Aldeyra Therapeutics, Inc. (NASDAQ:ALDX) Q4 2022 Earnings Call Transcript

Aldeyra Therapeutics, Inc. (NASDAQ:ALDX) Q4 2022 Earnings Call Transcript March 9, 2023

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Aldeyra Therapeutics Full Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After speakers’ presentations, there will be a question-and-answer session. I would now like to hand the call over to — the conference call over to Mr. Bruce Greenberg, the company’s Interim Chief Financial Officer. Please go ahead, Sir Bruce Greenberg.

Bruce Greenberg: Thank you, and good morning, everyone. With me today is Dr. Todd Brady, our President and Chief Executive Officer. This morning, we issued a press release reporting recent corporate highlights and our financial results for the year ended December 31, 2022. A copy of the press release is available on the Investors & Media section of our website at www.aldeyra.com. Please note that this morning’s conference call contains forward-looking statements regarding future events and the future performance of Aldeyra. Forward-looking statements include, but are not limited to, statements regarding FDA review of our drug applications — of our new drug applications, potential commercialization, the anticipated timing of initiation of results from our clinical trials, our projected cash runway, our possible or assumed future results of operations, expenses and financial position, and potential growth opportunities.

These statements are based on the information available to us today and reflect our current views concerning future events. They are based on assumptions and subject to risks and uncertainties, including the development, clinical and regulatory plans or expectations for Aldeyra’s product candidates and systems-based approaches. The risks that result from clinical trials or portions of clinical trials may not accurately predict the results of future trials for the same or different indications and Aldeyra is continuing review and quality control analysis of clinical data. Aldeyra assumes no obligation to update these statements as circumstances change. Future events and actual results could differ materially from those projected in our forward-looking statements.

Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in our press release issued this morning and in our filings with the SEC. I will now turn the call over to Dr. Brady.

Todd Brady: Thank you, Bruce. Good morning, everyone, and thank you for joining us. Let me begin by recognizing the entire Aldeyra team as well as the clinical investigators and researchers and patients who have worked with us over the past year. The time and dedication you’ve invested to advance our strategic priorities in 2022 have resulted in two FDA accepted new drug applications, Reproxalap for dry eye disease and ADX-2191, which was recently designated priority review for primary vitreoretinal lymphoma, a rare aggressive high-grade retinal cancer with no approved therapy. We deeply appreciate your support in achieving a milestone that few companies of any size achieved this quarter and are proud to be actively working with the FDA to potentially bring two new therapies to patients as quickly as possible.

These NDAs are catalysts for Aldeyra’s future. They validate the novel platforms we’ve developed to treat both common and rare immune-mediated diseases characterized by inflammation. And they speak to the power of our drug discovery and development engine. Building on this strong foundation, we’re focused on advancing the next generation of RASP modulation platform, ADX-629, ADX-246 and ADX-248 in 2023. For those of you that are new to Aldeyra, RASP are pro-inflammatory mediators that are elevated in ocular and systemic inflammatory disease, and thus represent therapeutic targets for immune modulation. Because RASP affects many proteins simultaneously, the RASP modulator platform represents a unique and novel pharmacologic approach. Unlike almost all drugs in use today, the platform is not designed to directly inhibit or activate a particular protein, but instead selectively target a family of small molecules that in turn modulate the activity and structure of many proteins simultaneously.

ADX-629, our first-in-class orally administered RAS modulator product candidate, is being evaluated in Phase 2 clinical trials in multiple systemic indications, including: idiopathic nephrotic syndrome, which encompasses a broad group of renal inflammatory diseases, including minimal change disease, and is characterized by edema, proteinuria and hypoalbuminemia; Sjogren-Larsson syndrome, an autosomal recessive neurocutaneous inborn error of metabolism that prevents degradation of specific RASP; and atopic dermatitis, a chronic hypersensitivity condition that is characterized by dry, itchy and inflamed skin. The ADX-629 clinical trials encompass a variety of clinical designs that are intended to develop to demonstrate activity across a range of diseases where RASP are implicated.

Top-line results from Sjogren-Larsson syndrome as well as Part 1 of the atopic dermatitis and idiopathic nephrotic syndrome trials are expected in the second half of 2023. Our strategic approach is to identify multiple opportunities to establish the clinical relevance of ADX-629 in both common and rare diseases, where the unmet medical need is significant. Toward this end, we also are conducting a multi-center, randomized, crossover Phase 2 clinical trial in approximately 50 patients with refractory or unexplained chronic cough. We expect to announce top-line results from the trial in the first half of this year. Additionally, in 2023, we plan to initiate a Phase 2 trial in moderate alcohol-associated hepatitis. The decision to pursue this indication stems from the positive results we reported in December of a placebo-controlled Phase 2 alcohol challenged clinical trial in which ADX-629 improved signs of alcohol intoxication.

