Clearside Biomedical, Inc.
Q1 2021 Earnings Call Transcript

Published: 17 May 2021

[Operator:]

Greetings, and welcome to the Clearside Biomedical First Quarter Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. I’d now like to introduce your host, Ms. Jenny Kobin, Clearside Investor Relations. Ma'am, please go ahead.

[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, 2020, and our other SEC filings available on our website.

[George Lasezkay:]

Thank you, Jenny. Good afternoon, and thank you for joining us on the call today. We have made meaningful progress since we hosted our last earnings call in March. We resubmitted our XIPERE New Drug Application to the U.S. Food and Drug Administration. XIPERE is our proprietary suspension of the corticosteroid triamcinolone. It's formulated for suprachoroidal administration for the treatment of macular edema associated with uveitis, which is delivered by our patented SCS Microinjector. This is an important milestone for our company and our shareholders for two reasons

[Thomas Ciulla:]

Thank you, George. Our clinical and development teams are extremely excited about the milestone we achieved with the resubmission of our XIPERE NDA. We look forward to our first potential product approval and further validation of the benefits of our suprachoroidal injection platform. We are also pleased with the progress we have made with CLS-AX, our lead development asset.

[Charles Deignan:]

Thank you, Tom. Our financial results for the first quarter were published this afternoon in our press release and are available on our website. Therefore, I will summarize our current financial status. Our cash and cash equivalents as of March 31, 2021, totaled approximately $26 million. This includes approximately $14.4 million in aggregate net proceeds from our registered direct offering and use of our ATM facilities in January. Our quarterly cash burn is primarily due to work on the activities related to getting XIPERE approved in our CLS-AX program. Investments in our pipeline are also incorporated into our operating plans. Based on our current funding and planned spending, we expect to have sufficient resources to fund their operations into the first quarter of 2022. Importantly, this estimate does not include milestone payments we may receive under our current partnership agreement. If XIPERE approved, we expect to receive up to $15 million from Bausch + Lomb, an approval and pre-launch milestones. In addition, we would receive a milestone payment from Arctic Vision of $4 million. Thus, we are on track to receive nearly $20 million of non-dilutive funding before the end of this year. We appreciate the interest and support from our shareholders and the broader investment community, and we look forward to participating in the upcoming JMP and Raymond James Investor Conferences next month. I will now turn the call back over to George for his closing remarks.

[George Lasezkay:]

Thanks, Charlie. We are optimistic as we look forward to reporting data next month from our OASIS trial and to the potential XIPERE U.S. marketing approval later this year. There are currently four ongoing clinical trials with three novel product candidates administered into the suprachoroidal space using our proprietary SCS Microinjector. Our extensive clinical experience with more than 1,200 injections reinforces our belief that the SCS Microinjector has the potential to be a reliable, non-surgical, office-based method to access the suprachoroidal space for the treatment of a broad range of back of the eye diseases. We at Clearside remained dedicated to making a difference for people suffering from potentially blinding diseases and we look forward to keeping you updated on our progress as the year unfolds. I would now like to ask the operator to open the call up for questions.

[Operator:]

Your first question is from Dr. Zegbeh Jallah from ROTH Capital Partners. Your line is open.

[Zegbeh Jallah:]

Hi, guys. Thanks for taking my question. Just have a couple of quick ones. Yes, I think the first one is just about the upcoming Phase I/II study. Just want to clarify the patients that are being enrolled. Are they anti-VEGF responders or non-responders? And I know, the focus is safety, but just wanted to get a sense of the patient.

[George Lasezkay:]

Tom, do you want to take that question?

[Thomas Ciulla:]

Sure. So patients to be eligible in the trial had to have been treatment experience. They had to have had two prior injections within the four months proceeding screening. They received flipper set injection on screening and then a CLS-AX injection a month later. They have to have active exudation based on a masked reading center assessment. So I would categorize these patients as VEGF dependent.

[Zegbeh Jallah:]

Okay. Perfect. And then just to follow-up here, I know at ARVO you presented some information on your virtual training procedures, and just kind of wanted to get some more details on that. And then to get a sense of how you expect that to perhaps influence your ability to actually train more physicians for future studies?

