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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                to                               

Commission File Number: 001-36332

 

ALDEYRA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-1968197

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

131 Hartwell Avenue, Suite 320

 

 

Lexington, MA

 

02421

(Address of principal executive offices)

 

(Zip Code)

 

(781) 761-4904

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes         No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes         No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company or an emerging growth company. See the definitions of the “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

  

Smaller reporting company

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes         No  

Securities registered pursuant to 12(b) of the Act:

 

Title of Class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.001 par value per share

ALDX

The Nasdaq Stock Market LLC

 

As of August 4, 2020, there were 38,633,134 shares of the registrant’s common stock issued and outstanding.

 

 

 

 


 

Aldeyra Therapeutics, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2020

INDEX

 

 

Page

PART I – FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements:

3

 

Consolidated Balance Sheets at June 30, 2020 (Unaudited) and December 31, 2019

3

 

Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 (Unaudited)

4

 

Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2020 and 2019 (Unaudited)

5

 

Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019 (Unaudited)

6

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (Unaudited)

8

 

Notes to Condensed Consolidated Financial Statements

9

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

26

ITEM 4.

Controls and Procedures

26

PART II – OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

27

ITEM 1A.

Risk Factors

27

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

64

ITEM 3.

Defaults Upon Senior Securities

64

ITEM 4.

Mine Safety Disclosures

64

ITEM 5.

Other Information

64

ITEM 6.

Exhibits

64

Signatures

65

 

2


 

Part I – FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

 

 

 

 

 

 

 

2020

 

 

December 31,

 

 

 

(unaudited)

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

50,688,834

 

 

$

16,425,830

 

Cash equivalent - reverse repurchase agreements

 

 

10,000,000

 

 

 

28,000,000

 

Marketable securities

 

 

5,500,975

 

 

 

28,938,545

 

Prepaid expenses and other current assets

 

 

5,232,717

 

 

 

1,804,450

 

Total current assets

 

 

71,422,526

 

 

 

75,168,825

 

Right-of-use assets

 

 

103,074

 

 

 

201,007

 

Fixed assets, net

 

 

101,695

 

 

 

148,449

 

Total assets

 

$

71,627,295

 

 

$

75,518,281

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

216,689

 

 

$

808,302

 

Accrued expenses

 

 

3,693,594

 

 

 

11,873,122

 

Current portion of credit facility

 

 

894,042

 

 

 

-

 

Current portion of operating lease liabilities

 

 

116,124

 

 

 

226,328

 

Total current liabilities

 

 

4,920,449

 

 

 

12,907,752

 

Long-term debt

 

 

13,917,180

 

 

 

14,528,212

 

Total liabilities

 

 

18,837,629

 

 

 

27,435,964

 

Commitments and contingencies (Notes 13 and 14)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Common stock, voting, $0.001 par value; 150,000,000 authorized and 32,997,346

   and 28,656,832 shares issued and outstanding, respectively

 

 

32,997

 

 

 

28,657

 

Additional paid-in capital

 

 

269,502,290

 

 

 

247,409,793

 

Accumulated other comprehensive income

 

 

4,754

 

 

 

5,866

 

Accumulated deficit

 

 

(216,750,375

)

 

 

(199,361,999

)

Total stockholders’ equity

 

 

52,789,666

 

 

 

48,082,317

 

Total liabilities and stockholders’ equity

 

$

71,627,295

 

 

$

75,518,281

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

4,885,875

 

 

$

10,664,858

 

 

$

11,519,478

 

 

$

18,513,448

 

Acquired in-process research and development

 

 

 

 

 

(49,848

)

 

 

 

 

 

6,547,703

 

General and administrative

 

 

2,220,003

 

 

 

3,116,414

 

 

 

5,224,844

 

 

 

6,101,452

 

Loss from operations

 

 

(7,105,878

)

 

 

(13,731,424

)

 

 

(16,744,322

)

 

 

(31,162,603

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

71,710

 

 

 

432,908

 

 

 

281,809

 

 

 

932,049

 

Interest expense

 

 

(486,048

)

 

 

