Ladies and gentlemen, thank you for standing by, and welcome to the Aldeyra Therapeutics Third Quarter 2021 Financial Results Conference Call. [Operator Instructions] I would now like to hand over the conference to the company's Chief Financial Officer, Mr. Joshua Reed. Please go ahead, sir..

Good morning, everyone. With me is Dr. Todd Brady, President and Chief Executive Officer of Aldeyra. This morning, we issued a press release reporting our financial results for the quarter ended September 30, 2021. A copy of the press release is available on the Investors & Media section of our website, www.aldeyra.com.

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 submission of potential new drug applications, potential commercialization, the anticipated timing of results from our clinical trials, our projected cash runway, our possible or assumed future results of operations, expenses and financial position and potential growth opportunities among other things.

These statements are based upon the information available to the company today. These statements reflect Aldeyra's current views concerning future events.

They are based on assumptions and subject to risks and uncertainties, including the development, clinical and regulatory plans or expectations for Aldeyra's product candidates and systems-based approaches; the risk that results from clinical trials or portions of clinical trials may not accurately predict the results of future trials for the same or different indications; and Aldeyra's continuing review and quality control analysis of clinical data.

As a result of the COVID-19 pandemic, clinical site availability, staffing and patient recruitment have been negatively affected, and the time lines to complete our clinical trials may be delayed. 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, including the current and potential future impact of the COVID-19 pandemic on our business, results of operations and financial position.

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 and our filings with the SEC. I will now turn the call over to Dr. Brady..

Thank you, Joshua. This morning I’m excited to share with you important progress we’ve made and the development of our novel therapeutic approaches for ocular and systemic immunological diseases as we continue to strive to improve the lives of patients with significant unmet medical needs.

Let me begin by updating you on our anterior segment ocular programs. This quarter, we expect to report top line results from the TRANQUILITY and TRANQUILITY-2 clinical trials of reproxalap in dry eye disease. The primary endpoint of these trials is ocular redness, which is arguably the only objective sign of dry eye disease that matters the patients.

Secondary endpoints are tear RASP levels, Schirmer's test, and dry eye symptoms. Additionally, enrollment has completed in a multicenter double-masked randomized vehicle-controlled parallel group, Phase II clinical trial of reproxalap in dry eye disease. The purpose of the Phase II trial is to optimize the tear collection process to measure RASP.

Pending ongoing discussions with the FDA and the timing of clinical results including our 12 months safety trial of reproxalap and consistent with prior guidance, we expect to be in a position to file a new drug application or NDA early next year for dry eye disease.

In addition, we remain in discussions with the FDA regarding NDA requirements for allergic conjunctivitis, and expect to be able to provide an NDA update for reproxalap by the end of this year.

During the year, several peer reviewed journals have published articles highlighting the safety and efficacy profile of reproxalap in dry eye disease and allergic conjunctivitis.

Most recently, the Journal Clinical Ophthalmology reported results of the clinical trial evaluating the subjective eyedrop experience of two formulations of reproxalap versus lifitegrast in patients with dry eye disease.

The paper entitled a Post-Acute Ocular Tolerability Comparison of reproxalap and lifitegrast is open access and available on PubMed. Turning to our retina programs, as many of you know ADX-2191, has been granted orphan drug designation for three distinct clinical indications that affect the retina.

Retinitis pigmentosa, proliferative vitreoretinopathy or PVR and primary vitreoretinal lymphoma. Retinitis pigmentosa is a group of rare genetic eye diseases that affects an estimated 80,000 to 100,000 individuals in the United States, and approximately 1 in 4,000 people worldwide.

Last quarter, we announced our plan to initiate a Phase II clinical trial of ADX-2191 in patients with retinitis pigmentosa, and we remain on track to do so by the end of this year. The primary endpoint of the trial will be safety and tolerability of ADX-2191.

Secondary endpoints include visual acuity, central retinal sensitivity, dark adapted retinal sensitivity, and retinal morphology. PVR is a sight threatening condition and the leading cause of failure of retinal detachment surgery. We remain on track to conclude enrollment at the end of this year for Part 1 of our ongoing Phase III GUARD trial in PVR.

