10-Q
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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 March 31, 2022

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)

 

 

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

 

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

 

As of May 2, 2022, there were 58,301,491 shares of the registrant’s common stock issued and outstanding.

 

 

 

 


 

Aldeyra Therapeutics, Inc.

Quarterly Report on Form 10-Q

For the Quarter Ended March 31, 2022

INDEX

 

 

Page

PART I – FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements:

3

 

Consolidated Balance Sheets at March 31, 2022 (Unaudited) and December 31, 2021

3

 

Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (Unaudited)

4

 

Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022 and 2021 (Unaudited)

5

 

Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021 (Unaudited)

6

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (Unaudited)

7

 

Notes to Condensed Consolidated Financial Statements

8

ITEM 2.

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

16

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

23

ITEM 4.

Controls and Procedures

23

PART II – OTHER INFORMATION

 

ITEM 1.

Legal Proceedings

24

ITEM 1A.

Risk Factors

24

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

ITEM 3.

Defaults Upon Senior Securities

67

ITEM 4.

Mine Safety Disclosures

67

ITEM 5.

Other Information

67

ITEM 6.

Exhibits

67

Signatures

68

 

2


 

Part I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

March 31,

 

 

 

 

 

 

2022

 

 

December 31,

 

 

 

(unaudited)

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,909,328

 

 

$

104,790,989

 

Cash equivalent - reverse repurchase agreements

 

 

65,000,000

 

 

 

125,000,000

 

Marketable securities

 

 

57,957,020

 

 

 

 

Prepaid expenses and other current assets

 

 

5,488,707

 

 

 

2,961,781

 

Total current assets

 

 

222,355,055

 

 

 

232,752,770

 

Right-of-use assets

 

 

296,504

 

 

 

351,863

 

Fixed assets, net

 

 

41,422

 

 

 

32,487

 

Total assets

 

$

222,692,981

 

 

$

233,137,120

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,442,830

 

 

$

1,019,702

 

Accrued expenses

 

 

13,675,555

 

 

 

10,523,353

 

Current portion of long-term debt

 

 

 

 

 

 

Current portion of operating lease liabilities

 

 

236,048

 

 

 

229,607

 

Total current liabilities

 

 

16,354,433

 

 

 

11,772,662

 

Operating lease liabilities, long-term

 

 

63,325

 

 

 

125,232

 

Long-term debt, net of current portion

 

 

15,586,501

 

 

 

15,503,703

 

Total liabilities

 

 

32,004,259

 

 

 

27,401,597

 

Commitments and contingencies (Notes 13, 14, and 15)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value, 15,000,000 shares authorized, none
   issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value; 150,000,000 authorized and 58,301,491
   and
58,081,215 shares issued and outstanding, respectively

 

 

58,301

 

 

 

58,081

 

Additional paid-in capital

 

 

502,172,392

 

 

 

500,369,444

 

Accumulated other comprehensive loss

 

 

(61,677

)

 

 

 

Accumulated deficit

 

 

(311,480,294

)

 

 

(294,692,002

)

Total stockholders’ equity

 

 

190,688,722

 

 

 

205,735,523

 

Total liabilities and stockholders’ equity

 

$

222,692,981

 

 

$

233,137,120

 

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 March 31,

 

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

12,234,320

 

 

$

7,726,342

 

General and administrative

 

 

4,249,387

 

 

 

3,104,702

 

Loss from operations

 

 

(16,483,707

)

 

 

(10,831,044

)

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

101,382

 

 

 

23,762

 

Interest expense

 

 

(405,967

)

 

 

(482,580

)

Total other income (expense), net

 

 

(304,585

)

 

 

(458,818

)

Net loss

 

$

(16,788,292

)

 

$

(11,289,862

)

Net loss per share - basic and diluted

 

$

(0.29

)

 

$

(0.25

)

Weighted average common shares outstanding - basic and diluted

 

 

58,297,861

 

 

 

45,630,910

 

 

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

4


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net loss

 

$

(16,788,292

)

 

$

(11,289,862

)

Other comprehensive loss:

 

 

 

 

 

 

Unrealized loss on marketable securities, net of tax

 

 

(61,677

)

 

 

 

Total other comprehensive loss

 

$

(61,677

)

 

$

 

Comprehensive loss

 

$

(16,849,969

)