[Thomas Ciulla:]

That's a great question. We have a very robust training program or medical science liaisons, our biomedical engineers who have helped with the validation of the original injector, and they in conjunction with the medical affairs team has designed a very robust training program. We have an artificial eye where physicians can practice. And during COVID-19, obviously with travel restricted, we actually developed a virtual training program, it’s a very clever program where we will ship out this artificial eye to the physician and able to actually do live training over the Internet. We then as part of this looked at some metrics with respect to the training and physicians were overall quite pleased with both the virtual and in-person training, and in – and both the virtual and in-person training felt quite well trained in order to be able to deliver investigational products for suprachoroidally in the future.

[Zegbeh Jallah:]

Thanks, Tom. Looking forward to more updates on the program including the data coming up, and congrats to the team on the NDA for XIPERE.

[Thomas Ciulla:]

Thanks, Zegbeh. Appreciate it.

[Operator:]

Your next question is from Annabel Samimy from Stifel. Your line is open.

[Annabel Samimy:]

Hi, guys. Thanks for taking my question and congratulations on the progress. I had a couple of questions. I guess, first on OASIS. I just wanted to understand, are you skipping an actual dose and going straight into the one milligram for that second cohort? Or is there going to be any additional dosing cohorts after that certainly looking to go higher? And then are you – beyond the three months, are you looking for durability data beyond that? I'm just trying to understand what your intention is of this dose escalation trial. And just have another follow-up. Thanks.

[George Lasezkay:]

Okay. Tom, do you want to go ahead with…

[Thomas Ciulla:]

Sure. Let me talk a little bit about the dosing and the changes we've made. As I mentioned in the prepared remarks, we approach the FDA and the IRB ultimately because we wanted a broader range of dosing and more flexibility. So cohort 1 was unaffected with 0.03 milligram dose. Cohort 2 is now the 0.1 milligram dose, which was our originally proposed cohort 3. And then for cohort 3, we plan to go to 0.3 milligrams.

[Annabel Samimy:]

Sorry. To that you're going to which one?

[Thomas Ciulla:]

To 0.3. So the dosing will range from 0.03 to 0.3. So potentially tenfold . And, of course, this will all be contingent on cohort 2 results and reviewed by the safety monitoring committee. But that's the current plan. So in essence, we are skipping over the 0.06 milligram. So we're going – instead of going from a twofold increase over cohort 1, we're going to a threefold increase over cohort 1.

[Annabel Samimy:]

Okay. And are you looking for greater durability data in terms of three months?

[Thomas Ciulla:]

Sure. Yes. So with respect to the second question, as we said before, the cohort 1 dose is really to establish a floor of safety. It's a low dose and we want to proceed prudently in escalating these doses. So we don't expect robust signs of biologic efficacy from cohort 1. And ultimately as we escalate, we plan to establish an extension study where we follow the patients for an additional three months beyond the originally planned three months. So we will be looking for durability as we escalate the dose.

[Annabel Samimy:]

Okay. And then I have one other question on the – I guess, the REGENXBIO, and I'm thinking more conceptually, I guess, historically there've been some serious immune responses to the delivery of viral vectors for gene therapy. As upside being a surge moving to the SCS space, are there benefits to delivering the gene therapy suprachoroidally in terms of an immune response? Is there anything you can help us understand about that? Thanks.

[Thomas Ciulla:]

