Aldeyra Therapeutics Inc (ALDX) 2018 Q4 法說會逐字稿

Good morning, and welcome to the Aldeyra Therapeutics Fourth Quarter and Full Year 2018 Financial Results Conference Call. (Operator Instructions) Please note, this event is being recorded.

I now will turn the call over to Joshua Reed, please go ahead.

Good morning, everyone. I'm Joshua Reed, Chief Financial Officer of Aldeyra Therapeutics, and welcome to the Aldeyra Therapeutics conference call to discuss our year-end 2018 financial results. With me today is Dr. Todd Brady, Chief Executive Officer of Aldeyra Therapeutics.

This conference call contains forward-looking statements regarding future events and the future performance of Aldeyra. Forward-looking statements include statements regarding Aldeyra's possible or assumed future results of operations, expenses and financial position, business strategies and plans, research, development and commercial plans or expectations, trends, market sizing, competitive position, industry environment and potential growth opportunities, among other things.

These statements are based upon the information available to the company today and 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. Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the company's press release issued earlier this morning containing financial results for the year ended December 31, 2018, and the company's filings with the SEC.

Now I'd like to turn the call over to Dr. Todd Brady, President and Chief Executive Officer of Aldeyra. Dr. Brady?

Thank you, Joshua, and thank you all for joining us today. As Joshua mentioned this morning, we issued a press release and our financial results and recent corporate highlights. As always we encourage you to review the press release as it contains information that is important to consider in conjunction with today's call.

Over the past few years, we have purposefully expanded our pipeline in support of our corporate strategic initiatives and our mission to invent, develop and commercialize next-generation medicines that treat immune-mediated diseases. As we speak this morning, our pipeline consists of 6 different compounds in development representing 3 unique mechanisms of action, targeting 10 potential clinical indications. We focused on ocular disease and select systemic conditions. We now have 5 Phase III programs in progress or expected to be initiated this year.

With the advancement of our pipeline and with a number of important late-stage programs, Aldeyra is rapidly evolving. And we entered 2019 with a number of important late-stage milestones, as we begin to transition to a commercial-stage company.

2018 was a remarkable year for Aldeyra, culminating in positive Phase IIb clinical results in dry eye disease. The Phase IIb dry eye disease results suggested that our lead product candidate reproxalap has the potential to improve dry eye disease symptoms faster and more broadly than standard of care.

And market in dry eye disease is one of the largest in ophthalmology. And current drugs used for the treatment of dry eye disease are generally regarded by patients and physicians as inadequate. We've recently announced that in conjunction with regulatory authorities we've established the co-primary endpoints for our planned Phase III dry eye disease clinical trial, which are ocular dryness symptom score and fluorescein nasal region staining.

And then our Phase IIb clinical trial, those endpoints were achieved with p-values of 0.0048 and 0.0007, respectively.

Earlier this year, we were pleased to announce the closing of the acquisition of Helio Vision, a company based on the technology of Dr. Dean Eliott of Harvard's Massachusetts Eye and Ear Infirmary. The acquisition adds another Phase III ready product candidate, ADX-2191, to Aldeyra's late-stage pipeline.

ADX-2191 is being developed for the prevention of proliferative vitreoretinopathy or PVR, a rare, but potentially blinding retinal disease with no therapeutic options. ADX-2191 has received Orphan Drug Designation from the FDA. We look forward to initiating Phase III development in PVR in the second half of this year.

Our first Phase III clinical trial to conclude is the ALLEVIATE trial in allergic conjunctivitis. We remain on track to announce results from ALLEVIATE in early 2019. The primary endpoint in ALLEVIATE will be met if drug is statistically lower than vehicle and area under the ocular itch score curve from 10 to 60 minutes post-allergen challenge.

For the 0.5% concentration of reproxalap in the Phase IIb clinical trial, which enrolled approximately 1/3 the number of patients enrolled in the Phase III trial, the p-value for this endpoint was 0.004.

