Clearside Biomedical Inc

NASDAQ:CLSD

Earnings Call Analysis

Key Financials and Clinical Trials Update

The company concluded the year with about $29 million in cash and equivalents. A recent funding round added $15 million, ensuring operations can continue through Q3 2025. Priority for the year includes completing the ODYSSEY Phase IIb clinical trial in wet AMD with results expected in the third quarter. Positive outcome may establish CLS-AX as a significant treatment for wet AMD, enhancing the company's leadership in suprachoroidal drug delivery.

Clearside Biomedical's Forward Momentum

The past year was significant for Clearside Biomedical, showcasing substantial progress in clinical programs and forging strategic partnerships. The key achievement was advancing the CLS-AX program in wet Age-related Macular Degeneration (AMD), with the ODYSSEY Phase IIb trial enrolling rapidly due to strong physician interest, promising a new therapy's potential and impact.

Upcoming Milestones and Clinical Trials Impact

Looking forward, 2024 is poised to be transformative for Clearside with the pivotal ODYSSEY trial data expected in Q3 and further clinical developments in suprachoroidal drug delivery. The success of these trials could lead to an extended treatment paradigm for AMD patients, offering reduced injection frequency and potential improvements in treatment efficacy.

Demonstrating the Suprachoroidal Delivery Method's Effectiveness

Real-world analysis of their XIPERE treatment supports Clearside's strategy for extending small molecule drug release and reducing treatment burden. With over 2,000 injections performed to date, the SCS microinjector technology has shown a promising safety profile, a significant factor for its acceptance and use in various clinical trials and commercial products.

Financial Positioning and Expected Runway

Clearside's financial strategy is sound with a cash balance sufficient to fund operations into Q3 of 2025, covering significant milestones such as the ODYSSEY trial data readout and the initiation of the Phase III program for CLS-AX.

Harnessing Partnerships for Growth

The company's collaboration strategy is robust, with partnerships across the globe aimed at expanding the indications and utilization of the SCS microinjector. Through strategic agreements, such as the license with BioCryst Pharmaceuticals, Clearside is positioned for a steady stream of potential milestone and royalty payments, subject to clinical and regulatory successes.

Focused Therapeutic Development and Sales Expectations

Clearside is zeroing in on wet AMD as the sole indication for CLS-AX, with no current plans to explore other diseases like DME or DR. For their commercial product XIPERE, royalty revenues will be realized only after surpassing an initial $45 million threshold in sales, of which there are no amounts reported yet.

Earnings Call Transcript 2023-Q4

[Operator]

Greetings, and welcome to the Clearside Biomedical Q4 2023 Financial Results and Corporate Update Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Jenny Kobin, of Clearside Investor Relations. Jenny, you may begin.

[Jenny Kobin, executive]

Good afternoon, everyone, and thank you for joining us on the call today. Before we begin, I would like to remind you that during today's call, we will be making certain forward-looking statements. Various remarks that we make during this call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2023, that will be filed today and our other SEC filings available on our website. .

In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change.

On today's call, we have George Lasezkay, our Chief Executive Officer; and Charlie Deignan, our Chief Financial Officer. After our formal remarks, we will open the call for your questions.

I would now like to turn the call over to George.

[George Lasezkay, executive]

Thank you, Jenny, and good afternoon, everyone. The tremendous progress that we accomplished in 2023 has propelled us into 2024 and positioned us for an important year. Last year, we advanced our CLS-AX clinical development program in wet AMD, meeting our targeted time line and budget. In February 2023, we reported positive results from our OASIS extension study that supported initiation of our Phase IIb clinical trial ODYSSEY.

Later that year, we initiated and completed enrollment in ODYSSEY again, on our targeted time line and budget. This rapid enrollment was primarily a result of significant enthusiasm from physicians because of the compelling aspects and potential clinical impact of the program. During 2023, each of our licensing partners reported excellent progress in their clinical development programs. Collectively, there are now 4 assets in clinical development with suprachoroidal delivery for 5 different indications.

