Earnings Call Transcript - ALDX Q1 2022

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Aldeyra Therapeutics First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. I would now like to hand over the conference to the company's Chief Financial Officer, Mr. Joshua Reed. Please go ahead, sir.

Joshua Reed, CFO

Good morning, everyone. With me today are Dr. Todd Brady, President and Chief Executive Officer; and Bruce Greenberg, incoming Interim CFO. This morning, we issued a press release reporting our financial results for the quarter ended March 31, 2022. 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, but are not limited to, statements regarding the 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. These statements are based upon the information available to us today and reflect our 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 risks that result 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 timelines 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 our 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 our press release issued this morning and our filings with the SEC. As many of you know, next week, I will be leaving Aldeyra to take a position as CFO of another publicly-traded company in the life sciences space. Though the timing was less than ideal, it was an opportunity I could not let pass. While transitions are a natural part of this business, you always relish the friendships you make and the skills you gain along the way. Aldeyra has provided both. It has been gratifying to work with Todd, the Board of Directors, and our entire team over the past 3.5 years. I'm exceedingly proud of what we accomplished and look forward to seeing the company's continued success. Bruce Greenberg, Aldeyra's incoming CFO, is highly qualified for the post. I've taken particular pride in helping build a strong finance team at Aldeyra with more than 25 years of science and operating experience, much of it at public companies. Bruce exemplifies that depth of knowledge. Having hired Bruce as our controller in 2019 and working closely with him since, I know that he'll do an outstanding job. I will now turn the call over to Dr. Brady.

Dr. Todd Brady, CEO

Thank you, Joshua. Good morning, everyone. Thank you for joining us as we review the recent progress of our clinical programs and discuss our first quarter financial results. But before we do that, let me convey my sincere appreciation to Joshua for his work and dedication over the past 3.5 years. All of us at Aldeyra wish him much success as he begins the next chapter of his career. And I also want to congratulate Bruce on his appointment as Vice President, Finance, Interim CFO, and Treasurer. I expect that Bruce's knowledge of our business over the past several years, coupled with deep industry and financial experience, will make this a truly seamless transition. Turning to our recent research and development highlights, between our clinical accomplishments and our R&D Day, Q1 was an exciting quarter for Aldeyra. It marked the start of what we believe will be a catalyst-rich year for our company, one in which we plan to continue executing on the key strategic milestones in our ocular, systemic, and retinal disease programs. We are continuing to advance reproxalap toward an expected midyear NDA submission in dry eye disease. Reproxalap is the lead asset in our drug discovery and development platform targeting RASP, which represent a novel pharmaceutical target comprised of pro-inflammatory small molecules that are implicated in a wide range of immunological diseases. Dry eye disease affects an estimated 39 million adults in the U.S., a large percentage of whom are dissatisfied with current standard of care treatments. It's been nearly 20 years since the first approval of a prescription drug for dry eye disease. Currently available topical therapies often require months to demonstrate even modest efficacy. As a result, the dry eye disease market remains significantly underserved. We envision introducing a new therapy that changes that pattern. We took another step toward that vision in the first quarter, completing enrollment in the Phase III TRANQUILITY-2 trial of reproxalap in dry eye disease. We have received many questions from investors on TRANQUILITY-2, and I want to spend some time describing the precise nature of the trial, the criteria for success, the potential implications for our product label, if approved, and the timing of planned FDA interactions regarding our dry eye disease NDA submission. The primary endpoints of TRANQUILITY-2 are Schirmer tests on the first day of dosing and ocular redness on the second day of dosing during a dry eye chamber. Because we've implemented an alpha sharing mechanism, per FDA multiplicity guidance, that distributes alpha roughly equally across both endpoints, if either redness or Schirmer test is achieved, the primary endpoint of TRANQUILITY-2 will have been met. Based on the results of the previously completed Phase II and TRANQUILITY trials, simulations of TRANQUILITY-2 indicate that in at least 90% of the potential outcomes, the simulated trial was positive. That is, statistical significance of drug over vehicle for either ocular redness or Schirmer test was achieved. We're continuing to review the TRANQUILITY data to confirm the analytical plans for TRANQUILITY-2, and we remain on schedule to report results of TRANQUILITY-2 in the second quarter. Our next major interaction with the FDA is expected to be the Type B pre-NDA meeting, following the results of TRANQUILITY-2. We may submit 2 pivotal trials for either ocular redness or Schirmer test or 2 trials for both signs, if ocular redness and Schirmer tests are achieved in TRANQUILITY-2. Pending the outcome of TRANQUILITY-2, reproxalap could represent the first time a dry eye disease drug will have qualified for the demonstration of activity for 2 objective signs, in addition to symptoms. Two additional trials are ongoing, a crossover chamber trial and a 1-day Schirmer test trial. Either of these trials could also serve as pivotal trials in support of an NDA submission. Both trials are designed to generate results soon after TRANQUILITY-2 so as not to significantly impact NDA submission timing. In addition to dry eye disease, reproxalap is also in a Phase III clinical trial in allergic conjunctivitis, a condition that affects at least 66 million adults in the U.S. alone. We initiated the Phase III INVIGORATE-2 allergen chamber trial earlier this year and expect results in 2023. Enrollment criteria endpoints, trial design, and study conduct are substantially similar to our previously completed INVIGORATE trial, which demonstrated statistically significant improvement in the primary endpoint of ocular itching and the key secondary endpoint of ocular redness. Based on data from INVIGORATE, simulation modeling of INVIGORATE-2 indicates that more than 90% of outcomes achieved the primary endpoint of patient-reported ocular itching. At our R&D Day in March, we announced topline data from our proof-of-concept trials of ADX-629, our first-in-class oral RASP modulator, in psoriasis, asthma, and COVID-19 infection. In those trials, ADX-629 demonstrated signs of pharmacodynamic and clinical activity consistent with broad-based reduction in pathologic inflammation. As we announced at R&D Day, we have advanced ADX-629 to Phase II clinical trials in 4 new clinical indications. Our Phase II clinical trials in ethanol toxicity and chronic cough have already initiated. Phase II clinical trials in Sjogren-Larsson syndrome and minimal change disease are expected to be initiated later this year, positioning our systemic program for multiple clinical milestones over the remainder of 2022 and 2023. We also continue to advance ADX-2191, our vitreous compatible formulation of methotrexate for orphan retinal diseases. An investigator-sponsored Phase II clinical trial in retinitis pigmentosa, conducted at Duke University Medical Center, has been initiated. In addition, in the first quarter, we completed enrollment in Part 1 of the Phase III GUARD trial in proliferative vitreoretinopathy. Results from both of these trials are expected in the second half of this year. Now I'll turn the call over to Joshua, after which I will summarize our recent clinical progress and our future potential in developing novel platforms for the treatment of immune-mediated diseases.