As we mentioned in our Research and Development Day last week, in second half of this year, we expect to announce Phase III results from the SOLACE trial in noninfectious anterior uveitis and part 1 of the RESET trial in Sjögren-Larsson Syndrome. We look forward to updating you throughout this catalyst-filled year, as we continue to expand in our mission of providing novel therapeutic options to patients with unmet medical need.

And with that, I'd like to turn the call back over to Joshua to review the year-end 2018 financial results. Joshua?

Thank you, Todd. For the year ended December 31, 2018, we reported a net loss of approximately $38.9 million compared to a net loss of approximately $22.3 million for the year ended December 31, 2017.

Basic and diluted net loss per share was $1.79 for the year ended December 31, 2018, compared to $1.40 per share for the same period last year.

Losses have resulted from the cost of our clinical trials, research and development programs as well as from our general and administrative expenses.

R&D expenses were $29.8 million for the year ended December 31, 2018, compared to $16.3 million for the same period in 2017. The increase of $13.5 million is primarily related to the increase in research and development expenditures, including manufacturing, preclinical and clinical development costs, and an increase in personnel costs.

General and administrative expense were $9.9 million for the year ended December 31, 2018, compared to $6.2 million for the year ended December 31, 2017.

The increase of $3.7 million is primarily related to an increase in legal and patent-related costs, consulting costs and personnel costs.

In 2018, total operating expenses were approximately $39.7 million compared to $22.5 million in the prior year.

Cash, cash equivalents and marketable securities were $93.6 million as of December 31, 2018, which includes $67.6 million in net proceeds raised in our underwritten public offering of common stock that closed in October of 2018.

Based on our current operating plan, we expect our cash, cash equivalents and marketable securities to fund currently anticipated operating expenses through 2020.

This concludes my comments and our year ended 2018 financial results. Now I'd like to turn the call back to Todd for summary comment.

Thanks, Joshua. Before we open the call for questions, I would like to quickly recap our upcoming milestones for 2019.

In allergic conjunctivitis, we expect results from the ALLEVIATE Phase III clinical trial in early 2019. In dry eye disease, we expect to begin enrolling the RENEW Phase III clinical trial in the first half of 2019. In noninfectious anterior uveitis, we expect to report results from the SOLACE Phase III clinical trial in the second half of 2019. In Sjögren-Larsson Syndrome, we expect to have results from part 1 of the RESET Phase III clinical trial in the second half of 2019.

We expect to begin an adaptive Phase III clinical trial of ADX-2191 in proliferative vitreoretinopathy in the second half of 2019. And lastly, we expect to initiate clinical testing of ADX-629 and ADX-1612 in immune-mediated disease this year.

This concludes our prepared remarks for today. Operator, please open the call for questions.

(Operator Instructions) And the first question comes from Yigal Nochomovitz with Citigroup.

So in AC and DED obviously, there's a lot of symptom overlap, but in the AC trial, you're looking at 2 doses, 0.5% in addition to the 0.25% in the DED study. Obviously, you're just looking at 0.25%. I guess, I'm just trying to get a better sense as to the strategy there? And wondering what -- what's the harm in also looking at 0.5% in the DED trial that would potentially just maximize your flexibility on the future product profile and keep the -- keep everything parallel?

Thanks for the question, Yigal. Good morning. Great questions around concentrations of reproxalap and they very much relate to commercial strategy, 0.25 percentage as you point out, Yigal, is the concentration that is moving forward in dry eye disease. There is potential to use reproxalap in both dry eye disease and allergic conjunctivitis, and we would at least like to maintain the option of using the same concentration in both diseases. This is why and the ALLEVIATE trial in allergic conjunctivitis, 0.5% and 0.25%, were tested. But generally, I'm a big fan of additional dose ranging in the first Phase III trial because, I think, it gives you more information about the safe and effective dose, that's the lowest dose, in the commercial markets. I also think that if 0.25% works in ALLEVIATE, there is, as I said, the optionality of using the same concentration across both diseases. So that's generally how we were thinking about it. In dry eye disease, we've completed dose ranging. And there is a tolerable and most effective dose that we've identified is 0.25%. And that is what will advance to the RENEW Phase III trial that should begin in the first half of this year.

