Clearside Biomedical, Inc.
Q2 2023 Earnings Call Transcript

Published: 14 Aug 2023

[Operator:]

Greetings, and welcome to the Clearside Biomedical Second Quarter 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 Investor Relations. You may begin.

[Jenny Kobin:]

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, 2022, our quarterly report on Form 10-Q for the quarter ended June 30, 2023, 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:]

Thanks, Jenny. The last 6 months have demonstrated that Clearside is the clear leader in delivering agents to the suprachoroidal space. We have a proprietary suprachoroidal space injection technology that utilizes our patented SCS microinjector. We're able to deliver small molecules and gene therapy behind the visual field, targeting multiple retinal diseases. We have the first and only FDA-approved SCS product with XIPERE, and we have four external validating SCS delivery collaborations as well as an early-stage internal research and development pipeline. Importantly, as we expand our development opportunities, both internally and with our partners, our versatile therapeutic platform continues to grow together with our licensing partners, there are now six ongoing SCS trials in five different indications utilizing four potential therapies. Clearside lead internal clinical development program is CLS-AX, our proprietary suspension of axitinib delivered into the suprachoroidal space. CLS-AX is targeting the million -- multibillion dollar market for wet AMD. So let me take a moment to talk about the market opportunity and why we believe we can truly make a difference in the lives of the millions of patients suffering from this disorder. Wet AMD is a crowded arena for the development of new products, mainly due to the large and growing market as a result of the aging population, particularly in the U.S. With the higher demand, there is room for new treatments that provide significant improvement over current therapies, including reducing the treatment burden for patients and their caregivers. Based on the label for existing marketed products for wet AMD, Lucentis is recommended to be dosed 12 times a year, EYLEA 2 milligrams, 6 times a year and recently approved VABYSMO up to 6 times per year. In contrast, we believe that CLS-AX may be up to a twice a year treatment for wet AMD. This matters because it has been well documented that patient compliance is a challenge, and therefore, a treatment option where patients maintain their vision with less frequent dosing may achieve improved patient outcomes. CLS-AX could reduce the onerous treatment burden for patients who currently require frequent dosing and numerous office visits with existing approved drugs. CLS-AX has the potential to be a better maintenance treatment option based on three main differentiating factors. First, CLS-AX utilizes axitinib, which is the most highly potent tyrosine kinase inhibitor, delivering 10 times more potency than other TKIs and preclinical studies. Second, CLS-AX is administered suprachoroidal using our proprietary SCS microinjector. This delivery mechanism does not require surgery and does not require an implant insert it into the eye. It's delivered by physicians in their office and has proven to be safe and reliable, both commercially and in multiple clinical trials. And thirdly, in our OASIS Phase I/IIa clinical trial, we showed that a single administration of CLS-AX demonstrated a favorable safety profile with no signs of inflammation. In terms of duration in the extension study of Oasis in higher dose cohorts with a single dose of CLS-AX, 2/3 of the participants did not need supplemental treatment for 6 months or more. Also, these participants experienced a 77% to 85% reduction in treatment burden as measured by the number of anti-VEGF treatments they received during the 6 months compared to the 6-month period prior to entering the OASIS trial. Importantly, we also observed signs of biological effect with stable mean best corrected visual acuity or BCVA and stable mean central subfield thickness or CST. Encouraged by the promising OASIS results and following the FDA draft guidance for drug development of treatments for wet AMD, last quarter, we initiated ODYSSEY, our randomized double-masked, multicenter Phase IIb clinical trial in participants with wet AMD. The overall objective for the trial is to evaluate the safety, efficacy and duration of CLS-AX treatment and participants with wet AMD. The other arm in the trial is the current standard of care, EYLEA or aflibercept. Our goals for the ODYSSEY trial are to demonstrate similar visual acuity outcomes with a lower treatment burden for the CLSA exon and to obtain the necessary clinical data to determine a desired CLS-AX fixed dosing regimen or a Phase III wet AMD clinical development program. We are pleased that the trial is off to a solid start and is progressing as planned. Multiple participants have been randomized to receive either CLS-AX or aflibercept. Clinical trial sites have been eager to be part of the trial, and we have nearly all of our planned 30 sites currently open to enroll participants in the trial. As a reminder, Odyssey is expected to enroll a total of 60 participants randomized to either CLS-AX 1 milligram or aflibercept 2 milligrams for a 2