In addition, we were pleased to announce a new collaboration with BioCryst Pharmaceuticals to utilize our SCS Microinjector to deliver their proprietary compound of orlistat to treat diabetic macular edema. This adds both another asset and another indication to our collaboration pipeline.

As we look ahead, 2024 will be a critical year for Clearside as we execute on 2 key areas of focus. First, the primary data readout for our ODYSSEY Phase IIb trial will occur in third quarter this year. Second, we and our partners expect to continue demonstrating the benefits of drug delivery into the suprachoroidal space with our SCS Microinjector device technology.

I'll start with ODYSSEY, our randomized double-mask active controlled clinical trial in participants with wet AMD. We are utilizing our patented suprachoroidal injection technology to deliver CLS-AX, a small molecule suspension of the tyrosine kinase inhibitor axitinib. Our proven delivery method combined with the differentiated mechanism of action and high potency of axitinib offers the potential for CLS-AX to be a long-term maintenance therapy for wet AMD patients. In ODYSSEY, we are looking to replicate the excellent safety profile, stable vision and reduced frequency of injections over 6 months that we observed in our OASIS extension study. The efficacy and safety results from ODYSSEY will support the design of our pivotal Phase III development program for CLS-AX.

With our focus on extending treatment duration, utilizing suprachoroidal delivery of small molecules, I think it's relevant to highlight recent positive real-world outcomes from XIPERE usage. This analysis was presented by Dr. Michael Singer at the Macula Society Meeting last month. In his presentation, Dr. Singer evaluated nearly 800 eyes utilizing the American Academy of Ophthalmology IRIS Registry and open source claims data.

This real-world data showed excellent durability where over 75% of eyes did not require retreatment for 6 months after just one dose of XIPERE. This durability is consistent with the XIPERE preclinical pharmacokinetic data and the data from our Phase III PH3 clinical trial. Importantly, we believe this analysis validates Clearside's approach to extended small molecule drug release and reduced treatment burden for patients by delivering drug directly to the suprachoroidal space with our SCS microinjector.

As we look back over the last several years, I'm thrilled with the progress we have seen leading to the adoption and acceptance of suprachoroidal delivery. As the original pioneers in the space, we are proud that Clearside's technology has led the way for this important and innovative approach for delivering of drugs behind the visual field directly to the retina. The suprachorodal injection procedure now has a permanent Category 1 CPT code available to help facilitate better access, adoption and insurance coverage. This CPT code is a major milestone for the procedure itself.

Our proprietary SCS microinjector continues to enable reliable, simple in-office nonsurgical drug delivery as shown with its use in multiple ongoing clinical trials and with our commercially approved product, XIPERE. Most importantly, our SCS microinjector has demonstrated a positive safety profile with over 2,000 injections performed to date. We believe this strong safety profile is due in part to the fact that drug delivery by SCS injection is compartmentalized in the suprachoroidal space keeping it away from nondisease tissues and entirely behind the visual field.

We do not put drug into the vitreous, and we do not place physical inserts or gels in the vitreous that rely on complete bio erosion over time. Since the suprachoroidal injection allows for drug to flow behind the retina to the back of the eye. This limits the risk of vitreous floaters, vitreal or anterior chamber toxicity or possibly impairing or interfering with the patients [Technical Difficulty] to date, we've established multiple partnerships with leading biopharma companies who have elected to utilize our SCS Microinjector over other delivery methods. We believe that suprachoroidal delivery may become the delivery method of choice for gene therapy and ophthalmology.

Utilizing our SCS microinjector, our partner, REGENXBIO has demonstrated in their wet AMD clinical trial that there were 0 cases of inflammation observed in patients who received just 7 weeks of prophylactic topical steroids. In contrast, recently reported data from other gene therapies in development using intravitreal delivery has shown inflammation despite prophylactic steroid treatments of over 20 weeks.

These steroid regimens involve injections, oral medications and in some cases, extended release steroid inserts. So we're excited about the progress REGENXBIO has made in their 2 programs utilizing our SCS microinjector. In diabetic retinopathy, REGENXBIO presented data last November from their altitude trial showing that RGX-314 prevented disease progression in nonproliferative DR patients at one year.

