Aldeyra Therapeutics (ALDX) FY 2025 Conference February 11, 2025 09:20 AM ET Company Participants Todd Brady - CEO, President & Director Conference Call Participants François Brisebois - Managing Director, Senior Biotechnology Research Analyst François Brisebois Alright. Great. Thank you for joining. My name is Frank Breasbois. I'm one of the biotech analysts at Oppenheimer. Our next presenting company here is Aldara Therapeutics. From the company, we have CEO, Todd Brady, to join. I think what we're going ...

Group 1 - The Biotech Forum, led by Bret, offers a model portfolio featuring 12-20 high upside biotech stocks, along with live chat discussions and weekly market commentary [1][2] - Recent discussions in The Biotech Forum have focused on profitable buy-write or covered call strategies for selected biotech stocks [2] - Aldeyra Therapeutics, Inc. (NASDAQ: ALDX) is highlighted as being on the verge of commercialization, with a significant inflection point expected in April of the following year [5]

Core Viewpoint - Aldeyra Therapeutics has received FDA acceptance for the resubmitted NDA for reproxalap, a potential treatment for dry eye disease, with a decision expected on April 2, 2025 [1][3]. Company Developments - Aldeyra's shares increased by 11.6% on November 18 following the announcement of the NDA acceptance, and the stock has risen 33.9% year-to-date, contrasting with a 6% decline in the industry [2]. - The company had previously received a complete response letter (CRL) from the FDA in November 2023, indicating that the initial study results did not demonstrate the efficacy of reproxalap for treating dry eye symptoms [3][4]. - In response to the CRL, Aldeyra initiated a dry eye chamber clinical study to address the FDA's concerns, enrolling the first patient in May 2023 [5][4]. - The phase III dry eye chamber study met its primary endpoint, showing that reproxalap was statistically superior to the vehicle for ocular discomfort, an FDA-accepted symptom of dry eye disease [6]. Collaboration with AbbVie - Aldeyra has expanded its option agreement with AbbVie, where Aldeyra will cover 40% of certain pre-commercial activities, while AbbVie will bear the remaining 60% if the option is exercised [8]. - Under the agreement, if AbbVie exercises the option, Aldeyra could receive an upfront payment of $100 million, minus previously paid option fees of $6 million, and up to $300 million in regulatory and commercial milestone payments, including $100 million upon potential FDA approval [10]. - The profit-sharing arrangement stipulates that Aldeyra will receive 40% of the profits from the commercialization of reproxalap, while AbbVie will receive 60% [11].