Joshua Reed, CFO

Thank you, Todd. Cash, cash equivalents, and marketable securities as of March 31, 2022, were $216.9 million. Based on our current operating plan, we expect our existing cash, cash equivalents, and marketable securities to be sufficient to fund currently projected operating expenses through the end of 2023, including potential new drug application submissions, initial commercialization of reproxalap, if approved, and continued development of our product candidates in ocular and systemic immune-mediated diseases. Moving on to our first quarter 2022 results, net loss was $16.8 million, or $0.29 per share, compared with a net loss of $11.3 million, or $0.25 per share, for the comparable period of 2021. Losses have resulted from the cost of clinical trials and research and development programs, as well as from general and administrative expenses. Research and development expenses were $12.2 million, compared with $7.7 million for the same period in 2021. The increase of $4.5 million is primarily related to increases in our clinical research and development expenditures. General and administrative expenses were $4.2 million, compared with $3.1 million for the same period in 2021. The increase of $1.1 million is primarily due to an increase in consulting expenditures. Total operating expenses were $16.5 million, compared with total operating expenses of $10.8 million for the same period in 2021. Now I'll hand the call back to Todd for closing comments.

Dr. Todd Brady, CEO

Thank you, Joshua. We have started 2022 with great enthusiasm regarding our clinical progress, as well as the clinical and regulatory milestones scheduled for the second quarter and the latter half of this year. Given the unique rapid onset of action and the broad activity across symptoms and signs observed so far, we believe that reproxalap has significant potential to change the dry eye disease market, and we are eager to announce the results of the Phase III TRANQUILITY-2 trial later this year, specifically this quarter. In addition to reproxalap, our systemic and retinal disease platforms present substantial opportunities for both near-term and long-term value creation that we believe is still significantly undervalued. With that, we would be happy to take your questions. Operator?

Operator, Operator

Our first question today comes from Justin Kim at Oppenheimer.