And we expect results from GUARD next year. We continue to be excited about the broad ADX-2191 platform and the potential of ADX-2191 to treat rare, immune mediated retinal diseases that today have no currently approved therapies.

Turning to our systemic disease program, we remain on track to report Phase II proof-of-concept clinical results from ADX-629 in asthma, psoriasis and COVID-19 in the fourth quarter of 2021, or the first quarter of 2022. ADX-629 is our orally available RASP inhibitor.

It represents a first-in-class systems based therapeutic approach for the potential treatment of many immune mediated diseases that are currently treated with single target drugs that can lead to toxicity.

We've also continued to evaluate the possibility of expanding clinical testing for ADX-629 in other indications where RASP may mediate pathology and where current therapy is either inadequately effective or toxic. We expect to update you on our progress later this year.

With that, I'll turn the call back over to Joshua to review our third quarter financial results..

Thank you, Todd. Cash and cash equivalents as of September 30, 2021 were $241.4 million.

Based on our current operating plan, we believe that existing cash and cash equivalents will be sufficient to fund currently projected operating expenses through the end of 2023, including potential NDA submissions, initial commercialization of reproxalap if approved, and continued development of our product candidates in ocular and systemic immune mediated diseases.

Turning now to our third quarter 2021 results. Research and development expenses were $12.9 million for the quarter ended September 30, 2021, compared with $6.1 million for the same period of 2020.

The increase of $6.8 million is primarily related to increases in clinical research and development expenditures and consulting costs, partially offset by decreases in personnel related costs, including stock-based compensation and manufacturing activities.

General and administrative expenses were $2.5 million for the quarter ended September 30, 2021, compared with $2.3 million for the quarter ended September 30, 2020. The increase of $200,000 is primarily due to an increase in miscellaneous administrative expenses.

The net loss for the third quarter of 2021 was $15.8 million, or $0.27 per share compared with a net loss of $8.9 million or $0.23 per share for the quarter ended September 30, 2020. Looking at our upcoming investor calendar, Todd and I will be participating virtually in conferences hosted by Jefferies, Berenberg and BTIG.

On November 11, Todd will be presenting at Eyecelerator at AAO 2021, a featured event ahead of next month's American Academy of Ophthalmology's 2021 Annual Meeting in New Orleans. Please check the Events and Presentations section of our website for details.

If you're attending any of the conferences and would like to schedule a one-on-one, please email our Investor Relations team at aldx@investorrelations.com. Now, I'll hand the call back to Todd for closing comments..

Thank you, Joshua. We continue to make meaningful progress in developing safe and effective treatments for ocular and systemic diseases. In addition to the present quarter, we have several busy and exciting quarters with significant clinical development milestones ahead.

We're excited about the first line potential for reproxalap as a treatment for anterior surface inflammatory diseases that are not being adequately controlled by standard of care approaches versus a significant percentage of patients.

And beyond the anterior segment, we're developing innovative medicines for retinal inflammatory diseases that we believe will create near-term high value commercial opportunities for our company.

And we are committed to expanding our therapeutic applications to systemic inflammatory diseases, representing a broad array of conditions that are not sufficiently treated by current therapies today. With that, Joshua and I'll be happy to take your questions.

Operator?.

[Operator Instructions] Your first question is from the line of Tom Shrader from BTIG. Your line is now open..

Hi, good morning. Thank you for taking the questions. I had a question on the commercialization front. We've seen some young companies, first product companies use a short-term commercial alliance with an existing company.

Is that something that's easy to set up in this space? Have you thought about that? Or do you think whatever you do, you're likely to do on your own?.

So thanks for the question, Tom. Let me start off by saying the data that shows reproxalap's early onset of activity, effect on redness and broad symptom improvement profile is unmatched by existing products in BD and dry eye. This makes our commercial prospects extremely attractive.

Of course, that is if the product is approved, this is only the success of our clinical trials and our NDA submission. The anticipated top line could support us building a commercial infrastructure on our own. And it makes it attractive for potential strategic partners.

So we have lots of options available to us, including the one that you mentioned, using a different organization to commercialize for us, at least on a short-term basis is something that's extremely easy to set up. But again, with reproxalap's commercial potential, we have lots of options available to us..