In wet AMD, they presented data in January 2024 from their AAVIATE trial, showing that patients treated with 314 continued to demonstrate stable vision and retinal anatomy with a meaningful reduction in treatment burden at 6 months. REGENXBIO expects to share new program and data updates for their altitude trial in Q2 of this year and for the AAVIATE 8 trial in mid-2024. Aura Biosciences chose to exclusively use suprachoroidal delivery over intravitreal injection for their Phase III CoMpass trial, which is evaluating the safety and efficacy of bel-sar first-line treatment in adults of early-stage choroidal melanoma. The design of this trial is covered under a special protocol assessment written agreement with the FDA or is currently enrolling participants in the CoMpass trial. We are also looking forward to continued progress by our Asia Pacific partner, Arctic Vision, who's developing XIPERE, which they have branded as Arcadis.

This year will include completion of the Phase III trial in China in uveitic macular edema and data from their Phase I DME trial. In addition, they plan to announce the results of their new drug application submission in Australia and additional NDA submissions in other Asia Pacific territories. In our most recent partnership development, we expanded the use of the SCS Microinjector with a new small molecule. Last November, we entered into an exclusive worldwide license with BioCryst Pharmaceuticals to use our SCS Microinjector for the delivery of their proprietary plasma kallikrein inhibitor, avoralstat for DME. This partnership provided us with an upfront license fee of $5 million.

Additionally, the agreement includes $77.5 million in potential clinical, regulatory and post-approval sales-based milestone payments and tiered mid-single-digit royalties on net project -- net product sales. We are working closely with the BioCryst team as we collaboratively conduct formulation and nonclinical work this year with a target of BioCryst initiating clinical work in 2025.

We are very encouraged by the continued progress in all 5 suprachoroidal development collaboration programs.

I will now turn over the call to our CFO, Charlie Deignan, to provide a financial update. Charlie?

[Charlie Deignan, executive]

Thank you, George, and good afternoon, everyone. Our financial results for the fourth quarter and year-end 2023 were published earlier in our press release and are available on our website. Therefore, I will only provide a summary of our financial status on today's call. As of December 31, 2023, our cash and cash equivalents totaled approximately $29 million. Subsequent to the end of the fourth quarter, we completed a registered direct offering of stock and warrants, which generated $15 million in gross proceeds. With this combined cash balance we believe we will have sufficient resources to fund our planned operations into the third quarter of 2025. This takes us through the anticipated data readout for the ODYSSEY trial this year and supports our planning for CLS-AX Phase III program.

In terms of investor outreach, we will be participating in the upcoming Needham Healthcare Conference and Citizen JMP Securities Life Science Conference. We look forward to keeping the investment community updated on our progress.

I will now turn the call back over to George for his closing remarks.

[George Lasezkay, executive]

Thanks, Charlie. As I highlighted, we have 2 key areas of focus this year. We expect to complete our ODYSSEY Phase IIb clinical trial in wet AMD and report top line data in the third quarter of this year. We believe that the data readout may demonstrate that CLS-AX could be a valuable addition to the treatment regimen for patients with wet AMD.

In addition, we'll continue our leadership in the suprachoroidal space as we and our partners generate additional data demonstrating the benefits of drug delivery with our SCS microinjector. We remain steadfastly committed to developing new treatments and collaborating with leading health care companies to improve vision for individuals living with site-threatening diseases. I would now like to ask the operator to open the call for questions.

[Operator]

[Operator Instructions] the first question today is coming from Annabel Samimy from Stifel. Annabel, your line is live.