[Charlie Deignan:]

Thank you, George, and good afternoon, everyone. Our financial results for the second quarter were published earlier in our press release and are available on our website. Therefore, I would just provide a summary of our financial status. As of June 30, 2023, our cash and cash equivalents totaled approximately $35 million. We continue to prudently manage our cash as we move forward with our programs, and we have worked to fine-tune our budget over the next year. Based on our current outlook, we now expect to have sufficient resources to fund our planned operations into the third quarter of 2024. We -- over the next few months, we look forward to participating in several investor conferences, including the H.C. Wainright Ophthalmology Conference this Wednesday that came our Global Healthcare Conference in September and the Jones Trading Healthcare Summit in October. We look forward to keeping you updated on our progress. I will now turn the call back over to George for his closing remarks.

[George Lasezkay:]

Thanks, Charlie. In closing, our state-of-the-art suprachoroidal injection technology continues to advance globally. CLS-AX is targeting a large market opportunity in wet AMD with a new mechanism of action utilizing pan-VEGF inhibition and a unique supergoodal delivery using our SCS Microinjector. We are confident in our Phase IIb ODYSSEY trial design and the potential for CLS-AX to offer patients a therapy that will maintain their vision while reducing the burden of frequent injections. Our current partners are making meaningful progress as well and reporting encouraging clinical data across their respective programs. We continue to receive positive feedback on our SCS microinjector and the potential advantages of drug delivery to the suprachoroidal space. We remain very active within the medical community at scientific meetings and in ongoing discussions with key opinion leaders in the treatment of back-of-the-eye diseases. Clearside has pioneered drug delivery behind the visual field to treat retinal disorders. We will continue to explore opportunities to expand the use of our suprachoroidal injection technology platform. Now I'd like the operator to open the call for questions.

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] One moment please while we poll for questions. Our first question is coming from Jon Wolleben with JMP Securities.

[Jon Wolleben:]

Thanks for taking the question and the update. A couple for me, George. You mentioned almost 30 sites are open now. Wondering if you still feel good about that number, if you think you'll add more, you have enough. And then also, I think you commented that patients are being dosed. Can you tell us how many have been dosed so far in the study?

[George Lasezkay:]

Okay, John. Our goal was 30, and we're very close to 30. We feel comfortable with 30. We have a lot of interest. We may enroll a few extra over 30, that's possible. But right now, our goal is 30 and we're just about there. So we're feeling very good with that. In terms of updates, we have reported that we've begun the randomization process. So we've had multiple patients be randomized between the CLS-AX arm and the aflibercept arm. But at this point in time, we're not giving updates on the actual number of patients in the trial.

[Jon Wolleben:]

Okay. And then interesting nuance in the design for Odyssey is the ability to re-dose CLS-AX depending on when someone hits rescue criteria. I'm wondering about your modeling about how many patients do you think will be re-dosed with CLS-AX or rescued with EYLEA based on the OASIS data. I think this could give us a lot of interesting information. We're not going to get from other TKI studies.

[George Lasezkay:]

Yes. We -- listen, we've designed this trial in a way that we think we're going to be -- have a lot of success in getting this to be a 4- to 6-month treatment. And I'm very hopeful and I expect a high degree of success of getting the vast majority of the patients towards 6 months. I don't believe, unless there is some deviations from protocol, I would be very surprised if we have any rescues that are less than 12 weeks in the CLS-AX one. There -- that -- our expectation is there's very few, if any, early stage rescues in less than 12 weeks after the first CLS-AX dose, which if you remember, we've got the three loading doses and we're dosing CLS-AX at the second loading dose of aflibercept. So we're doing aflibercept on label for both groups in terms of loading. And then we're going -- switching to in the aflibercept arm. They're being dosed every two months on label in the CLS-AX on. We're going to dose at least every 6 months with CLS-AX unless supplemental therapy is required earlier. But I really don't anticipate any significant number of patients being rescued before 12 weeks after the [indiscernible].