That’s a great question. So it's really a two-part question. So number one, what are the potential benefits of suprachoroidal delivery over a subretinal surgical delivery of gene therapy? And as you mentioned, obviously we avoid the surgical risks of vitrectomy in general. We also avoid the risk of creating a retinotomy or a hole in the retina through which the gene therapy is injected. And we also avoid the risks of creating a bleb or subretinal – during the subretinal injection, you’re literally creating a small retinal detachment, which, of course, can cause harm to the photoreceptors. So we avoid the risks of surgery. Also the distribution of suprachoroidal delivery maybe quite attractive for gene therapy because we're able to potentially expose the retina in the choroid circumferentially and peripherally, which maybe a very attractive way to treat inherited retinal diseases, which often start in the retinal periphery. So those are the potential advantages of suprachoroidal delivery. And then for the second part of your question with the immune response, and that's really an important key question. That's still being worked out. There's an increasing body of literature suggesting that it is well-tolerated and that the immune response is not insurmountable that it's overall a fairly favorable immune response. And I think the fact that REGENXBIO is starting a cohort 3, these are patients who actually have neutralizing antibodies is a very positive sign for suprachoroidal gene therapy. And I just want to remind everybody that they're doing this without any protocol mandated corticosteroid immunosuppressive therapy. So I think we're still learning a lot about suprachoroidal gene therapy administration. But I think so far so good, especially with respect to some of the news coming from REGENXBIO.

[Annabel Samimy:]

Great. Thank you.

[Operator:]

Your next question is from Andreas Argyrides from Wedbush Securities. Your line is open.

[Andreas Argyrides:]

Good afternoon. Thanks for taking our questions. This is Andreas on for Liana Moussatos. Congrats guys also on the progress during the quarter. For XIPERE, can you provide an update on the status of the pre-approval manufacturing inspections? And then I have a follow-up after that. Thanks.

[George Lasezkay:]

Sure. I'll take that. This is George. We're not sure what – how the FDA is going to approach this. We've made our resubmission. Two things that we've done in the resubmission actually was a full NDA resubmission that was responsive to all of the items in the CRL as I mentioned in the prepared remarks. The most important thing that we had to provide to them was a stability data, three months stability data on our registration batches and we'd done that. Secondly, and more to your question, we had to demonstrate that the procedure that we by which we make the drug product was substantially the same as the previous CMO, and we've done that as well. So it's really up to the FDA. At this point in time, it's hard to predict how they're going to do any kind of inspection of our new contract manufacturer. They may decide to do an onsite inspection and they may not because of some COVID backup in their shop. They may take a different approach, but I'm sure they'll let us know once we're engaged in the conversations with the FDA regarding the NDA resubmission. So by now that's up to them, and we don't know exactly what they're going to do in terms of a pre-approval inspection.

[Andreas Argyrides:]

Would that be included in the six-month timeline? Or do you think if they were to do an inspection that could push it out?

[George Lasezkay:]

Well, they're going to do – if they do an onsite inspection, it's going to be on whatever schedule they have available and how they can fit it into their schedule. But we would anticipate that any inspection, including an onsite inspection would be within that six-month timeframe.

[Andreas Argyrides:]

Appreciate that. Thanks. This is probably one for, Tom. So for CLS-AX, anatomic benefit remains the biggest driver of positive outcomes, when do you think you guys will provide imaging of fluid levels at what point? Thanks.

[Thomas Ciulla:]

I'm sorry. You broke up the last part of that.

[Andreas Argyrides:]

Yes. Apology. So at what point do you think you would show any type of imaging of fluid levels that would give indication of the effectiveness on drying, et cetera? Thanks.

[Thomas Ciulla:]

Sure. As I mentioned, the first cohort is really geared towards safety. So we don't expect robust signs of efficacy from this first cohort. In fact, the primary endpoint is really to look at the safety and tolerability, but of course, the secondary endpoints visual acuity, and some of the anatomic features from OCT and angiography. Once the final patients or a patient that has completed and reviewed the data, we plan to report data from the first cohort and we expect that would be in the next month. And that will include the safety parameters as well as some of the obviously signs of biologic activity, like visual acuity and some of the OCT and anatomic parameters.

[Andreas Argyrides:]

Okay. Thanks for taking my questions and congrats again.

[Operator:]

Your next question is from Serge Belanger from Needham & Company. Your line is open.

[Serge Belanger:]

Hi, good afternoon. Thanks for taking my questions. First one on XIPERE. So from a Clearside standpoint, what remains outstanding with regards to this collaboration now that you submitted the NDA?

[George Lasezkay:]

The collaboration – are you referring the collaboration with Bausch Health?

[Serge Belanger:]

Yes.

