$ALDX $OKYO $NBY: Biotech’s Race to Capture the Multi-Billion Dry Eye Disease Market

David Keller
5 min readMar 12, 2023

Dry Eye Disease (DED), a condition that affects up to 49 million Americans alone, has found itself in the cross-hairs of a race between biotechnology and pharmaceutical companies racing to develop more competitive treatment options. A recent study performed on a sample size of nearly 80K individuals in the Netherlands also revealed that 9.1% of participants suffered from DED, suggesting that the high incidence of individuals suffering from the condition is global in scope.

Industry analysts contend that DED costs the US economy $55.4b per annum whereas the market for DED treatments is forecast to increase to $6.6b by 2027, testifying to the existence of a massive TAM. Furthermore, this broad global demographic suffering from DED is critically underserved by available treatment options. As reflected in the table below, only five FDA-approved treatments for DED are on the market, and they are characterized by inadequate therapeutic efficacy and/or deleterious side effects.

Three companies that are stepping in to address this market gap are Aldeyra Therapeutics (NASDAQ: ALDX), OKYO Pharmaceuticals (NASDAQ: OKYO), and NovaBay Pharma (NYSE: NBY). Given the high incidence of DED amongst the global public, developing a top-of-the-line treatment will provide a significant financial windfall for the first-mover.

Aldeyra Therapeutics (NASDAQ: ALDX)

On February 28th, Aldeyra announced top-line results from a 12-month clinical trial for an investigational drug, Reproxalap. According to their February 2023 corporate overview, Aldeyra forecasts a PDUFA deadline of Q4 2023 for Reproxalap’s usage in treating DED. This timeline suggests that Reproxalap could be hitting pharmacy shelves as early as H1 ’24, which would represent a significant breakthrough for Aldeyra’s therapeutic portfolio.

Analyst coverage for ALDX is bullish and strongly suggests that the stock is currently undervalued given its $7.37 close on March 8th. An average price target (PT) of $19.88 has been issued by eight analysts, with a low-ball PT of $13.00 and a high-ball PT of $30.00. This range translates into the fact that ALDX investors are looking at minimum upside of ±75% and maximum upside of ±300% over a 12-month time horizon, thereby rendering its current share price a highly attractive entry-point for a long-term position.


With a market cap of $5M compared to Aldeyra’s $431M, OKYO is a dark horse entrant into the race for DED treatments with clear disruptive potential. In Q4 ’22, the company’s flagship treatment, OK-101, saw its IND cleared by the FDA, effectively providing the regulatory green light needed for the initiation of Phase II clinical trials.

On February 28th, OKYO provided an update that OK-101 drug samples earmarked for use in their Phase II first-in-human clinical trials had cleared US customs and were en-route to testing centers. OKYO projects the release of top-line trial data in Q4 ’23, signaling its intention to begin Phase III trials in 2024 and potential go-to-market as early as H2 ‘24/H1’ 25. OKYO is trading at a ~50% discount from its May ’22 initial offering price of $4.50. The upside of this is that if OK-101 continues to report encouraging progress in its clinical pipeline, then current shareholders can expect significant upward movement as OKYO closes the gap between its initial offering and current share price.

NovaBay Pharma (NYSE: NBY)

NovaBay is a microcap pick currently trading on the NYSE for $1.63 (at close on Friday) with a market cap of $3m. Notwithstanding its size, NBY has also recently made moves to capture DED market share that array it alongside more established players like ALDX and OKYO. NBY is currently covered by 2 analysts with a PT consensus of $15, signifying 820% upside relative to current share price. Notwithstanding the speculative nature of biotech investing, NBY’s current share price is regarded as severely undervalued by Ascendiant Capital and Ladenberg Thalmann & Co.

NovaBay’s flagship product for DED is Avenova, a topical spray for lids and lashes that works for relieve symptoms. The company is working to expand its Avenova product line to develop a comprehensive DED product portfolio for relief of symptoms, treatment, and forward prevention. In this vein, on March 7th NovaBay announced the launch of Avenova Eye Health Support oral supplement, and OTC solution that embraces a preventative approach to DED. In a recent study, their MaquiBright solution, “showed an 89% increase in tear production and reported a 57% improvement in dry eye discomfort with Avenova Eye Health Support.”


Aldeyra Therapeutics, OKYO Pharma, and NoveBay Pharmaceuticals are leading the charge in the race to develop more efficacious treatments for the massive and largely unserved DED global market. Given ALDX and OKYO’s proposed timelines, Q4 2023 represents an important milestone for both companies’ clinical pipelines. Meanwhile, NBY is working to develop a vertically integrated over-the-counter product line for DED that will work to diversify treatment options on a more immediate time frame. While investing in biotechnology and pharmaceutical equities is always speculative to a certain extent, ALDX, OKYO, and NBY sport attractive entry prices along with the promise of dominating a rapidly growing DED treatments market.

Disclaimer: this is not financial or investment advice but rather the reflection of the author’s independent opinion.



David Keller

Market analyst into the intersection of technology, finance, society, politics, and macro-econ. Straddles the NY-TLV axis. Fortis Fortuna Adiuvat.