Financial Performance - The net loss for the three months ended September 30, 2024, was $15.11 million, compared to a net loss of $8.19 million for the same period in 2023, indicating an increase in losses of approximately 84%[6] - Net loss for the nine months ended September 30, 2024, was $40,042,677, compared to a net loss of $32,789,548 for the same period in 2023, representing a 22% increase in losses year-over-year[11] - The company reported a comprehensive loss of $15.0 million for the three months ended September 30, 2024[7] Assets and Liabilities - Total current assets decreased from $147.81 million as of December 31, 2023, to $116.72 million as of September 30, 2024, representing a decline of approximately 21%[5] - Cash and cash equivalents decreased significantly from $142.82 million as of December 31, 2023, to $28.12 million as of September 30, 2024, a reduction of about 80%[5] - Total liabilities increased from $28.53 million as of December 31, 2023, to $32.22 million as of September 30, 2024, reflecting an increase of approximately 13%[5] - The accumulated deficit grew from $394.26 million as of December 31, 2023, to $434.30 million as of September 30, 2024, an increase of about 10%[5] - The total stockholders' equity decreased from $119.80 million as of December 31, 2023, to $85.10 million as of September 30, 2024, a decline of approximately 29%[5] Research and Development - Research and development expenses for the three months ended September 30, 2024, were $12.44 million, up 79% from $6.96 million in the same period of 2023[6] - The company anticipates needing additional funding in the future to support ongoing research and development activities, as well as commercialization efforts[16] - The company’s principal activities include research and development of therapies for immune-mediated and metabolic diseases[12] Stock and Compensation - The weighted average common shares outstanding for the three months ended September 30, 2024, were 59.53 million, compared to 58.99 million for the same period in 2023[6] - Stock-based compensation for the nine months ended September 30, 2024, was $6,710,160, slightly up from $6,553,112 in the same period of 2023, reflecting a 2.4% increase[11] - Total stock-based compensation expense for the three months ended September 30, 2024, was $3,225,794, an increase from $789,217 for the same period in 2023[57] Marketable Securities and Cash Flow - The company incurred $75,351,884 in purchases of marketable securities during the nine months ended September 30, 2024, with no such purchases reported in the same period of 2023[11] - The company reported a net cash decrease of $74,702,987 for the nine months ended September 30, 2024, compared to a decrease of $1,084,476 in the same period of 2023[11] - Cash and cash equivalents at the end of the period were $68,120,029, down from $143,334,888 at the end of September 2023, indicating a decrease of approximately 52%[11] Debt and Financing - The Company has a current long-term debt obligation of $15 million under the Hercules Credit Facility as of September 30, 2024[43] - The effective interest rate on the loan was 13.3% as of September 30, 2024[42] - The Maturity Date for the Hercules Credit Facility has been extended to April 1, 2026[40] Collaboration Agreements - The Company entered into an exclusive option agreement with AbbVie, receiving a non-refundable payment of $1 million for the option to collaborate on reproxalap development[72] - AbbVie will pay the Company a $100 million upfront cash payment and up to $300 million in milestone payments related to the Collaboration Agreement[75] - The profit-sharing arrangement for the commercialization of reproxalap in the U.S. is set at 60% for AbbVie and 40% for the Company[75] Changes in Operations - As of September 30, 2024, the Company ceased development of the Helio Product Candidate, which may result in the reversion of related intellectual property rights[23] - The Company has not reported any changes to significant accounting policies during the nine months ended September 30, 2024[20] Tax and Valuation - The Company has a 100% valuation allowance against net deferred tax assets due to ongoing losses since inception[49] - The Company is subject to tax in the U.S. and is open to examination for tax years ended December 31, 2023, 2022, 2021, and 2020[50]

Financial Performance - The net loss for the three months ended June 30, 2024, was $16.85 million, compared to a net loss of $8.99 million for the same period in 2023, indicating an increase in losses of approximately 87%[9] - The net loss for the six months ended June 30, 2024, was $24,929,694, compared to a net loss of $24,602,677 for the same period in 2023, indicating a slight increase in losses[20] - The company reported a net loss per share of $0.28 for the three months ended June 30, 2024, compared to a loss of $0.15 per share for the same period in 2023[9] Assets and Liabilities - Total current assets decreased from $147.81 million on December 31, 2023, to $125.65 million on June 30, 2024, representing a decline of approximately 15%[8] - Cash and cash equivalents decreased significantly from $142.82 million on December 31, 2023, to $31.03 million on June 30, 2024, a reduction of about 78%[8] - Total liabilities decreased slightly from $28.53 million on December 31, 2023, to $27.73 million on June 30, 2024, a decrease of approximately 3%[8] - Total stockholders' equity decreased from $119.80 million on December 31, 2023, to $98.31 million on June 30, 2024, a decline of approximately 18%[8] - The accumulated deficit increased from $394.26 million on December 31, 2023, to $419.19 million on June 30, 2024, an increase of approximately 6%[8] Research and Development - Research and development expenses for the three months ended June 30, 2024, were $14.97 million, compared to $6.96 million for the same period in 2023, reflecting a year-over-year increase of approximately 115%[9] - Research and development expenses for the six months ended June 30, 2024, were $1,898,358, down 38% from $3,053,738 for the same period in 2023[65] Cash Flow and Investments - The company used $23,196,985 in operating activities during the first half of 2024, compared to $22,801,654 in the same period of 2023[20] - The company reported a net cash used in investing activities of $48,614,499 for the first half of 2024, compared to a net cash provided of $30,000,000 in the same period of 2023[20] - The company recorded a net cash decrease of $71,793,293 for the first half of 2024, contrasting with an increase of $7,256,197 in the same period of 2023[20] Stock and Equity - The company had 59,414,489 shares outstanding as of June 30, 2024, an increase from 59,195,951 shares as of December 31, 2023[8] - The company reported a total of 8,765,797 common stock equivalents as of June 30, 2024, compared to 7,775,253 as of June 30, 2023, indicating an increase of approximately 12.7%[34] - The Company has 3,542,805 shares of common stock available for grant under the 2023 Equity Plan as of June 30, 2024[60] Debt and Financing - The effective interest rate on the Company's debt was 12.6% as of June 30, 2024[50] - The company has a credit facility with Hercules Capital, Inc., providing for a term loan of up to $60 million, with the maturity date extended to October 1, 2024[48] - Future principal payments, including the Supplemental End of Term Charge, total $15,292,500 for the year ending December 31, 2024[52] Legal and Regulatory Matters - The Company is currently involved in a securities class action lawsuit alleging violations of the Securities Exchange Act, with no reasonable prediction of the outcome at this time[84] - The Company has not experienced any losses related to indemnification obligations for its officers and directors, concluding that the fair value of these obligations is negligible[79] Other Financial Metrics - Interest income for the three months ended June 30, 2024, was $1.64 million, compared to $1.88 million for the same period in 2023, a decrease of about 13%[9] - The company reported a decrease in cash paid for interest during the period, totaling $884,500 compared to $823,521 in the prior year[20] - The total grant date fair value of RSUs vested was $1.1 million for the six months ended June 30, 2024[72]