Okay. I guess, what is your -- or do you have a base case for whether you're going to have 1 SKU, 1 product across AC and DED or is the base case they're going to be different brands? Or is it just you don't know yet until you see data?

Yes. I think that's to be determined. And as you correctly pointed out, will be dependent on data. There is commercial precedent for either of those scenarios in allergic conjunctivitis. There is at least 1 steroid that is high dose and for allergic conjunctivitis, a low-dose. The other commercial precedence for the same concentration being used across multiple diseases. But I would prefer to see how the clinical data shake out and then we can update you on those scenarios. I can tell you now that a business case can be made for either direction.

And just one other one, not sure how much you've said about this. But since you're looking for 2 doses in AC, how are you handling that from a stats plan perspective?

We have a predefined sequence hierarchy. So that 0.5% will be analyzed first and then subsequently 0.25%. And I think that's fairly standard across the industry these days to avoid alfa spend.

Next question comes from Adam Walsh with Stifel.

Todd, on the ALLEVIATE trial, you're getting some data and then on your R&D Day and previously, you've talked about perhaps having a Type C meeting with FDA after that. I remember earlier when the original earlier trial data came out, the surprise was that your drug actually worked for longer duration and also at different time points than traditional allergic conjunctivitis drugs. Is this the purpose of the Type C meeting, and can you elaborate on what will be discussed or what you expect to discuss in the meeting? And then, also on ADX-1612, if I recall correctly, that drug showed a positive effect on overall response rate in the investigator study in patients with pleural malignant mesothelioma. Any update on the discussion with the FDA or the time line and design details of the Phase II that you can share with us?

Thanks, Adam. Good morning. Let me take your second one quickly. For ADX-1612, we'll complete our dialogue with the agency. We'll update the Street later on this year as to next steps. The first question about meeting with the agency after ALLEVIATE is a really good question. I'm also a big fan of frequent interactions with the agency. And this is part of a deliberate strategy to meet with the agency because reproxalap is a new chemical entity. It is not an antihistamine. It is not a steroid. So testing the drug in clinical trials in ways that are different from those 2 compounds and how those 2 compounds as a test in the past, is very important in getting agency buy-in when that plan is very important. So the current plan, as you pointed out Adam, and as we disclosed at R&D Day last week, is to read out ALLEVIATE, examine opportunities for a second Phase III trial, which instead of direct allergen administration to the eye is environmental exposure, particularly, for instance, through a chamber administration and discuss that second Phase III on the back of ALLEVIATE with the agency. So we would look forward to updating the Street likely I think in the second half of this year as to the subsequent Phase III plans for allergic conjunctivitis.

And the next question comes from Mr. Hong with Janney Montgomery Scott.

So my first question is on PVR. Can you discuss the different types of retinal detachment surgeries? And if the type of retinal detachment surgery as well as the skill of the surgeon has any impact on the development of PVR and the rate of success or failure with that surgery? And then my second question is on dry eye disease. So with dry eye disease and the upcoming Phase III RENEW study, can you provide additional color on the reasons to evaluate q.i.d to b.i.d tapering? And what was previously observed to support this dosing regimen?