Okay. And if I can ask an unrelated follow-up. We've seen the enormous power of the Schirmer test in the eyes of the FDA. It's almost like a loophole. The flip side is that if you hit redness, but not Schirmer, so patients are clearly benefiting, but a very different way than conventional eyedrops.

Does the label -- does the generic labels still make sense? Or do you think you'd be back to negotiation? Just your thought on how important Schirmer is, because it's fundamentally different than redness?.

Hi, Tom. Good morning. It's Todd. Thanks for the question. I still resonate with that question because it seems that there are so many products beginning with Restasis years ago, that focused on Schirmer's test as the objective time for dry eye disease.

As I mentioned in my prepared comments this morning, I don't think that patients care about objective signs of dry eye disease. That is signs that can be assessed by physicians or staff with one major exception, and that is ocular redness, which is a sign of dry eye disease.

And it's obvious why patients care about redness, no one wants to have a red eye. Now, I don't think having ocular redness in our label is in any way a detriment.

In fact, I think it is a significant commercial advantage for physicians, health care providers, optometrists and patients to see that there is a drug available, potentially, that whitens their eyes that diminishes ocular redness.

I think it's very, very powerful commercially and a tremendous advantage relative to drugs on the market today for chronic treatment of dry eye disease. We continue to be asked about Schirmer's. Schirmer's test is a secondary endpoint and our current dry eye disease trials that I described in my prepared comments this morning.

But in the end, we're focused on ocular redness for all the reasons that I just described..

Okay, thank you..

Your next question is from the line of Justin Kim from Oppenheimer & Company. Your line is now open..

Hi, good morning all and thanks for taking the question. Maybe just a couple on dry eye.

With the Phase II dry eye data being first available, can the team comment a little bit as to what might be disclosed and available from the study? And how we can think about those results in forming the anticipated Phase III program?.

Right. Justin, excellent question and thanks for that. The Phase II trial that I mentioned in my prepared comments is designed to optimize the RASP signal. In particular, it's designed to optimize the collection of peers so that we're able to collect more tears from dry eye patients.

As you can imagine, collecting tears from a patient population for lack of tears is a challenging process. The Phase II trial is roughly half the size of the two TRANQUILITY trials. Each of the TRANQUILITY trials is approximately 300 subjects. The Phase II trial is 150 subjects.

And I think your assumption that the Phase II trial will complete or results will be available first is correct, simply because as we've announced this morning enrollment is complete in that Phase II trial and the trial is smaller than the TRANQUILITY trials.

I think it's also reasonable to assume that we'll be able to assess the data from the Phase II trial in order to optimize the completion of the TRANQUILITY trials. In itself, the Phase II RASP trial is not pivotal. It is not critical path for NDA filing. I think that trial, depending on the results could be both of those things.

But we'll just have to see the data. I think whether we have a data release that concerns the Phase II trial is a materiality question that we'll need to answer once we have the data in our possession. Otherwise, I think the data from that trial, the RASP data and so forth, could be announced in conjunction with other data releases..

Understood. Understood.

And maybe on the point that you had mentioned about sort of the sizes of the studies and considering sort of the timing of the initiation of those studies, is it fair to sort of assume that TRANQUILITY is at least half enrolled and TRANQUILITY-2 at least a little less than half, sort of given the timing of the initiations and the study sizes?.

Well, we typically don't comment on the trial enrollment, at least, not until enrollment has been completed. I do think it's fair to assume that TRANQUILITY-1 is well on its way towards completion, as you mentioned, given the start dates of those trials.

One option based on the data from the Phase II trial is to expand enrollment in either of the TRANQUILITY trials, if needed. That is, if the data from the Phase II suggests that either of the TRANQUILITY trials is not sufficiently powered, we have the option prior to database lock of either TRANQUILITY trial of expanding those trials.

So in a sense, we don't quite know what enrollment is complete in either TRANQUILITY trial until we have the Phase II data..

Okay, great. Very helpful. Thanks for the question and answers ..

Thanks, Justin..

Your next question is from the line of Yigal Nochomovitz from Citigroup. Your line is now open..

Hi, Todd and Josh. Thank you for taking the questions.