 

$

(11,289,862

)

 

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 Stock

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional
Paid-in Capital

 

 

Other
Comprehensive
Income/(Loss),
net of tax

 

 

Accumulated
Deficit

 

 

Total
Stockholders'
Equity

 

Balance, December 31, 2021

 

 

58,081,215

 

 

$

58,081

 

 

$

500,369,444

 

 

$

 

 

$

(294,692,002

)

 

$

205,735,523

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,779,844

 

 

 

 

 

 

 

 

 

1,779,844

 

Release of restrictions on Helio
   founders’ shares

 

 

10,890

 

 

 

11

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

Issuance of common stock, employee
   stock purchase plan

 

 

6,860

 

 

 

7

 

 

 

23,317

 

 

 

 

 

 

 

 

 

23,324

 

Issuance of common stock, vested
   restricted stock awards

 

 

202,526

 

 

 

202

 

 

 

(202

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(61,677

)

 

 

 

 

 

(61,677

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,788,292

)

 

 

(16,788,292

)

Balance, March 31, 2022

 

 

58,301,491

 

 

$

58,301

 

 

$

502,172,392

 

 

$

(61,677

)

 

$

(311,480,294

)

 

$

190,688,722

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

38,667,491

 

 

$

38,667

 

 

$

296,385,619

 

 

$

 

 

$

(236,915,728

)

 

$

59,508,558

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,292,170

 

 

 

 

 

 

 

 

 

1,292,170

 

Release of restrictions on Helio
   founders’ shares

 

 

35,005

 

 

 

35

 

 

 

(35

)

 

 

 

 

 

 

 

 

 

Issuance of common stock in connection
with Helio Vision, Inc. acquisition milestone

 

 

246,562

 

 

 

247

 

 

 

2,499,744

 

 

 

 

 

 

 

 

 

2,499,991

 

Issuance of common stock, net of
   issuance costs

 

 

7,868,421

 

 

 

7,868

 

 

 

70,041,582

 

 

 

 

 

 

 

 

 

70,049,450

 

Issuance of common stock, exercise
   of stock options

 

 

543,826

 

 

 

544

 

 

 

4,003,746

 

 

 

 

 

 

 

 

 

4,004,290

 

Issuance of common stock, employee
   stock purchase plan

 

 

2,786

 

 

 

3

 

 

 

9,872

 

 

 

 

 

 

 

 

 

9,875

 

Issuance of common stock, vested
   restricted stock awards

 

 

286,944

 

 

 

287

 

 

 

(287

)

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,289,862

)

 

 

(11,289,862

)

Balance, March 31, 2021

 

 

47,651,035

 

 

$

47,651

 

 

$

374,232,411

 

 

$

 

 

$

(248,205,590

)

 

$

126,074,472

 

 

 

 

6


 

ALDEYRA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$

(16,788,292

)

 

$

(11,289,862

)

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

 

 

 

 

 

 

Stock-based compensation

 

 

1,936,578

 

 

 

2,381,656

 

Non-cash interest expense

 

 

82,798

 

 

 

141,505

 

Net amortization of premium on debt securities available for sale

 

 

(3,228

)

 

 

 

Depreciation and amortization expense

 

 

62,741

 

 

 

67,863

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,526,926

)

 

 

(3,429,586

)

Accounts payable

 

 

1,423,128

 

 

 

66,953

 

Accrued expenses and other liabilities

 

 

2,940,002

 

 

 

(1,410,270

)

Net cash used in operating activities

 

 

(12,873,199

)

 

 

(13,471,741

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Acquisitions of fixed assets

 

 

(16,317

)

 

 

(7,806

)

Purchases of marketable securities

 

 

(58,015,469

)

 

 

 

Net cash used in investing activities

 

 

(58,031,786

)

 

 

(7,806

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

 

 

 

70,049,450

 

Proceeds from exercise of stock options

 

 

 

 

 

4,004,290

 

Proceeds from employee stock purchase plan

 

 

23,324

 

 

 

9,875

 

Net cash provided by financing activities

 

 

23,324

 

 

 

74,063,615

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

(70,881,661

)

 

 

60,584,068

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

229,790,989

 

 

 

77,858,311

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

158,909,328

 

 

$

138,442,379

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

Cash paid during the period for interest

 

$

322,500

 

 

$

341,250

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION AND DISCLOSURES OF NONCASH ACTIVITIES:

 

 

 

 

 

 

Common stock issued in connection with Helio Vision, Inc. acquisition milestone

 

$

 

 

$

2,499,991

 

 

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

7


 

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 devoted to developing and commercializing next-generation medicines to improve the lives of patients who suffer from immune-mediated diseases.