[Annabel Samimy, analyst]

Congratulations on the rapid enrollment. That's great. I just was hoping maybe you can clarify something for me. I guess it's a little bit more bigger picture. But little confuse as to how each of these Phase II trials were designed, not just yours, but just in general, the TKI inhibitors, obviously, yours has a loading dose for 2 Eylea loading doses, then you treat Eyepoint [indiscernible] Ocular Therapeutics is now doing the superiority trial. And I guess one of the other things you noted was that yours is not powered for non-inferiority or statistical significance and it's just really to identify duration. So I guess the question is, how are we supposed to read all these data and really understand how it fits into the evolving landscape for TKIs? And at what point do you think there might be some harmonization of all these trials, not just for our clarification, but for physicians, you need to choose between these different treatments, right, as a maintenance therapy. So I was hoping maybe you can sort of discuss this a little bit more big picture.

[George Lasezkay, executive]

Well, it's an interesting point that you raised. There does need to be -- I mean, I'm not sure there needs to be, but perhaps there will be some harmonization over time. We're in the process right now [indiscernible] our Phase II trial is 3 loading doses, just to be clear, I think I heard you say something to 3 loading doses.

[Annabel Samimy, analyst]

[indiscernible] before your injection, yes, sorry.

[George Lasezkay, executive]

Yes, our injection of CLS-AX is concurrent with the second loading dose, and then there's a third loading dose a month later. Ocular really kind of thrills -- thrills us or loop a little bit because they're just basically doing one dose of each theirs and aflibercept and then waiting to see who needs to be retreated. And I understand I'm learning more and more about why they've done it that way. But we're in the process now to try to harmonize things. We're in the process now. We'll begin it over the next couple of months to discuss what our pivotal program would look like.

And so you're right about what we're looking at in ODYSSEY is we want to measure duration, where do we think the best dosing regimen would be to go into Phase III. But that doesn't really get to your question, which is how do we harmonize how these TKIs are being used because each one of us is using some aflibercept or some anti-VEGFA, but slightly differently. We're timing our TKI administration slightly differently. And it looks like EyePoint is going for noninferiority. Ocular is clearly going for superiority. Those trials are very different in design and when we disclose our Phase III, we'll see if we match up with one or the other or we come up with a third design. So I can appreciate where you're having a bit of a problem. But as we learn more about how the TKIs work, and where they fit in, I think you'll begin to see this come together. And I don't think that necessarily the loading doses are going to be that big a deal over time to harmonize, but the thing is with ocular, they're going after treatment naive patients. And so I'm a little bit -- I'm a little bit puzzled why they didn't do a bigger, more on-label loading dose with aflibercept. But I think I understand why they're trying to do it this way, and we'll see what happens. But I can't guarantee we're going to harmonize, but I think over time, what you will see between the 3 different studies.

I think you will see that the tyrosine kinase inhibitors as a group are going to be a very important addition to the treatment alternatives that physicians have for their wet AMD patients in particular. I think you're going to see that. I don't think we're -- I think that's going to be very clear that we have a place in that treatment regimen. And we have to wait for the data to come out. But I think if you talk to the other 2 companies, I think they would believe the same thing. And most of the physicians that we talk to believe that as well. So we have to go out and we have to demonstrate it we may all demonstrate it in a slightly different way. But I think you're going to see that the tyrosine kinase inhibitors have duration, have effect, mechanistically, they're very competitive -- excuse me, not competitive, but very -- they can form very nicely with anti-VEGFA because they don't compete and they kind of help and supplement the anti-VEGFA mechanism of action by blocking receptors instead of just binding with circulating VEGF

So there's a theoretical reason why they should work. I think we've all seen data in our clinical trials that indicate that they have extended duration and I think as we go through all of our additional clinical trials, the place for the TKIs is going to be very clear.

[Annabel Samimy, analyst]

And if I can just add one more question to that. As you discuss this with more of the retinal community. Does it seem that the TKIs are kind of landing in this maintenance treatment sort of domain? Or is ocular therapeutics essentially going to blow that up if they're looking at treatment naive? What's -- what's their mindset as far as where anti-VEGF serves and where TKIs will be best served?

