Aldeyra Therapeutics Inc (ALDX) 2019 Q4 法說會逐字稿

Good morning, and welcome to the Aldeyra Therapeutics Full Year 2019 Financial Results Conference Call.

At this time, I would like to turn the call over to Mr. Joshua Reed, the company's Chief Financial Officer.

Please go ahead, sir.

Thank you, and good morning, everyone.

With me are Dr. Todd Brady, Aldeyra's President and Chief Executive Officer; and David McMullin, our Chief Commercial Officer.

Todd will begin with an overview of our recent highlights and upcoming clinical milestones.

I will discuss our full year results.

I will make some concluding comments, and then we'll take your questions.

Please note that this morning's 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 this morning containing financial results for the year ended December 31, 2019, and the company's filings with the SEC.

Now I will turn the call over to Dr. Brady.

Thank you, Joshua, and good morning, everyone.

Thank you for joining us.

Today, I want to touch on the progress we've made regarding our strategy to develop and commercialize novel medicines for patients whose conditions are not adequately being treated by current therapies.

In particular, I want to discuss the announcement we made this morning to focus that strategy on our late-stage pipeline in ocular disease, a decision that extends our cash runway through the end of 2021.

During our recent R&D Day in New York, we highlighted the statistically significant and clinically relevant data observed in late-stage clinical trials of our lead asset, reproxalap, in allergic conjunctivitis and dry eye disease.

These conditions currently make up the majority of anterior ocular inflammatory disease, which affects more than 40% of the U.S. population and more than 1 billion people worldwide.

The economic burden of ocular allergy and dry eye disease is expected to accelerate, exacerbated by pollution, global warming, rising pollen counts and increasing urbanization.

These trends play directly into our drug development initiatives for reproxalap, as we noted during the R&D Day.

To date, reproxalap has demonstrated significant and clinically relevant effects on ocular itching in 3 distinct clinical models of allergic conjunctivitis: a conjunctival challenge trial, an allergen chamber clinical trial and a pilot field study in patients during allergy seasons.

This extensive body of work, which encompasses nearly 700 patients has helped to inform the ongoing INVIGORATE Phase III trial.

INVIGORATE, which was initiated in January of 2020, will evaluate approximately 120 subjects in an allergen chamber.

INVIGORATE is a randomized double-masked, crossover vehicle-controlled Phase III clinical trial, powered to assess the efficacy and safety of 0.25% reproxalap topical ophthalmic solution-compared vehicle.

And consistent with our prior AC trials, the primary endpoint of INVIGORATE will again be subject to reported ocular itching score.

Patient enrollment is proceeding on schedule, and we expect results from INVIGORATE in the second half of this year.

We have an opportunity to be the first novel entrant in allergic conjunctivitis in decades.

And we believe we are well-positioned to uniquely address this growing disease, either as an adjunct treatment with antihistamines or in lieu of corticosteroids.

Turning to Part 2 of our RENEW Phase III trial in dry eye disease.

Reproxalap has now met the primary endpoint of symptom control in both Part 1 of RENEW and the formulation Phase II trial.

Thus, as noted during our R&D Day, we have requested a meeting with the FDA regarding next steps in our development path.

We'll be providing an update on future development plans in dry eye disease following FDA feedback expected in the second half of 2020.

At R&D Day, we presented data combining the 3 clinical trials where the formulation, time points and dosing regimen in dry eye disease were the same.

Over 4 weeks of therapy, reproxalap was statistically superior to vehicle in both patient-reported ocular dryness and investigator-assessed Fluorescein Staining Score.

We also presented data from a head-to-head tolerability clinical trial of the current formulation of reproxalap and a novel formulation of reproxalap, versus Xiidra, which is recognized as the leading approved therapy for dry eye disease.

Over 1 hour after dosing, ocular discomfort, blurry vision and taste disturbance were statistically lower in both formulations of reproxalap-treated patients than in Xiidra-treated patients, results we believe support the positive symptomatic effects observed in both the Phase II and RENEW Part 1 trials, though we note that the trial compared only tolerability under the aforementioned conditions.

Across an aggregate of 10 allergic conjunctivitis and dry eye disease trials, topical ocular reproxalap has been studied in more than 1,100 patients to date, with no observed safety concerns.

Mild and transient instillation site irritation is the most common reported adverse event.

