and/or regulatory actions related to the acquisition
of Combangio, the uncertainties inherent in the initiation and
conduct of clinical trials, availability and timing of data from
clinical trials, whether results of early clinical trials or trials
in different disease indications will be indicative of the results
of ongoing or future trials, whether results of the Phase 1b
clinical trial of KPI-012 will be indicative of results for any
future clinical trials and studies of KPI-012, uncertainties
associated with regulatory review of clinical trials and
applications for marketing approvals, whether regulatory or
commercial milestones are achieved, Kala’s ability to successfully
integrate Combangio’s business into its business, Kala’s ability to
retain and hire key personnel, the risk that disruption resulting
from the acquisition of Combangio may adversely affect its business
and business relationships, including with employees and suppliers,
the sufficiency of cash resources and need for additional financing
and other important factors, any of which could cause the Kala’s
actual results to differ from those contained in the
forward-looking statements, discussed in the “Risk Factors” section
of Kala’s Annual Report on Form 10-K, most recently filed Quarterly
Report on Form 10-Q and other filings Kala makes with the
Securities and Exchange Commission. These forward-looking
statements represent the Company’s views as of the date of this
release and should not be relied upon as representing the Kala’s
views as of any date subsequent to the date hereof. Kala does not
assume any obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
Investor Contacts: Jill
Steierjill.steier@kalarx.com 781-996-5252
Hannah
Deresiewiczhannah.deresiewicz@sternir.com 212-362-1200
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