Aldeyra Therapeutics, Inc. Q1 FY2021 earnings call

• Phase 3 INVIGORATE Trial in allergic conjunctivitis showed Reproxalap achieved statistically significant improvement over vehicle for primary and secondary endpoints. Plans to meet with FDA in H2 2021 to discuss submission of new drug application.
• Tranquility and Tranquility 2 trials of Reproxalap in dry eye disease are on track to read out top line results in H2 2021. Patient enrollment in Tranquility trial is underway.
• Systemic disease programs: Initial Phase 2 clinical trial results from ADX-629 expected in H2 2021 in asthma, psoriasis, and COVID-19. Evaluating new RASP inhibiting compounds for retinal and systemic disease.
• Strong balance sheet with cash and cash equivalents of $138.4 million as of March 31, 2021, from recent underwritten public offerings.

Research and development expenses for the first quarter of 2021 were $7.7 million, compared to $6.6 million in the same period of 2020. The increase of $1.1 million was primarily related to higher clinical development and manufacturing costs, partially offset by lower personnel-related costs and a decrease in preclinical cost. General and administrative expenses were $3.1 million for the quarter ended March 31, 2021, compared with $3 million for the same period in 2020. The net loss for the first quarter of 2021 was $11.3 million or $0.25 per share compared with a net loss of $9.9 million or $0.34 per share for the quarter ended March 31, 2020.

• INVIGORATE Trial completed, planning to meet FDA in H2 2021 for NDA submission for Reproxalap in allergic conjunctivitis.
• Tranquility and Tranquility 2 trials in dry eye disease expected to read out top line results in H2 2021.
• Phase 2 results of ADX-629 in asthma, psoriasis, and COVID-19 expected in H2 2021.
• Existing cash and cash equivalents expected to fund operating expenses through end of 2023, including potential NDA submission and development of product candidates.

• Impact of COVID-19 on clinical site availability, staffing, and patient recruitment, potentially delaying clinical trial timelines.
• Variability in dry eye disease trials, which could affect trial outcomes.
• Clinical trials may read out in unexpected or sideways manners, which could impact expectations.

Q: Hi, good morning. Thanks for taking the question. Just a couple from me and just maybe touching on the cash balance as the team reviews the overall pipeline and sort of the robust cash position. Are there areas of the pipeline where we might see or expect a greater focus on potential pipeline on the[ph]BDM&A is there anything in terms of what programs might have - should have growth given for the additional cash?

A: Well, let me, Justin. Thanks for the question. And let me start off and perhaps Josh can provide some color. I think we are rich in pipeline assets at this point as I mentioned in my prepared comments, we are very excited about the potential for RASP inhibition broadly which is reflected not only in Reproxalap, our lead asset that I hope is close to the goal line in terms of submission of a marketing application, but also in terms of retinal disease and systemic disease, both of which are likely to relate to RASP inhibition. So I think as Josh may mention a lot of the proceeds that have been raised this year are earmarked for continued development of RASP inhibition broadly as well as our retinal program with ADX-2191 which as you know, is currently in Phase 3 testing for proliferative vitreoretinopathy. We are always opportunistic in terms of assessment and licensing of new assets. I think we've proven to investors over the years that we're capable of evaluating in licensing and developing novel assets but with that, perhaps, I will turn it over to Josh for further color.

Q: Good morning and thank you for taking my questions. So my question is regarding ADX-629 --it's an oral version of Reproxalap and my question is even though there are two different administration route, but what is the[ph] real route through 629 programs from the [ph]odd part is the results so far from Reproxalap and also strategically how do you think about prioritized indications for these two molecules? Thank you.

A: Thanks for the question. Kelly and I'm glad you mentioned ADX-629 which we view as a hidden gem in our pipeline. When we started this company many years ago, we were excited about RASP as a target. Not only do Reproxalap and ADX-629 which are closely related structurally represent new molecules and not only do those new molecule represent targeting new physiologic mediators of disease but the entire pharmacology is different. From 99% of drugs available today, most of drugs that we take today bind to proteins, receptors, enzymes, cytokines or they're directly involved in making proteins, such as the case with gene therapy. Most drugs available today effect single targets, a particular receptor, a particular enzyme. Reproxalap in ADX-629 are different and that those drugs target a variety of non-protein that is small molecule inflammatory mediators and therefore we have classified RASP inhibition as a systems-based approach. The challenge with the drugs available today is that inhibiting a single target that is taking a single molecule out of a physiological cascade leads to toxicity --now I guess driving your car with three tires whereas modifying a system without inhibiting a single target have safety advantages and efficacy advantages. One reason that we believe we have seen the broad-based symptomatic activity of Reproxalap in dry eye disease, not just with dry eye score, not with dryness score, not just with ocular discomfort score, not just with burning, not just with stinging but across the board it is due to the fact we believe that Reproxalap effects variety of the small molecule mediators of inflammation. So this kind of systems-based approach could have efficacy advantages as well. There is no reason why RASP inhibition should only apply to the eye or the front of the eye which is why in response of Justin's question I mentioned RASP inhibition as it may apply to the retina and systemic diseases. We're really thrilled about ADX-629 and the potential thereof. We are currently testing the drug across different forms of inflammation as by representing more allergic or TH2 type inflammation psoriasis representing more autoimmune or TH1 type inflammation. To your question, Kelly, it's really difficult to prioritize diseases or kinds of inflammation as they relate to treatment with ADX-629 until we see the results of those trials, but I think you can hear in our voices today that we are optimistic given the success of Reproxalap as you point out about the prospects of ADX-629. In a way the front of the eye for Aldeyra has been a model of inflammation. I think it's very clear with INVIGORATE and the success we've had in dry eye disease that Reproxalap is active and safe and therefore I think there is considerable read through to, the potential success of ADX-629 and that's why we're so excited about keeping you up to date regarding the Phase 2 results later this year.