KALA BIO, Inc.
For the period ended Mar 31, 2026. Filed May 15, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 15, 2026
KALA$0.16+2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-19.
0001104659-25-113927
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001104659-26-062397
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 155 previous paragraphs and 75 current paragraphs.
25 unchanged; 15 reworded; 35 added; 111 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 29 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
We are in the process of evaluating and transitioning from historical biologics research and development (R&D) activities to an “AI platform-as-a-service” model intended to provide dedicated, on-premises artificial intelligence infrastructure solutions to biotechnology and pharmaceutical customers. Following the discontinuation of the CHASE Phase 2b clinical trial of KPI-012 in September 2025 and the subsequent resolution of our obligations to Oxford Finance, our current operating focus is (i) the monetization or out-licensing of remaining biologics-related assets and (ii) development and commercialization planning for our licensed Researgency agentic AI platform (the “Researgency Platform”). This transition is expected to impact our operating expenses, capital requirements, and sources and uses of cash as described further below.
Current report
We have refocused our business on two complementary strategic priorities. First, we are preserving and seeking to maximize the value of our MSC-S biologics asset portfolio, including the KPI-012 and KPI-014 product candidates and related intellectual property, through potential licensing, collaboration, and other strategic arrangements with third parties, as well as through evaluation of opportunities to resume preclinical development activities subject to the availability of additional capital. Second, we are building our Researgency business through our exclusive license for Researgency Platform, which we intend to deploy as a dedicated, on-premises AI infrastructure solution for biotechnology and pharmaceutical companies. We believe this dual-track strategy preserves and creates optionality with respect to our biologics assets while simultaneously pursuing a potential business opportunity in the rapidly growing
Current report
AI platform market for the biotechnology industry.
Current report
Research and development expenses were less than $0.1 million for the three months ended March 31, 2026, compared to $6.1 million for the three months ended March 31, 2025, a decrease of $6.0 million. The decrease was primarily driven by a decrease in KPI-012 clinical development costs following our discontinuation of our MSC-S platform and the decrease in personnel and facilities expenses after workforce reductions.
Current report
Loss on fair value remeasurement of contingent consideration for the three months ended March 31, 2026 and 2025 was $0 and less than $0.1 million, respectively. The decrease was primarilydue to our decision to cease development of KPI-012 and our MSC-S platform.
Current report
Interest income was $0.1 million and $0.5 million for the three months ended March 31, 2026 and 2025. Interest income consists of interest earned on our cash, cash equivalents and short-term investments.
Current report
Other income (expense), net
Current report
Other income, net for the three months ended March 31, 2026 was $0.1 million as compared to $0 for the three months ended March 31, 2025. The increase was primarily related to gains associated with settlements*.*
Current report
Based on our current operating plan, including anticipated expenses related to our Researgency initiative and routine corporate costs, we believe our existing cash and cash equivalents will fund operations into the second quarter of 2027. We are evaluating additional financing alternatives, including potential sales under our ATM program (as defined below) and private placements, and pursuing asset monetization opportunities. If these actions are not successful or timely, we will need to further reduce or defer planned expenditures, which could materially affect our strategy. Our ability to raise additional capital may be constrained by market conditions, our The Nasdaq Capital Market (“Nasdaq”) continued listing compliance efforts, and investor perceptions regarding our liquidity position and historical operating losses. Our efforts to regain compliance with Nasdaq’s market value of listed securities and minimum bid price requirements as discussed below, and any actions we may take to address compliance, including the reverse stock split effected on May 8, 2026, subsequent to March 31, 2026 (the “Reverse Stock Split”), could affect our access to and cost of capital. In addition, the timing and availability of sales under our ATM program depend on market conditions and trading windows. If we are unable to raise additional capital as contemplated, we may need to implement additional cost reductions or delay elements of our Researgency platform strategy.
Current report
Nasdaq Deficiencies
Current report
On November 10, 2025, we received a deficiency letter (the “MVLS Letter”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market notifying us that the listing of our Common Stock was not in compliance with Nasdaq Listing Rule 5550(b)(2) (the “Minimum MVLS Requirement”) for continued listing on Nasdaq, as the market value of our listed securities was less than $35 million for the previous 30 consecutive business days.
Current report
In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we were provided a period of 180 calendar days, or until May 11, 2026 (the “MVLS Compliance Date”), to regain compliance with the Minimum MVLS Requirement.
Current report
On April 17, 2026, we received a letter from the Staff that the market value of our listed securities closed at $35 million or more for a minimum of 10 consecutive business days. Accordingly, we have regained compliance with the Minimum MVLS Requirement and this matter is now closed.
Current report
In addition, on January 20, 2026, we received a letter from the Staff indicating that, based upon the closing bid price of the Company’s Common Stock for the 30 consecutive business days between December 3, 2025, to January 16, 2026, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). The letter also indicated that we will be provided with a compliance period of 180 calendar days, or until July 20, 2026 (the “Minimum Bid Price Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). On May 8, 2026, we effected the Reverse Stock Split to seek to regain compliance with the Minimum Bid Price Rule.
Current report
ATM Facility
Current report
On January 8, 2026, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with Wainwright providing for the sale and issuance of our Common Stock from time to time, through or to Wainwright as the Company’s sales agent or principal in an “at the market offering” program and as set forth in the ATM Agreement (the “ATM program”).
Current report
We filed a prospectus supplement, dated January 8, 2026, including an accompanying base prospectus, dated May 11, 2023, contained therein (the “ATM Prospectus Supplement”), which together form a part of the Company’s shelf registration statement on Form S-3, as amended (File No. 333-270263), initially filed with the SEC on March 3, 2023 and declared effective by the SEC on May 11, 2023 in connection with the offer and sale of shares of Common Stock pursuant to the ATM Agreement. The aggregate market value of the shares of Common Stock eligible for sale under the prospectus supplement is currently $15.0 million.
