Key points:
- Kala Pharmaceuticals’ stock price surged 34.2% on a special meeting.
- The company wants shareholders to approve a reverse stock split.
- Investors cheered the move. Is Kala stock a buy?
The Kala Pharmaceuticals Inc (NASDAQ: KALA) stock price surged 34.2% after revealing plans to hold a special meeting with its shareholders on October 19, 2022, to approve a reverse stock split. Investors cheered the move that would bring Kala shares into compliance with the Nasdaq’s listing rules.
Unlike most penny stocks, Kala Pharmaceuticals has a viable business and significant cash reserves that it predicts will last up to the second calendar quarter of 2024. The biotech company is working on treatments for rare eye diseases such as persistent corneal epithelial defect (PCED), which has an orphan drug designation.
Also read: The Best Biotech Penny Stocks Under $5 To Buy Right Now.
Other diseases the company targets include ocular manifestations of moderate-to-severe Sjögren’s and Partial Limbal Stem Cell Deficiency. Kala’s lead drug candidate KPI-012 is in clinical development and is expected to treat the diseases mentioned above.
Kala Pharmaceuticals’ drug candidate is promising but still has a long way to go before it can be commercialised. The drug must still prove effective in clinical trials before the US Food and Drug Administration (FDA) can approve its use.
Investors cheered today’s announcement of a special meeting to approve a reverse stock split and bring KALA’s share price in line with the Nasdaq’s listing requirements.
The move shows that the company’s management team is keeping track of its share price since the firm is not close to breaching the six-month grace period accorded by the Nasdaq for companies to regularise their stock price once they fall below $1.00.
Kala Pharmaceuticals had cash, cash equivalents and short-term investments of $44.6 million on June 30, 2022, which did not include the net proceeds from selling its commercial portfolio and related intellectual property assets to Alcon Inc.
So, should you buy KALA shares? The short answer is no; I would wait for the reverse stock split to be completed before buying. Furthermore, the company has a long way to go before commercialising its lead drug candidate.
*This is not investment advice. Always do your due diligence before making investment decisions.
Kala Pharma stock price.
The Kala Pharmaceuticals stock price surged 34.24% to trade at $0.38, rising from Tuesday’s closing price of $0.2821.