(28,649

)

 

 

(925,863

)

 

 

(30,612

)

Total other income (expense), net

 

 

(414,338

)

 

 

404,259

 

 

 

(644,054

)

 

 

901,437

 

Loss before income taxes

 

 

(7,520,216

)

 

 

(13,327,165

)

 

 

(17,388,376

)

 

 

(30,261,166

)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

1,309,973

 

Net loss

 

$

(7,520,216

)

 

$

(13,327,165

)

 

$

(17,388,376

)

 

$

(28,951,193

)

Net loss per share - basic and diluted

 

$

(0.25

)

 

$

(0.49

)

 

$

(0.59

)

 

$

(1.08

)

Weighted average common shares outstanding - basic and

   diluted

 

 

30,118,456

 

 

 

26,985,454

 

 

 

29,586,148

 

 

 

26,836,292

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

$

(7,520,216

)

 

$

(13,327,165

)

 

$

(17,388,376

)

 

$

(28,951,193

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities, net of tax

 

(52,840

)

 

 

6,641

 

 

 

(1,112

)

 

 

22,677

 

Total other comprehensive (loss) income

$

(52,840

)

 

$

6,641

 

 

$

(1,112

)

 

$

22,677

 

Comprehensive loss

$

(7,573,056

)

 

$

(13,320,524

)

 

$

(17,389,488

)

 

$

(28,928,516

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


5


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

 

Stockholders' Equity

 

 

 

Common Voting Stock

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-in Capital

 

 

Other

Comprehensive

Income/(Loss),

net of tax

 

 

Accumulated

Deficit

 

 

Total

Stockholders'

Equity

 

Balance, December 31, 2019

 

 

28,656,832

 

 

$

28,657

 

 

$

247,409,793

 

 

$

5,866

 

 

$

(199,361,999

)

 

$

48,082,317

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,696,041

 

 

 

 

 

 

 

 

 

3,696,041

 

Release of restrictions on Helio

   founders’ shares

 

 

202,051

 

 

 

202

 

 

 

(202

)

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of

   issuance costs

 

 

3,974,068

 

 

 

3,974

 

 

 

18,266,514

 

 

 

 

 

 

 

 

 

18,270,488

 

Issuance of common stock, exercise

   of stock options

 

 

14,448

 

 

 

14

 

 

 

60,405

 

 

 

 

 

 

 

 

 

60,419

 

Issuance of common stock, employee

   stock purchase plan

 

 

14,151

 

 

 

14

 

 

 

69,875

 

 

 

 

 

 

 

 

 

69,889

 

Issuance of common stock, vested

   restricted stock awards

 

 

135,796

 

 

 

136

 

 

 

(136

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,112

)

 

 

 

 

 

(1,112

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,388,376

)

 

 

(17,388,376

)

Balance, June 30, 2020

 

 

32,997,346

 

 

$

32,997

 

 

$

269,502,290

 

 

$

4,754

 

 

$

(216,750,375

)

 

$

52,789,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

26,244,435

 

 

$

26,244

 

 

$

225,136,127

 

 

$

(9,224

)

 

$

(138,535,168

)

 

$

86,617,979

 

Stock-based compensation

 

 

 

 

 

 

 

 

3,981,052

 

 

 

 

 

 

 

 

 

3,981,052

 

Issuance of common stock,

   acquisition of Helio Vision,

   Inc.

 

 

582,363

 

 

 

582

 

 

 

4,862,149

 

 

 

 

 

 

 

 

 

4,862,731

 

Issuance of common stock, net of

   issuance costs

 

 

83,557

 

 

 

84

 

 

 

720,879

 

 

 

 

 

 

 

 

 

720,963

 

Issuance of common stock, employee

   stock purchase plan

 

 

11,569

 

 

 

12

 

 

 

79,149

 

 

 

 

 

 

 

 

 

79,161

 

Issuance of common stock, vested

   restricted stock awards

 

 

65,012

 

 

 

65

 

 

 

(65

)

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

22,677

 

 

 

 

 

 

22,677

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,951,193

)

 

 