ADX-629 was superior to placebo in reducing dermal flushing, increasing Romberg test balance time, and lowering levels of the ethanol RASP metabolite acetaldehyde following acute exposure to alcohol. We believe these results support the potential role of RASP modulation in treating alcohol-associated liver diseases, an indication for which there are few treatment options. ADX-629 has been administered to approximately 110 patients across multiple Phase 1 and Phase 2 clinical trials for up to 90 days. The drug has been observed to be generally well tolerated and has not resulted in any serious adverse events. We have invested thoughtfully and strategically to expand our RASP modulator pipeline. The newest product candidates powered by our systems-based drug discovery and development engine are ADX-246 and ADX-248.

In the second half of 2023 or early 2024, we plan to initiate a Phase 1/2 clinical trial of orally administered ADX-246 for the treatment of systemic immune-mediated diseases and intravitreally injected ADX-248 for the treatment of geographic atrophy, a severe form of macular generation. With regard to ADX-2191, last week, we were thrilled to announce that the FDA accepted for priority review our NDA for the treatment of primary vitreoretinal lymphoma, also known as ocular lymphoma. The FDA designed a PDUFA date of June 21, 2023, four months from the acceptance of the NDA for review. The NDA is supported by a combination of more than 30 years of published literature on the safety and efficacy of methotrexate, the active ingredient of ADX-2191 for the treatment of ocular lymphoma.

The submission is further supported by safety data from the recently completed Phase 3 GUARD trial of ADX-2191 in patients with proliferative vitreoretinopathy. An estimated 300 to 600 patients in the United States are diagnosed with ocular lymphoma each year, and the median survival for newly diagnosed patients is less than five years. If approved, we expect to launch ADX-2191 in the United States in the second half of this year, which would make ADX-2191 the first FDA approved drug available for patient suffering from ocular lymphoma. ADX-2191 is also in development for two other retinal diseases without FDA approved therapies: proliferative vitreoretinopathy, a rare condition that is a leading cause of failure of retinal reattachment surgery; and retinitis pigmentosa, a group of rare genetic eye diseases characterized by retinal cell death and loss of vision.

We plan to conduct a Type C Meeting mid-2023 with the FDA to discuss the completion of clinical development of ADX-2191 for the prevention of proliferative vitreoretinopathy. In addition, we plan to report top-line results from the Phase 2 clinical trial of ADX-2191 and patients with retinitis pigmentosa in the first half of this year. With respect to Reproxalap, the PDUFA date is November 23, 2023. We continue to engage in potential partnering discussions with multiple parties for Reproxalap and are also preparing for commercialization internally. Our commercial preparations are designed to exploit the unparalleled rapid onset and breadth of activity observed in clinical trials of Reproxalap in patients with dry eye disease. Last week, we reported top-line results of the vehicle-controlled 12-month safety clinical trial for Reproxalap in dry disease patients.

Ocular safety was similar across Reproxalap and vehicle-treatment groups and no treatment emergent serious adverse events deemed at least possibly related to treatment were identified. What we believe to be particularly significant about the results is the potentially landmark evidence that visual acuity in patients treated with Reproxalap was statistically superior to that in patients treated with vehicle. Visual acuity in the Reproxalap group improved by approximately 37%, resulting in a P-value of less than 0.0001. Coupled with demonstrated broad activity and rapid onset of action, the positive visual acuity data observed in the safety trial potentially further differentiate Reproxalap in what we estimate is a $23 billion addressable market in the U.S. Now, I’ll turn the call back over to Bruce for the financial review.

Bruce Greenberg: Thanks, Todd. Let me begin with our liquidity profile. Cash, cash equivalents and marketable securities as of December 31, 2022 were $174.3 million. Based on our current operating plan, we believe that existing cash, cash equivalents and marketable securities will be sufficient to fund currently projected operating expenses into the second half of 2024. This includes the initial commercialization and launch plans for Reproxalap and ADX-2191, if approved, and continued early- and late-stage development of our product candidates in ocular and systemic immune-mediated diseases. Net loss for the year ended December 31, 2022 was $62.0 million or $1.06 per share compared with the net loss of $57.8 million or $1.07 per share for the same period in 2021.