[Jon Wolleben:]

Okay.

[George Lasezkay:]

I think is really -- the OASIS data really -- The OASIS data gives us that kind of encouragement. Again, we have to run the trial. We have to do -- carry out the trial according to the protocol. But if we run according to the protocol and based on what we saw in the OASIS, I think there'll be very few.

[Jon Wolleben:]

Can you talk about the opportunity for treat and extend with CLS-AX versus potentially looking at a treatment-naive population in a subsequent study? And I'll hop back in the queue.

[George Lasezkay:]

Okay. John, just real quick. Could you repeat that again? I just missed the last part of that.

[Jon Wolleben:]

How do you think about the treat and extend opportunity like you're studying now or potentially looking at a treatment-naive population in a subsequent study?

[George Lasezkay:]

Well, like I said, we're going to make sure that everybody in the CLS-AX arm gets a dose at 6 months, if they didn't require one earlier. I think our real hope is that there will be people that are being treated at six months that by virtue of looking at BCVA changes and CST changes really don't require it. So we're looking at a multiple dose therapy, but we're also going to be looking at the biological indicators, the anatomical indicators and being able to report out whether it was they really met a need. And so what we're trying to do here is really trying to determine what the proper fixed dose is to go into Phase III. And because I believe that we need to go into Phase III with a fixed dosing regimen. Aflibercept has a fixed dosing regimen, but physicians quite often used to treat and extend. I think patients are going to be coming into the office. They're not going to come into the office twice a year or once a year. They're going to be coming back every couple of months, every other month. And if they come in at 6 months after getting their CLS-AX dose in practice, if it was approved and their BCVA is stable and the CST is stable, I think it will be just like any other therapy that people feel comfortable doing treatment extend. I'm not sure if that's completely responsive to your question, but I really look forward to seeing a fixed dosing regimen where we can clearly, as I mentioned in the opening remarks. I mean, if you look at on-label now and even with VABYSMO, which was just recently approved, that dose is every four months at a maximum. And there's a number of people that have to be dosed after four loading doses in every two months or three months. I think if we're in the four to five -- 5- to 6-month category, that's a major improvement for patients. And I think even at that point, doctors will still look to treat and extend past that. So we may be going past five, six, seven months in a number of patients. That is... See the data, and we have -- we really have to go into Phase III, I believe, with fixed dosing regimen rather than the way it was done in the past where there's kind of a treat-and-extend and we'll see how far we go. Our goal is to really set up the fixed dosing regimen.

[Operator:]

Our next question is coming from Andreas Argyrides with Wedbush Securities. Andreas.

[Unidentified Analyst:]

This is Caroline, actually...

[George Lasezkay:]

Sorry, I can't see anything...

[Unidentified Analyst:]

It's okay. No worries. Just two from us. Can you discuss your targeted time line for enrollment in ODYSSEY and how enrollment is progressing? Are you seeing any impact from the availability of the VABYSMO? And then second, can you just discuss the powering assumptions for ODYSSEY?