Great. Those are -- I could probably spend 2 hours on each of those questions, but I'll spare you. PVR is a serious problem with any retinal detachment, right. The -- generally, the retina comes off the back of the eye. It is surgically reattached usually with lasers to generate some sort of attachment. In almost all cases, though, either oil or air is inserted into the vitreous. And what that does is it allows the retina to remain attached to the back of the eye as long as the patient stays in a face down position for days, if not weeks. That's one of the major problems of this surgery, is that post operatively, the patients are required to face -- maintain a face down prone position for days or weeks, which is if you can imagine very difficult to do. Your question about surgical quality and the variability from surgeon to surgeon is a good one. I can tell you that we are thinking about this very carefully. The protocol -- the surgical protocol for reattaching the retina, I can assure you we nailed down. And all those details are going to be systematically elucidated so that there is less variability from surgeon to surgeon. But of course, surgeons are different and that may be something that we have to deal within the Phase III trial. And the dry eye question on dosing. We were pleased in the Phase IIb clinical trial to see early onset of action as soon as 2 weeks. And in fact, in Phase III, as we mentioned at R&D Day, in Phase III, we'll have a 1-week assessment after dosing. That's important because the current therapy on the market today for dry eye disease takes weeks, if not months, to generate even modest efficacy. I think one reason that reproxalap works quickly is that we administer the drug 4x a day. This is a classic pharmacodynamic approach where you give a loading dose and then taper the dose down subsequently for a maintenance dose. That's used all the times, it has been used for decades and decades. One thing we don't want to do is abandon the initial 4x a day dosing because that early onset of activity is so important. However, it would be nice to taper dosing down if patients don't need 4x a day administration as they feel better, there's no need to continue to administer the drug at 4x a day. That is the intent of the adaptive phase of the Phase III RENEW trial in the dry eye disease. What gives us hope that the q.i.d to b.i.d. taper will work, I think, it's very evident in the Phase IIb results. Recall, that we tested in Phase IIb, 0.5% and -- sorry, 0.25% and 0.1%. The low dose, 0.1%, is less than half of the high dose, which is 0.25%. And you can see from the data from the Phase IIb trial that the low dose worked pretty well. But the other data point we have is that commercially when you ask patients in marketing studies how they treat themselves, a lot of the treatment is PRN. Patients will self taper. They will take the drug when they feel like they need it. And we saw a little bit of that in our own Phase IIb trial as folks got better, they took the drug a little bit less. So I think, we have lots of reasons to believe that the q.i.d. to b.i.d. that is 4x a day to 2x daily dosing will be effective, but that is exactly the point of the adaptive phase of the RENEW Phase III trial.

Okay. Great. And then just a quick follow up. On Sjögren-Larsson Syndrome, so assuming there is positive data, what are your thoughts on expansion in the derm space beyond Sjögren-Larsson?

That's a great question, Esther. We've thought about that for years. We see no reason why the activity of reproxalap administered as a dermatologic formulation should be just restricted to Sjögren-Larsson Syndrome. As you know, RASP are pro-inflammatory, they are promiscuous in terms of autoimmune disease, especially those diseases that affect the skin, for example, atopic dermatitis or psoriasis. It's certainly something we're thinking about long term. I think we'll be in a position to advise on that expansion of the dermatology franchise in terms of autoimmune disease after the RESET trial in Sjögren-Larsson Syndrome reads out, but it's a very good thought and one that we've been thinking about carefully for a long time.

And the next question comes from Yale Jen with Laidlaw & Company.

Good morning and congrats on the progress so far and going forward. Lot of questions are being answered. So there's 2 I am interested in. First one is that you mentioned -- I mean, in the press release you mentioned a number of systemic pipeline products will be -- get into the clinical study in 2019. Could you elaborate a little bit more on that front?

Great question, Yale, I feel like there is so much going on out there that the systemic program has taken a backseat. But I really do resonate with your question and Esther's comments previously, RASP in addition as a platform has broad applicability. And we, as a company, have made the decision to move from the eye to the rest of the body. We're so pleased to initiate clinical testing along those lines this year. I think, if you look at Aldeyra 5 years from now, the systemic program will be a key part of our pipeline, maybe even sooner because RASP represents a new anti-inflammatory immune-mediated mechanism of action that it really does apply broadly. Not only the diseases that I mentioned in response to Esther's question, but also other autoimmune disease, rheumatoid arthritis, for instance, inflammatory bowel disease. And there are many diseases that aren't classically thought of as immune-mediated diseases, but are; they do have an immune component, many CNS diseases, cardiovascular diseases, hepatic diseases like NASH and ASH that we're really interested in pursuing. So I think that aspect of our platform and portfolio, well, is a little bit behind the ocular franchise, that really represents a bright future for Aldeyra.

Okay. Great. That's very helpful. Maybe 1 follow-up on the ADX-2191. You mentioned this is adaptive design. So could you elaborate a little bit more on the sort of first stage what do you anticipate before you head into the second stage?