We believe there is no stronger validation of the potential benefits of an investigational product and the support of key opinion leaders and practicing health care professionals.

So at the R&D Day, it was especially gratifying to hear internationally renowned optometrist, Paul Karpecki, Clinical Director of the Kentucky Eye Institute, discuss using reproxalap is approved as a first-line therapy for ocular surface disease.

As Dr. Karpecki noted, among dry eye disease patients, the level of dissatisfaction with their current therapy is very high.

As many as 70% do not stay on treatment beyond 3 months.

In parallel with our work in ocular surface disease, enrollment is underway in the Phase III GUARD trial of ADX-2191 for the prevention of proliferative vitreoretinopathy, or PVR, a rare but sight-threatening condition that is the leading cause of failure of retinal detachment surgery.

A video shown during our recent R&D Day, currently available on our website, highlights the significant unmet medical need of PVR through the perspective of a patient and Mass.

Eye and Ear's Dr. Dean Elliott, who developed ADX-2191.

We expect to provide an update on the progress of GUARD later this year.

In light of all the progress we've made on our ocular disease pipeline, this morning, we announced the strategic decision to prioritize our near-term clinical development initiatives in allergic conjunctivitis, dry eye disease and PVR.

Due to our prioritization of our late-stage ophthalmology product candidates, we have elected to place on hold further clinical development of topical dermal reproxalap for the treatment of ichthyosis associated with Sjögren-Larsson syndrome, and ADX-1612 for the treatment of post-transplant lymphoproliferative disorder.

Consistent with our renewed emphasis on ocular disease, we have appointed an ophthalmic expert, Dr. James Gow, as Senior Vice President of Clinical Development, and we announced that Dr. David Clark, Aldeyra's former Chief Medical Officer, is transitioning to a consulting role.

On behalf of the company and the Board, I want to thank Dr. Clark for his many contributions to Aldeyra during the past 4 years.

He has played an important role in advancing our pipeline, and we appreciate his desire to stay on in a consulting capacity.

Dr. Gow comes to Aldeyra with 20 years of experience, most recently as Strategic Global Development Lead for Xiidra on global clinical development projects at Novartis.

He served in similar positions at Shire and Takeda and, before that, was in senior medical affairs roles at Inotek, Alcon and Bausch + Lomb.

In terms of preclinical activities, our collaborative research agreement with Janssen Research & Development related to development of new systemic anti-inflammatory therapies has concluded.

Consistent with our prioritization, however, we are continuing the development of ADX-103, an investigational RASP inhibitor for the treatment of retinal disease, and expect to begin clinical testing in 2021.

While ocular disease will be the primary focus of our near-term clinical development efforts, we also plan to continue to advance ADX-629, a novel orally administered RASP inhibitor we believe has broad applicability to a variety of immune-mediated diseases.

Phase I clinical testing of ADX-629 has been completed.

A top line data readout is expected in the second quarter of this year, and the initiation of Phase II clinical trial is planned for the second half of 2020.

Also moving forward as the investigator-sponsored EUDARIO Phase II trial of ADX-1612 in combination with platinum therapy and niraparib, a PARP inhibitor, in ovarian cancer patients.

Based on information received from the investigator, patient enrollment in this trial is expected to be completed in the first half of this year.

Additional clinical work on ADX-1612 patients with mesothelioma is currently contingent on subsequent investigator funding.

Looking ahead, we have a number of expected clinical milestones in the coming quarters.

Our Phase III programs in allergic conjunctivitis, dry eye disease and PVR represent compelling therapeutic approaches to address serious conditions not adequately addressed by current treatments.

We are committed to developing novel drugs that improve patient outcomes, and we believe that we are well-positioned to achieve that objective.

Now let me turn the call back over to Joshua for his financial review.

Thank you, Todd.

For the year ended December 31, 2019, we reported a net loss of approximately $60.8 million compared with a net loss of approximately $38.9 million for the year ended December 31, 2018.

Basic net loss per share was $2.24 for the year ended December 31, 2019, compared with $1.79 for the same period in 2018.

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 $44.4 million for the year ended December 31, 2019, compared to $29.8 million for the year earlier period.

The increase of $14.6 million is primarily related to the increase in clinical and preclinical development and manufacturing costs, an increase in personnel costs and noncash compensation costs related to a portion of upfront acquisition consideration that is subject to vesting based on continued service.