(28,951,193

)

Balance, June 30, 2019

 

 

26,986,936

 

 

$

26,987

 

 

$

234,779,291

 

 

$

13,453

 

 

$

(167,486,361

)

 

$

67,333,370

 

 

 

6


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

 

 

 

Stockholders' Equity

 

 

 

Common Voting Stock

 

 

 

 

 

 

Accumulated

Other

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-in Capital

 

 

Comprehensive

Income/(Loss),

net of tax

 

 

Accumulated

Deficit

 

 

Total

Stockholders'

Equity

 

Balance, March 31, 2020

 

 

29,506,829

 

 

$

29,507

 

 

$

252,615,578

 

 

$

57,594

 

 

$

(209,230,159

)

 

$

43,472,520

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,742,389

 

 

 

 

 

 

 

 

 

1,742,389

 

Release of restrictions on Helio

   founders’ shares

 

 

59,896

 

 

 

60

 

 

 

(60

)

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of

   issuance costs

 

 

3,411,399

 

 

 

3,411

 

 

 

15,094,253

 

 

 

 

 

 

 

 

 

15,097,664

 

Issuance of common stock, exercise

   of stock options

 

 

12,448

 

 

 

12

 

 

 

50,137

 

 

 

 

 

 

 

 

 

50,149

 

Issuance of common stock, vested

   restricted stock awards

 

 

6,774

 

 

 

7

 

 

 

(7

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(52,840

)

 

 

 

 

 

(52,840

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,520,216

)

 

 

(7,520,216

)

Balance, June 30, 2020

 

 

32,997,346

 

 

$

32,997

 

 

$

269,502,290

 

 

$

4,754

 

 

$

(216,750,375

)

 

$

52,789,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

 

 

26,910,355

 

 

$

26,910

 

 

$

232,605,244

 

 

$

6,812

 

 

$

(154,159,196

)

 

$

78,479,770

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,094,963

 

 

 

 

 

 

 

 

 

2,094,963

 

Issuance of common stock, employee

   stock purchase plan

 

 

11,569

 

 

 

12

 

 

 

79,149

 

 

 

 

 

 

 

 

 

79,161

 

Issuance of common stock, vested

   restricted stock awards

 

 

65,012

 

 

 

65

 

 

 

(65

)

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

6,641

 

 

 

 

 

 

6,641

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,327,165

)

 

 

(13,327,165

)

Balance, June 30, 2019

 

 

26,986,936

 

 

$

26,987

 

 

$

234,779,291

 

 

$

13,453

 

 

$

(167,486,361

)

 

$

67,333,370

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(17,388,376

)

 

$

(28,951,193

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Acquired in-process research and development

 

 

 

 

 

6,547,703

 

Deferred taxes

 

 

 

 

 

(1,309,973

)

Stock-based compensation

 

 

3,696,041

 

 

 

3,981,052

 

Non-cash interest expense

 

 

283,010

 

 

 

30,738

 

Accretion on debt securities available for sale, net

 

 

(87,452

)

 

 

(341,758

)

Depreciation and amortization expense

 

 

144,687

 

 

 

48,263

 

Change in assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(705,371

)

 

 

(2,138,104

)

Accounts payable

 

 

(591,613

)

 

 

(956,174

)

Accrued expenses

 

 

(8,289,732

)

 

 

(2,353,411

)

Net cash used in operating activities

 

 

(22,938,806

)

 

 

(25,442,857

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Acquisitions of fixed assets

 

 

 

 

 

(9,529

)

Cash acquired in Helio asset acquisition

 

 

 

 

 

562,362

 

Purchases of marketable securities

 

 

(5,776,090

)

 

 

(21,466,353

)

Sales of marketable securities

 

 

29,300,000

 

 

 

38,000,000

 

Net cash provided by investing activities

 

 

23,523,910

 

 

 

17,086,480

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

15,547,592

 

 

 

720,964

 

Proceeds from exercise of stock options

 

 

60,419

 

 

 

 

Proceeds from employee stock purchase plan

 

 

69,889

 

 

 

79,161

 

