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

Hello, everyone, and welcome to the Aldeyra Therapeutics conference call to discuss results from the Phase III INVIGORATE-2 trial of reproxalap in allergic conjunctivitis. My name is Emily and I'll be coordinating your call today. [Operator Instructions] I'll now turn the call over to David Burke, Head of Investor Relations. Please go ahead.

Thank you, Emily, and good morning, everyone. With me today is Dr. Todd Brady, President and Chief Executive Officer of Aldeyra. This morning, we issued a press release reporting top line results for the INVIGORATE-2 trial of reproxalap in allergic conjunctivitis. A copy of the press release is available on the Investor & Media section of our website at www.aldeyra.com. The press release contains important information and should be read and considered in conjunction with the slides presented and the prepared remarks made on today's call. Turning to Slide 2. This presentation and various remarks, which may be made during this presentation contain forward-looking statements regarding Aldeyra, its investigational drug candidate, reproxalap, and its plans and expectations. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Aldeyra's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These statements are based upon the information available to Aldeyra today and reflects Aldeyra's current views with respect to future events and are based on assumptions and subject to risks and uncertainties, including the development, clinical and regulatory plans or expectations for Aldeyra's investigational drugs, including reproxalap. Aldeyra assumes no obligation to update these statements as circumstances change. Future events and actual results could differ materially from those projected in the company's forward-looking statements, including the results of operations and financial position. Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the press release issued this morning and in our filings with the Securities and Exchange Commission. I would now like to turn your attention to Slide 3 and introduce Dr. Brady.