Acquired in-process research and development expenses were $6.6 million for the year ended December 31, 2019.

There was no such expense for the prior year.

The $6.6 million increase is related to the in-process research and development expenses associated with the January 2019 acquisition of Helio Vision.

General and administrative expenses were $12.2 million for the year ended December 31, 2019, compared with $9.9 million for the year ended December 31, 2018.

The increase of $2.3 million is primarily related to an increase in personnel costs and public company costs related to continuing compliance with the Sarbanes-Oxley Act of 2002.

In 2019, total operating expenses were approximately $63.1 million compared to $39.7 million in the prior year.

Cash, cash equivalents and marketable securities were $73.4 million as of December 31, 2019.

Based on our current operating plans, we expect our cash, cash equivalents and marketable securities to fund currently anticipated operating expenses through the end of 2021.

We believe that this liquidity will be sufficient to support the completion of the Phase III INVIGORATE trial in allergic conjunctivitis; the currently planned Part 2 of a Phase III program for reproxalap in dry eye disease, the RENEW trial; and the initial part of the adaptive Phase III GUARD trial in proliferative vitreoretinopathy.

Now I will turn the call back to Todd for closing comments.

Thank you, Joshua.

We believe that the focus of the majority of our drug development resources on our Phase III programs in allergic conjunctivitis, dry eye disease and PVR enhances our ability to advance these candidates toward an NDA filing, and enables extension of our cash runway through the end of 2021.

As always, we remain committed to executing efficiently on our strategic plan and bringing to market novel therapies that improve the lives of patients with serious unmet medical needs.

With that, Joshua, Dave and I will be happy to take your questions.

Operator?

(Operator Instructions) And your first question here comes from the line of Louise Chen with Cantor.

So I had a few questions.

My first one is if you could comment on the dry eye landscape.

We recently saw some positive competitor data, and I know there are others to come as well.

So how do you see this playing out?

And who do you think will be successful here?

Or what will drive success here?

Second question I have is on reproxalap for dry eye disease.

Can you comment on the length of your trials and how it compares to the RESTASIS 12 weeks of data that they've shown?

And then the last question here is also on reproxalap for dry eye disease.

Can you give more color on the nasal staining results that you saw and how competitive that is versus the other products out there in the market or other data we've seen here?

Louise, let me take a first stab at some of these questions, and then I'll ask Dave McMullin to contribute to the answers as well.

You're correct.

We have seen recent activity in the dry eye space, primarily, though, involving, I would say, a short-term symptomatic improvement based on the use of a corticosteroid, which, as we all know, cannot be used chronically.

I do think that reproxalap is competitive, not only for the reason that I just brought up, but also due to the, I would say, early onset and yet broad activity symptomatically that we've demonstrated across a couple of different trials.

I don't think that the 12-week versus 4-week versus 2-week differential for reproxalap is terribly important, Louise.

I think that in terms of signs, the signs of dry disease, particularly staining, in our case, the length of time over which a sign is demonstrated appears to be less relevant to market.

But I'll let Dave comment on those topics as well.

Thanks, Todd.

And yes, thanks, Louise, for the question.

I think fundamentally, we're excited about our program for dry eye.

And we're also excited that there's a lot of activity in dry eye because that really supports the clear unmet need in this area.

Dry eye patients, today, they suffer.

Don't have many great options.

And new products, new innovation is needed.

So it's always good news to see progress for these patients.

The other thing is, we know that, today, that unmet need is very large.

So only 5% of the patients diagnosed with dry eyes today in the U.S., we estimate, are getting a prescription.

And the majority of those drop off their prescriptions very quickly.

And when you talk to them in market research, they playback that they're not seeing the efficacy that they need to stick on.

And to some extent, tolerability also plays into that.

Further supporting the opportunity in dry eye, this week, Fortune Business Insights published a report where they are projecting a compound annual growth rate over the next 6 years of almost 7%.

So there's so much unmet need, and there are so many patients who are out there looking for solutions that there's a lot of room for solutions to be entered into the marketplace.

So reproxalap, we view as very competitive, but we don't view this as a situation where the first drug to get approved is going to fundamentally change the dynamics in the marketplace.

In terms of what it will take for a product to really drive penetration in market, that is going to come down to the ability to differentiate in a meaningful way to patients and physicians.

Todd talked about the rapid onset that we see with reproxalap.