Current report
Pursuant to the terms of the ATM Agreement, Wainwright agreed to use its commercially reasonable efforts, consistent with applicable state and federal law, rules and regulations, and the rules of the Nasdaq Capital Market, to sell the shares of Common Stock from time to time. Under the ATM Agreement, the Company may designate the parameters
Current report
for the sale of shares of Common Stock, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number of shares that may be sold on any trading day and any minimum price below which sales may not be made. Subject to the terms and conditions of the ATM Agreement, Wainwright may sell the shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including without limitation, sales made directly on Nasdaq or on any other existing trading market for the Common Stock or to or through a market maker. In addition, with the Company’s prior written approval, Wainwright may also sell shares in privately negotiated transactions or block transactions. The gross sales price of the shares of Common Stock sold by Wainwright under the ATM Agreement as sales agent is the market price for the shares of Common Stock on Nasdaq at the time of sale.
Current report
On November 25, 2025, the Company entered into a Securities Purchase Agreement (the “November 2025 Purchase Agreement”), with a certain investor (the “Series AA Investor”), pursuant to which the Company agreed to issue and sell, in a private placement, shares of the Company’s Series AA Convertible Non-Redeemable Preferred Stock (“Series AA Preferred Stock”) and the Series AAA Convertible Non-Redeemable Preferred Stock (“Series AAA Preferred Stock”) of the Company in two closings for aggregate gross proceeds of up to $6.0 million.
Current report
On December 11, 2025, the Series AA Investor transferred his rights and obligations under the November 2025 Purchase Agreement solely with respect to the shares of Series AAA Preferred Stock and the director nomination rights to AK Holdings Group Inc., a Panamanian company (“AK Holdings”). On January 29, 2026, pursuant to the terms of a certain Rights Purchase Agreement, by and among AK Holdings and the Series AAA Investors, AK Holdings sold its rights to purchase the Series AAA Preferred Stock (but not its director nomination rights under the November 2025 Purchase Agreement) to the Series AAA Investors.
Current report
On January 30, 2026, we entered into a Securities Purchase Agreement (the “January 2026 Purchase Agreement”), pursuant to which we issued and sold to the Series AAA Investors in a private placement (the “January 2026 Private Placement”), an aggregate of 2,100,000 shares of Series AAA Preferred Stock at a price per share equal to $2.00, for aggregate gross proceeds of $4.2 million. The closing of the January 2026 Private Placement occurred on January 30, 2026. Each share of Series AAA Preferred Stock was convertible into 8.4 shares of Common Stock for an aggregate total of 17,640,000 shares of Common Stock issuable upon conversion of the Series AAA Preferred Stock. As of March 31, 2026, all of the shares of Series AAA Preferred Stock have been converted into shares of Common Stock and there are no Series AAA Preferred Shares outstanding.
Current report
Loan and Security Agreement
Current report
On February 9, 2026, we made a loan (the “Loan”) in the principal amount of $7.0 million evidenced by a secured promissory note (the “Note”) to Minglemint Solutions LLC (“Borrower”) in connection with our determination that a portion of our cash on hand was in excess of our near-term working capital requirements and operational needs. In order to optimize the return on such excess cash, rather than holding the full balance in a bank deposit account, which offered a materially lower yield, we elected to deploy that portion into the Loan, which bears interest at a rate of 8.0% per annum and is due and payable on February 9, 2027.
Current report
The Note includes customary event of default provisions, including, but not limited to, for a breach of any representations and warranties or covenants, any bankruptcy or insolvency proceedings of the Borrower, and the failure of the Borrower to pay, upon 15 days’ written notice of default, any principal amount of the Loan or interest due. The Note provides for a default interest rate of 13.0%.
Current report
On May 11, 2026, the Company and the Borrower entered into a Note Amending Agreement (the “Loan Amendment”) which added a provision that the Company has the right at any time and from time to time, on no less than 45 days’ notice to demand repayment of all or any portion of the outstanding principal amount of the Loan, including all accrued and unpaid interest thereon and any other amounts owing under the Note by delivering written notice to the Borrower (a “Call Notice”). The Borrower agrees to repay the amount in the Call Notice, and any amount not timely
Current report
repaid will accrue interest at the default interest rate of 13.0%.Additionally, the Note is secured by a continuing first priority lien and security interest in all fixtures and personal property of the Borrower (the “Collateral”), pursuant to the security agreement with the Borrower dated February 9, 2026 (the “Security Agreement”). The Collateral includes, but is not limited to, all accounts, goods, documents, instruments, securities and investment properties, money, accounts and rights to payment of the Borrower, and any proceeds, records and obligations relating to the foregoing, as more fully detailed in the Security Agreement.
Current report
Platform Development and Exclusive License Agreement
Current report
On March 3, 2026, we entered into a Platform Development and Exclusive License Agreement (the “Younet License Agreement”) pursuant to which we obtained a worldwide exclusive license of Younet’s Researgency Platform, together with associated trademarks and intellectual property. The term of the Younet License Agreement is for 12 months following the Effective Date (the “Initial Term”), with the option to renew the agreement for successive 12 months terms (each, a “Renewal Term”), in each case by providing notice to Younet pursuant to the terms of the Agreement (the “Extension Notice”). Pursuant to the Agreement, Younet agreed to provide us certain deliverables and services related to the Researgency Platform, with certain additional deliverables to be provided by Younet in the event of a Renewal Term, in each case with all operating costs relating to the Researgency Platform to be paid by us.
