Kala Bio (KALA) Q2 Loss Widens 15%

Key Points

• GAAP EPS loss of $1.71 in Q2 2025 slightly missed the consensus estimate by $0.01; revenue remains at zero (GAAP) in Q2 2025, as expected for a clinical-stage biotech.

• Operating loss (GAAP) widened to $11.0 million, driven by higher research and development spending on lead program KPI-012.

• Cash reserves decreased to $31.9 million at the end of Q2 2025, with management projecting funding will last into the first quarter of 2026.

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Kala Bio (NASDAQ:KALA), a clinical-stage biopharmaceutical company focused on novel therapies for eye diseases, released its second quarter 2025 results on August 8, 2025. The headline was a net loss per share of $1.71 (GAAP). Marginally wider than the analyst estimate of $1.70 (GAAP). The company remains pre-commercial, so there was no revenue to report or compare to expectations. Overall, the quarter was defined by continued progress in its key clinical trial for KPI-012 for persistent corneal epithelial defects (PCED), but also higher operating losses and a shrinking cash position.

Source: Analyst estimates for the quarter provided by FactSet.

Company Overview and Business Model

Kala Bio is developing new treatments for serious eye diseases using its proprietary mesenchymal stem cell secretome (MSC-S) platform. As a clinical-stage biotech, it currently has no approved or marketed products and generates no revenue. Its lead candidate, KPI-012, is being evaluated for treating persistent corneal epithelial defects (PCED), a rare eye disorder affecting an estimated 100,000 people in the United States.

The company's pipeline is anchored by KPI-012, but it is seeking to apply its MSC-S technology to other rare front-of-the-eye diseases, including Limbal Stem Cell Deficiency (LSCD) and certain inherited retinal diseases. Success hinges on clinical trial results, regulatory review, and the ability to secure funding or partnerships before commercial launch.

Quarterly Developments and Performance

The main operational highlight for the quarter was the completion of patient enrollment in the Phase 2b CHASE trial of KPI-012. According to management, 79 patients across 37 sites in the US and Latin America were enrolled in the CHASE Phase 2b clinical trial as of July 2025. Topline efficacy and safety data from the CHASE Phase 2b clinical trial of KPI-012 in persistent corneal epithelial defect (PCED) are expected by the end of September 2025. Clinical trials investigate if a new therapy is safe and effective for patients—positive results will determine if the therapy moves closer to market.

Advancing KPI-012 remains central for Kala Bio’s future. The company noted that approval of KPI-012 would be significant, as there are currently no FDA-approved prescription products with a broad indication covering all underlying etiologies of PCED. The product has been awarded Orphan Drug and Fast Track designations by the Food and Drug Administration (FDA), which can provide exclusive marketing rights and faster regulatory review if trial results are positive.

Research and development (R&D) expenses (GAAP) rose to $6.2 million, up 17% compared to Q2 FY2024, mainly due to increased costs for the KPI-012 clinical program and higher employee-related expenses. General and administrative (G&A) costs also increased, up approximately 7.5%, as a result of greater stock-based compensation expense. Operating loss was $11.0 million, compared to $9.6 million for Q2 2024, reflecting greater spending as the clinical program ramps up.

The balance sheet continues to show the typical financial profile of early-stage biotech. Cash and cash equivalents declined by $10.3 million since March 2025, ending the quarter at $31.9 million. The drop was due to ongoing operating costs and a $2.5 million debt repayment. Shareholder equity turned negative at the end of the quarter, and management noted that cash on hand as of June 30, 2025, will fund operations only into Q1 2026. This situation increases the likelihood that the company will need to secure new funding, either through raising capital, finding partners, or both, before it can launch any products.

Product Pipeline and Strategic Focus

KPI-012, a therapy under study for persistent corneal epithelial defects (a chronic failure of the cornea to heal after injury or surgery), is the lead product in the pipeline. Management said that if the ongoing CHASE trial results are positive, it may enable the company to seek FDA approval using this data, potentially reducing the time to market. The therapy is based on the company’s MSC-S platform, which uses proteins and factors secreted by stem cells to promote healing in eye tissues.

Kala Bio is also developing the MSC-S platform for other eye diseases, like Limbal Stem Cell Deficiency (LSCD), another rare disorder for which there is currently no broadly approved therapy in the United States. The company started preclinical work on KPI-014, aimed at inherited retinal degenerative diseases such as Retinitis Pigmentosa and Stargardt Disease. By expanding its focus, Kala Bio hopes to broaden its base of future products and diversify risk beyond KPI-012.

Outlook and Investor Considerations

Management reiterated that topline results from the Phase 2b CHASE trial for KPI-012 will be released at the end of September 2025. This milestone is seen as the critical event for the company, with regulatory approval and future revenue prospects hinging on positive data. No financial projections or guidance for the next quarter were provided, and there were no updates regarding commercial partnerships.

KALA does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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