Debt issuance costs paid in cash

 

 

 

 

 

(401,656

)

Net cash provided by financing activities

 

 

15,677,900

 

 

 

398,469

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

16,263,004

 

 

 

(7,957,908

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

44,425,830

 

 

 

47,357,472

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

60,688,834

 

 

$

39,399,564

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION AND DISCLOSURES OF NONCASH ACTIVITIES:

 

 

 

 

 

 

 

 

Helio acquisition:

 

 

 

 

 

 

 

 

Assets acquired

 

$

 

 

$

75,632

 

Liabilities acquired

 

$

 

 

$

637,994

 

Fair value of securities issued

 

$

 

 

$

4,862,731

 

Debt issuance costs not yet paid

 

$

 

 

$

121,530

 

Right-of-use assets acquired through operating leases

 

$

 

 

$

386,060

 

Receivable for proceeds from the issuance of common stock, net of issuance costs

 

$

2,722,896

 

 

$

 

Cash paid during the period for interest

 

$

693,875

 

 

$

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

8


 

ALDEYRA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.

NATURE OF BUSINESS

Aldeyra Therapeutics, Inc., together with its wholly-owned subsidiaries (the “Company” or “Aldeyra”), a Delaware corporation, is a clinical-stage biotechnology company focused on the development of novel therapies with the potential to improve the lives of patients with immune-mediated diseases.

The Company’s principal activities to date include raising capital and research and development activities.

2.

BASIS OF PRESENTATION

The accompanying interim condensed consolidated financial statements and related disclosures are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission on March 12, 2020 (the “2019 Form 10-K”).

The financial information as of June 30, 2020, and the three and six months ended June 30, 2020 and 2019, respectively, is unaudited. In the opinion of management all adjustments, consisting only of normal recurring adjustments considered necessary for the fair presentation of financial position, results of operations, and cash flows at the dates and for the periods presented, have been included. The balance sheet data as of December 31, 2019 was derived from audited consolidated financial statements. The results of the Company’s operations for any interim periods are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year.

 

Based on its current operating plan, and not including additional access to capital that may become available under the Company’s credit facility, the Company believes that its cash, cash equivalents, and marketable securities as of June 30, 2020, along with sales of common stock pursuant to the Company’s Open Market Sales Agreement SM (“Jefferies Sales Agreement”) made between July 1, 2020 and July 13, 2020, will be sufficient to fund currently anticipated operating expenses through the end of 2022, including potential new drug application (NDA) approvals for reproxalap in dry eye disease and allergic conjunctivitis, assuming positive clinical trial results, and planned NDA submissions, acceptances, and approvals; the Phase 2 clinical trials of ADX-629 in COVID-19-associated respiratory compromise, atopic asthma, and psoriasis; and the continuation of Part 1 of the adaptive Phase 3 clinical trial in proliferative vitreoretinopathy contingent on patient enrollment. As a result of the COVID-19 pandemic, clinical site availability, staffing, and patient recruitment have been negatively affected and the timelines to complete the Company’s clinical trials may be delayed. The Company’s assessment of its liquidity and capital resources includes an estimate of the financial impacts of these changes.  The Company will need to secure additional funding in the future, from one or more equity or debt financings, collaborations, or other sources, in order to carry out all of the Company’s planned research and development activities and regulatory activities; commercialize product candidates; or conduct any substantial, additional development requirements requested by the FDA. Additional funding may not be available to the Company on acceptable terms, or at all. If the Company is unable to secure additional capital, it will be required to significantly decrease the amount of planned expenditures and may be required to cease operations.  In addition, the disruption in the capital markets caused by the COVID-19 outbreak could make any financing more challenging, and there can be no assurance that Aldeyra will be able to obtain such financing on commercially reasonable terms or at all.

Curtailment of operations would cause significant delays in the Company’s efforts to develop and introduce its products to market, which is critical to the realization of its business plan and the future operations of the Company.

9


 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, including fair value estimates for investments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. The Company’s management evaluates its estimates and assumptions on an ongoing basis. Management’s most significant estimates in the Company’s conso