Todd, could you just explain in a bit more detail the purpose for this additional Phase II for reproxalap in dry eye? If the goal is to optimize the measurement of tear RASP levels, could you just clarify why this Phase II wasn't completed before heading into the TRANQUILITY trials, were rasp levels is -- tear RASP levels is a secondary endpoint?.

Good morning, Yigal. I think that's a good question as well. Let me begin by explaining why we're interested in RASP. RASP was designated as a sign of dry eye disease by the FDA last year. However, as I mentioned in my response to Tom's question earlier this morning, we think that ocular redness is a more relevant sign to providers and patients.

And that's why we're focusing on redness in addition to the fact that we continue to demonstrate positive redness data in allergic conjunctivitis. And the redness data in the running cohort of TRANQUILITY announced in January of this year was also very positive.

However, the ability to include RASP modulating data in the pharmacology or mechanisms section of our potential drug label, I think it's also commercially differentiating. And that's why we're so interested and showing that we can diminish RASP in tears of patients.

RASP is the target of reproxalap and I believe we would be the first eyedrop ever to demonstrate target modulation in a clinical trial. The Phase II trial altered the mechanisms by which we collect tears. There are two primary ways to do that.

The first is a small glass capillary that's inserted in a tear lake after the lower lid is retracted, that capillary can remain in or near the surface of the eye for approximately 10 minutes. We need about 5 microliters of fluid to be extracted for RASP analysis.

And remarkably, there are many patients with dry eye disease that don't have 5 microliters of fluid. Just for reference, your typical eyedrop is 40 microliters. So if you take an eyedropper at home, you drop a drop on -- you place a drop in the palm of your hand you look at that, that's about 40 microliters.

And amazingly, many of the dry eye patients in our trials simply don't have enough volume to assess RASP, which is why we ran the Phase II trial. We've switched around some of the capillary extraction processes. And then they change the order of the other method to extract tears, which is the Schirmer test.

The Schirmer test, as you know, is a small strip of paper, also inserted into the tear lake following lower lid retraction. The strip can remain in the eye for about 10 minutes or so, as the tear fluid is whipped up into the strip. The strip can then be removed, spawned down in a centrifuge and that fluid can then be analyzed.

As you point out, and as I was describing in response to Justin's question, I think it's reasonable to assume that we will have the Phase II results prior to the TRANQUILITY results. And the timing of the RASP data is somewhat different from the timing of our other clinical data redness and symptoms and so forth.

The reason for that is that the tears have to be shipped to a third-party laboratory. The tears are then analyzed using an ELISA, which is a process to measure the RASP levels. Those data are then transferred back to our statisticians and we'll analyze them separately.

And the running cohort announced in January, we announced our clinical data first redness symptoms and so forth. Subsequently, we announced the RASP data, a similar pattern that may evolve with our clinical trials here and that the RASP data could come after the clinical data.

Does that answer your question, Yigal?.

Yes, thank you. And I just had one for Josh. I think you mentioned in the press release that you have cash to support initial commercialization of reproxalap.

I’m wondering if you could just be a bit more specific about the definition of initial and what that encompasses?.

Thanks. Thanks, Yigal. Essentially what that -- what I'm referring to there is building out of the home office and another factor to think about there is our runway out to 2023. So I think it's important to not signal that we'll be -- we have enough cash that will support an entire commercialization effort, well after the product launch..

Got it. Thank you..

Your next question is from the line of Marc Goodman from SVB Leerink. Your line is now open..

Yes, good morning. I was wondering if you could just walk us through TRANQUILITY-1, TRANQUILITY-2, you get the data. Talk to us about from there what's left, so that we understand all the boxes being checked towards when you actually file. Thanks..

Hi, Mark. Good morning. Happy to comment on the remaining boxes to check prior to NDA filing. As you know, the FDA requires symptoms and signs for NDA submission in dry eye disease. We believe we've completed our symptom requirements.

Those data are prominently highlighted in our corporate deck with two 12 week pivotal trials that using eye dryness as our symptom. The remaining trials particularly the TRANQUILITY-1 and 2 trials are focused on the sign requirements for NDA submission.

