Aldeyra Therapeutics, Inc. (ALDX) Earnings Call Transcript & Summary

So again this is the second panel that I'm moderating for the day and is entitled Ophthalmology Seen 2020 in 2020. I'm Yigal Nochomovitz. [Operator Instructions] So it's my pleasure to have with me this morning 4 distinguished guests, all CEOs of their respective companies from Aerie, Vince Anido; from Aldeyra, Todd Brady; from Apellis, Cedric Francois; and last but not least, from ProQR, Daniel de Boer. So welcome, all, gentlemen. Thank you very much for taking the time to chat with us today. I think what I'll do is just as a -- just very preliminarily, if each of you could give a very brief 1- to 2-minute overview of each of your companies, just as level set, so that everyone has a sense as to what you're doing because some may not be familiar. And then in answering that question, if you could also just comment on what you think is being least appreciated by the street in each of your respective pipelines. So Cedric, do you want to kick-off?

Sure. Happy to. Thank you, Yigal, and thank you for putting me on the panel with these distinguished co-CEOs. It's good to be on an ophthalmology panel. So Apellis is a company that is focused on the complement pathways and has 2 key programs in advanced clinical testing, one is in a nonophthalmological field called the paroxysmal nocturnal hemoglobinuria, which is a rare disease of the bone marrow, where we administer our lead compound, pegcetacoplan, subcutaneously twice per week to control that disease. We then take the exact same molecule, which controls complement factor C3 and use that to do intravitreal injections, either monthly or every other month, in -- for the treatment of geographic atrophy. In GA, we have kind of an interesting or macular degeneration, I should say, there's an interesting story over the past 20 years where obviously, with the anti-VEGFs, we can control the leakage associated with the wet form of macular degeneration, but there's currently nothing on the market. And up to our Phase II results, everything had really failed to control the progression of the dry form, which is like the forest fire in the back of the eye where the retina gradually disappears. In its pure form, that is something that affects 1 million patients in the U.S., it's also worth mentioning that patients who are on chronic anti-VEGF use are at very high risk of developing GA as well, about 98% over 7 years. We have fully enrolled 2 Phase III clinical trials of 600 patients each. And we will have a readout in Q3 of next year.

Very good. Todd, do you want to give us the highlights quickly?

For sure. So Aldeyra is life-centric company and immunology company. We have both ocular and systemic programs. Our ocular programs seem to be at the forefront these days. We -- our lead molecule, reproxalap have 2 Phase III trials, one in dry eye disease and one in allergic conjunctivitis. We have another Phase III program in retinal disease called vitreoretinopathy. And then most recently, we've announced that our systemic immune-modulating agent, ADX-629 will be beginning shortly 3 trials, one in COVID, one in asthma and one in psoriasis. What is the least appreciated, I think, it's allergic conjunctivitis. It's everyone's favorite disease to dislike. But what's amazing is about 1/3 of the world has allergic conjunctivitis. There hasn't been a new mechanistic approach in decades. We think we will be the next novel entrant in allergic conjunctivitis in about 40 to 50 years actually and dry eye disease, which has more recent entrants, but an exciting time for reproxalap and an exciting time for folks like myself that suffer from anterior ocular inflammation.

Great. Daniel?

Yes, happy to, and thanks for inviting me to this panel, Yigal. So ProQR Therapeutics, we are developing medicines for inherited retinal diseases. These are genetic diseases that cause typically congenital blindness. So vision loss that starts in childhood and gets more severe over the course of the lifetime of people. There's about 3 million people in the world with these types of diseases and only a few thousand of them have a treatment available to them. We are developing a platform of RNA therapeutics for these inherited retinal diseases. And we think we can target many of these inherited retinal diseases, and we currently have 3 drugs in clinical studies and the fourth one to start clinical studies soon. All 4 of these programs will have clinical data over the next, let's say, 12 to 18 months, including a pivotal readout on our lead program for Leber's congenital amaurosis. So a lot's going on.

Great. And Vince, you want to tell us just the highlights on Aerie's commercial franchise and the pipeline.