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

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 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, 2021, which was filed with the Securities and Exchange Commission on March 17, 2022 (2021 Form 10-K).

The financial information as of March 31, 2022, and the three months ended March 31, 2022 and 2021, 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, 2021 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, the Company believes that its cash and cash equivalents, as of March 31, 2022, will be sufficient to fund currently projected operating expenses through the end of 2023, including potential new drug application (NDA) submissions; initial commercialization of reproxalap, if approved; and continued early and late-stage development of our product candidates in ocular and systemic immune-mediated diseases. 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 Food and Drug Administration (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.

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.

Use of Estimates

The preparation of condensed consolidated 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 condensed 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 condensed consolidated financial statements include, but are not limited to, estimates related to clinical trial accruals, estimates related to deferred and accrued research and development costs, and accounting for income taxes and related valuation allowance. Although these estimates and assumptions are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

8


 

Summary of Significant Accounting Policies

There were no changes to significant accounting policies during the three months ended March 31, 2022, as compared to the those identified in the 2021 Form 10-K.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires that credit losses be reported as an allowance using an expected losses model, representing the entity’s current estimate of credit losses expected to be incurred. The accounting guidance currently in effect is based on an incurred loss model. For available-for-sale debt securities with unrealized losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. The amendments under ASU 2016-13 are effective for interim and annual fiscal periods beginning after December 15, 2022. The Company is continuing to evaluate the impact of ASU 2016-13 but does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

3. Helio Vision Acquisition

On January 28, 2019 (Closing Date), the Company acquired Helio Vision, Inc. (Helio). As a result of the acquisition, the Company initially issued an aggregate of 1,160,444 shares of common stock to the former securityholders and an advisor of Helio. The founders of Helio were issued 568,627 shares and non-founders were issued 591,817 shares. The Helio founders’ shares were subject to vesting based on continued service to the Company over three years from the Closing Date, of which, 100% are vested as of March 31, 2022. The Company recognized the expense associated with the founders’ restricted shares as research and development compensation expense on a straight-line basis as the shares vested over the three-year period. For the three months ended March 31, 2022 and 2021, the Company recorded $0.1 million and $0.3 million of research and development compensation expense, respectively, for the founders’ restricted shares.

In January 2021, pursuant to the terms of the acquisition agreement, the Company issued 246,562 shares of its common stock to the former securityholders of Helio (January Shares). In addition, the Company, subject to the conditions of the acquisition agreement, is contingently obligated to make additional payments to the former securityholders of Helio as follows:(a) $10.0 million of common stock following approval by the FDA of a new drug approval application for the prevention and/or treatment of proliferative vitreoretinopathy or a substantially similar label prior to the 10th anniversary of the Closing Date; and (b) $2.5 million of common stock following FDA approval of a new drug application for an indication (other than proliferative vitreoretinopathy) prior to the 12th anniversary of the Closing Date (the shares of common stock issuable pursuant to the preceding clauses (a) and (b) are referred to herein as the Milestone Shares), provided that in no event shall the Company be obligated to issue more than an aggregate of 5,248,885 shares of common stock. Additionally, in the event of certain change of control or divestitures by the Company, certain former convertible noteholders of Helio will be entitled to a tax gross-up payment in an amount not to exceed $1.0 million.

The Company determined that liability accounting is not required for the Milestone Shares under FASB ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480). The Company also determined that the Milestone Shares meet the scope exception as a derivative under FASB ASC Topic 815, Derivatives and Hedging (ASC 815), from inception of the Milestone Shares through March 31, 2022. Accordingly, the Milestone Shares are evaluated under FASB ASC Topic 450, Contingencies (ASC 450) and the Company will record a liability related to the Milestone Shares if the milestones are achieved, and the obligation to make additional payment(s) becomes probable. At that time, the Company will record the cost of the Milestone Shares issued to the Helio founders as compensation expense and to the Helio non-founders as in-process research and development (IPR&D) expense if there is no alternative future use. At December 31, 2020, the issuance of the January Shares was considered probable and $2.5 million was accrued as contingent consideration payable in stock and the Company recorded $1.8 million to IPR&D (Milestone IPR&D), which included a $0.5 million income tax benefit, and $1.2 million of compensation expense related to these January Shares, which amounted to 246,562 shares and were issued during the quarter ended March 31, 2021. No other milestones related to the remaining Milestone Shares are probable of being achieved as of March 31, 2022.

