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

Good afternoon, and welcome to the Aldeyra Therapeutics conference call. My name is Jean, and I'll be your moderator for today. [Operator Instructions] I would now like to turn the conference over to our host, Ms. Laura Nichols, Head of Investor Relations. Laura, please proceed.

Thank you, and good afternoon, everyone. With me today is Dr. Todd Brady, President and Chief Executive Officer of Aldeyra. Today, on April 3, we issued a press release announcing receipt of a Complete Response Letter for reproxalap for the treatment of the signs and symptoms of dry eye disease as well as Aldeyra's expectations regarding the timing of 2 additional ongoing dry eye disease trials in a potential NDA resubmission. A copy of the press release is available on the Investor and Media section of our website, www.aldeyra.com. The press release contains important information and should be read and considered in conjunction with the slides presented in 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; its plans, expectations and opportunities, including potential clinical trials and regulatory activities. 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 reflect Aldeyra's current views with respect to the 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. There are risks that the results from earlier clinical trials may not be indicative of results of ongoing or future trials. 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 the factors that could cause the 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, Laura. Before I discuss the FDA's recent action, I'll begin with a bit of background. As many of you know, per FDA draft dry eye disease guidance, efficacy in dry eye disease may be demonstrated with 2 symptom trials and 2 sign trials. Among a number of other clinical trials, we conducted 2 trials for ocular redness, a dry eye disease sign in a dry eye chamber and 2 dry eye disease symptom or field trials, which were submitted as part of an NDA in November of 2022. In November 2023, the FDA issued a Complete Response Letter stating that an additional symptom trial was required and as part of a comprehensive strategy designed to account for disease heterogeneity and potential differences in clinical sites and environment, Aldeyra initiated 3 clinical trials assessing dry eye disease symptoms, a 6-week field trial and 2 trials that were performed in dry eye chambers per draft FDA dry eye disease guidance. In August 2024, Aldeyra announced the achievement, the primary endpoint in the first dry eye chamber clinical trial of reproxalap, and the NDA was resubmitted in October 2024. Results from the ongoing dry eye chamber trial and the ongoing dry eye disease field trial are expected to be available this quarter. Last night, we received a Complete Response Letter notification from the FDA that the reproxalap New Drug Application for the treatment of dry eye disease was not approved due to the need for an additional clinical trial to demonstrate the activity of reproxalap in improving symptoms of dry eye disease. In particular, the letter stated that the NDA "failed to demonstrate efficacy in adequate and well-controlled studies in treating ocular symptoms associated with dry eyes." And that "at least 1 additional adequate well-controlled study to demonstrate a positive effect on the treatment of the ocular symptoms of dry eye" should be conducted. The letter identified concerns with the data from the trial submitted to the NDA that may have affected interpretation of the results which the FDA stated may be related to methodological issues, including a difference in baseline scores across treatment arms. No manufacturing or safety issues were identified in the Complete Response Letter. As summarized on Slide 4, with over $100 million in cash on hand as of December 31, 2024, we believe that Aldeyra remains well positioned to resubmit the NDA by midyear. Results from the ongoing field trial and the ongoing chamber trial are expected to be available this quarter. And since most of the costs for the ongoing trials were incurred last year, only approximately $6 million in costs are expected to be incurred for 2025. Any results of a Type A meeting expected to be held within approximately 30 days. We believe that successful results from either trial would be sufficient to allow for a potential resubmission of the NDA. The NDA review is expected to be 6 months. The ongoing dry eye disease field trial design is illustrated on Slide 5, the field trial design, which is a traditional environmental exposure, dry eye disease trial design is substantially similar to longer field trials previously conducted by Aldeyra and consists of screening, followed by 2 weeks of vehicle treatment followed by requalification of screening criteria, followed by 1:1 randomization and 6 weeks of treatment. Consistent with previous dry eye disease field trials and a 12-month safety trial conducted by Aldeyra, dosing was 4x daily for the first month and twice daily afterwards. 