[George Lasezkay:]

Okay. Sure. The powering assumption, we're not conducting a non-inferiority trial. We're not conducting a superiority trial. So there really isn't a powering assumption in here. What we're looking at is aflibercept on label. Can see what over the 6 week -- 36 weeks, how those patients in the aflibercept arm do in terms of keeping a stable BCVA and CST and then we're going to look at the CLS-AX arm. And what we're trying to do is to see whether the BCVA and the CSTs are similar between the two groups and what our ideal dosing regimen would be on a fixed basis going into Phase III. Should it be every four months, should it be every five months? Should it be every six months, maybe can we go longer than that, okay? So there's not -- this is not set up as a trial that has sufficient patients to have a powered outcome, as you would think of in a non-inferiority trial in particular. So we think that the Phase II design here in terms of total patients that are in the treatment arm is very consistent with the way a number of the recent Phase II trials have been run. We're not looking to convert this into a Phase III. We're looking to run a standard Phase IIb trial here, trying to compare in an estimation -- on an estimation basis, how well we're doing and where we should go into Phase III on a fixed dosing. In terms of the enrollment, as I mentioned in the press release and in the opening remarks, we're nearly at the 30 targeted sites that we want. We have all of our previous sites from OASIS are included in ODYSSEY. So we have very -- people that are very experienced with CLS-AX already in. We'll be closing that out soon. And then on enrollment, we're not going to give enrollment updates per se, but what we are not changing is our disclosure regarding when we think top line data is going to be available. We're still looking at third quarter of next year and the way we've been able to enroll sites and as we see enrollment of participants going on, we're still very comfortable with Q3 of 2024 in terms of top line data.

[Unidentified Analyst:]

Okay. Great. Thank you so much and congrats on the progress.

[George Lasezkay:]

Thank you.

[Operator:]

Thank you. Our next question is coming from Shawn Kim with Jones Trading.

[Shawn Kim:]

I guess first question for me -- my first question is that in light of recent FDA issues reported with an FDA-approved therapy in geographic [indiscernible]. Could you please remind us if there has been any retinal vasculitis reported with any of [indiscernible] injections given thus far? And a related question is in comparison to intravitreal injections, whether this [indiscernible] drug delivery approach might be intrinsically more likely or less prone to causing retinal of escalators and related adverse effects?

[George Lasezkay:]

Well, I think the first part of the question first, as far as I know, certainly with CLS-AX, we've had no events, no indication of any kind of inflammation, including retinal vasculitis. So that is covering both the product itself, CLS-AX, the tyrosine kinase inhibitor as well as the injection technique and the injection procedure. We've not seen any of that. And as far as I'm aware, we don't have any significant reports or any reports at all of retinal vasculitis. I'd have to double check that to be sure, but there's nothing that comes to mind in our partners' trials or in our previous trials getting XIPERE approved that -- that was a significant problem. Certainly, if you look at the injection procedure itself using our SCS microinjector, it's been very reliable, safe, very repeatable physicians that are trained on and find it once they're trained on it and the training doesn't take all that long. It's not that complicated, but it is important once they're trained, they find it an easy procedure, a very acceptable procedure and very comparable in a sense to -- from a patient experience and a physician experience to intravitreal injections. So retinal vasculitis has just not come up as a problem that I can recall in any of our clinical trials or our partners' clinical trials. Now to be fair, REGENXBIO had did have some inflammation in some of the earlier trials. But they've recently reported that with the topical steroids in their Phase II trial, I believe, was in wet AMD. They've seen no signs of inflammation and has certainly not heard of any reports of retinal vasculitis.

[Shawn Kim:]

Okay. That's helpful. And related to the ODYSSEY trial, if I understand correctly that one of the goals for the ODYSSEY trial is to define the fixed dosing schedule for potential Phase III. So my question is, what end point would you dictate that dosing interval for Phase III? Would it be the BCVA that are change? Or would it be more of a totality of data across different efficacy tons?

[George Lasezkay:]

I think the most important and certainly from the FDA's point -- perspective, the most important endpoint would be the BCVA. They certainly want to -- Dr. Chambers at the FDA is very focused first and foremost on vision -- vision preservation or vision improvement. And so I think the real most important factor would be the BCVA stability for the duration. How long can we keep that BCVA stable without requiring any kind of supplemental intervention? So, I think that's the most important thing. Other things like CST are important, but I think BCVA is the most important factor there.