So with reproxalap, we're unique in that we're addressing inflammation, which everyone knows is at the core of this chronic dry eye disease.

We also have a product that can be safe to be used at a higher frequency at 4 times a day, or at a lower frequency at twice a day for convenience over the long term.

And we have seen very broad symptomatic improvements that we believe is unparalleled.

That's a winning proposition for patients and for physicians for a product like reproxalap.

And once approved, that will be an option that we believe will be widely looked at and considered for even first-line treatment post-OTC when the patients come at the door.

I just want to emphasize, Louise, that we continue to believe that the symptomatic improvement observed in induction maintenance arm of RENEW Part 1 is first-line superior to any existing product, or product that we're aware of in development.

And symptoms matter.

This is what patients care about.

Patients do not care about signs.

No one is waking up in the morning thinking, "I wonder what my Schirmer test is today.

I wonder how my staining is today." Physicians treat based on symptoms.

So I do want to emphasize Dave's comments that, as of now, based on the symptom improvement we've seen at least as coming out of RENEW Part 1, this would be a first-line therapy.

You'd also asked about nasal region staining.

The nasal region is particularly interesting.

If you think about how you itch your eye, rub your eye, blinking, where redness occurs, most of that is in the nasal region.

And that is one reason why we selected the nasal region for assessment.

One interesting thing about reproxalap is we've now shown in 4 different models, including dry eye, that the drug has a potent effect in reducing ocular itching, which is a major problem, not only in allergic conjunctivitis, but also dry eye disease.

Itching is persistently disturbing, it affects quality of life.

And that we're aware reproxalap is the only therapy that's demonstrated, at least in development, an effect on the dry eyes symptoms, but also itching.

And that is particularly relevant to the nasal region.

If you rub your eye, generally, it's in the nasal region.

And so thus, we think using nasal staining is advantageous for market reasons.

And obviously, the FDA has signed off on the use of nasal region for the establishment of efficacy in the sign.

Your next question comes from the line of Yigal Nochomovitz with Citigroup.

I have a few here.

First, just starting with your filing strategy.

I recall at the R&D Day, one of the KOLs noted that he prefers to see separate NDAs and that he'd like to see the dry eye approval first with the comment that if you got approval with -- for AC first, then [maybe pigeonhole for] reproxalap into an AC drug.

So what are your latest thoughts as far as the filing strategy?

I think you've said that you want to do a joint NDA for dry eye and AC, obviously, assuming the positive RENEW Part 2 and Phase III INVIGORATE.

So just comment a little bit on that.

Or is that part of the discussion with the FDA coming up later in the year?

Thanks, Yigal.

And yes, it is part of the discussion with the FDA.

As we've announced, we intend to guide on next steps in dry eye disease based on FDA feedback in the second half of this year.

So obviously, a concurrent filing or separate filings really depend on those discussions as well as the INVIGORATE data and other factors.

Ideally, I agree, a concurrent filing would be best.

But I think, until we hear back from the agency, and until we see the results from INVIGORATE, it's too early to tell.

Okay.

Understood.

And then additional question related to FDA guidance.

I think you mentioned that now you've treated over 1,100 or about 1,100 patients with core reproxalap.

So therefore, what are your thoughts as far as a separate safety study?

Do you think you're going to need a separate safety study for the filing?

Or do you think that the current body of patients, the 1,100, is going to be sufficient?

Right.

That's a very astute question.

Traditionally, sponsors performed safety studies on an indication-by-indication basis.

In this case, because there's so much overlap between the 2 diseases, I think the answer to that question is to be determined, and it's something that we're engaging with the agency in terms of a dialogue.

So I expect you'll hear more from us in the near future.

But you are correct to point out that 1,100 patients is a lot of patients.

And many of these patients have been treated for weeks, if not months.

So I think we're in a good position in terms of safety studies, and you'll hear more from us shortly in terms of the safety study requirement for the allergic conjunctivitis and the dry eye NDA filings.

All right.

Got it.

And then just one more.

Where do you guys stand with respect to partnering reproxalap?

Is that still the strategic plan to seek a partner or not?

And if so, what are the characteristics that you're looking for in a partner?

I'll turn this over to Dave.

But as a high-level comment, ocular disease is, for small companies, a good place to be because 1 sponsor does not need 10,000 reps to launch a drug.