4. NET LOSS PER SHARE

As of March 31, 2022 and 2021, diluted weighted average common shares outstanding is equal to basic weighted average common shares due to the Company’s net loss position.

9


 

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact:

 

 

 

For the Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Options to purchase common stock

 

 

5,972,926

 

 

 

3,856,204

 

Nonvested restricted stock units

 

 

706,446

 

 

 

454,635

 

Nonvested founder shares (1)

 

 

 

 

 

117,851

 

Total of common stock equivalents

 

 

6,679,372

 

 

 

4,428,690

 

 

(1) Represents 117,851 shares of common stock that are issued and outstanding but that were subject to vesting based on service requirements at March 31, 2021, and were not included in stockholders’ equity at such date.

 

5. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

At March 31, 2022, cash, cash equivalents, and marketable securities were comprised of:

 

 

 

Carrying
Amount

 

 

Unrecognized
Loss

 

 

Estimated
Fair Value

 

 

Cash and Cash
Equivalents

 

 

Current
Marketable
Securities

 

Cash

 

$

87,557,084

 

 

$

 

 

$

87,557,084

 

 

$

87,557,084

 

 

$

 

Money market funds

 

 

6,352,244

 

 

 

 

 

 

6,352,244

 

 

 

6,352,244

 

 

 

 

Reverse repurchase agreements

 

 

65,000,000

 

 

 

 

 

 

65,000,000

 

 

 

65,000,000

 

 

 

 

Total cash and cash equivalents

 

$

158,909,328

 

 

$

 

 

$

158,909,328

 

 

$

158,909,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency securities

 

 

58,018,697

 

 

 

(61,677

)

 

 

57,957,020

 

 

 

 

 

 

57,957,020

 

Available for sale (1)

 

 

58,018,697

 

 

 

(61,677

)

 

 

57,957,020

 

 

 

 

 

 

57,957,020

 

Total cash, cash equivalents, and current marketable securities

 

 

 

 

 

 

 

 

 

 

$

158,909,328

 

 

$

57,957,020

 

 

At December 31, 2021, cash, cash equivalents, and marketable securities were comprised of:

 

 

 

Carrying
Amount

 

 

Unrecognized
Loss

 

 

Estimated
Fair Value

 

 

Cash and Cash
Equivalents

 

 

Current
Marketable
Securities

 

Cash

 

$

100,364,523

 

 

$

 

 

$

100,364,523

 

 

$

100,364,523

 

 

$

 

Money market funds

 

 

4,426,466

 

 

 

 

 

 

4,426,466

 

 

 

4,426,466

 

 

 

 

Reverse repurchase agreements

 

 

125,000,000

 

 

 

 

 

 

125,000,000

 

 

 

125,000,000

 

 

 

 

Total cash and cash equivalents

 

$

229,790,989

 

 

$

 

 

$

229,790,989

 

 

$

229,790,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cash, cash equivalents, and current marketable securities

 

 

 

 

 

 

 

 

 

 

$

229,790,989

 

 

$

 

 

There were no marketable securities held at December 31, 2021.

 

(1)
Available for sale securities are reported at fair value with unrealized gains and losses reported net of taxes, if material, in other comprehensive income.

 

The contractual maturities of all available for sale securities are less than one year at March 31, 2022.

 

 

6. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value are performed in a manner to maximize the use of

10


 

observable inputs and minimize the use of unobservable inputs. ASC 820, Fair Value Measurements, establishes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following:

Level 1 – Quoted prices in active markets that are accessible at the market date for identical unrestricted assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs for which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

There were no liabilities measured at fair value at March 31, 2022 or December 31, 2021.

Money market funds included in cash and cash equivalents in the consolidated balance sheets, are recorded at fair value and considered as Level 1 inputs under the fair value hierarchy.