Losses have primarily resulted from the cost of our clinical trials and research and development programs as well as from general and administrative expenses. Research and development expenses for the year ended December 31, 2022 were $47.3 million compared with $44.9 million for the same period in 2021. This increase was primarily related to an increase in drug product manufacturing expenditures, personnel costs, consulting expenditures and external preclinical development costs, which were partially offset by a decrease in external clinical development costs. General and administrative expenses for the year ended December 31, 2022 were $15.4 million compared with $11.3 million for the same period in 2021. This increase was primarily related to higher consulting expenditures and higher personnel costs.

Total operating expenses for the year ended December 31, 2022 were $62.7 million compared with total operating expenses of $56.2 million for the same period in 2021. Now, let me turn the call back to Dr. Brady for closing remarks.

Todd Brady: Thank you, Bruce. 2022 was a transformational year for Aldeyra, highlighted by the achievement of key clinical and regulatory milestones across our drug development pipeline, including the submission of two new drug applications. That momentum continues in 2023 as we move closer to our goal of validation of our platforms for immune-mediated systemic and retinal diseases. In our industry, success comes from forging one’s own path based on evidence and science, that is precisely the course we’re charting at Aldeyra. The development of Reproxalap has created a strong foundation for our RASP modulation platform, which now features our orally administered candidate ADX-629 and five Phase 2 clinical trials, representing varied designs and two new drug candidates poised to enter the clinic.

Through ADX-2191, we are creating a potential first-line therapy for rare retinal diseases without FDA approved therapies, beginning with ocular lymphoma, proliferative vitreoretinopathy and retinitis pigmentosa, all indications for which our drug has received FDA’s orphan drug designation. And with that, we’ll be happy to take your questions. Operator?

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Q&A Session

Operator: Thank you very much. Our first question today comes from Marc Goodman of SVB Securities. Marc, please go ahead. Your line is open.

Marc Goodman: Hey, good morning. Todd, can you talk about the side effect profile that you’ve seen of the oral? And how you think about that product and just the profile relative to what’s on the market today? Obviously, the excitement is a broad spectrum oral. Just give us a sense of how you’re thinking about it? What should we be looking for as far as just the profile — the side effect profile? Thanks.

Todd Brady: Thanks, Marc. Very much appreciated fireside chat we had together the other day. And thanks also for highlighting our oral RASP modulation pipeline. I would say broadly that inhibiting or activating single proteins tends to lead to toxicity. There’s a reason why we have such proteins. There’s a reason why they are neither consistently turned off or constitutively turned on, and therein lies the value of RASP modulation. ADX-629, ADX-246, ADX-248 are all molecules that influence a family of mediators that in turn influence a family of proteins. So, we’re not turning any protein on or off. We like, in RASP modulation, to a master volume knob where we’re dialing down inflammation, say, from a 7 to a 2. The value of that is safety and tolerability.

Not only do we have breadth of activity, but we have drugs that aren’t individually affecting proteins and, therefore, should lead to less toxicity. We have seen that in trials observed to date. With ADX-629, we have very few side effects. As I mentioned in my prepared comments, we have no serious adverse events that have been deemed related to drug. So, as we continue to test patients in other indications, I expect that safety profile will continue based on the mechanism of action of the drug.

Operator: Thank you. Our next question is from Yigal Nochomovitz from Citigroup. Yigal, please go ahead. Your line is open.

Yigal Nochomovitz: Hi. Thanks very much for taking the question. Todd, with respect to the PDUFA for Reproxalap for dry eye, obviously, that’s filed. Could you comment to an extent on the partnering discussions there, and does that has a clear target date for FDA approval? And then related to that, obviously, you have the second Phase 3 for AC coming up. I think in the past you’ve indicated that it may not necessarily — be necessary to file there, given the extensive overlap between the AC and dry eye patient populations. I’m just wondering how are you thinking about that? Is it potentially a situation where the partners may want to see that data and then make a determination as to whether it’d be necessary to file in that second indication? Thank you.

Todd Brady: Thanks, Yigal. Happy to comment on partnering discussions and happy to comment on allergic conjunctivitis. As you know, the Reproxalap NDA for dry eye disease has been accepted and thus, to some extent, regulatory risk has been removed at least as it relates to the FDA’s review of that FDA. As we’ve said before, we believe the NDA submission is the most comprehensive ever for a dry eye disease drug with three different signs and a variety of clinical trials that feature acute and chronic administration up to 12 weeks for efficacy and now 12 months for a safety. All in all, the data continue to suggest that Reproxalap is the only drug in development that can work quickly. And I think that’s a major commercial differentiator.