Justin Kim, Analyst

The overview on reproxalap trials ongoing has been helpful. As the team approaches the upcoming TRANQUILITY-2 readout, could you just discuss for us a little bit about the confidence in having a fileable data package on the basis of redness or Schirmer test? And could you just clarify the motivation for the 2 additional trials following TRANQUILITY-2? Are these studies intended to serve in the place of TRANQUILITY-1 as it relates to sort of 2 pivotal studies?

Dr. Todd Brady, CEO

Based on our discussions with the agency, we are quite confident in the robustness of our NDA submission package. I would argue that the package we plan to submit is the most thorough ever submitted for dry eye disease. Regarding whether the Schirmer test or redness can be an acceptable indicator for dry eye disease, there is significant precedence for both. Most drugs, starting with RESTASIS many years ago, have utilized the Schirmer test as an objective measure of dry eye disease. Recently, a generic steroid was approved for dry eye disease based on redness as the indicator. Therefore, we have a solid precedent that the FDA will accept either the Schirmer test or redness. The additional trials I mentioned, the crossover chamber trial and the 1-day Schirmer test trial, are aimed at supporting TRANQUILITY-2. If for any reason the data from TRANQUILITY-2 is unclear, we will effectively have two additional opportunities to back our submission package. Broadly speaking, as you know, the FDA evaluates the overall body of evidence, and the more robust your package—meaning the number of clinical trials, the number of patients tested, and so on—the better your chances for approval. Aldeyra is fortunate to be able to conduct rapid 1- or 2-day clinical trials at a minimal cost to bolster our NDA submission package. Thus, pursuing additional trials is a prudent and wise use of resources as we prepare to submit our dry eye disease package.

Justin Kim, Analyst

Got it. Got it. Understood. Maybe just one more from me. With regards to timeline, I know you had mentioned that a midyear filing is sort of in the cards. Just wondering how the progress of the long-term safety study is going and whether that sort of still remains on the critical path.

Dr. Todd Brady, CEO

The safety trial remains on the critical path. The safety trial is the gating factor for the submission of the NDA. As you know, the FDA requires 100 subjects, or 100 patients to have been exposed to your commercial formulation at your commercially proposed dosing regimen for at least 12 months. We are masked as to how many patients are on drug versus vehicle; the safety trial is a 2:1 randomization, that is drug to vehicle. However, based on the information we have to date, we believe that we remain on track for a midyear submission of the NDA.

Justin Kim, Analyst

Great. Great. Congrats on the project.

Operator, Operator

Our next question comes from Marc Goodman of SVB Leerink.

Marc Goodman, Analyst

Yes. Two questions; first, the dynamics of the dry eye market. Todd, can you just give us a flavor for what's happening there right now and how much anything has changed, if at all, with RESTASIS going generic? And then second, given that there's a transition at CFO, and this is a product that potentially could be licensed partnered, can you give us a sense of confidence that the relationship there is there with Bruce, or who's going to be the key driver of making that deal?

Dr. Todd Brady, CEO

Thank you for your question, Mark. It's somewhat ironic as you were present during the launch of RESTASIS back in 2006, and I remember your involvement in the initial coverage of Allergan. Now that RESTASIS is generic, there are both advantages and disadvantages. One downside is that payers will likely require patients to try the generic first, which is standard practice when a generic option is available. The upside is that many patients have not had success with RESTASIS, with about a month being the median duration before discontinuation; roughly 70% of patients stop using it after a year. Thus, the issue of having to step through RESTASIS or its generic may not be as significant as it seems. Our aim is to establish reproxalap as the preferred branded treatment, which is why we have conducted two head-to-head trials against Xiidra, the only other novel dry eye disease treatment available. In the first trial, we demonstrated that reproxalap was better tolerated than Xiidra, resulting in less blurry vision and taste disturbance, with all findings being statistically significant and published on PubMed. The second trial, conducted in a dry eye chamber, assessed how well each drug prevented symptom exacerbation in a challenging environment. We found that while both treatments faced symptom escalation, reproxalap-treated patients experienced less and slower escalation compared to those treated with Xiidra, reinforcing our position against generic RESTASIS. Our goal continues to be establishing reproxalap as the top branded choice. Regarding partnerships, it's clear there is strong demand for a new dry eye disease treatment. Many physicians and patients are dissatisfied due to the slow onset of existing therapies and the limited effectiveness of both RESTASIS and Xiidra for many individuals. Moreover, the late-stage pipeline for dry eye disease is quite sparse, and innovation in anterior segment ophthalmology is lacking. Reproxalap stands out as one of the few innovative options for front-of-the-eye inflammation and represents a new class of drugs applicable to a range of conditions beyond just eye diseases. The ongoing business development process has focused on both development and commercial strategies, currently centering on label positioning and branding discussions led by our commercial lead, Kelly Mizer.