Sure. And again, thanks for the invitation. Our company, Aerie, has 2 products on the market for the treatment of glaucoma here in the United States. Rhopressa was launched a couple of years ago. Rocklatan, a combination of Rhopressa plus latanoprost, a major prostaglandin here in the United States, we've launched about a year or so ago. We're gaining quite a bit of traction. And the great news is that we've got a lot now of managed care coverage in the U.S., which is critical to the success of the products. In addition to that, we have a growing pipeline. We have a number of products that are just now in the process of reading out, most recently, we introduced the data for our 1105, AR-1105, which is dexamethasone insert for the treatment of diabetic macular edema. We had great results there. We did get the -- we knew that the product worked. We knew dexamethasone worked. The issue was, can we deliver it for 6 months and we were able to do that, and that's a critical time line from a retinal physician's point of view. We have another retinal program, which is AR-15503 (sic) [ AR-13503 ], which is for Rho kinase, protein kinase C inhibitor for wet AMD. That will read out sometime in the middle of next year. Last fall, we acquired a company from Spain that had a unique treatment for dry eye, and they had completed a Phase IIa trial, which is very exciting. And so that program, which is designated as 512, for us, we'll start its Phase IIb clinical trial here in the United States later on this year. On a global basis, we continue to progress. We had great results in our Phase II trial in Japan and moving into Phase III trials there before the end of the year. And in Europe, for Roclanda, which is Rocklatan here in the United States, approved sometime towards the end of the year, beginning of next year. And that's to follow-on to the fact that Rhopressa was approved sometime towards the end of last year. So it's an exciting time. And what's really unappreciated right now for us is the revenue ramp for Rhopressa and Rocklatan in the United States. Clearly, like everybody else, we got hit by COVID towards the end of March of this year. And as of last month or just a few weeks ago, we're back to the pre-COVID revenue levels. And so we're excited about the prospects, and we've put an awful lot of new things out in the market that allow us to progress a little bit more quickly.

Perfect. Well, thank you all for the introductions, and everyone's working on relatively different indications.

So I'd like to move into a bit of a more thematic discussion around some of the challenges and opportunities in developing drugs for ocular conditions. And maybe we could just start out with a conceptual question, which I'm sure all of you have thought about in great length, and that is, how do you effectively design your Phase II or early stage program such that it's properly designed to support an effective Phase III program? Would love to hear your thoughts. Cedric, do you want to give that a shot?

Sure. I'm not sure that there's a straightforward answer to that question, Yigal, because it's highly individual, of course. But I think, at least from our perspective and then kind of, I guess, more narrowly focused on geographic atrophy, it was very important in GA, where the endpoint is an anatomical endpoint and where there had been so many failures that we would have a Phase II that would give us the confidence and the ability to raise the money needed to run a Phase III clinical program. Trials in ophthalmology mineral, I believe, are very expensive because of the imaging and are also very difficult. I mean, there are lots of failures. So I think when you come out of the Phase II, it is important that you come out of that with great confidence and with good data. And in my opinion, it's important that between Phase II and Phase III, you don't make a lot of changes. I mean, I think often when you -- it's tempting, right? You've got to go. I see something there, post-talk there, post-talk and then I redesign my patient population for Phase III. That, in my opinion, is a mistake. So I think the redeeming message here is when you start your Phase II, think through all the way to registration, and make sure that you're ready to get everything funded and do it in a staggered way.

Makes a lot of sense. Todd, do you want to answer your thoughts?

I think what's key for a novel approach is to assess a variety of endpoints, especially in your first Phase III trial. In fact, we have a rule here at Aldeyra, for the first Phase II, we don't clear a primary. The primary is safety. Because if you have a novel agent, a novel mechanism, we don't know precisely how it's going to work. And you have a variety of secondary endpoints, all of which have to be clinically relevant, the FDA would have eventually approved. And then in your next Phase II trial, run that, pick your best, power the trial and run it with the primary at that point. But I think the key is a variety of choices for your first Phase II trial and then some ability to demonstrate the clinical relevance of those endpoints and some regulatory precedent that those end points accepted. I tell people at our company, I want to hear the term precedent once. I don't -- I'm not a big precedent guy. We've been very successful with the agency with new endpoints. An example is RASP as an endpoint, which is how our drug works, the target of our drug. As long as you're able to put forth to the agency good data to suggest that your endpoint is meaningful and relates to the disease, I think it puts the company in a good position in terms of future trials.

Okay. Great. Dan or Vince, do you want to add anything to the question around development, transitioning from...