[Shawn Kim:]

Okay. Got you. And just a quick follow-up on that is, just curious what your expectations might be for the aflibercept arm in terms of that BCVA change to six months, specifically in the target population for the ODYSSEY trial?

[George Lasezkay:]

I'm not sure what to expect that BCVA -- regarding BCVA. I would hope that -- I would expect not so much I would hope. But I would expect if the patients are -- the typical patients that go into that and they get and they get dosed appropriately on label with aflibercept, they'll have a similar outcome. There'll be a similar overall outcome to what you've seen with aflibercept dosed labeled before in the hands of other people. I don't know why it would be any different in our hands than other people. We looked at how VABYSMO did versus aflibercept using aflibercept as their control in Phase III. And we saw how VABYSMO did against that. And we think that we can do as well against -- as well against the aflibercept as VABYSMO did against aflibercept. But we believe that our dosing interval is going to be longer than the VABYSMO turned out to be in their Phase III. So I don't expect any difference in the way of aflibercept patients respond to aflibercept other than what you've seen in other trials in wet AMD that enrolled a similar population. And it really does come down to the enrollment, what kind of patients are you putting in? Are you -- if you're putting in patients that really don't have strong signs of active disease, those patients are going to do really, really well because they may not have required any real intervention to begin with. And there's lots of literature that we'll talk about patients that are relatively dry but diagnosed with the disease, but no active signs of -- no signs of active disease might go for a long period of time between injections. But we're trying to make sure that the two groups have people that are responsive to anti-VEGF and have active disease when they're enrolled. And then I think the outcome in the aflibercept group will be pretty consistent with history.

[Operator:]

Our next question is coming from Rohit Bhasin with Needham & Company.

[Rohit Bhasin:]

This is Robin on for Serge. Are you still evaluating new potential new collaborations for the SCS microinjector platform? And then is the current cash balance sufficient to get us to a top line readout of ODYSSEY?

[George Lasezkay:]

All right. I'll take the first part of that question, and I'll let Charlie take the second. Yes, we are in discussions with other companies about potentially partnering in various disease states or with various therapeutic agents that we think might be useful, delivered [indiscernible]. We conduct those kind of business development activities on a regular ongoing basis. We don't jump into them lightly. We want to make sure they're very strategic and very positive for us and would be a positive for the company. And so we need to make sure that we have the right terms, the right partner, and it fits our strategy for partnering. We typically try to partner in areas where the collaborator has technologies that we cannot access that we don't have any expertise in, for example, gene therapy that is not a core competency of us -- of Clearside. So that's why we partner in the -- or look to partner in the area of gene therapies in particular. But there could be other small molecules that are proprietary to other companies that want to be put into our suprachoroidal delivery system, and we're certainly open to that. And we have a constant set of conversations with people trying to put together the right deal that makes sense for us as well as for them. And Charlie, I'll let you take the cash runway all...

[Charlie Deignan:]

Thanks. Hi, Robin. Yes, -- so our -- as we said, our data is coming -- planned to come Q3 next year, and our cash can get us into Q3 of next year. That's -- obviously, we'd want a cushion, and we can't -- until we finish enrollment, I know exactly within the quarter, the data will come. But we will continue to look to extend our runway much past or when the data comes in, and that's what we're doing now is looking at all dilutive and non-dilutive ways to extend our runway.

[Operator:]

Our next question is coming from Jack Padavano with Stifel. This is Jack calling in for Annabel.

[Jack Padavano:]

Just a quick question for me. Could you briefly go over again some of the economics with your partners? And if there's any chance that you might be able to see some additional near-term expected catalysts or milestones from them?

[George Lasezkay:]

Charlie, is that something you would want to address?