[George Lasezkay, executive]

Where we've studied this and where everybody studied this and maybe Ocular will change things. Again, they're going treatment naive. So we'll see how that works. In particular, we'll see how it works early on in their therapy in the first couple of months after they put their insert in. But I think most people right now would look at us in the way where most of us have been [indiscernible] is more maintenance therapy than first-line monotherapy, but that maybe ocular will show that where they're doing their trial. I don't know. But I can tell you that I think most people look at this as extended duration maintenance therapy is where we go. And that the 2 drugs mechanistically, the anti-VEGFA and the TKI should work very nicely. They should complement one another. .

I always draw the comparison, I believe, to cancer chemotherapy or even antidepressant therapy is you're trying to affect an outcome, better vision, improved or treating cancer, better vision treating people who are depressed to making not depressed. And so physicians have multiple approaches in cancer chemotherapy and antidepressant. They haven't really had that. They've had multiple different approaches to the same mechanism of action from the old days of [indiscernible] Eylea and even Vabysmo. So they're principally going after anti-VEGFA approach. That allows for the overexpression of C&E that doesn't get taken care of it. That doesn't account for binding all of the circulating VEGFA that's circulating. So I think that the 2 drugs could work very nicely together finding circulating VEGFA by blocking A, C, and E if there's overexpression at the receptor level.

So I see them as I think physicians should look at this. And I think company should look at this as a real opportunity to add complementary therapy to wet AMD rather than seeing it one replacing the other necessarily. And over time, as it gains usage, we'll see what happens. But I think right from the start, I think it's a very complementary approach and I think patients will be the main beneficiary of this complementary approach.

[Operator]

The next question is coming from Jon Wolleben from JMP.

[Unknown Analyst]

This is Catherine on for [indiscernible] few questions on the ODYSSEY trial. And just how your population compares to other mid-stage wet AMD studies? I know you talked about Ocular, just generally some color on that. And then another one just on how you think about safety of the suprachoroidal administration approach on that clear side? how that compares to other wet AMD candidates.

[George Lasezkay, executive]

In ODYSSEY, we made a very determined attempt to enroll patients who had been diagnosed with wet AMD had, had some treatment experience, so they were more or less lightly treatment-experienced. So they weren't patients that were naive. And importantly, we've tried to make sure that they either had the presence of intraretinal fluid or subretinal fluid or both or leakage that was documented on fluorcinangeography. So what we did was -- they don't know that other -- any of the other TKI companies have done this, but we made a very concerted effort to make sure that the patients that we were enrolled had had some experience, but we're clearly had fluid on enrolling into the trial. We did not want to enroll and try very hard not to enroll patients who have been diagnosed, but were dry.

And that's certainly been the case to some degree in previous trials by other companies and because the dry patient can get in there and kind of artificially inflate your positive results because you can see it right patient, and they may not require any real intervention for many months. So we wanted to make sure that the patients that are in our trial had fluid required therapy, had responded to some degree in the past, but weren't like our OASIS patients that were -- our KOLs would call anti-VEGFA addicts. They were responsive, but they were super -- they needed a lot more anti-VEGF intervention than you might expect. So they were getting their Lucentis or their Eylea's far more frequently than you would expect.

So we wanted patients that had some response, had some experience there, but weren't overly dependent on a lot of anti-VEGFA and when enrolled in the trial, they had the presence -- documented presence of fluid documented by independent reading center. So that's one thing we've tried to do. I don't know that the other companies have been that careful about that enrollment criteria, but that was very important to us, and we believe that's the right thing for us to do.

You had a second question on safety? That was on safety? We've had very good luck with the suprachoroidal injection from a safety perspective. We've looked at it over time, compared to intravitreal injections in terms of complications in patients, and we find that they're essentially the same. We've had no particular safety issues that I'm aware of in the OASIS, our Phase I/IIa trial. From an injection procedure point of view, our safety results in OASIS were very, very good. We had no inflammation of dose limiting toxicities. But if you just look at the injection procedure itself, we had no issues there. And so the safety from suprachoroidal injection has been very good.