And as we've discussed this morning, that sign is ocular redness, though we were also assessing RASP, and Schirmer's test. In addition to the efficacy requirements for NDA submission, our safety requirements consistent with NDA submissions generally, there is a safety trial that must be part of the submitted package.

As I said in my prepared comments this morning, we are currently running a 12-month safety trial to support the chronic use for reproxalap and dry eye disease. I continue to believe that the 12 months safety trial will be the gating factor for us in terms of NDA submission timing.

In addition, there are chemistry manufacturing and control requirements for NDA submission. I believe that we are in excellent position with regard to our C&C requirements. And I think that rounds out the basic components of what we need to file the NDA..

So you're thinking that the 12-month safety is going to run into early next year and that's the gating issue. And as soon as that's done, that's when the filing occur.

So that will be whatever early next year means that's the gating issue?.

The FDA requires 6 months of data from the safety trial and I believe 100 drug treated patients for submission. And that will be -- the timing of that will be one of the gating factors for NDA submission. At the 120-day update after NDA submission, the remaining 6 months that is months 7 through 12 must be submitted to the FDA.

So at the time of NDA submission, approximately 8 months or so of safety data would be required, so that by the 120-day update, the remaining safety data is complete..

And it's also on 629, noticing that you're saying the data could come in the fourth quarter could come in the first quarter.

Has there been any enrollment impact by COVID or anything like that? Or is this basically it's always been around the end of the year early next year in your mind?.

It's certainly the latter. We've always thought that the results of the trials could be available towards the end of this year, early next year.

We have had COVID impact on some of these trials, particularly the asthma trial where respiratory disease patients are understandably concerned about presenting to clinics or hospital environment or enrolling in clinical trials given COVID. We’ve also seen recent impact on our COVID trial itself.

The reason there are being vaccinations and boosters and therapeutic antibodies and new drugs to treat a COVID that has diminished interest in the COVID trial. Nonetheless, we do expect to be able to announce data per our guidance. We also expect to announce all three of those trials in aggregate.

To remind the listeners on the call, these are proof-of-concept Phase II trials.

They are not designed, nor are they powered statistically to indicate the clinical results, rather the trials are designed to indicate pharmacodynamic of ADX-629 which includes a cytokine levels, the RASP levels and potential early clinical signals as we evaluate future trials, particularly Phase IIb clinical trials that can be run with ADX-629 starting next year..

Thanks..

Thanks, Marc..

Your next question is from the line of Kelly Shi from Jefferies. Your line is now open..

Thank you for taking my questions. I have two questions regarding the stats [ph] design. In Phase III INVIGORATE conjunctivitis trial, you mentioned that [indiscernible] were remarkable, like consistent across patients. The standard of error [ph] were approximately .03 units for each arm.

What was your observation of the standard error of redness scores in TRANQUILITY run-in cohort? And what's your expectation of the standard error of redness falls in two Phase III TRANQUILITY trials? And also a relevant question here is since you are going to see the new Phase II trial first and ocular redness is one of the endpoints there, [indiscernible] standard error number from that new Phase II [indiscernible] could shed some -- shed light [indiscernible] outcome for the Phase III.

Thank you..

Kelly, thanks for the questions and you're better at math than I am. So forgive me ahead of time for simplistic answers. The allergy trials are somewhat different than the dry eye trial. Both trials -- both the INVIGORATE trial, for example in allergy and the TRANQUILITY trial in dry eye disease are in chambers.

However, obviously, the allergy trials are with allergen in the chamber and the dry eye trials are with low to no humidity air in the chamber. The patient populations are related, but different for obvious reasons. I think there is approximately a 50% overlap in the patient populations between allergic conjunctivitis and dry eye disease.

What I'm saying is that there are some similarities across the allergy chamber trials and the dry eye chamber trials, but there are also some important differences. Another important difference statistically is that the allergy trials were crossover trials, which as you know will diminish standard error.

And that the intra patient differences can be controlled. That is not the case with the dry eye chamber trials. These are parallel group trials, so intra patient differences are not controlled. I would expect the standard errors to be slightly higher for that reason. However, without having the data, we don't know.