Sure. Happy to add. I think for us, it's a since we are in rare diseases. So typically, our development programs are much leaner, and we don't follow a typical Phase I/II, III. We use a lot of adaptive trial designs where we typically combine Phase I and II, and then we do a combined Phase II/III adaptive pivotal study for registration. I think across the board, we tried to derisk the programs early. So work with strong translational models that can predict what we will see in the clinic, such as we in the early clinical studies can refine and confirm that we indeed see that, understand what patient population, what subset of the population is most likely to respond on those endpoints and enriched the population in the pivotal study for that particular subgroup for the -- that relates well to the endpoint that you have fixed to register the drug. So I think for us, it's the Phase I/II is really a learning exercise to inform the Phase II/III. I think broader than that, we are developing a platform. So all of these drugs are targeted to certain mutation, but are targeting very similar disease phenotypes. So whatever we learn from one disease, we can apply to the next. And with that, we really refine how we look at the endpoints that we select for our clinical studies.

Okay, very good. Vince, do you want to add anything?

Yes. Just a bit. So for us, it's very different depending on which segment of ophthalmology we're chasing. So for example, in glaucoma, the kind of trials that you have to run using intraocular pressure decreases as the metric are relatively straightforward. In fact, if you run them pretty much in a standard way, every product that has achieved success in Phase II has ended up getting approved. And so it's a great track record. Unfortunately, we're also in dry eye, which is a huge market, but what we know there is as soon as you complete one study and it's successful, there is no guarantee that if you replicate that study, that the Phase III will be successful. And so in a Phase II trial for the drug that we're starting later on this year, we're not only chasing some pretty standard endpoints, which are well validated, and you buy the agency quite a bit for approvals, but we're also backing up the truck with almost every secondary endpoint that we can find for the treatment of dry eye because some of the -- the folks have already said you're really still a real research mode at this point. And what you're trying to do, elucidate what exactly it is your drug really can do that's unique and different. And then so that when you get into your final Phase III design, you've got the -- you put your best foot forward.

Great. And in terms of trial design, I just want to focus a little bit on endpoints. All of you've already touched on it a little bit, but how do you balance the decision process in terms of focus on more of the anatomic versus more of the functional, obviously, visual outcomes. Are there certain points in development where anatomic matters more than visual and vice versa. And can you just comment on the strategy to blend those 2 endpoints to produce a successful value proposition?

Sure. The -- if I take a look at our retina trial that we just completed for our 1105, our dexamethasone insert, what's really interesting is when you talk to the retina physicians and you do have to do functional changes like decreasing in the thickness, the macular thickness and things like that, but ultimately, the FDA and other agencies look at visual acuity changes. But what's interesting is the doctors decide whether to keep the patients on drug or not, if they see that decrease in the macular edema upfront. And so that for them, while it is somewhat validated, but not totally correlated, the visual acuity change will occur if upfront, they see a decrease in the macular thickness. And so we do spend an awful lot of time reading that out because it does help to get the physicians on board faster because they'll say, well, if I saw that, then I'm bound to keep us taking on, I think the drug is working.

Got it.

Yes. I think, building on that, we used the imaging methodology is more to support the visual outcomes as well. I think it builds a lot of confidence. When you see the 2 combined. I think they could give earlier signals in the anatomy of what you're doing to the retina. But eventually, you will likely improve the drug based on vision outcomes. So we typically do study them but the secondaries. I think for us, as we are purely focused on these inherited retinal diseases. We define our endpoints based on the disease phenotype. So some of these diseases, like retinitis pigmentosa have much more of a peripheral vision loss where we look for several perimetry measures, where for more central vision loss diseases, BCVA, is the typical outcome measure. So we really have that defined by the disease phenotype, and it therefore, differs a little bit program to program.

Yes. I agree with that. I think it depends. I mean visual acuity is really foveal acuity, right? And when you have a disease like GA where you have foveal sparing, visual acuity slows down or goes -- you lose visual acuity deceptively slowly compared to the visual function loss that you have. I mean I'm personally very excited about kind of the new methodologies to track visual loss through interaction with cell phones and electronic devices. I think in the future, we're going to see much more of that where through adaptive designs and through adaptive studies, you can actually see population's behavior on the phone, maybe correlate with visual function loss in a more astute way than once every couple of months visual acuity measurement.

Great. Todd, did you want to add anything?