421 patients were randomized in total, approximately half of which received reproxalap and half of which received vehicle, representing the largest dry eye disease field trial for a single dosing regimen ever conducted by Aldeyra. The primary endpoint is ocular discomfort score over the duration of treatment from week 1 to week 6 as assessed by mixed model for repeated measures. Using the same enrollment criteria as that of the ongoing dry eye disease field trial pooled results from the 2 previously completed dry eye disease field trials submitted in the original NDA are presented on Slide 6. 397 patients roughly divided between treatment groups were analyzed roughly equivalent to the size of the upcoming field trial. At Week 6, improvement in ocular discomfort relative to baseline in the reproxalap group about 15% was approximately tenfold that of the vehicle group about 1.5%, an effect, it was highly statistically significant with a p-value less than 0.0001. The ongoing dry eye chamber trial design is illustrated on Slide 7. The chamber trial design is in all material respects identical to the previously completed dry eye chamber clinical trial. Screening occurred at Visit 1, which included a dry eye chamber with vehicle administration, 1 to 2 weeks later, 1:1 randomization occurred at Visit 2 followed by 4 in-office doses of either vehicle or reproxalap. The next day at visit 3 patients completed a dry eye chamber with either vehicle or reproxalap, 116 patients were enrolled, approximately half of which received vehicle and half of which received reproxalap. Similar to all previously disclosed dry eye chamber clinical trials, either vehicle or reproxalap was administered just before the chamber and 50 minutes after chamber entry to assess prophylactic and treatment activity, respectively. The dry eye chamber, which is described in draft FDA guidance on dry eye disease is an acute exposure to temperature and flow controlled low or no humidity air during forced visual tasking. Using the same enrollment criteria as that of the upcoming dry eye chamber trial, pooled results from the 3 previously completed dry eye chamber trials conducted in the same chamber as the ongoing trial are presented on Slide 8. 82 patients roughly divided between treatment groups were analyzed, approximately 70% of the size of the upcoming chamber trial. By the end of the chamber, the chamber induced increase in ocular discomfort relative to baseline in the vehicle group was approximately 1.5x that of the reproxalap group, an effect it was highly statistically significant with a p-value of less than 0.001 (sic) [ 0.0001 ]. As is summarized on Slide 9 that we are aware, despite what we hope is a short-term delay in FDA approval, reproxalap remains the only late-stage or approved topical ocular therapy suitable for chronic administration to have potentially demonstrated acute reduction in ocular redness as well as reduction in ocular discomfort, suggesting both rapid and broad activity for the signs and symptoms of dry eye disease, a chronically disturbing condition that affects tens of millions of patients in the United States alone. In addition, if approved, and to our knowledge, reproxalap would represent the first new chemical entity for the treatment of signs and symptoms of dry eye disease since 2016. Slide 10 outlines our current milestones highlighted by expected results from the 2 ongoing dry eye disease trials this quarter and the potential NDA resubmission midyear. For the remainder of 2025, we expect initiation of a Phase II clinical trial in atopic dermatitis and a Phase II/III clinical trial in retinitis pigmentosa, in addition to IND submissions for dry age-related macular degeneration and metabolic inflammation. As illustrated on Slide 11, as of December 31, current cash, cash equivalents and marketable securities of over $100 million are expected to support operations into 2027, including clinical trial results in alcoholic hepatitis, atopic dermatitis, retinitis pigmentosa, dry age-related macular degeneration, Sjögren-Larsson Syndrome and metabolic inflammation. Importantly, our cash runway guidance does not include partnership or product revenue associated with reproxalap. Notwithstanding what we hope is a temporary setback for reproxalap and its path to regulatory approval, we believe that Aldeyra remains a well-capitalized and diversified company with a number of clinical development catalysts focused on novel therapeutic approaches for indications with unmet medical need. With that, operator, I'd now like to open the call for questions.