Core Thesis - Aldeyra Therapeutics, Inc. (NASDAQ:ALDX) is viewed as a high-risk/high-reward investment opportunity, trading at a discount with a market cap of approximately $230 million and holding $133 million in cash and equivalents as of March 31st [1] Company Overview - Aldeyra is a clinical-stage biotechnology company focused on developing treatments for immune-mediated and metabolic diseases, particularly through reactive aldehyde species (RASP) modulators [2] - The lead product candidate, Reproxalap, targets chronic and acute symptoms of dry eye disease and allergic conjunctivitis, showing promising results in preclinical and clinical trials [2] Recent Developments - Following a significant drop in share price from $5.4 to $1.4 due to concerns over Reproxalap's new drug application (NDA), the stock has recovered to $3.86, attributed to proactive measures by Aldeyra and AbbVie [2] - Aldeyra plans to resubmit Reproxalap's NDA by Q4 2024, with a potential PDUFA date by Q2 2025, following the initiation of three parallel Phase 3 trials to address FDA concerns [2][5] Market Context - The global prevalence of dry eye disease was estimated at 29.5% in 2021, with a market size of approximately $5.2 billion in 2023 and a projected CAGR of 4.2% over the next six years [3] - Existing treatments like AbbVie's Restasis and Novartis' Xiidra have faced declining sales due to the emergence of biosimilars and slower mechanisms of action, creating an opportunity for faster-acting products like Reproxalap [3][4] Reproxalap Program Details - The ongoing Phase 3 trials include dry eye chamber trials and a field trial, designed to demonstrate Reproxalap's efficacy in a controlled environment [5][6] - If successful, Reproxalap could receive a label for treating acute symptoms of dry eye disease, with results expected by Q3 2024 [7] Financial Overview - Aldeyra's Q1 2024 financials indicate a healthy balance sheet, with a 44% reduction in operating expenses year-over-year and a net loss decrease of approximately 48% [15] - The company has a cash runway of about three years, allowing it to sustain operations until at least the potential PDUFA date for Reproxalap [15] Pipeline Beyond Reproxalap - Aldeyra's pipeline includes ADX-629, targeting alcoholic hepatitis and Sjögren-Larsson Syndrome, and ADX-2191, aimed at retinitis pigmentosa, both showing potential for significant revenue generation [9][10][13] - ADX-629 has demonstrated promising results in weight loss and lipid improvement, with potential applications in a market projected to reach $100 billion by 2030 [11] Valuation and Market Sentiment - ALDX shares are currently trading at $3.86, reflecting a year-to-date increase of 9.97%, with expectations of a strong price reaction if Reproxalap's trial results are positive [16][17] - The potential for Reproxalap to generate revenues similar to Restasis, along with milestone payments from AbbVie, could significantly impact Aldeyra's financial outlook [17]