We've got lots of precedent for that.

And in terms of partnership, I think we have the option of launching internally or partnering.

However, we have, for some time now, been in active dialogue, as you can imagine, based on the results we've generated with a variety of different groups.

Dave, perhaps you can comment on the qualifications.

Yes.

Thanks, Yigal.

Yes.

When we look at this, we basically ask the question what's the best thing for the product, for the patients, for the company and our shareholders as we move towards commercialization.

As Todd said, there are no fundamental barriers to entry to establishing a commercial infrastructure.

And at the same time, there are multiple parties out there who have commercial infrastructure that directly touch the target physicians that we would be looking at for reproxalap for both indications, dry disease and allergic conjunctivitis.

There's also a lot of interest from partners, and these are partners of different sizes.

And we maintain the dialogue with them, evaluating what will be the best fit for the profile of reproxalap as that profile emerges.

Now for a large -- for a product that is competitive with like Xiidra, one of these large products or one of the large AC products, you need a footprint to be able to very quickly access the prescribing physicians across the nation in the U.S. and also to compete for share of voice and to be able to educate effectively as they get familiar with your product.

And so for that reason, we are interested in evaluating partners on that basis, who has a footprint, who would enable us to be able to hit the ground running and very quickly penetrate the market with the product once approved.

I do think, Yigal, that the ocular landscape in terms of big pharma is improving.

We're thrilled to see Alcon's interest in OTC, Pataday, for example.

We believe that Alcon will cement its interest in terms of drugs versus devices in the ophthalmic space.

And as Paul Karpecki said in R&D Day, there's probably going to be some promotional noise around Pataday going OTC, which means that when patients approach health care providers, they will be status post antihistamines.

Like there is, for example, there is no reason to place a patient on an antihistamine once they have self-treated OTC.

So we're pleased with the positioning of reproxalap in that regard.

Right.

Makes a lot of sense.

And by the way, congratulations on the addition of Dr. Gow to your team.

He seems like a very good hire.

Thank you, thank you.

Your next question comes from the line of Adam Walsh with Stifel.

This is Edwin on for Adam.

Two quick ones.

First, INVIGORATE Phase III trial is to read out in the second half this year.

Assuming it's positive, do you still need to run another Phase III trial in AC?

I guess my question is, trying to understand the timing and sequencing of the Phase III data in both AC and dry eyes.

The second one is maybe for Josh.

How do we think about the operational expense or cash burn this year after your strategic decision on your portfolio shift?

Thanks for the question.

INVIGORATE, we continue to expect will be completed this year.

There are a couple of variables that, we should highlight, we're keeping a close eye on.

One is the constantly evolving allergy landscape in terms of pollen.

So as Dave mentioned at R&D Day and as I highlighted in my comments this morning, the world is changing in terms of the geographic reach of pollen and the length of allergy seasons, which are increasing, primarily due to increasing temperatures, which means that in an allergen chamber study, if other allergens are persisting longer, that could interfere with enrollment in the chamber.

So recall, Edwin, that the chamber is ragweed.

So these are ragweed-sensitive patients.

Many of those patients, however, are also sensitive to other pollens.

And entering the chamber, patients cannot be itchy and red.

They can't be affected by other pollens.

And so how the pollen landscape evolves this year, and as we all know, it's been a very warm year, is to be determined and could affect, in theory, the timing of INVIGORATE.

I think the second comment I would make on the timing of any trial that we're running, and probably this is true across the whole industry, is the effect of COVID, which could adversely affect the timing of enrollment or patient qualifications.

Obviously, confirmed patients cannot be enrolled in clinical trials.

And we're particularly sensitive to that with regard to chambers where there's close contact and so forth.

We have not, as of today, heard any feedback from sites about the adverse impact or the potential adverse impact of COVID.

But I do -- I think it would be inappropriate for us not to mention that with regard to the timing of INVIGORATE or any of our clinical trials.

Your question about how many trials are needed for NDA approval is interesting.

We remind everyone that we already have completed a positive Phase III trial in allergy.

That was the conjunctival allergen challenge, the ALLEVIATE trial.

And not only did we show a reduction in itching as assessed by area under the curve, but also, we ran a responder analysis, which was highly statistically significant, showing that greater proportion of patients -- responders as assessed by 2-point improvement were present in the drug group versus the vehicle group.