We did assess the powering in the TRANQUILITY trials using the TRANQUILITY run-in cohort. As we've described previously, we believe at this point that the TRANQUILITY trials based on the run-in cohort are approximately 90% powered for ocular redness given the delta that was evidenced in the run-in cohort and the standard errors.

I think it is possible to back and to the standard error or standard deviations that we use to power TRANQUILITY, knowing what I just said that the TRANQUILITY trials are approximately 90% powered, 300 patients or 150 patients per arm and using the delta that was observed in the run-in cohort.

I particularly resonate the last part of your question Kelly regarding the use of the Phase II RASP trial to inform us on future conduct of TRANQUILITY. One of the things that I've mentioned previously today is that we will have the ability to change the in or the enrollment numbers of TRANQUILITY.

If we receive Phase II data that suggests that TRANQUILITY is not sufficiently powered, and that is by design. We have purposefully sequenced the Phase II trial and TRANQUILITY-1 and TRANQUILITY-2, so that between each of those trials we will have the ability to make powering changes if needed.

I think that answers your questions, Kelly, but forgive me if I haven't covered all the mathematical details you were asking about previously..

Thank you very much. It was super helpful. If I may also have a very quick one. I'm [Indiscernible] model is applied for the stats [ph] analysis in the design for TRANQUILITY Phase III trials.

I wonder how should I estimate a covariance for the Phase III based on the run-in cohort data? Should I expect like similar number, a substantial change on the covariance?.

Right. Generally, I am a big fan of ANOVA and COVA in MRM, because those statistical techniques allow for assessment of repeated measures, which is a fancy way of saying that each subject is assessed at multiple time points.

I believe in the TRANQUILITY chamber, there are 13 different time points during which ocular redness symptoms and so forth are assessed. Those are referred to statistically as repeated measures because within each subject, there are 13 different values.

And the standard error is accounted for differently based on the fact that those measures are repeated. The covariance matrix that you refer to is a method of adjusting for the correlation between time points. In fact, it's a correlation matrix is mathematically related to covariance matrix.

That makes sense that within a particular subject, that adjacent time points are correlated. Time 10 minutes is probably fairly similar to time 5 minutes or time 15 minutes. And that is exactly what the covariance matrix attempts to adjust for.

We typically have used the same covariance matrix -- matrices across clinical trials for the very reason that I just described. That is, there is a fairly clear relationship amongst adjacent time points. We haven't disclosed the exact statistical model. Perhaps one day you'll see it when the SAP is posted on clinical trials.gov.

But for now, I think you have a fairly good understanding of how we think about repeated measures and the correlation between time points..

Thank you for the thorough answers. Thanks, Todd..

Thanks, Kelly..

Your next question is from the line of Edwin Zhang from H.C. Wainwright. Your line is now open..

Hi. Thanks for taking my question. A question on the new trial of ADX-2191 retinitis pigmentosa. Can you briefly talk about the trial design for the efficacy endpoint? What should we look at and what improvement to expect from this Phase II trial? And lastly, are we going to see some data of this trial next year? Thank you..

Yes, thanks, Edwin, for the question. We're still working on getting that design up and running. I do expect it will be able to be in process this year, as I mentioned in my prepared comments this morning. Essentially, this is an open-label trial and we are going to assess a couple of different dosing regimens.

And as I mentioned, the primary endpoint will be safety because this particular compound ADX-2191 has not been previously tested before. So, in particular, as we've posted in our corporate deck, Edwin, you can see that we expect this to be a single center trial.

We're looking at approximately, I don't know, four or five patients per dosing cohort, a couple of different dosing cohorts and more or less a 3 month evaluation period.

But we're looking at all the standard secondary endpoints that most retinitis pigmentosa trials focus on, including, obviously visual acuity, but also retinal function and retinal morphology..

Great, thanks..

Your next question is from the line of Prakhar Agrawal from JonesTrading. Your line is now open..

Hi, good morning, and thanks for taking my questions. My first is on allergic conjunctivitis. On your comment around the NDA update for this indication by end of the year.

Is it more of a question of getting clarity around how much safety exposure is needed? Could you confirm whether you have the necessary efficacy data for submission in allergic conjunctivitis? And then I had a couple of follow-ups..