Group 1 - Aldeyra Therapeutics, Inc. (ALDX) has shown a year-to-date return of 5.4%, outperforming the average return of 3.8% for the Medical sector [2][3] - The Zacks Consensus Estimate for ALDX's full-year earnings has increased by 66.3% over the past three months, indicating improved analyst sentiment and earnings outlook [2] - Aldeyra Therapeutics, Inc. is ranked 92 in the Zacks Industry Rank within the Medical - Drugs industry, which has seen an average loss of 7.5% this year, further highlighting ALDX's relative performance [3] Group 2 - Teva Pharmaceutical Industries Ltd. (TEVA) has achieved a year-to-date return of 61.7%, significantly outperforming both the Medical sector and its own industry [2][3] - The consensus EPS estimate for Teva has increased by 0.3% over the past three months, and it also holds a Zacks Rank of 2 (Buy) [3] - The Medical - Generic Drugs industry, to which Teva belongs, is currently ranked 56 and has experienced a positive movement of +10.5% this year [3]

Product Development - Aldeyra Therapeutics is developing a novel pharmaceutical platform targeting reactive aldehyde species (RASP) associated with various diseases, with a product pipeline including ADX-629 and reproxalap[92]. - Reproxalap is in late-stage development for dry eye disease, demonstrating broad-based, rapid-onset activity and consistent safety in Phase 2 and Phase 3 clinical trials[92]. - The company does not expect any of its product candidates, including reproxalap, to be commercially available before at least the first half of 2025[104]. Collaboration and Licensing - An exclusive option agreement with AbbVie was established, granting AbbVie the option to obtain a co-exclusive license for reproxalap in the U.S. and an exclusive license outside the U.S., with an initial non-refundable payment of $1 million[93]. - AbbVie extended the option exercise period by paying an additional $5 million, allowing them to exercise the option until 18 months after the agreement date or 10 business days post-FDA approval[94]. - Upon execution of the collaboration agreement, AbbVie would pay a $100 million upfront cash payment, with potential milestone payments of up to $300 million[95]. - The profit-sharing arrangement for reproxalap in the U.S. is set at 60% for AbbVie and 40% for Aldeyra, while tiered royalties on net sales will apply outside the U.S.[95]. - An exclusive option agreement with AbbVie was established on October 31, 2023, with a non-refundable payment of $1 million received for the option[116]. - AbbVie extended the option exercise period by paying a non-refundable fee of $5 million, allowing them to exercise the option until 18 months after the agreement effective date or 10 business days post-FDA decision on reproxalap[117]. - Upon execution of the collaboration agreement, AbbVie will pay a $100 million upfront cash payment, with potential additional milestone payments of up to $300 million[119]. - The profit-sharing arrangement for reproxalap in the U.S. is set at 60% for AbbVie and 40% for the company, with tiered royalties applicable for sales outside the U.S.[119]. Financial Performance - The company reported a comprehensive loss of $8.1 million for the three months ended March 31, 2024, compared to a loss of $15.6 million for the same period in 2023[107]. - Research and development expenses decreased to $6.2 million for the three months ended March 31, 2024, from $11.2 million for the same period in 2023, a reduction of 44.64%[110]. - General and administrative expenses were $3.2 million for the three months ended March 31, 2024, down from $5.6 million in the same period in 2023, a decrease of 42.86%[110]. - Total other income (expense) was $1.3 million for the three months ended March 31, 2024, compared to $1.2 million for the same period in 2023, reflecting an increase of 8.33%[111]. - As of March 31, 2024, the company had total stockholders' equity of approximately $113.4 million and cash, cash equivalents, and marketable securities of $133.0 million[112]. - For the three months ended March 31, 2024, net cash used in operating activities was $10.0 million, an increase from $9.4 million in the same period in 2023[125]. - Net cash used in investing activities was $30.4 million for the three months ended March 31, 2024, compared to $30.0 million provided by investing activities in the same period in 2023[126]. - Net cash provided by financing activities was $18.2 thousand for the three months ended March 31, 2024, down from $52.6 thousand in the same period in 2023[127]. Capital Needs and Risks - Aldeyra has no products approved for sale and has primarily funded operations through equity sales and debt, indicating a need for additional capital to support product development[97]. - The company may pursue licensing or acquiring new immune-modulating approaches to expand its product pipeline[96]. - The company expects to generate operating losses for the foreseeable future, with significant investments in research and development ongoing[112]. - As of March 31, 2024, the company expects its cash, cash equivalents, and marketable securities to fund operations beyond 2026, but acknowledges the need for additional funding for ongoing R&D and commercialization activities[120]. - The company may need to secure additional capital through debt, equity, or partnerships due to economic uncertainties and potential disruptions in capital markets[122]. - The company faces risks related to the costs and timing of regulatory reviews and potential additional trials required for reproxalap[121]. - The company continues to incur costs associated with being a public entity, including compliance and insurance expenses[123]. Debt and Credit Facilities - The Hercules Credit Facility, as of March 31, 2024, had $15.0 million outstanding, with a total available term loan of up to $60.0 million[115].

