Back in June, we pegged Aldeyra Therapeutics Inc (NASDAQ:ALDX) as being stock to keep an eye on as part of our Biotech Catalyst series. The data that we focused on full coverage derived from a phase 2B study investigating the company’s lead asset, a drug called ADX-102, in a target indication of allergic conjunctivitis.
When the data hit press, it was somewhat mixed. The lower doses of the drug basically had no effect and the higher doses, while there were some signs of efficacy, didn’t perform quite as well as markets had expected or that shareholders had hoped they would. The company took a dip on the news and sentiment took a hit near term.
As part of our response to the release, however, we published this piece suggesting that the market response was over sell and that certain elements of the data suggested that the drug might have a chance going forward in one of the couple of other target indications that Aldeyra is investigating.
Specifically, we highlighted the release of data from a phase 2A trial in dry eye disease as a potential recovery catalyst and one that – if it hit press as positive – could make the dip we saw on the back of the initial release a nice opportunity to pick up shares at a discount.
Well, we just got the numbers from the trial in question and it turns out that we were right.
Aldeyra put out this release just ahead of the open on Tuesday and management took center stage on a webcast and conference call to discuss the results. The data came in strong and the company is running as a result. Premarket action added just shy of 45% to Aldeyra’s market capitalization and there is a good chance that we will see this will continue as the bell rings and normal participation gets underway.
So what did the numbers tell us what’s next?
This was a phase 2A dose escalation trial designed, primarily, to inform what’s called a maximum tolerable dose (MTD) for patients in a phase 2B trial. As such, the company was looking for a few things from the numbers. First and foremost, safety is key in these sorts of trials. Ideally, you want to see no major safety concerns on all doses (low to high) or, at the very least, a clean safety profile on the low doses with the odd adverse event filtering through into the high doses.
As per the release, there were no safety concerns observed for any of the formulations of ADX-102, and no serious adverse events were reported. So that’s a tick in that box. Next, from this sort of trial, you want to see signs of efficacy and, ideally, increased efficacy as the dose increases. And again, this one was a hit. The results demonstrated statistically significant improvement from baseline in six industry gold standard testing systems – Symptom Assessment in Dry Eye (SANDE) Score, Ocular Discomfort Score, Overall Four-Symptom Score, Schirmer (tear volume) Test, tear osmolarity, and Lissamine Green ocular surface staining score. Further, a modest dose-response was observed and activity increased over the duration of therapy, supporting evidence of the effect of the drug.
Again, then, that’s a big tick in another couple of key boxes for the trial.
Going forward, we are looking for the advance of this drug into pre-planned phase 2B study in line with the protocol already outlined by the company. Management has said that it will move forward with the 0.1% ADX-102 formulation (which is, ironically, the one that failed the conjunctivitis study) and we are looking for trial initiation, as well as subsequent interim and top line readouts as compounding the current momentum and getting this one running into a pivotal registration trial.
Cash at June 30 came in at a little over $14.6 million, which should be enough to get the trial in question underway. Beyond, there is a degree of dilution risk, but not enough to prohibit an exposure to the stock.
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Image courtesy of David Lienhard via Flickr
Disclosure: We have no position in ALDX and have not been compensated for this article.