Current report
In consideration of the services to be performed by Younet under the Agreement, we agreed to pay to Younet for the Initial Term a cash fee of up to $530,000 consisting of (i) $80,000 in cash, which was paid by the Company on the Effective Date, and (ii) in the event the Company delivers to Younet a written notice electing to engage Younet for the continued development of Researgency, $450,000 in cash, payable in 9 monthly installments of $50,000, pursuant to the terms of the Agreement. Such notice may be provided at any time on or after the first business day of the third month following the Effective Date and such continued development may be terminated upon 30 days notice by us. In addition, we issued to Younet 100,000 shares of our Common Stock. In addition, each time the Agreement is extended for a Renewal Term, the Company shall (i) pay to Younet $250,000 in cash and (ii) issue to Younet 100,000 shares of Common Stock within 10 business days of the Extension Notice. Any shares of Common Stock issuable to Younet pursuant to the Agreement shall herein be referred to as the “Younet Shares.” Except for certain block trades, during the Term (as defined in the Agreement) and for the twelve months thereafter, Younet shall not sell any Younet Shares on any Trading Day (as defined in the Agreement) in an amount that exceeds 3% of the Daily Trading Volume (as defined in the Agreement) for such Trading Day.
Current report
In addition, Younet has granted us an irrevocable option, exercisable at any time during the Initial Term or any Renewal Terms, to acquire all of the issued and outstanding equity interests of Younet, or, at our election, substantially all of the assets of Younet, for a total purchase price of $55.0 million, subject to the terms of the Agreement.
Current report
If we do not deliver an Extension Notice prior to the expiration of the Initial Term or any Renewal Term, the Agreement shall expire automatically at the end of the applicable term. In addition, the Agreement may be terminated by either party (i) for uncured material breach or (ii) due to the insolvency of the other party. Upon termination or expiration, (a) the Exclusive License will terminated, (b) all licenses granted to Younet with respect to KALA Data (as defined in the Agreement) will immediately terminate, (c) all licenses granted to us with respect to Younet Background IP (as defined in the Agreement) will survive in accordance with their terms, and (d) all Work Product (as defined in the Agreement) completed as of the date of termination shall be delivered to and owned by the Company.
Current report
Net cash used in operating activities for the three months ended March 31, 2026 was $2.9 million, compared to $8.8 million for the three months ended March 31,2025, a decrease of $6.0 million, primarily due to a decrease in net loss adjusted for non-cash charges of $1.4 million.
Current report
Net cash used in investing activities for the three months ended March 31, 2026 was related to the short-term investment loan. There was no cash used in or provided by investing activities for the three months ended March 31, 2025.
Current report
Net cash provided by financing activities for the three months ended March 31, 2026 was $4.1 million, primarily due to the net proceeds from the sale of 2,100,000 shares of the Series AAA Preferred Stock at $2.00 per share.
Removed paragraphs (111)
Previous report
Recent Developments
Previous report
CHASE Trial
Previous report
Oxford Foreclosure and Workforce Terminations
Previous report
On September 29, 2025, we received a written notice, or the Default Notice, of event of default from Oxford Finance LLC, or Oxford Finance, with respect to that certain Loan and Security Agreement, dated as of May 4, 2021, by and among us, Combangio and Oxford Finance, as lender and collateral agent, as amended, which we refer to as the Loan Agreement. The Loan Agreement provides under Section 8.3 that “events of default” include: (i) a material impairment in the perfection or priority of lien in the collateral or in the value of such collateral; (ii) a material adverse change in our business, operations or condition (financial or otherwise); or (iii) a material impairment of the prospect of repayment of any portion of the obligations under the Loan Agreement (each, a “Material Adverse Change”). The Default Notice asserted that an event of default, or the Event of Default, had occurred and was continuing under Section 8.3 (Material Adverse Change) of the Loan Agreement and alleged that other events of default under the Loan Agreement may exist. In the Default Notice, Oxford Finance declared by reason of the Event of Default, that all of our obligations under the Loan Agreement were immediately due and payable. In addition, the Default Notice indicated that our obligations under the Loan Agreement began accruing interest at the Default Rate (as defined in the Loan Agreement) effective immediately upon occurrence of the Event of Default. The total amount of our obligations under the Loan Agreement as of the date of the Default Notice that were accelerated and declared payable by Oxford Finance was $29.1 million, plus any additional interest due upon final payment and any expenses that become payable by us under the Loan Agreement.
Previous report
On October 2, 2025, we entered into retention agreements which we refer to as Retention Agreements, with Todd Bazemore, our then President and Chief Executive Officer, Mary Reumuth, our Chief Financial Officer, and Kim Brazzell, Ph.D., our then Head of Research and Development and Chief Medical Officer. The Retention Agreements entitled Mr. Bazemore, Ms. Reumuth and Dr. Brazzell to receive retention payments, or Retention Payments, of $183,750, $136,250, and $145,000, respectively. Each of the Retention Agreements provides that if, prior to December 31, 2025, such executive’s employment is terminated voluntarily by such executive or by us for cause (as defined in the applicable executive’s employment agreement), then, pursuant to the terms of the Retention Agreement, such executive shall, upon request, repay the gross amount of the Retention Payment to us.
Previous report
On October 18, 2025, pursuant to the terms of the Loan Agreement, Oxford Finance informed us that it intended to foreclose on all of our remaining assets and that Oxford Finance would not consent to our use of cash for any reason other than for minimal payroll expenses pending Oxford Finance’s foreclosure of our assets. In addition, Oxford has swept substantially all of our cash resources from our bank accounts.