Operator, Operator

Our next question comes from Yigal Nochomovitz from Citi.

Yigal Nochomovitz, Analyst

So, as you mentioned at the R&D Day, you've announced the 4 new indications for 629, ethanol toxicity, chronic cough, minimal change, and Sjogren-Larsson syndrome. And on the face of it, it seems these 4 indications are mutually orthogonal in terms of clinical presentation, albeit obviously with the common underlying commonality of aldehyde involvement. So, with that being said, if you were to rank these 4 in terms of POS, which ranks highest and which ranks the lowest based on the role of aldehyde biochemistry in disease progression?

Dr. Todd Brady, CEO

I'm smiling as you asked that question because it's something that we think about a lot here. And in a sense, the broad applicability of ADX-629 is a tremendous advantage. That is, we're able to test diseases that, as you point out, are different and/or complementary because of the potential broad activity of the drug. RASP mediates inflammation generally, which allows us to test different kinds of inflammatory diseases, which is precisely what we're doing and have done with ADX-629. Of the diseases that I think are most likely to derive benefit, I would argue that diseases that are particularly related to aldehydes, that is Sjogren-Larsson syndrome, ethanol toxicity, are probably more likely to demonstrate at least a pharmacodynamic activity. Ethanol, when we consume ethanol, we generate RASP, in particular, acetaldehyde, as was featured in at R&D Day, and ADX-629 should trap acetaldehyde and thereby diminish inflammation. And Sjogren-Larsson syndrome, we have an inborn error of metabolism that is caused by a genetic mutation in an enzyme that metabolizes fatty aldehydes, which have been shown to be trapped by ADX-629 and other RASP modulators. So, I would suspect that in terms of pharmacodynamic activity, we're best positioned in ethanol toxicity and in Sjogren-Larsson syndrome. For the inflammatory diseases, which are minimal change disease and chronic cough, I'm also optimistic, and I'm optimistic because of the data that we presented at R&D Day. We intentionally tested different kinds of inflammation, so on one end of the spectrum, we had an autoimmune disease; that is psoriasis. On the other end of the spectrum, we had an allergic disease, which is asthma. In each case, I think we had either clinical or pharmacodynamic activity, and thus, we remain optimistic about our inflammatory diseases as well. It's a little bit like selecting your favorite child. But in our case, we're optimistic about all 4 indications and look forward to discussing the results, beginning with ethanol toxicity, later this year.

Yigal Nochomovitz, Analyst

Okay. Got it. That's very, very helpful incremental color. I just had two kind of housekeeping questions on dry eye and TRANQUILITY. So, you made a comment in the press release that you're continuing to review the data from the completed TRANQUILITY trial to finalize analytical plans for TRANQUILITY-2. I guess I was just a little bit puzzled by that statement. I guess I thought everything was pretty much hammered away in terms of how the co-primary for redness and Schirmer's would be analyzed in TRANQUILITY-2. So, if you don't mind just elaborating on what you mean when you say analytical plans still need some finalizing.

Dr. Todd Brady, CEO

Well, Yigal, this answer is closely related to your work with simulation modeling, and I appreciate your skill in clearly simulating the results from TRANQUILITY-2. The additional analysis pertains to the alpha share, which involves determining how much alpha is designated for redness and how much for the Schirmer test. Typically, the alpha is set at 0.05, meaning the p-value must be under 0.05 to indicate a positive outcome. When allocating the alpha, you could split it equally, assigning 0.025 to both redness and the Schirmer test. However, the specific allocation in our case will depend on ongoing simulations of the outcomes from TRANQUILITY-2, informed by the data from TRANQUILITY-1, since that trial is the largest we've conducted so far. This ongoing analysis is what I mean. We have not finalized the exact alpha distribution between redness and Schirmer tests for TRANQUILITY-2, but I anticipate that the allocation will be approximately 1:1 at this stage.