Right. In PVR, as you can see from some of the slides at R&D Day last week, Dr. Eliott and his team under an investigator I&D tested a variety of patients with his new approach and the data looked fantastic. The point of the adaptive phase in the PVR Phase III program really is to confirm the kind of results that we saw earlier to clarify the protocol back to Esther's question to identify changes that we need to make for the pivotal -- for the pivotal phase of the trial. And we're hoping to get that adapted phase started in the second half of this year with potential results sometime next year, but we're very enthusiastic based on the data that Dr. Eliott has generated. It seems like the approach has tremendous potential in a disease that really has 0 therapeutic options today.

(Operator Instructions) And the next question comes from Matthew Cross with JonesTrading.

So you spent a good bit of time discussing your ocular programs at your R&D Day last. So first off, refining a bit on Yale's line of questioning. You've now announced a Phase I trial for ADX-629 that's set to begin in the second half of the year given the exciting potential for systemic targeting of RASP. I was hoping you could provide a bit more detail on this trial specifically? Do you expect this to comprise a basket of autoimmune indications or have preclinical studies suggested RASP may be more closely implicated than any specific ones? And what ultimately do you hope to see from this trial by next year?

Right. So ADX-629, which is our systemic RASP inhibitor, went through Phase I testing this year, Matt, we hope. And obviously, the intent with Phase I trial is to assess safety and tolerability and pharmacokinetics. There's always the chance in Phase I trials to include certain types of patients where you might measure pharmacodynamic signals. An example might be to include obese patients and morbid dyslipidemia. There are other kinds of ways we might be able to do that. But for now, I think, we're focused on confirming the safety of ADX-629 and the tolerability and assessing the pharmacokinetics, which, of course, as you know, is different from the ocular disease, and different from dermatologic disease, the systemic diseases. It's a different ball of wax and that's something that we're looking forward to assessing later this year. The other program I haven't mentioned is ADX-1612, which is an HSP90 inhibitor that we're planning to initiate Phase II this year in post-transplant lymphoproliferative disease. And I think that's also an exciting mechanism that has broad systemic implications, not just with PTLD, but a variety of other conditions, and behind ADX-1612 is a prodrug ADX-1615, which could be taken orally and we look forward to talking more about that next year.

Got it. And I agree to as far as this and expanding that push on the pipeline out as well. On the topic too, if I can get just a brief update on anything that you're able to say regarding the collaboration with Janssen as well, speaking of that kind of systemic part of that pipeline?

Right. So we announced a partnership last year with Janssen, which is the J&J Company on systemic autoimmune diseases and RASP inhibition. Today Janssen remains the only other company we know of that's working on RASP as a platform and they're doing it in conjunction with Aldeyra. That partnership continues. We look forward to updating the Street subsequently this year in terms of next steps there.

Okay. Great. Thanks for that. And just one last one. Obviously, ALLEVIATE and the AC program is now front and center. And I wanted to touch on the feasibility studies that you're also conducting. But as I understand they're expected to read out between ALLEVIATE and the beginning of the confirmatory Phase III. So could you kind of recap when you anticipate reporting results from those studies? And how these findings may inform the second Phase III in ways that are distinct from the conclusions we can draw from ALLEVIATE?

Right. So the plan is to complete the message development studies that is with environment exposure to allergen that read out the ALLEVIATE trial, package those data together in aggregate visits with the FDA in Washington, discuss the next Phase III trial and then update The Street subsequently on next steps. And the second part of your question was about what kinds of data do we expect are different from the conjunctival challenge, I believe, Matt.

Yes, that's correct.

Right. So there's 2 ways of testing patients with allergic conjunctivitis. The most controlled way is just to administer allergen directly to the eye. And the more real world way is either testing patients in the field during allergen season or exposing patients in aerosolized manner to allergen, that is the chamber study that I mentioned earlier in the call. We have a couple of good options that are there and we look forward to wrapping up those methods, development studies and meeting with the agency and advising on next steps.

Thank you. This concludes our question-and-answer session as well as the conference call. Thank you for attending today's presentation. You may now disconnect your lines.