Previous report
As a result, on October 19, 2025, we terminated all remaining employees not deemed necessary by Oxford Finance to execute a foreclosure of our assets. On October 19, 2025, in connection with this reduction, we terminated without cause the employment of Todd Bazemore, our President and Chief Executive Officer, effective immediately. Mr. Bazemore continues to serve as our principal executive officer, pursuant to the terms of a consulting agreement. In connection with the workforce reductions that were announced in September 2025 and October 2025, we incurred costs of approximately $1.6 million, of which approximately $0.4 million were incurred in the third quarter of 2025 with the remainder was incurred and will be incurred in the fourth quarter of 2025.
Previous report
On November 3, 2025, Oxford Finance informed us that it intended to pause its foreclosure of our assets and permitted us to use $125,000 of cash it previously swept to fund the negotiation and execution of the Convertible Loan Agreement (as defined below) and to fund preliminary preparation work on this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.
Previous report
After applying the swept cash to Oxford Finance’s secured debt claims, the total amount of our obligations under the Loan Agreement that have been accelerated and declared payable by Oxford Finance is approximately $9.6 million, plus any additional interest due upon final payment and any expenses that become payable by us under the Loan Agreement.
Previous report
On November 9, 2025, we entered into a Convertible Loan Agreement, or the Convertible Loan Agreement with an individual lender, or the Individual Lender, pursuant to which the Individual Lender provided us a convertible loan in the aggregate amount of $375,000 (the “Loan Principal”). The sole purpose of the funds from the Individual Lender is to facilitate the negotiation and finalization of a potential additional financing transaction with the Individual Lender and for preparing and filing this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.
Previous report
The Loan Principal will bear simple interest at a rate equal to 15% per annum, which we refer to as the “Interest”, and together with the Loan Principal, the “Loan Amount”, commencing on the date we receive the applicable portion of the Loan Principal and until full repayment thereof in accordance with the terms of the Convertible Loan Agreement. The applicable Interest is required to be paid by us on a monthly basis by no later than the 15th day of each calendar month starting in December 2025. The Loan Principal will become due and payable by us to the Individual Lender on the first anniversary of receiving the Loan Principal (the “Maturity Date”). We may extend the Maturity Date for one year by providing written notice to the Individual Lender up to two months prior to the Maturity Date, subject to specified conditions. We are also required to make certain prepayments to the Individual Lender upon the occurrence of specified events.
Previous report
Subject to compliance with the rules and regulations of The Nasdaq Stock Market, at any time prior to the full repayment of the Loan Amount to the Individual Lender, the Individual Lender will have the right, upon prior written notice to us, to convert all or any of the then outstanding and unpaid portion of the Loan Amount into shares, or the Conversion Shares, of our common stock at the conversion prices specified in the Convertible Loan Agreement. In addition, if we enter into a definitive agreement to consummate an M&A Transaction (as defined in the Convertible Loan Agreement) or an underwritten public offering (a “Public Offering” and together with an M&A Transaction, a “Liquidity Event”), and if the Loan Amount has not previously converted or been repaid pursuant to the Convertible Loan Agreement, the Individual Lender will have the right to elect to (i) convert the entire Loan Amount into the most senior class of shares issued us immediately prior to the closing of the Liquidity Event or (ii) have the entire Loan Amount repaid in cash.
Previous report
We may repay the outstanding Loan Amount in part or in full, at any time, with no prepayment penalty. We will provide the Individual Lender with three business days prior written notice of the repayment, during which time the Individual Lender may elect to convert any or all of the outstanding Loan Amount into Conversion Shares in accordance with the Convertible Loan Agreement.
Previous report
The Loan Amount will become due and payable in cash by us upon the occurrence, prior to the Maturity Date, of certain specified events of defaults, including, but not limited to, (i) our liquidation, dissolution or winding up, (ii) the filing by us of any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law, (iii) breach by us of any material undertaking or obligation under any financing agreement or credit facility (other than the Loan Agreement with Oxford Finance) occurring after November 9, 2025 and (iv) failure by us to fully or timely discharge our duties or obligations under the Loan Agreement, subject to certain exceptions.
Previous report
Our Current Strategy and Focus
Previous report
Prior to the cessation of our research and development activities, we were evaluating the potential development of KPI-012 for additional rare front-of-the-eye diseases, such as for the treatment of Limbal Stem Cell Deficiency and other rare corneal diseases that threaten vision. In addition, we had initiated preclinical studies under our KPI-014 program to evaluate the utility of our MSC-S platform for inherited retinal degenerative diseases, such as Retinitis Pigmentosa and Stargardt Disease. We had expected to commercialize in the United States any of our product candidates that receive marketing approval.
Previous report
Subject to consummation of an additional financing transaction with the Individual Lender or another third-party, we plan to continue to comply with our filing obligations under the Securities Exchange Act of 1934, as amended, and resume our exploration of strategic options, which may include a sale, license, merger or other monetization of remaining assets, the seeking of additional financing or, subject to the availability of additional funding, the resumption of certain research and development activities. Any future resumption of our historical research and development activities would depend on completing a strategic transaction that would support our prior operating plans or otherwise obtaining significant additional funding. If we are able to obtain significant additional funding, we plan to conduct preclinical testing focused on identifying the optimal dose of KPI-012 and the most relevant ocular disease(s) or indication(s) to pursue utilizing existing preclinical pharmacology and safety models. We believe that these results along with the manufacturing and analytical data from the previously conducted KPI-012 development activities may lead to the identification of a candidate for further clinical development. Additionally, if we were able to obtain significant additional funding, we plan to resume our preclinical studies of KPI-014 to evaluate the utility of our MSC-S platform for inherited retinal degenerative diseases, such as Retinitis Pigmentosa and Stargardt Disease.