Reverse repurchase agreements and U.S. government agency securities are recorded at fair market value and considered as Level 2 inputs under the fair value hierarchy.

Financial instruments including cash equivalents, clinical trial prepayments to contract research organizations, and accounts payable are carried in the consolidated financial statements at amounts that approximate their fair value based on the short maturities of those instruments. The carrying amount of the Company’s term loan under the Hercules Credit Facility (as defined in Note 9) approximates market rates currently available to the Company.

7. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets at March 31, 2022 and December 31, 2021 were:

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Deferred research and development expenses

 

$

5,056,003

 

 

$

2,404,145

 

Miscellaneous prepaid expenses and other current assets

 

 

432,704

 

 

 

557,636

 

Total prepaid expenses and other current assets

 

$

5,488,707

 

 

$

2,961,781

 

 

8. ACCRUED EXPENSES

Accrued expenses at March 31, 2022 and December 31, 2021 were:

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Accrued compensation

 

$

1,082,096

 

 

$

1,512,885

 

Accrued research and development

 

 

11,491,712

 

 

 

8,415,560

 

Accrued other expenses

 

 

1,101,747

 

 

 

594,908

 

Total accrued expenses

 

$

13,675,555

 

 

$

10,523,353

 

 

9. CREDIT FACILITY

The Company’s long-term debt obligation consists of amounts the Company is obligated to repay under its credit facility with Hercules Capital, Inc. (Hercules). In March 2019, the Company entered into a Loan and Security Agreement with Hercules and several banks and other financial institutions or entities, from time-to-time parties thereto (collectively, referred to as Lender), providing for a term loan of up to $60.0 million, subject to the satisfaction of certain conditions contained therein, that is secured by a lien covering all of the Company’s assets, other than the Company’s intellectual property (Loan and Security Agreement or the Hercules Credit Facility). The Loan and Security Agreement provided for (i) an initial term loan advance of up to $5.0 million at the Company’s option, which expired unutilized on April 15, 2019; (ii) three additional term loan advances of up to $15.0 million each, at the Company’s option, available to the Company upon the occurrence of certain funding conditions prior

11


 

to September 30, 2019 (2019 Tranche), March 31, 2020 (2020 Tranche), and March 31, 2021 (2021 Tranche); and (iii) a final additional term loan advance (Fourth Loan Tranche) of up to $10.0 million prior to December 31, 2021, at the Company’s option, subject to approval by the Lender’s investment committee. The 2019 Tranche was drawn down in full by the Company in September 2019 and the 2020 Tranche and 2021 Tranche expired unutilized prior to the Company satisfying the funding conditions for such tranche. On April 20, 2021, the Company entered into the First Amendment (First Amendment) to the Loan and Security Agreement with Hercules. The First Amendment, among other things, (i) increased the Fourth Loan Tranche from $10.0 million to $20.0 million and extended the deadline for drawing down the Fourth Loan Tranche to July 1, 2022; (ii) lowered the variable per annum rate of interest on borrowings under the Loan and Security Agreement from the greater of (a) 9.10% and (b) the prime rate (as reported in the Wall Street Journal or any successor publication thereto) plus 3.10% to the greater of (x) the Prime Rate (as defined therein) plus 3.10% or (y) 8.60%; (iii) extended the expiration of the period in which interest-only payments on borrowings under the Loan and Security Agreement are required from May 1, 2021 to July 1, 2022; and (iv) following the satisfaction of certain conditions in April 2021, further extended the expiration of the interest-only period and the deadline for drawing down the Fourth Loan Tranche to May 1, 2023. Repayment of the aggregate outstanding principal balance of the term loan, in monthly installments, commences upon expiration of the interest-only period and continues through October 1, 2023 (Maturity Date). The First Amendment was determined to be a modification in accordance with FASB ASC Topic 470, Debt and did not result in extinguishment.

Associated with this debt facility, the Company incurred a commitment charge of $25,000, transaction costs of $273,186, a fee of $375,000 upon closing, and is required to pay a fee (End of Term Charge) of 6.95% multiplied by the aggregate amount of advances under the Loan and Security Agreement at maturity. The fees, transaction costs, and the End of Term Charge are amortized to interest expense from 2019 through the Maturity Date using the effective interest method. The effective interest rate was 10.8% at March 31, 2022