I think in the anterior segment, it's all about subjective versus objective. So imaging is probably an example of an objective endpoint. But the FDA requires, if your primary endpoints, you have a subjective component that you also mash those with an objective component in the case of dry disease symptoms and signs. I do think there are some examples of anterior segment diseases where you can get away with signs only. So Schirmer test in dry eye, maybe for an example. Staining might be another example. But in general, I think the FDA is looking for the concordance between subjective and objective. And I can tell you that Dr. Chambers position is typically, if there is not a symptomatic component, 2-year drug, an improvement, something that's meaningful to the quality of life of the patient, we're going to look very carefully at your package. And in some cases, that will be [indiscernible]

Well, you mentioned the FDA interaction. Maybe we could talk a bit about how best to work with the ophthalmology division of the FDA and designing trials to best support approval? What are some of the "classic pitfalls" that everyone should avoid in approaching the agency? And just what does that partnership look like with the ophthalmology division to really bolster chances of success?

Yes. Our approach, Yigal, has been frequent communication with lots of data. So I think it is often difficult for a regulator to incline on a physician that you may have or proposed without data. So we've typically, on a frequent basis, from the FDA, typically with type C meeting request, asking about certain items but support it by data. And I mentioned RASP, that's a great example, where we've generated data on RASP and how that relates to anterior segment inflammation. And then the FDA, typically, in case -- in this case, the vision is very receptive to proposals as long as you have dated the back down.

Cedric, any words of wisdom in terms of FDA interaction?

I'm not sure about that, but I think that -- I agree with Todd. I mean, we interact with multiple divisions at the FDA, and I have to say the ophthalmology division is probably the most easily approachable at Dr. Chambers without any commitment, but it's someone who you can easily talk about conferences, who will share his opinions, who will -- who's open-minded. I mean, I remember specifically in geographic atrophy, because of the kind of the relative weakness of visual acuity as an endpoint there went through a whole process in collaboration with the NIH at that time to determine whether measuring the area of atrophy should be acceptable as -- or in the loss of retina as measured by -- as the OCT or autofluorescence should be acceptable as an endpoint. And at the end of that process, his famous statement was, I think we can all agree that a dying retina is a bad thing. And that was -- and hence, the endpoint became acceptable towards registration. So I think it's an example of -- to Todd's point, a very pragmatic division within the FDA, which benefits all of us. Very open and...

Yes. I couldn't agree more. I think that involving the agency early and lots of communication, really building that partnership that helps to align of minds on how you can arrive at a package that prove sufficient risk benefits to show that patients can benefit from the therapy. With both EMA -- with both FDA and EMA, I think it's really important to also engage EMA early. And I think in that context, the data has to tell the story. So we work with lots of predictive translational models where we, early on with clinical data, with preclinical data, can already predict what we think will happen in the clinic and building that relationship out with continuing to fill that pipeline with data and have that data-driven discussion is really building that relationship and the partnership.

And Vince, do you want to throw in any comments on FDA interaction?

Sure. The -- we're benefiting from the fact that it hasn't been all that long that the ophthalmology group had its own FDA group to call on, which was -- is very encouraging. And certainly, the actions today are more positive than they were, say, even 2 or 3 years ago, where they were reporting up the line with transplant at one point or dermatology in the early days, et cetera, et cetera. So the fact that Dr. Chambers is his own boss right now is a huge deal for the industry, and a lot of folks work very hard to make that happen. I think the interesting component about Dr. Chambers, and I think that Cedric actually called it out is, it was really easy to talk through. He offers his opinions and alike. And then so the balancing out for companies and for CEOs is, simply, if you listen to what he says, there is no e that if you follow what he says and your drug works, it will get approved. The balance is, in today's environment, where we're also having to consider all sorts of other factors, not the least of which is getting it on formularies and making sure you have the differentiation right so you can justify whatever pricing scheme that you're coming up with, it's really making sure that you have enough data in those studies in order to be able to do that. And so again, it's a very open environment. And certainly, it's a welcome change from what we saw even just 2 or 3 years ago.

Good. Well, let's move on to more -- more of the practicalities of delivery of ocular medicine and clients. Obviously, each of you are taking a different approach, some commonalities, but different approaches to delivery, whether it's eye drops into vitreal injections or sustained delivery. Could you just talk about in that context, how you think about managing compliance risk in terms of adherence to medication, and what you can do to assure adherence in the case of drops, in the case of the intravitreal injections and the extent to which you think that sustained delivery approaches sort of represent the next frontier in delivery of ocular medicines?