Previous report
We have engaged a financial advisor to advise on the exploration of strategic options. There can be no assurance that such exploration of strategic options will result in us pursuing a transaction or obtaining additional financing or that any such transaction or financing will be completed, nor as to the terms on which any such transaction or financing will occur, if at all. If we do not enter into any such transaction or financing prior to the utilization of the proceeds of the Convertible Loan Agreement, we expect that Oxford Finance will resume its efforts to foreclose on our assets.
Previous report
Our board of directors may decide that it is in the best interests of its stockholders to commence bankruptcy or insolvency proceedings. It is highly unlikely that there will be cash available for distribution to our stockholders and we cannot assure you as to the amount or timing if distributions, if any.
Previous report
Financial Operations
Previous report
On July 8, 2022, we sold to Alcon Pharmaceuticals Ltd. and Alcon Vision, LLC, which we refer to collectively as Alcon, the rights to manufacture, sell, distribute, market and commercialize EYSUVIS® (loteprednol etabonate ophthalmic suspension) 0.25%, for the short-term (up to two weeks) treatment of the signs and symptoms of dry eye disease, and INVELTYS® (loteprednol etabonate ophthalmic suspension) 1%, a topical twice-a-day ocular steroid for the treatment of post-operative inflammation and pain following ocular surgery and to develop, manufacture, market and otherwise exploit the AMPPLIFY Drug Delivery Technology, proprietary mucus-penetrating particle drug delivery technology, which we collectively refer to as the Commercial Business. We refer to this transaction as the Alcon Transaction. Alcon also assumed certain liabilities with respect to the Commercial Business at the closing of the Alcon Transaction. For a further description of the Alcon Transaction, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Note 1, “Nature of Business and Basis of Presentation” of our condensed consolidated financial statements, included herein. We generated only limited revenues from product sales of EYSUVIS and INVELTYS prior to the sale of the Commercial Business to Alcon in July 2022.
Previous report
Prior to the recent cessation of our research and development activities, we had devoted substantially all of our financial resources and efforts to research and development, including preclinical studies and clinical trials and, prior to the sale of our Commercial Business to Alcon in July 2022, engaging in activities to launch and commercialize EYSUVIS and INVELTYS. As a result of our acquisition of Combangio and the sale of our Commercial Business to Alcon, we were devoting substantial financial resources to the research and development and potential commercialization of KPI-012 for PCED and any other indications we determined to pursue, including Limbal Stem Cell Deficiency. We have no revenue-generating commercial products and, as a result of our acquisition of Combangio, we may be required to pay certain milestones and royalty payments to former equityholders of Combangio, which are more fully described in the “Liquidity and Capital Resources” section. Achievement and payment of any such potential future milestones and royalty payments to former equityholders of Combangio is dependent on the resumption of our research and development activities which would depend on completing a strategic transaction that would support our prior operating plans or otherwise obtaining significant additional funding.
Previous report
Although we are eligible to receive up to $325.0 million in payments from Alcon based upon the achievement of specified commercial sales-based milestones with respect to EYSUVIS and INVELTYS, there can be no assurance when we may receive such milestone payments or of the amount of milestone payments we may receive, if any. Additionally, due to our determination to cease clinical development of KPI-012 for PCED, we will not receive the remaining $0.6 million disbursement under the CIRM Award. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We may never achieve or maintain profitability. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year.
Previous report
We expect that our general and administrative expenses for 2025 will decrease compared to such expenses for the year ended December 31, 2024. If we were able to resume our research and development activities, we would expect our general and administrative expenses to increase, however, any future resumption of our historical research and development activities would depend on completing a strategic transaction that would support our prior operating plans or otherwise obtaining significant additional funding. If we were to obtain marketing approval for KPI-012 or any product candidates we may develop, we expect that our general and administrative expenses will increase substantially if and as we incur commercialization expenses related to product marketing, sales and distribution.
Previous report
We expect that our research and development costs for 2025 will decrease compared to such expenses for the year ended December 31, 2024. Our research and development costs began to decrease significantly as a result of our recent determination to cease research and development activities. If we were able to resume research and development activities, we expect that our research and development costs would increase as we conduct any necessary preclinical studies, clinical trials and other development activities for KPI-012, KPI-014 or any other product candidate we may develop in the future. Any future resumption of our historical research and development activities would depend on completing a strategic transaction that would support our prior operating plans or otherwise obtaining significant additional funding.
Previous report
If we were able to resume research and development activities, all of our existing research and development programs would be in the preclinical development stage. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time-consuming. If we were able to resume research and development activities, we may never succeed in obtaining marketing approval for any of our product candidates. The probability of success for each product candidate may be affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability.
Previous report
Successful development and completion of preclinical studies and clinical trials is uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each product candidate and future product candidate and are difficult to predict. If we able were to resume research and development activities, we would make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the scientific and clinical success of each product candidate as well as ongoing assessments as to the commercial potential of product candidates and our ability to enter into collaborations with respect to each product candidate.
Previous report
In addition to the Deferred Purchase Consideration, consideration payable to the Combangio Equityholders includes potential payments of up to $105.0 million that are contingent upon the achievement of specified development, regulatory and commercialization milestones. As of September 30, 2025, of the up to $105.0 million in contingent milestone payments, we paid to the Combangio Equityholders an aggregate of $2.6 million in cash and $2.4 million in shares of common stock (representing an aggregate of 105,038 shares of our common stock) as a result of our dosing the first patient in our CHASE trial in February 2023, or the First Dosing Milestone. All potential milestone payments to the Combangio Equityholders are payable in cash going forward. Achievement and payment of any such potential future milestones to the Combangio Equityholders is dependent on the resumption of our research and development activities which would depend on completing a strategic transaction that would support our prior operating plans or otherwise obtaining significant additional funding.