Group 1 - Aldeyra Therapeutics, Inc. (ALDX) is currently outperforming its Medical sector peers with a year-to-date return of 10%, while the Medical sector has returned an average of -0.3% [2] - The Zacks Consensus Estimate for ALDX's full-year earnings has increased by 87% over the past 90 days, indicating improved analyst sentiment and a stronger earnings outlook [2] - Aldeyra Therapeutics, Inc. holds a Zacks Rank of 2 (Buy), suggesting it has favorable characteristics to outperform the market in the near term [1] Group 2 - Aldeyra Therapeutics, Inc. is part of the Medical - Drugs industry, which includes 187 stocks and currently ranks 147 in the Zacks Industry Rank, with an average loss of 12.7% year-to-date [3] - Another outperforming stock in the Medical sector is Inspire Medical Systems (INSP), which has a year-to-date return of 12.7% and a Zacks Rank of 1 (Strong Buy) [2][3] - The Medical Info Systems industry, to which Inspire Medical Systems belongs, has a current rank of 148 and has declined by 10.3% year-to-date [3]

Core Insights - Insider purchases have decreased in number and size as the second quarter begins, but notable purchases were still made by influential investors like Mario Gabelli and TotalEnergies [1] - Insider buying is often viewed as a positive signal for potential investors, especially during uncertain market conditions [1] Company Summaries - **GAMCO Natural Resources, Gold & Income Trust** - Total shares purchased: 870,000 - Price per share: $10.00 - Total cost: $8.7 million - Shares have increased over 8% since the purchase, with a yield of about 7.4% and monthly distributions [3] - **Boundless Bio Inc.** - Total shares purchased: 512,500 - Price per share: $16.00 - Total cost: $8.2 million - Shares have declined since the IPO, currently trading around $13, with five of seven analysts recommending a buy [4] - **Five Star Bancorp** - Total shares purchased: less than 252,900 - Price per share: $21.75 - Total cost: approximately $5.5 million - The stock is down about 16% year-to-date, but analysts suggest a 30% upside based on a $28.67 consensus price target [5] - **Clearway Energy Inc.** - Total shares purchased: almost 197,000 - Price per share: $22.54 to $23.08 - Total cost: around $4.5 million - Despite a recent 3% increase, shares are down over 13% year-to-date, but 27% higher than the 52-week low [7] - **Aldeyra Therapeutics Inc.** - Total shares purchased: almost 504,300 - Price per share: $3.24 to $4.21 - Total cost: over $1.9 million - The stock surged about 43% following FDA approval plans, with a consensus price target of $9.25 suggesting potential for nearly double the current price [8]