So I think the plan is to, assuming the results from INVIGORATE are positive, as we expect them to be based on the prior chamber data we released in the middle of last year, to approach the agency to clarify the NDA filing requirements, to Yigal's point.

And particularly the safety requirements remaining at this point, and then to advise on NDA filing process from there.

Let me turn it over to Josh to discuss the financial question.

Sure.

So with respect to operating expenses for 2020, my overarching comment is that Q4 is probably more indicative of what you should expect here in 2020.

I'll dive into that just a little bit and say that G&A is a lot more predictable than R&D.

So the G&A that you see in the fourth quarter, it should be relatively predictive of what we see here in 2020.

As you know, R&D expenses shouldn't be trended in a straight line and can be somewhat variable based on when milestones are achieved, but I think, with all that said, Q4, again, is -- it should be a pretty decent predictor of where we're going here in 2020.

Your next question comes from the line of Esther Hong with Janney.

So two questions.

I wanted to know if you could provide any additional details on enrollment, maybe the percent of patients enrolled in the Phase III AC study to date.

And then separately, how should we view the nonlate-stage ocular disease programs?

Do you plan on continuing these internally once your 3 Phase III programs have been completed?

Or will you focus on out-licensing?

Any details there.

Thanks, Esther.

We plan, later in the year, as is our general practice, to update on the progress of the trials.

I think that we stated this morning and said in our press release in the second half of the year, we'll update on the progress of GUARD and PVR.

But -- and my prior comments regarding Edwin's question about INVIGORATE timing, I think, are also relevant here.

And in terms of the nonocular development, as we said this morning and based on the press release we issued this morning, we are focusing the majority of our efforts and resources on our late-stage ocular program.

I do think that we remain very interested in ADX-629, which is our lead systemic RASP inhibitor, as I mentioned this morning.

That has now completed Phase I clinical testing, and we would plan to release top line results from that trial probably in Q2.

We do intend to advance ADX-629 into Phase II clinical testing this year.

But obviously, Esther, that's an earlier stage program and will demand less time and resource than the 3 Phase III trials that we're emphasizing now in ophthalmology.

Your next question comes from the line of Yale Jen with Laidlaw.

My first question is that given the strategic prioritization you have installed recently, from the PD perspective, is 2191 also could be a licensing opportunity?

Or that's a product you intend to retain in-house for potential commercialization?

Good question, Yale.

I think that there is -- obviously, there's an active Phase III ongoing, the GUARD trial for 2191 in PVR.

My guess is that at least Part 1 of GUARD trial would be completed prior to the partnering, if there is partnering.

I will say one advantage, though, of PVR, and in general, retinal disease, especially rare retinal diseases, that is a clear possibility for internal launch.

There's no reason why we would be compelled for financial reasons, I think, to out-license PVR.

I think that's something that internally, we can handle with relative ease.

Okay.

Great.

That's very helpful.

And maybe one more question from me, which is about the ADX-629.

And you mentioned that for the Phase II will be systemic autoimmune disease.

Could you provide a little bit more color in terms of what specific indications you might sort of explore in your Phase II study?

We'll guide on that once the top line data are released next quarter from the Phase I trial in ADX-629.

The beauty of immune-mediated diseases is there are a lot of them.

And when using an orally available drug, as is the case with 629, there are many different possibilities.

I do think that we'll attempt to study conditions that are valuable in a relatively short period of time that over -- treatment periods of 3 months or less.

I don't think you'll hear us talking about multiyear treatment paradigms and so forth.

But we'll guide with more detail next quarter.

Your next question comes from the line of Matthew Cross with JonesTrading.

A couple of questions from me.

Sounds like kind of most of what I was hoping to ask about the dry eye and AC has been covered already, so maybe I'll kind of focus on some of the other indications you're retaining after the strategic shifts.

Partially touching on what the others brought up about PVR and kind of commercial considerations, I appreciate you guys kind of explaining that, that is likely a program that can be maintained internally while all options are kind of on the table.

But I was hoping you could maybe explain a part that I've been wondering about in terms of, kind of what your benchmark is from a pricing or competitive perspective.

I know there isn't really a lot, if anything, really out there for PVR other than repeated surgery.

So could you kind of help us frame what the pricing benchmark is there as we compare to something that's quite different from a mass market indication like dry eye or AC?

Yes.

Thanks, Matt.