Previous report
The potential payments and milestones are more fully described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Note 3, “Fair Value of Financial Instruments” of our condensed consolidated financial statements.
Previous report
On April 28, 2023, CIRM awarded Combangio a $15.0 million grant, or the CIRM Award, subject to entering into a final award agreement, to support Combangio’s KPI-012 program for the treatment of PCED as well as product and process characterization and analytical development for the program. On August 2, 2023, Combangio entered into the CIRM Award and received an initial $5.9 million disbursement from CIRM. In 2024, Combangio received an aggregate of $5.8 million in disbursements from CIRM upon the achievement of specified milestones. In April 2025 and
Previous report
September 2025, Combangio received an additional disbursement of $2.3 million and $0.5 million, respectively, from CIRM upon the achievement of a specified milestone.
Previous report
The CIRM Award was subject to a co-funding requirement under which Combangio was obligated to spend a specified minimum amount on the development of KPI-012 to obtain the full award amount. The remaining $0.6 million available under the CIRM Award was payable to Combangio only upon the achievement of specified milestones that are primarily related to Combangio’s progress in conducting the CHASE clinical trial. Due to our determination to cease clinical development of KPI-012 for PCED, we will not receive the remaining $0.6 million disbursements available under the CIRM Award.
Previous report
The CIRM Award is not in the scope of the contracts with customers accounting guidance as the government entity is not a customer under the agreement. Rather, the CIRM Awardis accounted for as a contract to perform research and development activities. As a result, grant income is recognized as the related research and development expenses are incurred.
Previous report
General and administrative expenses
Previous report
General and administrative expenses were $4.5 million for the three months ended September 30, 2025, compared to $4.4 million for the three months ended September 30, 2024, which was an increase of $0.1 million. The increase in general and administrative expenses for the three months ended September 30, 2025 was primarily due to an increase inadministrative and professional service fees of $0.4 million, partially offset by a decrease in employee costs of $0.3 million.
Previous report
Research and development expenses
Previous report
Research and development expenses were $6.1 million for the three months ended September 30, 2025, compared to $5.2 million for the three months ended September 30, 2024, an increase of $1.0 million. The increase was primarily due toa $0.9 million increase in employee-related costs and a $0.1 million increase in KPI-012 development costs, partially offset by a $0.1 million decrease in other research and development costs.
Previous report
(Gain) Loss on fair value remeasurement of contingent consideration
Previous report
Gain on fair value remeasurement of contingent consideration for the three months ended September 30, 2025 was $4.8 million as compared to a loss of $0.4 million for the three months ended September 30, 2024, primarily due to the determination to cease developmentof KPI-012.
Previous report
Impairment of right-of-use assets
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Reworded paragraphs (15)
Previous wording
Thefollowing discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission on March 31, 2025. This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. The words “anticipate,” “believe,” “continue” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the section entitled “Risk Factors” in Part II, Item 1A that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.
Current wording
Thefollowing discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”), which was filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2026. This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. The words “anticipate,” “believe,” “continue” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make. Unless otherwise indicated, references to “we,” “us,” “our,” or the “Company” refer to KALA BIO, Inc. (the “Company”).
Previous wording
We are a biopharmaceutical company dedicated to the research, development and commercialization of innovative therapies for rare and severe diseases of the front and back of the eye. Our product candidate, KPI-012, which we acquired from Combangio, Inc., or Combangio, on November 15, 2021, is a mesenchymal stem cell secretome, or MSC-S.
Current wording
We are a biopharmaceutical company in transition, evaluating the development of a dedicated, on-premises artificial intelligence (AI) infrastructure platform for the biotechnology industry. Our current focus is leveraging our mesenchymal stem cell secretome platform (the “MSC-S platform”) to test development of a scalable AI platform-as-a-service business to deploy secure, purpose-built AI systems directly within biotechnology and pharmaceutical client environments. We have historically been engaged in the research, development and commercialization of innovative therapies for rare and severe diseases of the front and back of the eye. Our lead product candidate was KPI-012 (“KPI-012”), an MSC-S, which we acquired from Combangio on November 15, 2021. KPI-012 was in clinical development for the treatment of persistent corneal epithelial defects (“PCED”), a rare disease of impaired corneal healing. Based on the results of a Phase 1b clinical safety and efficacy trial of KPI-012 in patients with PCED, we submitted an investigational new drug application to the U.S. Food and Drug Administration (the “FDA”), which was accepted in December 2022. In February 2023, we dosed our first patient in the United States in our CHASE trial (the “CHASE trial”). By September 2025, the CHASE trial did not meet its primary endpoints, and we determined to discontinue our development of KPI-012 and the MSC-S platform. We have since expanded upon our business to evaluate strategic alternatives for our legacy MSC-S assets and capitalize on the substantial intellectual property (IP), proprietary biological datasets, and research experience generated during the clinical trials by starting development of an AI platform.
Previous wording
We have financed our operations primarily through proceeds from the sale of our Commercial Business to Alcon, our initial public offering, or IPO, follow-on public common stock offerings and sales of our common stock under our sales agreement with Jefferies, LLC, or Jefferies, in at-the-market offerings, private placements of common stock and/or preferred stock (including our most recent private placement resulting in gross proceeds of approximately $10.8 million in December 2024), borrowings under credit facilities and our Loan Agreement with Oxford Finance, or the Loan Agreement, disbursements under a grant from California Institute for Regenerative Medicine, or CIRM (including our final disbursement of $0.5 million from CIRM and September 2025 upon the achievement of a specified milestone), convertible promissory notes and warrants.