[Operator Instructions] Our first question comes from Marc Goodman with the company, Leerink Partners.

This is Basma on for Marc. We have a question about the trial chamber that was resubmitted in the resubmission package. Can you elaborate a bit on the misbalance in the baseline scores in the treatment arms and how can you avoid this kind of misbalance of the baseline scores in the ongoing chamber trial? And also, we had a question about -- we were under the impression that you were working with [ YD Chambers ] to provide consulting for the resubmission package. So we're kind of struggling to understand where did the disconnect happen exactly.

Thanks for the question, Basma. Baseline imbalance was something that the FDA highlighted in the Complete Response Letter. What that means is that the baseline ocular discomfort scores and the reproxalap arm were somewhat different than the baseline ocular discomfort scores in the vehicle arm. As you point out, typically, baseline scores that scores before treatment are similar, and they're similar in large part due to randomization. However, in small trials, such as this one, which had approximately 130 patients, sometimes the baseline differs between treatment groups. Typically, that difference is not a problem because of control for baseline in a statistical model which effectively treats each patient at the mean baseline. However, in this case, the FDA noted what it believes to be a significant difference in baselines on a scale of 0 to 100 is approximately 7. The problem with differences in baseline across treatment groups is, in some cases, it may make the results difficult to interpret, notwithstanding baseline covariant adjustment in the statistical model. So for certain, the FDA's interpretation of the trial, had to do with the random assignment of subjects and the random chance finding that baseline ocular discomfort scores may have differed somewhat across treatment groups. So I don't think that represents a disconnect. I think it does represent a somewhat unfortunate random chance event. Typically though, we don't worry about those differences in baseline. One would expect 2 or 3 or 4-point differences. But again, this is something that the FDA highlighted in the Complete Response Letter. Thanks for your question.

Sure. Can I just one follow-up? Just to confirm, so the trial is not about the design per se, it just was this very unfortunate event of some misbalance that just happened from randomization, but the trial design itself is okay.

Correct. The trial design was discussed at length as part of a special protocol assessment and ensuing special protocol assessment Type A meeting that we're aware the division had no particular issues with the design of the trial that may have influenced the results.

Our next question comes from Kelly Shi with the company Jefferies.

This is Clara on for Kelly. So maybe could you talk about the immediate next steps? And maybe on a high level, the discussion points you will have with the FDA? And also, could you talk about your key assumptions to support the mid-2025 NDA resubmission time line and your confidence level in the NDA resubmission in midyear 2025?

Well, thanks for the question, Clara. The next step is to meet with the FDA. As in all settings where companies receive CRL and the Type A meetings are granted to discuss the deficiencies in the application and potential remedies for those deficiencies. Those meetings are by PDUFA guidelines held within 30 days of the request of the meeting. It's our goal to send in that request shortly. And part of the reason for that is, as we mentioned several times in my -- I mentioned several times in my prepared comments, we expect to have data from 2 additional dry eye trials this quarter. Because we expect that data from 2 additional dry eye trials this quarter, we've guided in this call that we expect to resubmit the NDA pending positive data and pending FDA discussions by midyear. And so I think it's understandable that data would come early this quarter that we would need some time to prepare the submission. And then following that, the submission would go in and the review following the submission would be 6 months.

Our next question comes from Tom Shrader with the company BTIG.

I think this question was asked, but I don't know that you answered it. Are you sure you don't have the same baseline mismatch in the trial you're about to submit? And just to be sure, the last time you kind of did quick and dirty as soon as you had a trial, you resubmitted. At this time, are you pretty sure you will wait for both to be completed and then resubmit both?