Yigal Nochomovitz, Analyst

Okay. Understood. If there's a refinement, I will reburn my simulations. And then one other final question. I think you sort of alluded to this before, but just with the safety, so 100 patients on drug with 12 months of exposure. Is my understanding correct that you're going to hit that goal, presumably middle of the year, given your guidance for filing the NDA middle of the year?

Dr. Todd Brady, CEO

Per FDA guidance, the NDA submission can occur with 6 months of data; that is, 100 patients with 6 months of exposure. However, by the standard 120-day update following NDA submission, the remainder of the 6 months of exposure needs to be submitted. I think most sponsors typically submit the NDA with 8 to 10 months of completion of exposure, which covers the initial 6 months and then allows the sponsor to submit, 120 days later, the remainder of the 6 months.

Operator, Operator

Our next question is from Kelly Shi at Jefferies.

Kelly Shi, Analyst

So, if only Schirmer's test is significant for TRANQUILITY trials and will be included in the label, I'm just curious, since Schirmer's test is more of a classic endpoint, what would be your strategy to convey repro's product differentiation from other dry eye drugs to prescribers? Would these 2 new dry eye trials following TRANQUILITY help in this scenario?

Dr. Todd Brady, CEO

That's a really interesting question that Kelly Mizer and I have been exploring with a large number of key opinion leaders, both on the optometry side and on the ophthalmology side. I think it's important to remember that about 60% of the dry eye scripts are derived from optometrists, so as a company, we spend a lot of time with key opinion leaders and thought leaders on the optometry side as well as ophthalmology. We spent a considerable amount of our interactions in terms of dealing with potential label scenarios, which gets right to your question. What if Schirmer test is the sign? What if redness is the sign? The answer is consistent, and that is, what matters is symptoms. As a healthcare provider, if you're an optometrist or an ophthalmologist, you want your patient to feel better, and you want your patients to feel better quickly. And therein lies the key competitive advantage of reproxalap, and that's why we said in our prepared comments that we expect reproxalap to represent a paradigm shift in the way dry eye disease is treated. Instead of having to wait a month or 2 months or 3 months for your patient to feel better, according to the head-to-head data we have versus Xiidra, you can wait 90 seconds. This is the key driver on the label. Whether Schirmer or redness is on the label seems to be, obviously, less relevant, and really depends on the particular healthcare provider with whom we're talking. I think on the optometry side, there may be a slight preference for redness because patients complain of redness. As I have said before, redness may be the only dry eye disease sign that patients care about. On the other hand, ophthalmologists seem to have a slight preference for Schirmer test, and that's because of the fact that you mentioned, Kelly, that most drugs have used Schirmer test as an indicator of activity in the past. And it makes sense that if a drug can generate more tears, dry eye symptoms and signs should improve.

Operator, Operator

Our next question is from Thomas Shrader of BTIG.

Sung Hong, Analyst

This is Sung calling in for Tom. So, I have 2 questions. One is kind of like a follow-up question from earlier about 629. So currently, you guys have multiple indications, but any thoughts on which indications to prioritize, and then whether it makes sense to potentially partner for a bigger Phase III study? And the second question is for 2191 in PVR. Just thinking about potential commercialization down the line, could you provide any color on sales force for the indication and whether there's any overlap with dry eye disease sales force for a potential synergistic effect?

Dr. Todd Brady, CEO

I believe that smaller companies excel at commercializing orphan drugs compared to mass-market drugs. In the case of ADX-629, if all indications prove effective and we advance them into Phase III or at least past Phase II clinical testing, I think we would focus on the smaller diseases, specifically minimal change disease and Sjogren-Larsson syndrome. Partnering remains an option for us, as there is significant demand for safe new immunological and specialty drugs. A key takeaway from our R&D Day was that we found no clinically significant adverse events related to the drug among over 30 patients tested. This suggests that we will have ample business development opportunities. My view is that we would consider entering into partnership discussions for mass-market indications. For ADX-629, I think ethanol toxicity, which could lead to alcoholic hepatitis, and chronic cough are noteworthy. There are numerous additional indications that could pertain to ADX-629's related conditions. During our R&D Day, we discussed Project X, our drug discovery engine, which we believe is unique and designed to create new RASP modulators. I expect that newer molecules will be evaluated for larger diseases, which would also be suitable for potential partnerships.

Sung Hong, Analyst

Great. And then, just regarding the 2191, could you just provide color on the sales force required and then if there's any overlap with the dry eye disease sales force for a synergistic effect, potentially?

Dr. Todd Brady, CEO

Yes, thank you for the reminder. The answer is, back office, yes; front office, no. Back office in terms of access, reimbursement, billing, legal, compliance, et cetera, would have considerable overlap for ophthalmology sales forces broadly. Typically, though, in ophthalmology, your sales force is either geared towards the front of the eye or the back of the eye, because the physician populations are quite different, not only in terms of their training and expertise and practice, but also in terms of their outlook on pharmaceuticals and so forth. I would say, though, that the dry eye disease and allergic conjunctivitis are representative of more typical sales force kinds of efforts, whereas ADX-2191 is different. Injectable drugs for retinal surgeons are typically buy-and-build, meaning that the surgeons purchase the drugs and then get reimbursed for them later. That is a different sales process. It typically involves a heavier emphasis on access, so that we may not need to have your standard sales force geared towards the launch and marketing and sales of ADX-2191.

Operator, Operator

Our next question comes from Matthew Cross at Alliance Global Partners.

Matthew Cross, Analyst

Best wishes to Joshua in the new role. I wanted to drill down a little bit on the exact handling of these two primary endpoints in TRANQULITY-2 that you guys are fully enrolled. I guess, wanted to get a reminder on, for the handling of Schirmer's, I know you're looking at the analysis there, both before and after the fourth dose in particular, as opposed to just straight baseline and post dosing, which I know was related to what you saw in TRANQUILITY. But given that basically, they'll have 3 doses prior to that, I just wanted to kind of review the rationale for looking at that in that fashion. And then, on redness, I wanted to confirm for that part of the equation that this was, as you've done in prior trials, still contingent on a majority of the assessed time points not all being necessarily successful relative to the comparator, or if this is more strict, given the significant split with Schirmer's. And on both fronts, whether the handling in TRANQUILITY-2 should be expected to be mirrored, to some extent, in these so-called backup studies.

Dr. Todd Brady, CEO

Well, Matt, you've highlighted some interesting statistical details. The answer to both questions is the same: I've never understood why companies choose single time points. Single time points are riskier as they reduce your statistical power. You lose a lot of data, and they lack clinical relevance. I’ve never asked a patient how they felt on a specific day without considering the context before or after that day. A more clinically relevant and statistically robust approach is to include all the data. For both the Schirmer test and the redness in the chamber, we have multiple time points. Specifically, for the Schirmer test, we are evaluating change from baseline before the fourth dose and after the fourth dose. The baseline measurement considers activity that may or may not have occurred with the first three doses, and the post-fourth dose measurement reflects the immediate effects of the fourth dose, so we are assessing two different yet clinically relevant things. Both endpoints are included in a statistical model, which enhances power by adding data. Even with just two points post-baseline, we can evaluate the overall trend of improvement over time. The redness assessment involves about ten time points in the dry eye chamber, and we include all ten in the model. One way to consider this statistical approach is in terms of the trend; we assess whether the patient's condition worsens, which you would expect in the dry eye chamber, but we also check if a patient on a vehicle worsens more than a patient on the drug. The expectation is that the trend would indicate a greater decline on the vehicle compared to the drug. This is all very clinically meaningful. As healthcare providers, we focus on patient outcomes over time rather than at a specific moment. Therefore, for both statistical and clinical relevance, we analyze multiple time points. As for whether the statistical approach in TRANQUILITY-2 will be reflected in the backup studies, the answer is definitely yes. We plan to keep the statistical plan unchanged. In fact, the execution of those studies will be quite similar. The Schirmer test trial does not involve the chamber, and the crossover chamber trial differs from TRANQUILITY only in that patients switch treatments. A patient might receive the vehicle and then, after some weeks, switch to the drug or vice versa, with the sequence randomized.

Matthew Cross, Analyst

Got it. Okay. Really helpful insight on several fronts there, Todd; I appreciate it. And if I can sneak in one quick confirmation, for INVIGORATE-2, I know you mentioned that you'd already initiated that study. So, just wanted to confirm, I know given your intention to kind of avoid effective seasonality on those patients in terms of data variability. Is that study, I guess, enrolling or just initiated, but planning to really enroll the bulk of patients still in winter for a 2023 readout?

Dr. Todd Brady, CEO

What we're learning about the front of the eye, whether it be dry eye disease or allergic conjunctivitis, is that seasonality probably matters. It definitely matters for allergic conjunctivitis, because during certain parts of the year we have pollen, and during other parts of the year, we do not have pollen. Unfortunately, to run a clinical trial in allergic conjunctivitis, you cannot have pollen in the atmosphere because the pollen in the atmosphere compounds the exposure to pollen in the chamber, and thus, the results are confounded. And thus, we cannot enroll allergy trial, say, in the spring or fall. The answer to your question about enrollment for INVIGORATE-2 is, yes, we have begun enrollment. Enrollment has been robust, which is always a good sign, not only in terms of clinical operations but in terms of commercial demand for such a therapy. But again, we expect to enroll over 2 allergy-free seasons, that is 2 winters, and maybe perhaps during the middle of the summer, with data coming out next year.

Operator, Operator

Our next question is from Catherine Novack of Jones Trading.

Catherine Novack, Analyst

I just have a couple of quick ones. One, I wanted to ask, on R&D spend for the year, with running additional trials for reproxalap as well as the ongoing 629 studies, how much should we be expecting for those studies, and in particular, the cost of the reproxalap studies?

Joshua Reed, CFO

Yes. Thanks for the question, Catherine. I'll give some broad guidance regarding R&D spend. With all our planned activity in 2022, from TRANQUILITY-2 to INVIGORATE-2 to the ADX-629 trials in chronic cough, ethanol toxicity, minimal change disease and SLS, with the development in our retina programs as well as advancing our RASP platform, broadly, you should expect our spend, particularly in R&D, to increase compared to 2021 levels.

Catherine Novack, Analyst

Got it. And then, just as we look forward to the TRANQUILITY data, trying to get a sense of when to expect that, given that it's a short dosing period, wondering is the database already locked? And what else needs to be completed in addition to analytical plans?

Dr. Todd Brady, CEO

Thank you for your question, Cathy. It's one we receive often. Let me explain how most sponsors analyze clinical trials. The initial step is ensuring the quality of the data after the last patient's final visit, which is nearly at the same time as the last patient's first visit, marking the end of enrollment. At this stage, the data undergo quality control. There is a specific procedure to determine if there is data for each endpoint, which is intricate in our trial due to the numerous endpoints I mentioned earlier in response to Matt's question. I am pleased to say that this process is almost finished. Once quality control is complete, the database is locked, meaning it cannot be altered further, and all inquiries between the clinical sites, the CRO, and the sponsor have been addressed. After the database is locked, which has not yet happened for TRANQUILITY-2, it is provided to a third-party statistical firm. This firm is the only entity that possesses the randomization codes, which means typically, only one person there knows which patient is assigned to which test article, whether it's the drug or a vehicle. Following an initial quality control check at the statistical firm, the randomization codes are released and applied to the data. A subsequent quality control process is then undertaken, which includes the statistical analysis. Only after this process is the sponsor informed of the results. I apologize for the lengthy explanation, but I believe it is crucial for investors to understand what occurs once a trial concludes and how the data are analyzed. I hope this gives you a clear idea of our current status in that process, which is just before the database lock.

Operator, Operator

Our next question is from Esther Hong at Berenberg.

Elaine Kim, Analyst

This is Elaine Kim on for Esther. We just wanted to ask, with the convenience of ADX-2191 as a specific injection formulation of methotrexate, we were wondering if that would be enough to compete with the growing support methotrexate itself is getting. And a follow-up is, have you gotten any feedback or conversations with KOLs or payers?

Dr. Todd Brady, CEO

Thank you for bringing up 2191. I wish we had more time to elaborate and answer further questions on it. Regarding your last question about feedback from payers, I can say yes. We have been in discussions with payers about both reproxalap and ADX-2191, which we believe is approaching NDA submission. We plan to provide updates on the regulatory strategy, especially concerning NDA submission for 2191, in the latter half of this year. The convenience of a GMP product is significant, and its safety is crucial as well. Currently, before administering methotrexate via injection in patients' eyes, particularly those with proliferative vitreoretinopathy or ocular lymphoma, the intravenous formulation is required. This involves opening a vial of intravenous methotrexate, drawing up a certain amount into a syringe, and then using that syringe to inject the eye. Unfortunately, this process raises the risk of contaminating the solution, which can lead to serious complications when injecting an eye. One potential issue is endotheliitis, an inner eye infection sometimes necessitating the removal of the eye. Contamination risks are considerably higher with non-GMP products, such as compounded medications. You also asked about the current use of methotrexate, which is interesting because it is already the standard treatment for ocular lymphoma. Additionally, its application for treating PVR is increasing, complicating enrollment in our Phase III GUARD trial. As you may recall, the GUARD trial randomly assigned patients to receive either methotrexate or no treatment, which is standard care. It was challenging to persuade our clinical sites and surgeons to enroll patients in the no-treatment group due to the prevailing belief that methotrexate is effective for PVR. We continue to see an increase in research and publications discussing methotrexate’s role in treating PVR, which I view as promising. Most retinal surgeons involved in PVR treatment would prefer to use a GMP product over compounded alternatives for the reasons mentioned. Thank you for your question.

Operator, Operator

Our next question is from Yale Jen from Laidlaw Capital.

Yale Jen, Analyst

Best luck for you, Josh. Just two quick ones here, both about the study design. In terms of the crossover chamber and the 1-day Schirmer's, what's the study size of that study, as well as what might be the rough time you will report the data, even if the TRANQUILITY-2 is positive? And then I have a follow-up.

Dr. Todd Brady, CEO

The patient numbers in the crossover trial are designed to roughly approximate the crossover trials we have completed for allergic conjunctivitis. I believe we have approximately 60 subjects or so in the crossover trial. But remember, that's equivalent to 120 subjects in a standard parallel group trial with a 1:1 randomization. In allergy and crossover trials, and at least in the allergy chamber, we saw highly statistically significant changes in symptoms and signs using that crossover technique, which really just eliminates patient-to-patient variability. What you might think is uncomfortable is different from what I might think is uncomfortable. And thus, it makes sense to compare drug to vehicle within patients, and that's why we're doing the crossover trial. The Schirmer study is designed to mimic TRANQUILITY, so I would expect hundreds of patients in that trial, again, because we saw statistically significant results regarding a Schirmer with about 300 subjects. The trials are designed to read out after our NDA submission timing, which we're reiterating is midyear this year.

Yale Jen, Analyst

Okay. Great. That's very helpful. And one more question here is for 629. You already started ethanol toxicity, and I think you mentioned about chronic cough as well. Could you give us a brief description of the study design for each of those studies?

Dr. Todd Brady, CEO

Sure, Yale. Absolutely. We had reviewed some of that at our R&D Day. Both of those trials, interestingly enough, are crossover trials. As you can tell, we're big fans of crossover trials, for the reasons I just discussed. That is, they generally eliminate subject-to-subject variability. That's especially important when you're talking about symptoms. That is, how does the patient feel about ocular discomfort? How does the patient feel about his or her coughing? How does the patient feel after consuming ethanol? And those are different from person to person, which is why we have crossover trials, so both of those are crossover designs that, in terms of patient numbers, are consistent with Phase II or Phase IIa type clinical trials in the range of 30 to 50 subjects or so.

Yale Jen, Analyst

Okay. And maybe lastly, just a follow-up on this. What might be the endpoint for each of those studies for the Phase II?

Dr. Todd Brady, CEO

Right. We're also big believers in signs and symptoms. I think typically, over the past several decades, the FDA has moved toward a sign and symptom calculus for assessing the activity of drugs, and we agree with that shift in thinking. So, for each of these, we'll have a subjective measure in the case of ethanol, standard ethanol exposure symptoms, nausea, dizziness, emesis, vomiting, et cetera. And then signs in the case of ethanol flushing, proprioception tests, acetaldehyde levels and other RASP levels, other markers of inflammation that involve the liver, such as liver function tests. The same is true with regard to chronic cough. The typical FDA endpoint for chronic cough seems to be the number of coughs over 24 hours. That can be measured objectively with the device that is attached to the patient's chest. Alongside that sign are a whole bunch of symptoms, quality of life, global impression of disease, global impression of improvement, and so on, so that for each condition, we have both symptoms and signs.

Yale Jen, Analyst

And is there a placebo involved in this study, or is this just a single arm?

Dr. Todd Brady, CEO

Both of them are placebo controlled, so the crossover is either drug and then vehicle, or vehicle and then drug.

Yale Jen, Analyst

Okay. Great. And congrats on the progress.

Operator, Operator

We have no further questions on the call, so I will hand the floor back to Dr. Brady.

Dr. Todd Brady, CEO

Well, thank you all for joining us today. And as always, we're excited about keeping you posted regarding our future updates and events.

Operator, Operator

This concludes today's conference call. Thank you all very much for joining. You may now disconnect your lines.