On Thursday, Aldeyra Therapeutics (NASDAQ:ALDX) received reaffirmation from Jones Trading on its Buy rating and $7.00 price target. The firm's position comes after the company disclosed updates from the FDA regarding the pivotal study design for reproxalap, their investigational drug.
Aldeyra has confirmed plans to initiate the study in the first half of 2024 and aims for a New Drug Application (NDA) resubmission in the second half of the same year.
The revised study will be conducted in parallel rather than as a crossover, a shift from the original design. This change addresses the FDA's concerns about potential carry-over effects, especially when the primary endpoint involves patient-reported symptoms.
While the initial NDA submission included crossover study data, the FDA now views the parallel approach as more appropriate for mitigating the impact of patient-reported outcomes.
Jones Trading acknowledges that the modification to a parallel study design introduces additional risk due to the inherent variability in patient responses in dry eye studies. Nonetheless, the firm maintains a high probability of success (80%) for the trial, bolstered by extensive data on ocular discomfort from previous reproxalap studies. Success in the trial could lead to a significant partnership with AbbVie (NYSE:ABBV), which is not currently rated by the firm.
If the trial proceeds according to plan and meets its endpoints, AbbVie may opt to develop and commercialize reproxalap. This agreement could result in a $100 million upfront payment to Aldeyra.
Moreover, even in the absence of the AbbVie deal, Aldeyra is reported to have sufficient cash reserves to support reproxalap's development and their broader pipeline of systemic RASP modulators through the end of 2026.
InvestingPro Insights
As Aldeyra Therapeutics (NASDAQ:ALDX) gears up for the pivotal study of reproxalap and navigates the regulatory landscape, investors are closely monitoring the company's financial health and stock performance.
According to InvestingPro data, Aldeyra holds a market capitalization of approximately $192.59 million and has a price-to-book ratio of 1.6 as of the last twelve months ending Q4 2023. These metrics suggest a valuation that reflects the company's book value, which could be of interest to value-focused investors.
Still, the road ahead is not without its challenges. Two pertinent InvestingPro Tips highlight that Aldeyra suffers from weak gross profit margins and analysts do not anticipate the company will be profitable this year.
Moreover, the stock has experienced significant volatility, with a 6-month price total return showing a steep decline of 50.8%. On the positive side, Aldeyra holds more cash than debt on its balance sheet and its liquid assets exceed short-term obligations, providing some financial stability as it advances its drug development efforts.
For investors seeking a deeper dive into Aldeyra's prospects, InvestingPro offers additional tips and insights. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to an extensive range of financial analysis tools and expert opinions. Currently, there are six more InvestingPro Tips available that could further inform investment decisions regarding Aldeyra Therapeutics.
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