Thanks for the question. We don't know the baseline scores of the ongoing trials because the data has not been unblinded. We have not locked the database. I guess it would be feasible to look at the baseline score overall, but that wouldn't tell you about any potential baseline differences between groups. We've run a lot of trials, as you know, Tom, and this is the first time I've been made aware of any kind of baseline and balance that the FDA thinks is significant. Typically, as I mentioned, they avoid baseline balance by randomizing subjects, it is possible to stratify by baseline. What that means is enroll a certain number of patients with, say, a mild baseline and split them evenly among treatment groups or enroll patients with severe baseline split them evenly and so forth. But that kind of stratification, I have not typically seen in dry eye disease trials and certainly in a small trial like this might impair enrollment. So I think going forward, odds are that we won't see these kinds of baseline imbalances. In this case, the results at least in terms of baseline were quite unique.

And then do you think you'll resubmit those trials?

Did I answer all your questions?

No, are you going to wait for both trials?

Yes, yes. The timing of the 2 trials depends on a variety of factors, including database lock timing, as well as discussions with the FDA. So I don't know the answer to your questions. The plan, however, would be to submit both trials in the new NDA.

Our next question comes from Catherine Novack with the company JonesTrading.

Okay. I just wanted to ask what have you heard, if anything, from AbbVie and confirm that the option agreement ongoing, deadline remains 10 days after approval, if any? And then how do you plan to proceed with them as you move forward with the FDA?

Right. Catherine, Well, let me just make a couple of publicly available statements about our relationship with AbbVie. AbbVie has an option to a co-promotion, co-development agreement with Aldeyra. In December, we expanded that option where both companies initiated certain pre-commercial activities. And also, we changed the expiration date of the option to 10 days after approval. And that's 10 days after approval whenever approval occurs. AbbVie, by right, at least by the contractual agreement that is the option has the ability to monitor communications with the agency and any important clinical development events, and that's the right that they've exercised. So clearly, again, by the terms of the option agreement, they've been kept up to speed.

Got it. And then you mentioned methodological issues. Were there any other identified besides the imbalance in baseline characteristics? And is there anything that you can discuss at the Type A meeting that might help you weak or in some way improves, change the ongoing trials to ensure that any of these issues are addressed?

Well, CRLs are notoriously vague. I am not exactly certain what methodological issues means. But one methodological approach to avoid a baseline imbalance is what we discussed in response to Tom's question, which is stratification and maybe that's something that will come up at the Type A meeting. I don't know. The enrollment for the ongoing trials has completed. So I don't think stratification matters much there. It's certainly not applicable. But maybe for future trials, if they ever run, that's something the FDA could recommend to us or some other sponsor. So we'll have to visit them and talk with them at the Type A meeting to clarify exactly what they meant.

Next question comes from Yale Jen with the company Laidlaw & Co (sic) [ Laidlaw & Company ].

For the field trials, 2 questions here. Number one, what stage they are right now? And would you anticipate actually finish that? And the second question is that I remember for the field trials, sometimes it'll be tough during -- at a time, if there's a spring or summer time where the hay fever and other stuff, how the situation occurs. So has the current ongoing study been through that or has been avoided?

Yes, that's a great point that one problem, especially with long field trials, is that patients cross over seasons. So if you begin in summer and wind up in fall, your dry eye disease could actually get worse, for example, due to higher levels of pollen. What we tried to do in the ongoing field trial would enroll the bulk of subjects in the fall. And because this trial was shorter, that is 6 weeks relative to our prior trials, which were 12 weeks, was much easier to keep patients within a single season, which I think in field trial settings is important. I'm sure there was some overlap, but hopefully, that's taken care of by the size of the trial, which, as I mentioned, is the largest single dosing regimen dry eye trial -- field trial that we've ever run. You had also asked about the timing, Yale. And I think we don't know the timing exactly. Obviously, these are late-stage trials designed to be pivotal. So database cleaning, database lock analysis, all of that is taken very seriously. And the fact that we intend to submit midyear probably tells you something about the timing for the results.