Current wording
Since inception, we have incurred significant losses from operations and negative cash flows from operations. Our net losses were $1.6 million and $27.0 million for the three months ended March 31, 2026 and year ended December 31, 2025, respectively. As of March 31, 2026, we had an accumulated deficit of $696.5 million. We have historically financed our operations primarily through proceeds from the sale of our Commercial Business to Alcon, our initial public offering (the “IPO”), follow-on public Common Stock offerings and sales of our Common Stock under our sales agreement with H.C. Wainwright & Co., LLC (“Wainwright”) in at-the-market offerings, private placements of Common Stock and/or preferred stock (including our most recent private placements resulting in gross proceeds of approximately $4.2 million in January 2026).
Previous wording
General and administrative expenses were $13.8 million for the nine months ended September 30, 2025, comparable to $14.1 million for the nine months ended September 30, 2024, which was a decrease of $0.4 million. The decrease in general and administrative expenses for the nine months ended September 30, 2025 was primarily due to a $0.9 million decrease in employee costs, partially offset by a $0.3 million increase in administrative and professional service fees and a $0.2 million increase in stock-based compensation.
Current wording
General and administrative expenses were $1.7 million for the three months ended March 31, 2026, compared to $4.6 million for the three months ended March 31, 2025, which was a decrease of $2.9 million. The decrease in general and administrative expenses for the three months ended March 31, 2026 was due to a decrease of approximately $3.0 million in employee-related costs and stock-based compensation, primarily a result of our decision to cease development of KPI-012 and our MSC-S platform, including costs related to restructuring and wind-down activities, partially offset by $0.1 million increased legal and professional services support in connection with those activities.
Previous wording
Research and development expenses consist of costs associated with our research activities, including compensation and benefits for full-time research and development employees, an allocation of facilities expenses, overhead expenses and certain outside expenses. Our research and development expenses include:
Current wording
Research and development expenses consist of costs associated with our research activities, including compensation and benefits for full time research and development employees, an allocation of facilities expenses, overhead expenses and certain outside expenses. Our research and development expenses generally include: employee related expenses, including salaries and stock based compensation; expenses incurred for the preclinical and clinical development of our product candidates and under agreements with contract research organizations, including costs of manufacturing product candidates prior to the determination that FDA approval of a drug candidate is probable and before the future economic benefit of the drug is expected to be realized; and facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and supplies.
Previous wording
We expense research and development costs as they are incurred. We expense costs relating to the production of inventory for our product candidates, as research and development expenses within our condensed consolidated statements of operations and comprehensive loss in the period incurred, unless we believe regulatory approval and subsequent commercialization of the product candidate is probable and we expect the future economic benefit from sales of the drug to be realized. Research and development costs that are paid in advance of performance are capitalized as a prepaid expense until incurred. We track outsourced development costs by development program but do not allocate personnel costs, payments made under license agreements or other costs to specific product candidates or development programs. These costs are included in employee-related costs and other research and development costs in the line items in the tables under “Results of Operations”.
Current wording
We expense research and development costs as they are incurred. We expense costs relating to the production of inventory for our product candidates, as research and development expenses within our consolidated statements of operations and comprehensive loss in the period incurred, unless we believe regulatory approval and subsequent commercialization of the product candidate is probable and we expect the future economic benefit from sales of the drug to be realized. Research and development costs that are paid in advance of performance are capitalized as a prepaid expense until incurred. We track outsourced development costs by development program but do not allocate personnel costs, payments made under license agreements or other costs to specific product candidates or development programs. These costs are included in employee related costs and other research and development costs in the line items in the above table.
Previous wording
(Gain) loss on Fair Value Remeasurement of Contingent Consideration
Current wording
Loss on fair value remeasurement of contingent consideration
Previous wording
We recorded an obligation for such contingent consideration at fair value on the acquisition date. We then revalue our contingent consideration obligations each reporting period. Changes in the fair value of our contingent consideration obligations, other than changes due to issuance, are recognized as a gain or loss on fair value remeasurement of contingent consideration in our condensed consolidated statements of operations and comprehensive loss.
Current wording
We recorded an obligation for such contingent consideration at fair value on the acquisition date. We then revalue our contingent consideration obligations each reporting period. Changes in the fair value of our contingent consideration obligations, other than changes due to issuance, are recognized as a gain or loss on fair value remeasurement of contingent consideration in our consolidated statements of operations and comprehensive loss.
Previous wording
Interest income consists of interest earned on our cash, cash equivalents and short-term investments, if any.
Current wording
Interest income consists of interest earned on our cash, cash equivalents and short-term investments.
Previous wording
We incurred interest expense of $1.0 million for the three months ended September 30, 2025 and $1.5 million for the three months ended September 30, 2024. Interest expense for the three months ended September 30, 2025 and 2024 was comprised of the contractual coupon interest expense, the amortization of the debt discount and the accretion of the final payment fee associated with our Loan Agreement with Oxford Finance. During the three months ended September 30, 2025, $26.9 millionof indebtedness was outstanding under our Loan Agreement. During the three months ended September 30, 2024, $34.0 million of indebtedness was outstanding under our Loan Agreement.
Current wording
We incurred interest expense of $0 and $1.1 million for the three months ended March 31, 2026 and 2025, respectively. Interest expense for the three months ended March 31, 2025 was comprised of the contractual coupon interest expense, the amortization of the debt discount and the accretion of the final payment fee associated with Loan and Security Agreement, dated as of May 4, 2021, by and among us, Combangio, Inc. and Oxford Finance LLC, as lender and collateral agent (as amended, the “Loan Agreement”). During the three months ended March 31, 2026 and 2025, $0 and $29.3 million, respectively, of indebtedness was outstanding under our Loan Agreement.