Thank you, David. Today, we are positively thrilled to announce what we believe to be the successful conclusion of the clinical development of reproxalap for the satisfaction of the efficacy requirements of a potential supplemental new drug application in allergic conjunctivitis, which is a symptomatically disturbing condition with unmet medical need across a substantial number of patients that do not adequately respond to currently available therapies. INVIGORATE-2, which is the second large Phase III clinical trial of reproxalap in an allergen chamber, confirmed the results of prior trials achieving all endpoints, including the primary endpoint of patient-reported ocular itching, which, to our knowledge, is the sole efficacy endpoint required by the U.S. Food and Drug Administration for approval. INVIGORATE-2 also achieved the key secondary endpoint of investigator-assessed ocular redness and the secondary endpoints of patient-reported ocular tearing and total ocular severity score, which is a composite of itching, redness and tearing. Importantly, allergic conjunctivitis is a common co-morbidity of dry eye disease, the subject of a new drug application for reproxalap with a PDUFA date on November 23 of this year. As depicted on Slide 4, the allergen chamber is a rigorously controlled, real-world clinical model of allergen exposure over 3.5 hours during which the signs and symptoms of allergic conjunctivitis are assessed at frequent and regular intervals. To our knowledge, reproxalap is the first investigational drug to demonstrate vehicle-controlled activity in an allergen chamber. Prior to INVIGORATE-2, reproxalap was tested in an allergen chamber in 2 other trials, a Phase II methods development trial, the results of which have been subsequently published and the first INVIGORATE trial. Both trials demonstrated highly statistically significant and clinically relevant reductions in ocular itching and redness. Like INVIGORATE-2, the INVIGORATE trial successfully achieved all primary and secondary endpoints. Slide 5 describes the protocol for INVIGORATE-2, which was substantially identical to the first INVIGORATE trial and features a crossover design where each patient is exposed to drug and vehicle at different times. The trials were performed during the winter when levels of ambient pollen were low or absent and thus typically require 2 years to complete in order to enroll a sufficient number of patients requisite for Phase III testing. Dosing occurred just prior to chamber entry and, again, at 90 minutes after entry, when allergic conjunctivitis symptoms typically peak, thus allowing for assessment of prophylactic and treatment effects of drug. Prior to enrollment, patients were required to have a history of allergic conjunctivitis and demonstrate exacerbation of signs and symptoms in the chamber. Based on FDA discussions and consistent with INVIGORATE, achievement of the primary endpoint required the change from baseline in patient-reported ocular itching score on a 0 to 4 scale with less than that of vehicle and that statistical significance was achieved for the majority of 11 prespecified time points from 110 to 210 minutes in the chamber. The key secondary endpoint of investigator-assessed ocular redness on a 0-4 point scale and the secondary endpoints of patient-reported ocular tearing on a 0-3 point scale and total ocular severity score on a 0-11 point scale were assessed over the duration of the chamber, accounting for both the escalation and maintenance of signs and symptoms. As summarized on Slide 6, all endpoints were achieved with a high degree of statistical significance. 131 subjects were enrolled and 130 subjects completed the trial, exceeding the size of INVIGORATE. To our knowledge, INVIGORATE-2 represents the largest allergen chamber trial ever conducted. Consistent with other trials of reproxalap, no safety concerns were noted. There were no discontinuations due to adverse events and the most commonly reported adverse event was mild and transient instillation site irritation as is commonly observed with topical ocular medications. On Slide 7, the results for the primary endpoint are graphed and indicate a highly statistically significant effect of reproxalap relative to vehicle in lowering both the development and the maintenance of patient-reported ocular itching in the chamber, thereby demonstrating prophylactic, after the first dose, and treatment, after the second dose, activity. Although statistical significance in favor of reproxalap over vehicle for the majority, that is at least 6 of the 11 prespecified time points, was required for achievement of the primary endpoint, all points were statistically significant, each with a p-value of less than 0.0001. The activity of reproxalap is acute, occurring within minutes of chamber entry even before symptoms exacerbate significantly. Investigator-assessed ocular redness graphed on Slide 8 was also statistically superior over the duration of the chamber, achieving the key secondary end point. While the graph accounts for only mean values at each time point, the crossover design statistical model considers within patient changes relative to baseline, thereby eliminating variance from patient-to-patient and the effects of different baselines, resulting in a p-value of 0.004 in favor of reproxalap over vehicle. Similar to ocular itching, evidence for both prophylactic and treatment effects can be observed. Similar results are graphed for patient-reported ocular tearing score on Slide 9 and total ocular severity score, a composite of itching, redness and tearing, on Slide 10. In each case, reproxalap was highly statistically significantly superior to vehicle occurring as soon as within minutes of chamber entry with a p-value of less than 0.0001. As noted on Slide 11, reproxalap was well tolerated and no concerns regarding visual acuity, intraocular pressure, corneal examination and retinal examination were identified. There were no discontinuations due to adverse events and the most commonly reported adverse event was mild and transient instillation site irritation consistent with many topical ocular drugs. Remarkably, reproxalap has now been tested in 2,400 patients across 21 different clinical trials, including a previously disclosed 12-month safety trial in dry eye disease that, to our knowledge, was the first trial to demonstrate chronic improvement in visual acuity following administration of a topical medication. Slide 12 compares the reproxalap versus vehicle ocular itching effect sizes that is changed from baseline relative to baseline standard deviation across the 3 completed allergen chamber clinical trials. In aggregate, the effect sizes are all statistically significant in favor of reproxalap and are approximately tenfold greater than the generally recognized clinical relevance effect size threshold of 0.5, suggesting that patients are highly likely to appreciate the superiority of reproxalap over that of vehicle in reducing ocular itching. Interestingly, INVIGORATE-2 generated the largest effect size to date, substantially exceeding that -- the Phase II clinical trial and the first INVIGORATE trial. Similarly, Slide 13 compares the reproxalap versus vehicle ocular redness effect sizes across 2 different clinical models, the allergen chamber trials and the Phase II dry eye chamber trial, all of which were crossover design trials. The aggregate effect size exceeds the clinically relevant threshold of 0.5, suggesting that patients are likely to perceive lower levels of ocular redness with reproxalap relative to vehicle. For obvious reasons, ocular redness is a substantial concern for patients with allergic conjunctivitis and dry eye disease and the reduction of redness may represent a significant benefit for patients that today generally treat redness with adjunct medications that may have little to no effect on symptoms. Slide 14 summarizes the overlap between allergic conjunctivitis and dry eye disease, which approximates 50%. In each case, one disease exacerbates the other and the predisposing factors are similar for both diseases. Pollen, for example, exacerbates dry eye symptoms. On the other hand, dry eyes itch. Due to escalating levels of pollution and longer pollen seasons occurring as a result of climate change, the prevalence and severity of allergy is increasing. Further, antihistamines used for treating allergy may lead to greater ocular dryness, whereas dry eye drugs may increase ocular itching. Thus, a single drug that can be used chronically for the treatment of both conditions may help to satisfy a clear unmet medical need and substantially improve the lives of patients afflicted with allergic conjunctivitis and dry eye disease. As Slide 15 indicates, the results released today are consistent with large number of late-stage clinical trials, demonstrating the activity of reproxalap over vehicle in reducing the signs and symptoms of dry eye disease, which comprise what we believe is the most comprehensive NDA package ever submitted for dry eye disease. The PDUFA date of the dry eye disease NDA is November 23 of this year. The observed activity of reproxalap, which is a novel first-in-class modulator of pro-inflammatory small molecule reactive aldehyde species, or RASP, in Phase II and Phase III clinical trials across 2 different diseases supports the development of other RASP inhibitors for the treatment of other immune-mediated diseases. As illustrated on Slide 16, we have developed the first orally administered RASP modulator, ADX-629, which has demonstrated proof-of-concept activity in small clinical trials and diseases that include psoriasis and asthma. This month, we expect to announce the results of the Phase II clinical trial of ADX-629 in chronic cough, a disease where RASP were elevated and exacerbate not only inflammation but also hypersensitivity. Later this year, we expect to announce part 1 results of Phase II clinical trials of ADX-629 in atopic dermatitis, nephrotic syndrome and Sjögren-Larsson syndrome. Our other pre-commercial candidate, ADX-2191, is a subject to proprietary review NDA for primary vitreoretinal lymphoma with a PDUFA date on the 21st of this month. And also this month, we expect to announce Phase II results of ADX-2191 in retinitis pigmentosa, a sight-threatening orphan retinal disease for which there is no currently approved therapy. All in all, we believe that 2023 looks to be a catalyst-filled year for Aldeyra as we continue our steadfast and unwavering quest to improve the lives of patients with immune-mediated diseases. Operator, I'd now I'd like to open the call for questions.

[Operator Instructions] Our first question comes from Kelly Shi with Jefferies.

Congrats on the progress. So curious of what has been the physician feedback on conjunctivitis trial? And compared to antihistamine and steroid, what has been the clinical advantages of reproxalap?

Well, good morning, Kelly, and thank you for your question. Long time no speak. I want to thank you again for the excellent Jefferies Conference held last week and the fireside chat we had together, which I received numerous positive comments on. So thank you for all of that. Your question about allergic conjunctivitis and the current therapeutic modalities relative to reproxalap is an outstanding one because really in allergic conjunctivitis, there is only 2 therapies that are commonly used. One is antihistamines, which are now over-the-counter. And the other is topical corticosteroids, which typically are only used for a couple of weeks due to toxicity, which includes cataracts and elevated intraocular pressure that can lead to glaucoma. The role for reproxalap likely will be in between those 2 therapies. What's interesting today is that patients that report to health care providers, whether ophthalmologists or optometrists, have already tried over-the-counter antihistamine. So de facto, those patients are antihistamine refractory, which means in the current environment, the health care provider has only one choice, which is to prescribe topical corticosteroids with the safety liabilities that I just discussed. Reproxalap would sit in between those 2 therapies, allowing the health care provider to avoid prescribing corticosteroids, assess potential relief on reproxalap and thereby facilitate the treatment of those patients in a manner that today is just not possible.

The next question comes from Yigal Nochomovitz with Citigroup.

Congrats on the data. Just a higher level in terms of the strategy here. Obviously, you filed for dry eye disease. You have excellent data in AC now in several studies, 2 Phase III trials. What is the high-level strategy, the intention to file a separate NDA for AC or not necessarily? And how may that intersect with potential partnership discussions with dry eye disease as well as with the AC?

Thanks, Yigal. I think your question highlights a high-class problem, which is that -- in our opinion, we now have met efficacy requirements for 2 different diseases. The dry eye NDA is under review. So obviously, the first priority is to facilitate approval of reproxalap in dry eye disease. If and when that approval occurs, the idea would be to consider submitting a supplemental NDA for allergic conjunctivitis. There are some commercial considerations in submitting such a supplemental NDA, which has to do with the data on the label, the focus on dry eye disease versus allergic conjunctivitis and so forth. And we look forward either at Aldeyra or with a partner to consider those different options as it relates to the submission of a new NDA for allergic conjunctivitis. Either way, I think our data in allergic conjunctivitis, much of which has already been published, I think we have 3 papers now published, plus the data releases for INVIGORATE and INVIGORATE-2 are highly supportive of activity of reproxalap in allergic conjunctivitis. And given that there is a substantial overlap with dry eye disease patients, I think the data today can be considered as an adjunct to the dry eye disease data that's already been submitted.

Okay. And then could you -- you commented a little bit on the redness and in terms of the statistical model, but could you just comment a little further? It seems like when you compare INVIGORATE with INVIGORATE-2, the redness -- the delta does look a little bit smaller with INVIGORATE-2. Was the same statistical model used for both analyses of both Phase IIIs? And any further thoughts on why you can see, perhaps, quite as large an effect size in the second Phase III for redness?

Yes. We graphed the various redness effect sizes on Slide 13. From a regulatory standpoint, the redness is irrelevant. However, as I mentioned in my prepared comments, I do think redness is important to allergic conjunctivitis and dry eye disease patients. None of us want to have red eyes. And the aggregate effect of reproxalap, as graphed on Slide 13, is clearly in favor of drug. It's not clear why from trial to trial there are variances in terms of the effect sizes. Often, it has to do with timing. Relative to INVIGORATE, INVIGORATE-2 was run earlier in the winter season due to CRO scheduling issues. The other thing I would note is that viral diseases, including COVID, are now being highlighted as potential causes of conjunctivitis, leading to red eyes. And it could be that all patients in the chamber, regardless of whether they received vehicle or drug, escalated more severely during the INVIGORATE-2 season due to concomitant viral diseases, but we have excluded COVID from this trial and any relationship between conjunctivitis and viral disease would be speculative at this point.

The next question comes from Tom Shrader with BTIG.

Congratulations. A fairly related question to what Yigal was just asking. Redness is all over the place in all of these trials, but seems to be better in AC. As far as I know, you've always hit it. Is it just a better population? Is there more redness to show the power of the drug?

Yes. I think that's right, Tom. The emergence of redness is quite strong in allergic conjunctivitis patients. Redness is less prominent in dry eye disease. So what you may be seeing in dry eye disease is the fact that baseline redness scores are lower than they are in allergic conjunctivitis. The chamber is quite effective -- the allergen chamber is quite effective in generating redness in patients and thus it may be a little bit easier to see reduction in redness with drug than it is in a dry eye disease. Remember that in dry eye disease trials, we don't exclude patients that have low redness scores typically. And so that is true in allergy and thus, we may be allowing for a population that's more susceptible to redness reduction in allergic conjunctivitis, notwithstanding the pathophysiological tendency to generate redness that's greater in allergy.

And then I have a follow-up, maybe a little random, but all of these markets are so huge and the drugs are historically so undifferentiated. Does the commercial strategy for dry eye patients that also suffer significant allergy makes sense? Is that something you've thought about to make your product clearer for who the -- who it's best for? Because all these markets are gigantic.

They are, Tom. In fact, dry eye disease and allergic conjunctivitis together represent the 2 largest diseases that are characterized by ocular surface inflammation and literally affect tens of millions of patients in the United States and probably hundreds of millions worldwide. I think what's interesting is the overlap between the 2 conditions. As I mentioned previously, our NDA has been submitted for dry eye disease. Our focus remains on working with the agency to gain marketing approval for dry eye disease. I think what happens next depends on a variety of factors. The good news is that, at least to our knowledge, we should be in a position to have satisfied the efficacy requirements for a potential NDA in allergic conjunctivitis as well. When providers face these patients that have dry eye disease, often those patients will exacerbate during pollen season. Pollen is an irritant, sort of like a dust, that exacerbates the dry eye. In fact, if you ask dry eye patients about their symptoms, I think you'll often hear the classic dryness, discomfort, grittiness, stinging, burning, but many of them will also say that they itch. So I think the comorbidity is clear and the provider faces a challenge in how to treat these patients. Topical corticosteroids could be used for a brief period of time. Steroids are active in both dry eye and allergic conjunctivitis, but are limited by the amount of time patients could be treated, as I mentioned, due to safety concerns. So here in reproxalap lies the potential for a one-stop shop to treat both indications at the same time. I think it makes the provider's choice in treating the patients much easier. And most importantly, there's the potential that it makes patients' lives easier when they're suffering from both of these conditions.

Our next question comes from Catherine Novack with Jones Research.

Congrats on the data. We talked about the significant overlap between dry eye disease and allergic conjunctivitis. And it looks -- how confident are you in capturing that 50% of AC patients with overlapping symptoms just on the dry eye label alone? And can you speak a little bit more to the commercial advantage of being able to address both populations with a single drug?