Okay. Maybe just one more question here, which is based on the readout or the difference between placebo and the treatment of the chamber study, you have submitted for the CRL. But at least in terms of the delta, would that be sufficient for approval? In other words, does FDA have any questions regarding the delta between the treatment and placebo?

Also a good point. No, the FDA does not require a threshold delta or difference between drug and placebo in dry eye disease trials. Certainly, not in symptom and sign trials. The FDA has talked about responder trials and other assessments, but for symptoms and signs in dry eye disease chambers, there is no required threshold between drug and placebo. And then I'm aware in dry eye disease field trials, the same thing is true. We certainly haven't heard anything from the FDA over the years regarding a required threshold such as the clinical relevant threshold.

Our next question comes from Matthew Caufield with the company H.C. Wainwright.

Thanks, Todd. Based on the prior agency dialogue, do you have any indication the additional requested trial could be above and beyond the current 2 ongoing trials that the agency had already known about?

Matt, no, first of all, the field trial, which is a very traditional environmental exposure trial, sort of the gold standard trial for approval or pivotal trials in dry eye disease, I don't think it's really that different from what many other sponsors typically perform. What is new and different is dry eye chamber. Now as I mentioned several times in my prepared comments, dry eye chambers are part of draft dry eye disease guidance from the FDA. But that we're aware, there are no dry eye disease chamber data on any label. And I think the FDA is correctly being quite thoughtful and careful about with reproxalap, what would be the first the dry eye disease label, if it's approved, with the dry eye chamber data. So I don't think that there are other requirements we're not aware of. As I mentioned in my prepared comments, it's our belief that either of the 2 ongoing trials that is either the field trial or the chamber trial would satisfy the requirement for an additional symptom trial.

Understood. I appreciate that. Do you feel there's any preference to the field trial considering it might be more familiar from a labeling standpoint that you mentioned?

I've been getting that question a lot today from investors, what does the FDA think about chambers? I don't think the FDA has problems with dry eye chambers. But as I just mentioned, there are no dry eye chamber data on any label in dry eye disease that I'm aware of for approved products. And again, I think the FDA is being appropriately careful and thoughtful about the context and the content of those labels where dry eye chamber data would be present. It might be easier for the FDA to approve a drug based on a field trial simply because that's been the standard in the past. But I think there are advantages to having dry eye chamber data on our label. As I mentioned in my prepared comments, we have 2 dry eye chamber trials, the FDA appeared to have accepted for the acute control of ocular redness. What's lacking at this point is a dry eye chamber trial for symptoms. We already have a field trial for symptoms. I think our label would be compelling with either an additional field trial or a dry eye symptom trial from a dry eye chamber on the label.

Our next question comes from François Brisebois with the company Oppenheimer.

I was just wondering, you said the trials that are ongoing, enrollment is complete. So there's no way just to take care of this baseline thing to increase the end number on these trials that maybe the stratification would be an angle, but you wouldn't increase the end number to take care of this. Is that fair?

I think that's fair, Frank. We would have to amend the protocols, first of all, to increase the size of the trial. Second of all, the field trial is a large trial that's over 400 subjects, as we described in my prepared comments. And I doubt just by chance that we would see baseline and differences there. In fact, I doubt we're going to see baseline differences in the upcoming chamber trial simply because significant differences are likely rare and due to chance. So my feeling is consistent with all the other trials we've performed except for this last one that we submitted, the baselines between treatment groups should be relatively similar.

And have you disclosed what the difference is with between -- at baseline in the prior trials? Like I think you mentioned 7 here, normal would be 2, 3 or 4. Did you disclose what it was in the prior trials?

We have not. We have not. But you can expect it's in that low single-digit range that I think most people expect to see when you're randomizing patients.

I'd now like to hand the conference over to Todd Brady for concluding remarks. Todd, you may proceed.

Well, thank you all for joining us on this late afternoon. We appreciate your time and interest in Aldeyra, as always, and we look forward to updating you on the future developments this quarter.

That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.