Previous wording
In February 2023, we dosed our first patient in our CHASE (Corneal Healing After SEcretome therapy) Phase 2b clinical trial of KPI-012 for persistent corneal epithelial defect, or PCED, a rare disease of impaired corneal dealing, in the United States, or the CHASE (CornealHealing AfterSEcretome therapy) trial. On September 29, 2025, we announced that the CHASE trial of KPI-012 for the treatment of PCED did not meet the primary endpoint of complete healing of PCED as measured by corneal fluorescein staining. The CHASE trial also failed to achieve statistical significance for key secondary efficacy endpoints and did not show any meaningful difference between either KPI-012 treatment arm and the placebo arm. Based on the CHASE trial results, we determined to cease development of KPI-012 and our MSC-S platform. In connection with such decision, we approved a reduction in our workforce by approximately 19 employees, or approximately 51%. During the three months ended September 30, 2025, we incurred costs of approximately $0.4 million related to this reduction in workforce, primarily consisting of severance payments and employee benefit costs. Additional costs related to the reduction in workforce are expected to be substantially incurred in the fourth quarter of 2025.
Current wording
Grant income for the three months ended March 31, 2026 and 2025 was $0 and $2.4 million, respectively, related to an award agreement with the California Institute for Regenerative Medicine for a $15,000 grant (as amended from time to time, the “CIRM Award”). On September 29, 2025, we announced that the CHASE trial of KPI-012 for the treatment of PCED did not meet the primary endpoint of complete healing of PCED as measured by corneal fluorescein staining. The CHASE trial also failed to achieve statistical significance for key secondary efficacy endpoints and did not show any meaningful difference between either KPI-012 treatment arm and the placebo arm. Based on the CHASE trial results, we determined to cease development of KPI-012 and our MSC-S platform, and as such, we do not expect to receive grant income relating to the CIRM Award in the near future.
Previous wording
Since our inception, we have incurred significant operating losses. We only generated limited revenues from product sales of EYSUVIS and INVELTYS prior to the sale of our Commercial Business to Alcon in July 2022. We have financed our operations primarily through proceeds from the sale of our Commercial Business to Alcon in July 2022, our IPO, follow-on public common stock offerings and sales of our common stock under our at-the-market equity offerings, private placements of common stock and/or preferred stock, borrowings under credit facilities andour Loan and Security Agreement, orthe Loan Agreement, with Oxford Finance LLC, or Oxford Finance, disbursements under a grant from CIRM, convertible promissory notes and warrants.
Current wording
Since our inception, we have incurred significant operating losses. We only generated limited revenues from product sales of EYSUVIS and INVELTYS prior to the sale of our Commercial Business to Alcon in July 2022. We have financed our operations primarily through proceeds from the sale of our Commercial Business to Alcon in July 2022, our IPO, follow-on public common stock offerings and sales of our common stock under our at-the-market equity offerings, private placements of common stock and/or preferred stock, borrowings under credit facilities and Loan Agreement, and warrants.
Previous wording
Our other material cash requirements from known contractual and other obligations as of September 30, 2025 primarily related to our license agreement with Stanford University and our operating lease. For information related to our future commitments relating to our license agreement, see Note 14, “Commitments and Contingencies”, of our condensed consolidated financial statements. For information related to our future commitments for our lease related obligations, see Note 7, “Leases”, of ourcondensed consolidated financial statements.
Current wording
Our other material cash requirements from known contractual and other obligations as of March 31, 2026 primarily related to our license agreement with Stanford University and our operating lease. For information related to our future commitments relating to our license agreement, see Note 14, “Commitments and Contingencies”, of our condensed consolidated financial statements.
Previous wording
As of September 30, 2025 and December 31, 2024, we had $21.1 million and $51.2 million in cash and cash equivalents, respectively. As of September 30, 2025 and December 31, 2024, we had $26.9 million and $29.3 million, respectively, in indebtedness, which represented the aggregate principal amount that was outstanding under the Loan Agreement with Oxford Finance. On October 19, 2025, pursuant to the terms of the Loan Agreement, Oxford Finance informed us that it intended to foreclose on all of our remaining assets and that Oxford Finance would not consent to the Company’s use of cash for any reason other than for minimal payroll and related expenses pending Oxford Finance’s foreclosure of the Company’s assets. Oxford then swept substantially all of our cash resources from our bank accounts. On November 3, 2025, Oxford Finance informed us that it intended to pause its foreclosure of the Company’s assets and permitted us to use $125,000 of cash it previously swept to fund the negotiation and execution of the Convertible Loan Agreement and to fund preliminary preparation work on this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025.
Current wording
As of March 31, 2026 and 2025, we had $1.8 million and $7.6 million in cash and cash equivalents, respectively.
Previous wording
Net cash used in financing activities for the nine months ended September 30, 2025 was $2.6 million, primarily due toa $2.5 million repayment of principal and payment fee on our Loan Agreement and $0.1 million payment of issuance costs related tothe sale of common stock and shares of our Series I Preferred Stock in our December 2024 private placement.
Current wording
Net cash used in financing activities for the three months ended March 31, 2025 was $0.1 million, primarily due to payment of issuance costs related tothe sale of common stock and shares of our Series I Preferred Stock in our December 2024 private placement.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Since inception, we have incurred significant losses from operations and negative cash flows from operations. Our net loss was $7.6 million and $27.7 million for the three and nine months ended September 30, 2025, respectively, and $38.5 million for the year ended December 31, 2024. As of September 30, 2025, we had an accumulated deficit of $695.6 million.
Previous report — wording carried elsewhere
●facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and supplies.
Previous report — wording carried elsewhere
The following table summarizes the results of our operations for the nine months ended September 30, 2025 and 2024:
Previous report — wording carried elsewhere
The following table summarizes the research and development expenses incurred during the nine months ended September 30, 2025 and 2024: