Aldeyra Therapeutics, Inc. (ALDX) Q4 2017 Earnings Report, Transcript and Summary

Good morning and welcome to the Aldeyra Therapeutics' provides Full Year 2017 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Steve Tulipano, CFO of Aldeyra Therapeutics. Please go ahead sir.

Good morning everyone. I am Steve Tulipano, CFO with Aldeyra Therapeutics and welcome to the Aldeyra Therapeutics conference call to discuss our year end 2017 financial results. With me today is Dr. Todd Brady, Chief Executive Officer of Aldeyra Therapeutics. Before we get started, we would like to remind you that this conference call contains forward-looking statements regarding future events and the future performance of Aldeyra. Forward-looking statements include statements regarding Aldeyra's possible or assumed future results of operations and expenses, business strategies and plans, research and development plans or expectations, trends, market sizing, competitive position, industry environment and potential growth opportunities among other things. These statements are based upon the information available to the company today and 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. 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 and the company's filings with the SEC. Now, I would like to turn the call over to Dr. Todd Brady, President and Chief Executive Officer of Aldeyra. Dr. Brady?

Thank you Steve, and thank you all for joining us today to discuss our 2017 full year results. Aldeyra remains committed to the development and commercialization of novel therapeutic approaches for the treatment of inflammatory diseases. 2017 was a successful year for Aldeyra as we moved closer to our goal of advancing product candidates to market. We announced positive clinical data in three different indications, initiated a Phase 3 clinical trial in noninfectious anterior uveitis and completed two End of Phase 2 meetings with the FDA to support Phase 3 programs in Sjögren-Larsson Syndrome and Allergic Conjunctivitis. We believe that there is substantial opportunity in the markets that we are pursuing, and that our product candidates, all of which represent new and differentiated mechanisms of action are well positioned against standard of care. Our novel therapeutic approach in dry eye disease continues to advance and is now in late stage clinical testing. The results of the Phase 2a clinical trial of topical ocular reproxalap in dry eye disease demonstrated consistent statistically and clinically relevant improvement from base line across a variety of signs and symptoms. In addition, the activity of reproxalap in dry eye disease appears to occur within one week of administration, suggesting important differentiation from standard of care. Earlier this year we announced that the results of our Phase 2a dry eye disease clinical trial were selected for podium presentation at ARVO, the Premier Ophthalmic Medical Conference and that we have initiated a Phase 2b clinical trial in dry eye disease. Consistent with prior guidance, we expect to announce the results from the Phase 2b trail in the second half of this year. In June of last year we announced that our Phase 2b clinical trial of topical ocular reproxalap in Allergic Conjunctivitis demonstrated clinically and statistically significant improvement in ocular itching. Following an End of Phase 2 meeting with the FDA we intent to initiate a Phase 3 clinical trial in the first half of this year and we anticipate the results from this trail be available in the second half of this year or early next year. We believe that reproxalap could represent the first new therapeutic class in ocular allergy in decades. As we presented at our Research and Development Day last year, market research suggests that many of the estimated 100 million patients in the United States with Allergic Conjunctivitis are not optimally treated with Antihistamines, which suffer from ocular dryness and the lack of durable activity. Our research suggest that approximately 35% of patients that do not respond to antihistamines resort to topical ocular corticosteroids, which can cause serious adverse events, including glaucoma, a lifelong disease that can lead to blindness. Of particular interest to us is allergic dry eye disease, a condition that we believe may affect approximately half of dry eye disease patients and for which no drug is currently approved. Other than potentially toxic corticosteroids that we are aware where reproxalap is the only drug that has shown activity in both dry eye disease and allergic conjunctivitis. Last year following a successful End of Phase 2 meeting with the FDA we announced initiation of enrolment in a Phase 3 clinical trial of topical ocular reproxalap in patients with noninfectious anterior uveitis or NAU, a serious painful and potentially blinding inflammatory condition that is today treated with corticosteroids resulting in high rates of glaucoma in the disease. The Phase 3 NAU clinical trial is the first large vehicle controlled clinical trial in flares of noninfectious anterior uveitis. Enrolment has been slower than we expected, which has mostly been explained by patients with severe pain who declined to participate in the trail due to the possibility of randomization to vehicle. Based on updated projections we anticipate that results from the trail will be available next year. The results from the Phase 2 NAU clinical trial were presented at two Ophthalmology conferences last year, ARVO and the American Uveitis Society held at the American Academy of Ophthalmology, demonstrating that the efficacy of reproxalap was statistically non-inferior to corticosteroids. From a market perspective, given the potential safety advantages of reproxalap, we believe that potential replacement of corticosteroid with reproxalap is compelling. Not only in noninfectious noninfectious anterior uveitis, but also in many other ocular disease that are today treaded with corticosteroids. Regarding our program in Sjögren-Larsson Syndrome, following an End of Phase 2 meeting with FDA held last year, we intend to initiate a two part global Phase 3 clinical trial in the first half of this year. Logistics associated with side initiation have required more time than expected to launch the trail, but we anticipate the result from part one of the trail will be available next year. There is no FDA approved therapy for SLS and that we are aware, reproxalap is the only drug in development for SLS. In April of last year reproxalap received Orphan Drug Designation for the treatment of congenital ichthyosis, the severe skin disease that us associated with SLS. We are leveraging our experience in topical inflation to develop compounds for systemic inflammatory diseases, including auto immune diseases and other immune mediated disorders. I’d like to highlight three important corporate developments that support our efforts in systemic inflammation. First, we have advanced ADX 629 to clinical testing and we expect Phase 1 clinical trials to begin in 2019. Second, we have in-licensed ADX 1612, formerly known as [inaudible] and originally developed for oncology indications, which is a heat shock protein-90 inhibitor with broad potential application in a variety of immune mediated diseases, especially those disease where excessive replication of immune cells were implicated. We expect to initiate Phase 2a clinical testing of ADX 1612 next year. Third, we announced a development partnership with Johnson & Johnson innovation earlier this year. The partnership encompasses a large array of development activities funded by Johnson & Johnson, designed to advance existing systemically administered compounds, the clinical testing in auto immune diseases. In summary, as I’m sure you can appreciate, we are pleased with our progress in 2017 across multiple indications and we look forward to continuing our momentum in 2018 as an innovative and rapidly expanding biotechnology company. Now I would like to turn the call back over to Steve to discuss the 2017 year-end financial results. Steve?

Thank you, Todd. For the year ended December 31, 2017, Aldeyra reported a net loss of approximately $22.3 million compared to a net loss of approximately $18.7 million for the year ended December 31, 2016. Basic and diluted net loss per share was $1.40 for the year ended December 31, 2017, compared to $1.65 for the same period in 2016. Losses have resulted from the costs of Aldeyra's clinical trials and research and development programs, as well as from general and administrative expenses. Research and development expenses were $16.3 million for the year ended December 31, 2017, compared to $13.2 million for the same period in 2016. The increase of $3.1 million was primarily related to the increase in research and development expenditures, including manufacturing, pre-clinical, and clinical development costs, and an increase in personnel costs. G&A expenses were $6.2 million for the year ended December 31, 2017 compared to $5.5 million for the year ended December 31, 2016. The increase of $700,000 is primarily related to an increase in legal costs, rent, consulting and personnel costs. In 2017, total operating expenses were $22.5 million for the year, compared to $18.7 million for the prior year. Cash, cash equivalents and marketable securities were $42.9 million as of December 31, 2017, including $26.9 million in net proceeds from the underwritten public offering that we closed in September 2017. That concludes our remarks today. Thank you for your participation. Operator, we would now like to open it up for questions please.

Thank you. [Operator Instructions]. And the first question comes from Adam Walsh with Stifel.

Good morning, guys. This is Neil Carnahan on for Adam. Just wondering, I know you previously said that you submitted information to the FDA for Reproxalap and Allergic Conjunctivitis. Can you give us an update on any discussions you have had with them at this point in time?

Good morning, Neil, thanks for the question. Yes, we completed the End of Phase 2 meeting with the FDA regarding Allergic Conjunctivitis, also regarding Anterior Uveitis, also regarding SLS. So we’ve now been through three of these supporting three different Phase 3 programs. The clinical trial design that we have disclosed previously reflects – in Allergic Conjunctivitis reflects our discussions with the FDA and reflects the outcome of the End of Phase 2 meeting and we are not anticipating any changes from that – from those prior disclosures to this point Neil.

Okay, great. And then any guidance in R&D. With everything you guys have going on, as far as studies are, are you confident that current runway is – the current cash runway you have is sufficient to see you through most of these readouts.

Thank you, that’s a great question. Yeah we will state publically when you see our 10-K that we expect our current cash to get us through the end of ’19 and pay for all the trials that we’ve been talking about. So we feel comfortable that our non-cash – let me put it this way, our cash expenditures for 2017 were approximately $20 million. So that obviously doesn’t include noncash items. That’s going to increase in 2018. We’ll probably closer to $30 million in ’20, but that’s where we stand and that’s the current play.

Great. Thank you guys.

Thanks Neil.

Thank you. And the next question comes from John Newman with Canaccord.

Hey guys, good morning and thanks for taking the question. So Todd, I just wondered if you could talk to us a little bit about how you are going to be thinking about the Phase 2b data coming up in dry eye. So what are the things that you are going to look for in order to give you confidence in pushing that program forward into Phase 3. Thanks.

Right, thank you John. The dry eye trial that we expect to announce, it’s a Phase 2b trail in the second half of this year. I think it’s going to be really interesting. A couple of things, obviously we have never run a Phase 2 trial in dry eye disease against vehicle, this is the first one. So critical for the regulatory process in dry eye, how well does your drug do versus vehicle and I think those end points are going to be important. I will say, as you know John most Dry Eye trails that are looking to compare against vehicle, especially pivotal dry eye trails are 300 to 400 patients per group. So these are very large trials and I think part of that is explained by the ideologic variability in dry eye disease, part of its explained by the amount of time it takes for certain drugs in the market today to work, part of it is explained by the variability amongst the patient population responding to those drugs. Our trail is significantly smaller. So this is – the Phase 2b trail we are running is a 100 patients per group. We are running two doses of drug in a vehicle. So 300 patients total for two drug groups and a vehicle group is relatively small, and the reason I say that is because when we are looking for statistical significance versus vehicle, which is the regulatory bar for a pivotal trial, but it’s a Phase 3 trail, it may be difficult to see that. So what the – the answer to your question, what is it that we are looking for, it’s not necessarily statistical significance versus vehicle, it’s a trend versus vehicle, and I tell investors in the Press Release, I think the key line will be what is our plan for Phase 3, where we able to demonstrate a trend versus vehicle that allows us to power statistically a Phase 3 of reasonable size. So not only does drug have to numerically improve patients more than vehicle, that effect size needs to be a certain magnitude that we can power a Phase 3 trial that doesn’t require 10,000 patients for example. I think the guidance we issue when these data come out about Phase 3, our thoughts will be very, very important. Other end points of course looking at changes from baseline and drug treated patients and safety and tolerability etcetera will also be important obviously. But I think the key message in that press release is what are our plans for Phase 3 for the reasons I just gave.

Can you comment on how the rapid time to effect if its reproduced in the Phase 2b could help you in terms of both showing – potentially showing a trend, as well as powering assumptions for Phase 3.

Right and this is really important, time to effect is a challenge in dry eye disease. As you know, there are only two drugs that are approved for the treatment of dry eye and both of them take a while to work, especially Restasis which can take months to work. Convincing a dry eye patient who is actively suffering to take a medication topically for months before seeing clinical benefit is challenging, as you might imagine. So a real potential differentiator for any new drug, not just ours is time to onset, that is a rapid time to onset would I think command a significant market premium in terms of adoption in this space. Low and behold in our Phase 2a trail, in drug treated patients it seemed that they were getting symptomatically at one week or before one week. The first we measured was at one week. This is remarkable, because you certainly would not see that I think with existing standard of care, certainly not in an obvious manner, and this is a real differentiator for us. How it might affect powering, and how it might affect the Phase 3 trial other than looking at early endpoints after initiation of therapy is not clear and I think we need to see the Phase 2b data before we comment on that specifically, but you can bet you on that part of Phase 3 is looking very quickly after initiation of drug administration to solidify what we think could be a potential market differentiator.

Great. Thank you.

Thank you. And the next question comes from Yale Jen with Laidlaw & Company.

Hey, good morning and thanks for taking the questions. My first question is that you have mentioned that you have in-licensed sharp growth in ADX-1612. Could you elaborate a little bit more of this particular one and what could be the strategic impact to the company?

Yes, I think this is really important Yale, because as we said for many years now, our intent as a company is to grow and expand mechanistically. This is our first in-license in that regard and we are very excited about it. ADX-1612 works differently from the other ADX molecules that are focused on trapping reactive Aldeyra’s that are through inflammatory. In this case, 1612 is focused on immune cell replication. So here in Q4 Aldeyra has been focused on diminishing the activation of immune cells, 1612 is a logical step in the next direction which is inhibiting the proliferation or replication of immune cells and we believe this is severely unexploited in today’s treatment of inflammation. In fact there are very few approaches along these lines and in fact we are aware of no other HSP90 related approaches along these lines. So we are thrilled to have in-licensed this compound. As I mentioned, we expect to be in Phase 2 clinical testing with this compound next year and I think it represents a real value added addition to our pipeline as we strategically as a company continue to expand and grow, particularly in the inflammation space.

Maybe I’ll follow-up a little bit on this, is that in terms of the indication you might slow down in next year’s. First of all, would that be some sort of systemically administrated drug and a specific indication or indications that may encompass might be what?

Excellent question and you will see more about this in the 10-K that will be filed shortly. Specifically there are a variety of diseases and immune mediated diseases that are related directly to uncontrolled or excessive immune cell replication, they are called lymphoproliferative diseases. Some examples include, Waldenstrom’s macroglobulinemia. Pemphigus Vulgaris is related to these kinds of mechanisms. There is autoimmune lymphoproliferative syndrome and a variety of other diseases that are immune regulated, but order on cancers such as myelodysplastic syndrome. So these indications are quite different from the ones obviously that we have been focusing on with the Aldeyra Scavenging Platform and this the in-license was quite strategic, because I don’t believe that the mechanisms we’ve developed and announced and disclosed previously relate to the diseases that we intend to test with ADX 1612, so it truly is an expansion of our indications and information.

And maybe one last question here, which is that – let’s assume that the dry eye study, the Phase 2b study shows the power trends you like to see, obviously we don’t have a specific here. But my question is, which is that what might be the next? Will that be something you might take us forward by yourselves or you are seeking the partners. Let’s assume the next study will be typical, less than 1000 patient type of Phase 3 study that you need to be conducted.

Yes, this is a question that’s near and dear to our heart. Our position on partnering has been clear and it has been consistent and it is that we are happy to consider partnering, we are happy to discuss partnering with larger corporations that may at lease extensively improve our commercial reach upon approval. However, our main goal at this company is to continue to develop compounds internally to take them forward, to commercialize them if they need be. I think in ophthalmology one advantage is that we can market the compounds, one company does not need 10,000 sales reps to market in ophthalmology given the concentrated base of ophthalmologist. So we are happy to have partnering discussions. I can assure you that there are many, many companies that are interested in our ophthalmology programs given the late stages of those programs and given the fact that there is very little that’s novel in ophthalmology, especially in anterior ocular inflammation. But our day to day job is to continue to advance these programs internally and if need be, we are prepared to commercialize and launch them.

Okay, great, thanks a lot and congrats on the progress. I look forward to seeing data in the second half and 2019.

Thank you, Yale.

Thank you. [Operator Instructions]. The next question comes from Elemer Piros with Cantor.

Yes, good morning. I was wondering Todd if you could maybe help us understand better, you would interrogate any different signs and symptoms in your Phase 2b trial for dry eye, different than what you had in the Phase 2a?

I think Elemer, by and large the signs and symptoms in dry eye have been consistent across all development approaches and I think our intention is to mirror that. One of the advantages in dry eyes as you point out is that there are lots of times one can assess and there is lots of symptoms that once can assess and I think that each company when it comes to time to pivotal Phase 3 testing, picks a different sign and a different symptom. Just a step back, if your regulatory bar for approval in dry eye is statistical significance versus vehicle and improvement of one’s signs and improvement of one’s symptom. I don’t think the FDA has generally cared very much which sign or which symptom and I think the reason that most companies like us in Phase 2 testing assess a variety of signs and a variety of symptoms because it gives the company more shots on goals, the program more shots on goals. Which sign and which symptom we advance to Phase 3 clinical testing obviously depends on the Phase 2b data that we’ll announce in the second half of this year. But as of now my view on the breadth of signs and symptoms that we are going to assess is more or less consistent with which is – that which is standardly assessed by all companies these days in Phase 2.

And then the follow–up, a little it on the enrolment pattern in the Uveitis. Would you care to a little bit further characterize where you spend in terms of what portion of the total have you enrolled and what makes the base go down?

I think specifics on enrolment and timing will come later this year. As I’ve been clear with on these calls in the past and with other investors, I think that the challenge with orphan diseases is that enrolment is difficult to predict. Obviously if these are rare patient populations and particularly in non-infectious Anterior Uveitis, you can’t just enroll any patient, you have to enroll patients that are actively flaring; that is they have a painful hot eye, they can’t have a premeditated. So it’s a challenge in enrolment anytime you have acute flairs with emergency like conditions. These trials are difficult and we went through this with Phase 2 in a way I’m not surprised that enrolment is challenging in Phase 3. I think the thing we’ve learned though Elemer is that when you are running a vehicle controlled trail in Non-Infectious Anterior Uveitis, one thing that must be accounted for is the painful situation that the patients with acute painful ocular crisis that are presented with the option of a 50% chance of getting enrolled in the vehicle and I think that is understandably challenging for certain patients to agree too and they opt not to be in the trial. Having said all that, this trail is moving forward and enrolment is progressing and we will be prepared I think later this year once we have a better handle on our patterns to give concrete guidance along the lines that you suggest.

And lastly, would you please characterize a little bit the Sjögren-Larsson trial in terms of its size and what is the distinction between Apart A and Part B?

Yes, this is a – Sjögren-Larsson is a complicated program because again, this is the first large clinical program that’s ever been run in Sjögren-Larsson Syndrome and we are thrilled to a part of that, because there really is no medication that we believe is active to treat these patients. Part 1 is really what we call a body surface area dose escalation, meaning that because almost all the skin of these patients is affected with this serious disorder called ichthyosis. We have negotiated with the FDA to treat 20% of the body surface area and then escalate upwards towards 90% of the body surface area, which is more or less all affected skin. As you recall the face is generally spared in these patients, the palms and the soles are generally spared. But every other aspect of the body surface area is generally affected with this disease, so part one is a body surface area escalation. Part two, which will be powered based on part one is starting with treatment of all affected area; that is about 90% of the body surface area. The size of part one is nine patients, okay, and I can tell you that we had 12 patients in our Phase 2. The caregivers of those patients have universally, that is without exception expressed interest in being involved in the Phase 3 trail. We may have an over enrolment situation for Part 1. Our challenge hasn’t been enrolment. Our challenge, like in the Phase 2 trial has been logistics that is these patients are generally immobile. There are few physicians that are qualified to treat and assess this disease given its rarity, but we still think consistent with prior guidance we’ll get the trial up and running in the first half of this year with data, I hope early next year.

And what would be the size of the Part B for the second Phase of this trial.

Part B depends on Part A. In terms of the size of the trail I think we’ve disclosed 20 to 30 patients as our current estimate, but again that really depends on the data from Part A that we’ll announce next year.

Thank you, Todd.

Thank you, Elemer.

Thank you, and the next question comes from Corey Davis with Seaport.

Thanks very much, I want to go back to your discussion and philosophy on partnering and at what point does it make sense to bring a partner in if you are thinking about doing that. So the question would be, is it primarily a money decision, meaning somebody to help pay for Phase 3 or is that also more strategic expertise that you would need. And also do you consider dry eye and allergic conjunctivitis mainly ophthalmic disorders or is the market more primary care and how does that factor in to your thinking as to when is the right time to bring in somebody else or not and decide to just really do it alone and bring in more commercial expertise in-house.

Thank you, Corey. I could go on for hours about both of those, but let me restrict my comments to just a few points. On the partnering size, as Steve mentioned earlier, our expenses in ophthalmology even with Phase 3 trials are relatively small. So the topical administration of drug to a large number of patients over a limited amount of time in ophthalmology is relatively not that expensive. We are obviously not talking about long term cancer trails with overall survival or cardio vascular trails looking at outcome. These are a much different animal and affordable for small companies, and that’s why I say the financial requirement for a partner, I think it’s fairly diminimus, even with large Phase 3 trials in ophthalmology. However, we have partnered with Johnson & Johnson as you know in systemic auto immune disease and the reason for that is that those trials are large and Johnson & Johnson is the leader in information drug development they have done by far, more partnering deals than any other company on the planet and we are thrilled to work with them frankly, because of their expertise and because they have far more experience than we do in developing auto immune indications that require systemic administration with very large patient numbers. Now your second question is really interesting. About the commercialization efforts required for dry eye disease and allergic conjunctivas, as you correctly point out Corey, there are a lot of healthcare providers in these spaces that are not ophthalmologists, right they are optometrists, they are nurse practitioners, they are general practitioners, the are internists, etcetera. We believe based on limited comparable information we have that even given those market dynamics you are still thinking about 300 to 500 reps, which for a small company is achievable. As I said earlier, these aren’t 10,000 rep launches and I think at least we have the option to commercialize internally as these kinds of dynamics increased from non-infectious Anterior Uveitis, which is about 30 to 50 centers in the United States, all the way to dry eye disease which probably every healthcare provider regardless of specialty has seen at least once in his or her career. I think the desire to partner increases, but I certainly don’t think we are in a situation if we have to partner. We continue to maintain in the ophthalmology market, a great deal of optionality when it comes to commercialization.

Okay, and then second and final question would be, it sounds like you are setting expectations for the Phase 2b dry eye study not to hit statistical significance and given that we sometime live and die by P values, if it’s not statistically significant, then how do we get our hands around thinking that its technically not a failed trail and how many different markers should we look at to say yeah, all the trends are moving in the right direction or what are the most important ones so that the market really would subscribe to your point of view that no there is a enough to move into Phase 3, even if it doesn’t hit statistical significance.

Right, and I think it’s an interesting philosophical point, what is the goal of Phase 2? The goal of Phase 2 in any company in drug development is not to hit statistical significance; the goal of Phase 2 is plan Phase 3. Sure it looks better and I think it feels better notionally to have a P value attached to your Phase 2 data, but that’s really not what have Phase 2 trails. The point of Phase 2 is to plan Phase 3. A couple of points I’d make, the primary end points in the dry eye trail, its coming out later this year is changed from base line in drug treated patients. Now you can see from the Phase 2a data that that looks really good. So the P value there I would expect has a [Audio Gap]. One thing that we saw in Phase 2a was not only significant change from base line in drug treated patients, but also at that size it was large and clinically significant. So if that size is in symptoms that are more than 0.5 are generally considered large and are generally considered clinically significant. I would look for something like that here again in drug treated patients and the other thing I would look for is those effect sizes occurring across a variety of signs and symptoms. So to the extent Corey that we can replicate what we saw in Phase 2a in terms of the breadth of activity and also as we’ve discussed earlier in this call, the timing of activity, I think it’s really important. The other thing I just want to highlight for this trail, we’ve got two doses, we’ve got two concentrations we are testing. We took forward a 0.1% and 0.5% in the last trial, we tested those concentrations. 0.1% was by far the best tolerated. So for the Phase 2b trail we split the difference. We now have 0.1% and 0.25% and our hope is that 0.25% will be equally well tolerated at 0.1%, but the activity will increase even further. So in terms of looking at the results, not only is it what do we say about Phase 3, can we power Phase 3, but I would think about what’s the breadth of activity across multiple signs and symptoms, what are the P values changed from base line in drug treated patients? Does that reflect a Phase 2a and then what’s the timing of the affected. All of those are pointing in the right direction. P values aside I think it’s a very, very positive Phase 2 trail.

Okay, so just to be clear, the primary end point is a change from baseline and the comparison between drug and placebo would be a secondary end point?

That’s correct and the reason for that is we don’t know, because we’ve never run a dry eye trial versus vehicle, we how no idea how to power the trial. So the primary can’t be changed versus vehicle if you don’t know how to power a trial, that’s unethical. So the primary here is the same as the end point of Phase 2a that is changed from baseline in drug treated patients. Now the secondary end points are critical, because that is how we are going to power the Phase 3 as you point out Corey.

Got it, thanks very much.

Thank you.

Thank you. And the next question is a follow-up from John Newman with Canaccord.

Hi guys, just had one follow-up. So Todd, one of the things that you were able to look at, in the Phase 2a study for dry eye which was interesting from a mechanistic standpoint was decreasing the pre-aldehyde in patients. And I’m just wondering if you will be able to look at that again in Phase 2 and if you will be able to look at that in both patients that are getting active dose, as well as patients that are getting vehicle. Thanks.

Yeah, I don’t believe we are looking at aldehyde specifically as the tiers of this trail and I’ll explain why. The aldehyde measurement in here is complex. It requires practically a variety of let’s just say somewhat challenging a protocol modification. You can imagine that analyzing tears in dry eye is troublesome because the patients don’t have a lot of tears. And then when you approach a trial subject with the idea of withdrawing tears from his or her eye, I don’t think that goes over well in general, because this is a larger number of patients, 300 patients we decided that we wouldn’t test it in this case. However, another reason we made that decision is because the change in aldehyde load in the Phase 2a trial was dramatic. I mean crystal clear that aldehyde goes down as a bio marker. That we are aware that this is the only time ever that a company has shown that their target that the drug target decreases in a clinical trial where you’ve also measured signs and symptoms in a meaningful way. So we consider ourselves at the top of the heap in terms of demonstrating a bio marker that is a drug target reduction that correlates directly with changes in size and symptoms that we released a good deal of data on that, on our research and development day last year. Thus we didn’t feel we needed to replicate it again for Phase 2b.

Great, thank you.

Thank you. And as there are no questions at the present time, this concludes the question and answer session as well as the call. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.