Kala Pharmaceuticals Inc. shares dropped as much as 20% in pre-market trade on Friday before evening out to a 4% decline after the company released results from two late-stage trials for its dry eye therapy KPI-121. KPI-121 had statistically significant results for some but not all endpoints in the two trials, which enrolled about 900 patients each. In particular, the therapy was not statistically significant for a primary sign endpoint of the second trial, STRIDE 2, measuring ocular discomfort severity change from baseline to day 15. “Although we did not achieve statistical significance for the primary symptom endpoint in STRIDE 2, we did observe a strong trend towards a positive treatment effect in symptoms in more symptomatic patients, for which we achieved statistical significance in STRIDE 1,” said Mark Iwicki, chief executive of Kala Pharmaceuticals. The company will continue to analyze the results and expects to discuss them with the Food and Drug Administration, he said, noting the company’s $114 million cash balance. Kala also ephasized that the therapy was well-tolerated, with the most common side effect being instillation site pain. Dry eye disease, which has symptoms such as chronic pain, dry eyes, eye discomfort and variable vision, is a major market primed for new entrants. Allergan’s Restasis has long been a powerhouse dry eye therapy without much competition, bringing in $1.4 billion in revenue for the company in 2016. Kala shares have dropped 25% over the last three months to $17.33, compared with a 6.7% rise in the S&P 500 and a 10.1% rise in the Dow Jones Industrial Average .
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