Sure. Thanks, Prakhar. No, it is not a function of safety data. The questions currently under discussion with the FDA have to do with efficacy requirements. I can go into a bit more detail along those lines.

In particular, we have two Phase III trials that have been completed both of which were highly statistically significant and hit their primary and key secondary endpoints. The -- it should be pointed out though, that those trials are different.

So the ALLEVIATE trial which was announced, I believe in 2020 or 2019 has to do with conjunctival allergen challenge which is a method of directly exposing the ocular surface to pollen. In this case, whereas the INVIGORATE trial that was released earlier this year, is an allergen chamber trial, which is a more real world.

The pollen exposure in that case of pollen is aerosolized into a chamber and subjects are exposed in that manner. So the two Phase III trials are different. And as you know, that requires discussion with the agency, which is currently ongoing, and that's the subject of those discussions..

Got it. And secondly, on early stage pipeline, you have previously talked about testing RASP innovation for backup DI [ph] indications. Just wondering if there are any updates there? Is that something we can expect to hear in the next 6 to 9 months? Thanks for taking my questions..

We are committed, Prakhar, to continuing to develop the new RASP inhibitors. As you can tell from my excitement this morning, we remain very positive on the potential of RASP broadly in immunological disease.

We're in the process of discovering, optimizing, testing preclinically a variety of new RASP inhibitor analogues with extended patent lives and so forth. And we look forward to updating you and the Street on our new approaches along those lines at some point next year..

Your next question is from the line of Esther Hong from Berenberg. Your line is now open..

Good morning. So I just wanted to know if you could remind us of the findings in the publication that you mentioned regarding the comparison reproxalap versus lifitegrast.

And then second, what's the feedback you're getting from practicing physicians regarding currently available therapies for dry eye disease and where reproxalap might fit in? Thanks..

Good morning, Esther. Speaking with key opinion leaders, both on the ophthalmology side of the fence and the optometry side of the fence is something that is of key importance to us that these days, so your question is particularly appropriate.

We're getting very positive feedback, particularly for the reasons that I think we all know, namely, that reproxalap in dry eye disease appears to be the only therapeutic option that's either in late stage development or currently available, that works quickly, within minutes, according to the data presented in January from the dry eye chamber.

It's also the only drug that can be in theory used chronically that is whitening that eliminates or reduces ocular redness, which as we discussed earlier this morning, I think is a key commercial advantage. The paper that you reference is open access and available on PubMed.

The idea was to compare tolerability between a couple of different formulations for reproxalap, including the one that we're currently advancing, that we call the standard formulation. And a novel formulation the difference between those two formulations is minor.

We increase the percentage of an excipient and attempt to delay release of drug on the ocular surface. But as you can see from the results of the paper, the two formulations perform similarly.

You can also see that in our corporate deck based on the 12-week symptom data that we present, one trial is a standard formulation and one trial is from the novel formulation. The tolerability evidenced in the paper is considerably better for both formulations of reproxalap compared to lifitegrast.

Lifitegrast is often plagued by acute discomfort, taste disturbances, blurry vision, those are the three elements that are tested directly in the paper. And you can go see how reproxalap performed relative to lifitegrast in the manuscript. itself.

The only other thing I'll say is that ocular discomfort score, which was I would say one of the key symptoms assessed in the paper has also been used as a pivotal symptom score for the approval of at least one compound in a dry eye disease. That's the same measure that is evidenced in the paper.

And I think it could represent a direct head-to-head comparison of a dry disease activity, not just tolerability, but activity of reproxalap versus lifitegrast..

Got it. Thanks..

Thanks, Esther..

[Operator Instructions] Your next question is from the line of Yale Jen from Laidlaw & Company. Your line is now open..

Good morning, Todd, and thanks for taking the questions.

My first question is just trying to confirm that for the Phase II study in reproxalap is that the main purpose is for [indiscernible] determining whether the TRANQUILITY study you might if you need to increase the size of the TRANQUILITY study is mostly for potential reach the statistical significance for RASP, but not necessary -- not for the redness or the Schirmer, is that correct?.

Good morning, Yale, and thanks for the question. Well, the reason we perform the Phase II study is to optimize the RASP signal. I think we will be able to use the data from the Phase II to power TRANQUILITY for all the endpoints, if we wish.