With profit training the physicians do it well, it's not really a big issue for them. The prep time for patients is basically the same as it would be for an intravitreal injection, and we don't see anything and there was no demonstrable difference in safety between suprachoroidal and intravitreal when we've gone back and looked at quite a number of clinical trials and compare them both. So we feel very good about the safety of the procedure itself. We feel very good about the safety of the TKI, axitinib itself. And so that's -- hopefully, that's an answer to your question.

[Operator]

The next question is coming from Serge Belanger from Needham & Company.

[Unknown Analyst]

Hi, everyone. This is John on for Serge. I'd like to hit on a couple of different points. First, going back to the OASIS trial. You guys had mentioned a slightly higher degree of the need for off protocol or early rescues for patients at the 1 milligram dose. Knowing this going into ODYSSEY, is there any degree to which you guys have higher expectations for potential patient dropouts? And if you have any kind of color at least at this point to whether or not your expectations are being reflected where the trial stands down. And then kind of moving past obviously in wet AMD, are you guys starting to explore any additional indications for the use of CLS-AX, whether it be DME or things like diabetic retinopathy?

[George Lasezkay, executive]

Let me answer the last one first. Right now, we don't have any plans to look into DME or DR for CLS-AX. So we're focusing entirely our efforts on wet AMD. If I go back to the early off protocol rescues that we're seeing in Oasis. When we looked at that, there were a couple of things. First of all, it was an open-label trial, so there was no blinding involved. And it was the first time that people had injected tyrosine kinase inhibitor into the suprachoroidal space in these wet AMD patients. So there was a little bit of nervousness, I think, and it was kind of site specific when we really looked at it. There was no good reason why 1 milligram should have these protocol or early rescues in the 0.5 milligram didn't. And I mean there's no logical reason for that. But when we looked in the Cohort 4, that 1 milligram dose, it seemed to be more of a site-specific issue. .

And I think there was a little nervousness about injecting and not having any experience with tyrosine kinase inhibitors and kind of jumping the gun on some early rescues. After that first couple of early rescues in Cohort 4 with the 1 milligram dose, basically in cohorts 3 and 4, they had about the same -- they had a couple of protocol rescues, but the majority were in the first month in that Cohort 4. And I think that was best we can tell it was kind of a site-specific issue for a particular investigator.

So we've designed our ODYSSEY trial to not -- we don't -- you talked about expectations. Our expectation is we should not see a very limited number of off protocol, which we worked very hard with our sites and through our training and our materials and our on-site people to make sure that they're very well educated in terms of the retreatment criteria. In addition, this ODYSSEY trial has 3 loading doses of aflibercept, as I was talking about with Annabel earlier. And we think that, that and dosing on the second -- the second loading dose, we think, will eliminate any nervousness about a very early rescue. So we really don't have an expectation of early rescues here. We have an expectation that the patients are going to do quite well on this regimen, and we're going to see extended duration of treatment. And just to be very clear, I have no insight into that. I'm totally blinded on the data. So I have no idea what -- whether our expectations are being met or not. So those are my expectations. I don't know whether they're being met, but we'll find out later this year.

[Unknown Analyst]

And if I can just follow up real quickly. Do you guys have any color on how the XIPERE is performing so far regarding volume and sales?

[George Lasezkay, executive]

XIPERE?

[Unknown Analyst]

Yes.

[George Lasezkay, executive]

Charlie, I'll let you handle that one, if you want.

[Charlie Deignan, executive]

Yes. So again, as we talked previously, until [indiscernible] sales, we can't get ahead of them. If you remember, the first $45 million in sales from XIPERE that's excluded from royalties. So until they get past that $45 million, we don't have any revenues to report yet. .

[Operator]

Thank you. And at this time, I would now like to turn the call back to Clearside's CEO, George Lasezkay, for closing remarks.

[Charlie Deignan, executive]

George, you maybe have a phone issue. You got it?

[George Lasezkay, executive]

Yes. I'm here. I'm sorry, I was on mute for a minute. Okay. Well, I want to thank everybody for joining us on the call this afternoon. We certainly appreciate your continued interest in Clearside, and we look forward to updating you on our progress. Operator, you may now discontinue.

[Operator]

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.