David Lazar Discloses 5.18% Stake in KALA BIO via Convertible Preferred Stock with Full Ratchet Protection
Summary
David E. Lazar, former CEO and current Chairman, disclosed beneficial ownership of 5.18% of KALA BIO, Inc. through a $1.8 million investment in convertible preferred stock featuring full ratchet anti-dilution protection.
Key Events
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Significant Investment
David E. Lazar acquired 900,000 shares of Series AA Convertible Non-Redeemable Preferred Stock for $1.8 million.
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Beneficial Ownership
Upon conversion, these preferred shares are convertible into 49.5 million common shares, representing approximately 5.18% of KALA BIO's outstanding common stock.
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Protective Terms
The Series AA Preferred Stock includes full ratchet anti-dilution protection, safeguarding the investor's stake against future dilutive offerings.
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Leadership Transition
Lazar, who was appointed CEO and a director on November 23, 2025, resigned as CEO on February 2, 2026, but remains a member and Chairman of the Board of Directors, as previously announced in a February 5th 8-K.
Analysis
This Schedule 13D filing reveals a significant investment by David E. Lazar, who was previously CEO and is now Chairman of KALA BIO's Board. His $1.8 million purchase of convertible preferred stock, which can convert into 5.18% of the company, provides a crucial capital infusion for the financially distressed company. However, the inclusion of full ratchet anti-dilution protection for the preferred stock is highly favorable to Lazar and could be significantly detrimental to existing common shareholders in future dilutive capital raises. The timing of this disclosure, following Lazar's recent resignation as CEO (announced in a February 5th 8-K) but retention of the Chairman role, suggests a strategic shift in his involvement from operational leadership to oversight, while maintaining a substantial and protected equity stake. This investment, while providing needed capital, comes with terms that heavily favor the preferred shareholder, indicating the company's challenging financial position.
At the time of this filing, KALA was trading at $0.44 on NASDAQ in the Life Sciences sector, with a market capitalization of approximately $12.3M. The 52-week trading range was $0.38 to $20.60. This filing was assessed with neutral market sentiment and an importance score of 8 out of 10.