[Charlie Deignan:]

Yes. Sure. So as a reminder, we haven't announced or we're not allowed to announce particular milestones, but as some of these -- our collaborators are getting into Phase III, typically, there's Phase III development milestones that go with them. But that's -- that would affect our EPS and revenues. But just don't forget that when we monetized our royalties with HCR, Healthcare Royalty, those milestones will get wrapped up and go towards the cap we have to pay. If you remember, we took $32.5 million from them, and we'll have to pay 2.5x that back, so approximately 180 -- $81 million. So those -- any milestones that come in will go directly to HCR on our partnered programs.

[Operator:]

Our next question is coming from Yi Chen with H.C. Wainwright.

[Yi Chen:]

Your partner, REGENXBIO recently reported some progress with their candidate for BMD. I don't know if you can comment on whether their candidate in the future could potentially become competitive to CLS-AX.

[George Lasezkay:]

I'll take that question. I suppose it could. It depends -- I think the -- as I understand their therapy, their therapy is a gene therapy that generates a Lucentis type molecule. And again, what CLS-AX does is a different mechanism of action than what REGENX the REGENX/AbbVie product would have, right? So that's -- it's pretty much standard anti-VEGF therapy just like EYLEA, VABYSMO, et cetera, Lucentis. There, I think their potential claim to fame is they're going to last a long time in binding the circulating VEGF. From our perspective, we're taking a different mechanistic approach and that is we're blocking the VEGF receptors 1, 2 and 3. So any circulating VEGF, including if it's not completely bound, they're still circulating VEGF -- and they're binding again VEGF-A. And in many cases, there's an overexpression of patients once you start to find the VEGF-A, especially on a longer-term treatment after a couple of years getting VEGFA -- anti-VEGFA therapy, that there's an overexpression of CNE in particular, which can cause potential neovascularization. So I think that while it's potentially competitive in that they're going after wet AMD as are we with CLS-AX, I think they could be complementary if you want to put a positive spin on it. I think they'd be complementary because the mechanisms are different. And theirs would unlikely based mechanistically, unlikely to address any of those patients that become resistant to VEGF -- anti-VEGF-A therapy. And because in many cases, overexpression of CNE, while our mechanism through using a tyrosine kinase inhibitor would block all 3 VEGF receptors. So even if there was overexpression of CNE, we would be blocking the interaction of VEGF CNE at the receptor sites. So I think there's room for multiple products. I often refer to this area as starting to develop the characteristics of cancer therapy, where there's multiple approaches, multiple products used for to treat particular cancer. And I think it could be that the two products end up being able to be used together rather than just competing straight up for all wet AMD patients. So I think there's room for both, and we'll see. The proof will be in the clinical data for both products.

[Yi Chen:]

My next question is, I don't know if you can comment on the prescription volume of XIPERE and whether your quarterly license revenue is correlated to the prescription volume?

[George Lasezkay:]

Okay. I'll let Charlie handle that.

[Charlie Deignan:]

Yes. So we don't have prescription information. I think those of you that track retina drugs difficult to get. So we can't give any guidance or trends on sales were contractually obligated to about not to discuss unless they do so until they start reporting out publicly the sales, I can't help you with that.

[Yi Chen:]

Got it. And lastly, could you comment on the potential time line to -- for your partner to obtain the approval [indiscernible] in Australia.

[George Lasezkay:]

Well, our understanding of the filing in Australia is that it's typically -- it's very similar to the United States in that your expectation should be about a 12-month review to approval cycle. And they filed a month or so ago. And so I would think it'd be they'll have news by this time next year. But that's kind of an educated guess on my part. But we do understand the Australian process for approval runs about -- in a similar time line to the United States, which is about 12 months.

[Yi Chen:]

Okay. Thank you.

[George Lasezkay:]

Sure.

[Operator:]

Thank you. We have reached the end of our question-and-answer session. So I will now turn the call back over to Dr.Lasezkay for any closing comments you may have.

[George Lasezkay:]

Thank you. Thank you all for joining us on the call this afternoon. We really appreciate your continued interest in Clearside. We look forward to updating you on our progress throughout the year. And at that, operator, you can now disconnect the call. Thank you again, all...

[Operator:]

Thank you, sir. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.