Kala Pharma Has 2 Material Milestones Upcoming In Q4

Biotech traders are always on the lookout for stocks with major catalysts on the horizon, and newly-public Kala Pharmaceuticals Inc KALA fits the mold ahead of what will be a critical second half of 2017 for the company.

On Monday, Wedbush analyst Liana Moussatos highlighted two key catalysts coming up for Kala investors that could have major implications for the stock.

By the end of the year, Kala will likely deliver an NDA submission for its eye drop treatment of post-op inflammation and pain. In addition, the company will also likely complete both of its ongoing Phase III trials for dry eye disease flares.

“Both ocular conditions have been somewhat derisked and with material catalysts anticipated in Q4:17, blockbuster sales potential for dry eye over $1 billion, acquisition potential and an attractive valuation, we anticipate KALA is likely to OUTPERFORM in 2017,” she wrote.

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Wedbush projects 2027 gross annual sales for Kala lead drug candidate KPI-121 1% at $271 million for post-op inflammation and 2027 sales of KPI-121 0.25% for dry eye disease flares at $1.9 billion.

The firm expects positive developments in the second half of 2017 will ultimately drive the stock to a price target of $46, more than double its current share price.

Sell-Side Weighs In

Wedbush isn’t the only Wall Street firm bullish on Kala. Wells Fargo analyst Davis Maris also initiated coverage of Kala at Outperform on Monday but is much less bullish on the near-term upside.

“We believe that Kala offers a differentiated opportunity in the growing eye disease market, with two promising programs in its pipeline,” Maris wrote.

Wells Fargo’s target of $24 represents only about 14 percent upside from Kala’s current share price. JPMorgan also initiated coverage on Kala on Monday with an Overweight rating and $35 price target.