I'll make a couple of comments and turn it over to Dave.

The first thing I would say is that and there are -- the number of PVR patients that exist, I would say, in the U.S. and Asia is in the low thousands.

And the surgeons that treat PVR in the United States are generally those that are enrolling patients in GUARD.

So we're quite familiar with the market to begin with.

The second point I'll make before turning it over to Dave is that PVR is one of those indications that is pharmacoeconomically justifiable.

The alternative is surgery, which is costly and expensive.

And it's not often that it's so readily accessible to pharmacoeconomically justify a drug.

But in this case, I think there's a clear need, and the pricing would evolve from that analysis.

Dave, I'll turn it over to you.

Yes.

Thanks, Todd.

Thanks, Matt, for the question.

And that's exactly right.

I mean we know the context right now, in the U.S. in particular, where drug pricing is a topic that is and has been talked about with our election cycle, et cetera.

And so as we think about the pricing of our products, we really do look at the value that it creates for the health care systems, for individual patients as well as what we need to do to make this investment an attractive return for our shareholders.

And with PVR, there is this situation where we have a tremendous opportunity.

Not only do patients undergo a very negatively impactful surgery and recovery period with the current state of affairs, that direct surgery cost is quite large.

So on average, patients go between 3 and 4 surgeries trying to deal with PVR.

And in the end, they end up most likely losing their vision and it's unsuccessful.

Those 3 or 4 surgeries itself cost around $8,000 a pop.

That's just the surgery.

So if you also factor in the cost -- the other ancillary costs for the treatment and the follow-up and then if you also factor in the cost of the impact, the economic impact to the patients themselves and their family as they miss work for the recovery period, et cetera, you are talking about a very large cost burden.

Just the cost of the surgery alone would justify, from a pharmacoeconomic perspective, an EYLEA-like price for the injection.

So EYLEA is priced somewhere around $1,900 per injection.

And for this course of treatment, we are doing 13 injections.

That's the absolute lowest number that you can come up with pharmacoeconomic approaches to justify in terms of pricing.

And in reality, there's a much larger cost that's been impacted on the health care system due to the current state of affairs.

So it is a very unique product, where not only does it have as big impact on patients, and patients want to do anything they can to sustain their vision, it has a very big impact on the health care system.

And everyone will line up -- based on the research we've done, everyone will line up around a novel approach that helps take away all of that problem for all of those people involved.

Got it.

That's very helpful level of detail from both you guys, I really appreciate that.

And then just one on ADX-629.

Maybe before we get into the Phase II portion that you're looking to begin later this year, I wanted to understand a little bit about what we should expect from Phase I in the next quarter.

I guess since we're looking at kind of a broad number of different indications, is there anything in particular you're looking to see translate from the preclinical setting and what you've seen there into the clinic?

A certain level of kind of PK or biomarker data that you want to kind of highlight next quarter, and whether this is something that we may see some kind of indication-by-indication efficacy or just really trying to assess what can we use RASP systemically effectively and where is it the most so?

Right, Matt, those are fascinating questions.

One unique aspect about RASP is that it is a small molecule target.

Almost all of the pharmacopeia today are based on protein targets.

So cytokines, enzymes, receptors.

RASP, however, is a small molecule target.

And as you know, RASP inhibitors in the Aldeyra platform, are covalent binders of RASP.

So the stoichiometry in this case is 1:1.

ADX-629 binds to RASP and thereby inhibits RASP, and that adduct is then degraded inside the cell.

So importantly in Phase I is the pharmacokinetic parameter of how much drug can exist after dosing.

Obviously, the more the better based on the amount of RASP in various diseases.

So that's number one.

Number two, your concept of pharmacodynamic assessment is right on.

In healthy volunteers, RASP are not high.

I don't think any of us are walking around today with high levels of RASP without being symptomatic or otherwise sick.

However, there are basal levels of RASP, and that's something that we've looked at, and you can expect to see more of with the top line data from Phase I. So for pharmacokinetic reasons and pharmacodynamic reasons, the results should be interesting.

We've reached the end of our Q&A session.

I will now turn the call back over to Dr. Brady for closing comments.

Thank you, operator.

I'd like to thank you all again for joining us today.

And as always, we look forward to continuing to update you on our progress in the coming year.

And ladies and gentlemen, this concludes today's conference call.

Thank you for your participation.

You may now disconnect.