For sure. Top of the morning to you, Catherine, and thanks for your question. In response to Tom's question, I think the key point is that in dry eye disease alone, we believe reproxalap represents an outstanding opportunity, if only because reproxalap appears to be the only drug that works quickly in dry eye disease. And I think that commercial potential alone, putting allergic conjunctivitis aside for a second, represents a major advance in the treatment of dry eye disease. Patients simply do not want to wait for activity, especially taking topical ocular medications that often sting and cause blurry vision or taste disturbance and so forth, whereas reproxalap offers at least the potential for patients to feel better within minutes based on the data presented on Slide 15 today. Adding in allergic conjunctivitis is yet another marketing angle or commercial opportunity relevant to dry eye. So I think it's really important these days, in particular, to have clinical differentiation for drugs on the market for all sorts of reasons, mostly for patients but also for provider's decision paradigms and also for payers. And here with reproxalap, just thinking about dry eye, there are 2 major differences from what's available today, and one is reproxalap seems to work very quickly and the second is reproxalap has activity in allergy which, as you mentioned, is comorbid with dry eye in many patients. Difficult for me to assess the particular implications for market sizing layering on allergic conjunctivitis to dry eye disease. My first response, though, would be consistent with my prior comments, which is that I think data in allergy augment reproxalap's commercial potential in dry eye disease.

Got it. That makes sense. And just to ask the proportion of allergic conjunctivitis patients who don't necessarily overlap with dry eye disease, what's the risk benefit of looking into a supplemental NDA for allergic conjunctivitis alone rather than looking to treat these AC patients off-label with just a dry eye label?

I think, ultimately, it boils down to a commercial decision. An example is, as you can see from the protocol of INVIGORATE-2, which is the same as the protocol of INVIGORATE-1 and the same as the Phase II methods trial in the allergen chamber. Drug is administered before exposure to allergen and then administered again during peak exposure to allergen. And thus, the dosing in a label for AC -- an allergic conjunctivitis indication would reflect that paradigm. So administration of drug prior to allergen exposure, administration of drug during allergen exposure, which is different than dry eye disease. And there are other implications of including allergic conjunctivitis in the label. The clinical data would include at least the ocular itching data that you have here, possibly the redness data. And I think commercially, the question is how many indications, how many dosing paradigms and how much clinical data do you want on your label? And what's the focus of your commercial effort? And either that will be decided by Aldeyra or a partner that we have to help commercialize Aldeyra. And I look forward to that decision in the future. As I mentioned, this is a great example of a high-class problem.

Our next question comes from Yale Jen with Laidlaw & Company.

Congrats on the data, Todd. And I just want to maybe reiterate a little update of what you have said and, hopefully, that's correct, which is, at this stage, you will potentially anchor the reproxalap in the dry eye disease. And one patient, for example, with the AC and when they finish, they are refractory from the antihistamine and reproxalap can be used for them as well. Would that be an overall strategy at this point? Or there is other sort of differences or permutations going forward?

Yale, I think you phrased it perfectly that the anchor indication for reproxalap is dry eye disease. And there are lots of reasons for that. There are lots of reasons why we pursue dry eye disease first. One of which is that the therapeutic landscape in dry eye disease, it really lacks any sort of medication that appears to work quickly, whereas reproxalap has generated data showing that the drug seems active within minutes in dry eye disease patients. I do think, given the anchor in dry eye disease, allergic conjunctivitis data and the potential inclusion of allergic conjunctivitis on a label would be considered as an adjunct to the dry eye disease anchor. It's really remarkable that there is no drug available today that can be used chronically to treat both conditions when millions and millions of patients suffer from both conditions simultaneously. And so we're super thrilled to have these data from INVIGORATE-2 come out just like the data for INVIGORATE and one day may provide patients better options in suffering from both of these conditions.

Okay. Great. And that's very, very helpful. Again, congrats for a long journey.

Thank you, Yale. And I know you've been here for much of that journey, over 21 trials in 2,400 patients, a lot of gray hair and sleepless nights. But ultimately, we're in this business to make people's lives better and I think that today is yet another example of how this drug has the potential to do just that.

At this time, we have no further questions. I'll turn the call back over to Todd Brady for closing remarks.

Well, thank you for joining us this morning. We appreciate your time and interest in Aldeyra. And as always, I look forward to updating you on future developments.

Thank you, everyone, for joining us today. This concludes our call and you may now disconnect your lines.