aibioKALA BIO receives Oxford Finance default notice, lender declares $29.1 million loan due
Tickers KALA
Oxford Finance says an event of default under a Material Adverse Change clause is continuing and has accelerated all obligations under the 2021 loan agreement. The notice says interest began accruing at the Default Rate, and that $29.1 million is now payable.
Key facts
- Company
- KALA BIO, Inc. (NASDAQ: KALA)
- News type
- Distress
- Primary source
- KALA BIO, Inc. Form 8-K filed October 1, 2025 (SEC EDGAR)
KALA BIO, Inc. (Nasdaq: KALA) received a written notice of event of default from its lender, Oxford Finance LLC, on September 29, 2025. The company reported the notice in a Form 8-K filed October 1, 2025 under Item 2.04, which covers events that accelerate a direct financial obligation. The notice declares all of the company's obligations under the loan immediately due and payable.
What the lender alleges
The loan is a Loan and Security Agreement dated May 4, 2021, among KALA, Combangio, Inc. and Oxford, which acts as lender and collateral agent. The notice says an event of default has occurred and is continuing under Section 8.3 of the agreement, the material adverse change clause. It also alleges that other events of default under the loan may exist.
Oxford says the total accelerated obligations are $29.1 million, plus any further interest and any expenses payable under the agreement. The notice also says the obligations began accruing interest at the Default Rate, as defined in the agreement, effective immediately upon the event of default.
The 8-K does not describe the event that Oxford regards as a material adverse change. It refers readers to the company's quarterly report on Form 10-Q for the period ended June 30, 2025, filed August 8, 2025, for a description of the loan. The 8-K does not say whether the company has paid, disputed or proposed to pay the amount, and it does not describe any waiver or forbearance.
The loan before the default
The 2024 annual report on Form 10-K lists $29.3 million of outstanding borrowings under the tranche A term loan at December 31, 2024. After July 1, 2023, the term loan bore interest at the greater of 8.00% and the sum of the one-month CME Term SOFR, 0.10% and 7.89%. Amortization was due to start on July 1, 2025, with the balance repaid in monthly installments through November 1, 2026.
That schedule means the company was already repaying principal when the lender declared the loan due. The 10-K warns that acceleration of the repayment of its indebtedness would raise substantial doubt about its ability to continue as a going concern, and would shorten the period for which it can fund operations.
The company behind the loan
KALA's lead product candidate in the annual report is KPI-012, for persistent corneal epithelial defects, or PCED. The company dosed its first patient in the CHASE trial, a Phase 2b study of KPI-012 in the United States, in February 2023. The 10-K says the trial has two patient cohorts. The company announced positive safety data on March 27, 2023 from the first cohort, an open-label study in two patients.
The 10-K puts the accumulated deficit at $667.9 million at December 31, 2024. It says the company had 38 full-time employees at that date. The company expects to keep losing money and says it may never reach profitability.
What the 8-K does not say
The 8-K does not give cash on hand, the company's plans to pay or refinance the loan, or any statement from KALA about the notice. It does not name a new lender, an advisor or counsel. Oxford's position, as reported in the filing, is that the default is continuing, and the filing does not say whether KALA disputes that.
What comes next
Oxford's notice has put the full loan balance in play. Oxford has declared $29.1 million, plus default interest and expenses, immediately due. The 8-K does not say whether KALA will pay, seek a waiver from Oxford or respond to the alleged other defaults.