RASP included redness, included Schirmer's test symptoms, whatever, I think it's prudent for any biotech company to use current and available clinical trial data to adjust powering of ongoing trials. And that's exactly what we're doing with a Phase II trial.

When we've designed the trial, when we initiated the trial, when the trial was ongoing in terms of clinical conduct and inpatient treatment and so forth, the idea really was to optimize RASP. And as I mentioned, adjust the timing and the sequencing and the order of tear collection processes.

I think an added advantage, though of the trial is exactly what you mentioned. And that is we're able to take the data from the Phase II and adjust the powering if needed for TRANQUILITY. But we could do that with any of the endpoints that we wish..

But should we assume that at least at this moment, in terms of TRANQUILITY, the study size is reasonably powered, assume the well powered for detecting the redness that does the current assumptions?.

I think that's an excellent point, Yale, that I have not made this morning. That is both the Phase II and the TRANQUILITY trials are powered for ocular redness. While the Phase II was designed to optimize the RASP signal, the Phase II was also powered based on ocular redness. The primary endpoint of the Phase II is ocular redness.

The question then is well, how can you reach 90% power with 150 subjects in one trial and 300 subjects in another trial? And the answer is we use slightly different powering techniques. And for those of you that are interested in the mathematics, in one case, we used individual group standard deviations.

And in another case, we used pooled groups standard deviations, the latter being much more conservative, obviously by a factor of approximately two in this case. So I think that both the Phase II and the Phase III trials are adequately powered for ocular redness.

And if we believe the power and calculations, then and the power and calculations reflect reality, then there should be no need to adjust powering going forward. But again, the run-in cohort was 23 patients. The Phase II trial is a 150 patients.

As I mentioned, I think it's prudent for any biotech company to take the most recent and fulsome clinical data to power or adjust the power for ongoing clinical trial..

Okay, great. That's a very comprehensive answer. Maybe one question on the 2191. Actually two up here. The first one is for the RP.

After the Phase II study, have you thought about what might be the potential approval endpoints for RP? Have you spoke with your consultants or with FDA about this?.

Thanks for asking about RP and I know Edwin brought up RP as well. I should say at the outset that we're extremely excited about retinitis pigmentosa. There is no approved drugs for retinitis pigmentosa. There's a tremendous unmet medical need.

There is a tremendously motivated patient population and kudos to those patients and their providers for organizing so effectively, we've received many inbound well wishes and thoughts and requests and so forth. And we're just thrilled that we're able to participate in the RP, a development program broadly for that patient community.

The pivotal endpoints, I think remain to be discussed in our case with the agency. We typically don't have those discussions until we have at least some clinical data to discuss with the agency.

My understanding typically, though, with rare retinal diseases, possibly including retinitis pigmentosa is at the pivotal endpoints concern, a functional studies, the ability for patients to see and operate in a variety of different lighting conditions.

And as we get closer to generating data, and as the initial data come in, we'll have those discussions for the agency and be able to provide more clarity on the endpoints needed for NDA submission at that point..

And maybe the last one also in 2191. Is that you mentioned recently that the drug also potentially can be used for lymphoma, vitreoretinal lymphoma.

Any thoughts in terms of a discussion on this front?.

Lymphoma, as it occurs in the primary sense, in the eye is a serious condition. I believe the median survival is about 5 years. The challenge is that those cancers often metastasized to the CNS or the brain.

There is currently one drug that is used to treat primary ocular lymphoma or PBRL and that is methotrexate, which is the active ingredient in 2191. There is a considerable amount of literature, scientific literature on the use of methotrexate both in terms of systemic administration and intra ocular administration for the treatment of lymphoma.

And our discussions with the agency involve the scientific literature as well as other mechanisms we may be able to use for NDA submission for lymphoma, and those discussions are ongoing, Yale..

Okay, great. Thanks a lot and congrats for all the progresses..

Yes, thanks, Yale. Thanks for the excellent questions..

There are no further questions. I will hand the call over back to Dr. Brady for closing comments..

Thank you all for joining us this morning. As always, we look forward to keeping you updated on our progress..

And with that, this concludes today's conference call. Thank you for attending. You may now disconnect..