Aldeyra Therapeutics Stock (ALDX): NDA Submission For Large Multi-Billion Dollar Market

Aldeyra Therapeutics (NASDAQ:ALDX) is a great speculative biotech play to look into. The reason why I state that is because it has been able to submit a New Drug Application (NDA) of reproxalap to the FDA for the treatment of patients with dry eye disease (DED). If the review goes well, then it should receive FDA approval of this drug for this patient population towards the end of 2023. Besides this potential regulatory approval of reproxalap for this patient population in the United States, there are two other catalysts for investors to look forward to. The first of which is the release of results before the end of 2022 from an ongoing phase 2 study, which is using ADX-629 for the treatment of patients with alcoholic hepatitis. The second catalyst would be the release of results from the phase 3 INVIGORATE-2 study, which is using reproxalap for the treatment of patients with allergic conjunctivitis. Such results are expected in 2023. Another possible catalyst would be expected results from the phase 2 study of ADX-2191 for the treatment of patients with retinitis pigmentosa, which are expected in the 1st half of 2023. With so much potential to achieve many milestones in the near-term and long-term, this is why I believe it is a great speculative biotech play to look into.

Reproxalap For The Treatment Of Patients With Dry Eye Disease

The reason why I believe this is the most important is because of two items. The first is that the intended primary endpoint result was met in the phase 3 study and secondly, the biotech is gearing up to file a New Drug Application (NDA) to the FDA of reproxalap for this patient population. As a refresher, Dry eye disease is when tears are not enough to provide adequate enough moisture for the cornea of the eyes. Dry eye is a common and chronic disease that is normally found in older adults. The global dry eye disease market is expected to become a $7.78 billion market by 2025. This is a large market and these patients have to deal with a lot of symptoms on a daily basis. Such symptoms that these patients experience are as follows:

• Burning of the eyes
• Stringy mucus in or around eyes
• Sensation of knowing that something is in the eyes
• Watery eyes

This is a large market opportunity and I think that things are looking well in this department. The reason why I state that is because there is a slew of clinical data released to date for this program.

Things did not go well when Aldeyra reported results from the phase 3 TRANQUILITY study. At that time, it noted that the primary endpoint of ocular redness was not achieved. With that said, this program looked quite bleak and dead. However, the company still had the phase 3 TRANQUILITY-2 study. Not only that, but it changed the protocol of the primary endpoint before the trial was read out. The changing of the pre-specified primary endpoint paid off, because it was then achieved. With the latest update, a major positive item happened after the release of the study data noted above. Aldeyra met with the FDA in the pre-NDA meeting and I would like to report that everything went well. Based on the meeting that occurred, it was noted that it would be able to file its NDA for reproxalap for the treatment of patients with dry eye disease (DED) in Q4 of 2022. As such, the NDA for reproxalap was just submitted on November 29, 2022. The review should take about 12 months, which could allow for FDA approval of reproxalap towards the 2nd half of 2023. It was well equipped to submit the NDA of reproxalap to the FDA because of how many studies it had completed. It had completed a total of five studies, so that it may prove that this drug works in treating this patient population. Each study has highlighted an endpoint for which the drug has greatly helped patients over other types of treatments. Such endpoints where reproxalap has shined greatly in are as follows:

• Ocular dryness symptom score
• Ocular redness
• Schirmer Test
• Schirmer Test ≥10 mm responder analysis

Aldeyra believes that this complete data package will help it receive FDA approval of reproxalap for the treatment of patients with DED. I think it has a good shot at being approved based on efficacy achieved to date. Not only that, but this drug was explored in more than 2,000 patients since the program started and there were no safety concerns noted. If the FDA does decides to approve this drug, then I think Aldeyra will do very well on the market with it. Why is that? Well, that’s because this drug works just about instantly. Matter of fact, it works within minutes of a patient receiving it. Whereas other DED drugs take weeks to work and even if they do work during that long-waiting period, they only work just a bit.

Financials

According to the 10-Q SEC Filing, Aldeyra Therapeutics had cash, cash equivalents and marketable securities of $185.3 million as of September 30, 2022. The reason for the current cash on hand is because of many public offerings that were done over the years. In May and June of 2021, it sold an aggregate of 10.2 million shares of its common stock at a public offering price of $12.50 per share in an underwritten public offering. It raised an aggregate amount of $119.8 million after deducting expenses. It will likely continue to raise cash in this manner in the coming year. Especially, since it has to prepare for possible commercialization of reproxalap and ADX-2191, if they are ultimately approved. It believes that it has enough cash on hand to fund its operations through the end of 2023. However, it is my belief that it may choose to raise cash at least in early 2023. It could also depend upon when it next receives a positive news cycle. For instance, if the results expected before end of 2022 from the phase 2 study using ADX-629 for the treatment of patients with alcoholic hepatitis are positive, then it may choose to raise cash immediately at that point. This could possibly happen after any one of the other catalysts to be announced in 2023 as well. Of course, that is if they are successful.

Risks To Business

There are several risks that investors should be aware of before investing in this biotech. The first risk to consider would be with respect to the NDA filing of reproxalap for the treatment of patients with DED. While there is a comprehensive package established for this program with multiple studies, there is no guarantee that the FDA will approve reproxalap for this indication in 2023. The second risk would be with respect to the phase 3 INVIGORATE-2 study, which is using reproxalap for the treatment of patients with allergic conjunctivitis. There is no assurance that the primary endpoint will be met, and in that case, Aldeyra will not be able to file a regulatory application for approval of reproxalap for this indication. The final risks to consider would be with respect to the other data readouts coming up. One data readout would be the use of ADX-629 in a phase 2 study for the treatment of patients with alcoholic hepatitis and then another for use of ADX-2191 in a phase 2 study for the treatment of patients with retinitis pigmentosa. They are each expected in Q4 of 2022 and 1st half of 2023 respectively. Hopefully, one of these clinical candidates will be successful, but there is no guarantee that they will meet the intended efficacy endpoints.

Conclusion

The final conclusion is that Aldeyra Therapeutics is a great speculative biotech play to look into. The reason why I state this is because it has several catalysts for investors to look forward to. The biggest catalyst of them all would be the potential to receive FDA approval of reproxalap for the treatment of patients with DED, which is anticipated in 2023. However, as I described above there are several other catalysts on the way for investors to look forward to. The closest catalyst being the data readout expected from the phase 2 study using ADX-629 for the treatment of patients with alcoholic hepatitis, which are expected any day now before the end of 2022. With the potential to receive FDA approval of reproxalap for the treatment of patients with DED in the coming year, plus several catalysts on the way as well, these are the reasons why I believe that Aldeyra Therapeutics is a great speculative biotech play to look into.