[George Lasezkay:]

Yes. Well, we'll be working with them during the review period to plan on success and they'll be working up there hopefully, their launch plans and anticipating that. We'll also – our medical affairs team, our supply chain people are working with their people to make sure the training is all buttoned up and ready to go. They have a very aggressive training program that they're contemplating. We'll be talking to them about supply chain issues or just working on those with them very cooperatively and we'll deal with any issues that may come up or any questions it came up with the FDA collaboratively. So once the XIPERE NDA is approved, there'll be a transfer of the NDA to Bausch + Lomb. So that's why we've been very cooperative with them. They've been great to work with and we've worked very cooperatively on the resubmission package and we'll continue to do so through the entire review process.

[Serge Belanger:]

Okay. And then on the licensing option for Europe and the UK, is there any timelines associated with them on when Bausch needs to get back to you on the decision there or something that hasn't been – you haven't disclosed?

[George Lasezkay:]

Yes. There is a timeline via the end of this summer – the end of August unless for some reason the XIPERE is approved quicker than that. But the decision will have to be – will have to be made before the end of August. And we'll be in – and we'll be talking with Bausch about that. Beginning or rather shortly, we'll start having those conversations with them now that the NDA has been resubmitted. So again, we anticipate that they're going to be a very good partners but we'll have to talk to them about their plans outside of North America. But that'll be ongoing over the next couple of months.

[Serge Belanger:]

Okay. And then on – I guess a question for Tom, on CLS-AX. As you increase the dosing levels here, you talked about durability, so what kind of durability do you think is possible? Could we see something as long as four to six months here? Or I guess just based on your preclinical models, is that something that's possible?

[Thomas Ciulla:]

Thanks for the question. Great question. So we feel that suprachoroidally administered CLS-AX is really attractively differentiated for several reasons, not just durability. But first of all for safety because we're compartmentalizing the drug in suprachoroidal space, so we don't expect to have particle migration into the vitreous or into the visual axis. So we think there's a potential safety benefit. Number two, we think the pan-VEGF inhibition aspect of this further differentiates it from other long acting therapies that are really focused on VEGF-A. This has potential to be more efficacious than current anti-VEGF-A therapies and even long acting anti-VEGF-A therapies because both preclinical and early clinical studies suggest that pan-VEGF inhibition maybe more efficacious with respect to visual acuity and/or drying. And then third, with respect to durability, we know from our preclinical models that we can have levels in the posterior segment for many months, many months above the IC50 for the VEGF2 receptor, which controls angiogenesis and leakage. So to answer your question, yes, we think that we can have – there's good potential to have beyond three to four months of durability, but we also may have a very nice safety profile and also potential for enhanced efficacy being a pan-VEGF inhibitor.

[Serge Belanger:]

Okay. Thanks. Look forward to seeing the data next month.

[Operator:]

Your next question is from Jon Wolleben from JMP Securities. Your line is open.

[Jonathan Wolleben:]

Hey. Thanks for taking the question and congrats on the progress. Just a couple for me. First with CLS-AX with the going ahead to this 0.1 milligram dose, I'm wondering what else is left before you start dosing the patient? I think you said you're going to wait till July to start dosing. I wonder if that could happen any sooner and when we could see data from that second cohort?

[George Lasezkay:]

Well, thanks for the question. So as I mentioned, once the final patient visits are completed, and we’ll review the data, have it reviewed by the safety monitoring committee, we planned to report data from the first cohort. We expect that to be in June. And then after that, we plan to start enrollment. So we potentially could have readout for the second cohort six months after that. So I think the investigators have been very eager to recruit. Operationally, the study has gone extremely well. And I also want to remind everybody we've started this trial during the pandemic, during the holiday season and we recruited very robustly. So as I mentioned, the investigators are very enthusiastic about the program and about recruiting. So we hope to have that data readout from the first cohort in June. And again, it's mostly going to be geared towards safety in the first cohort, but we expect to begin recruitment shortly thereafter for cohort 2.

[Jonathan Wolleben:]

That’s helpful. And then with the integrin inhibitors, you mentioned, I think that you'd be completing preclinical work this year. But I'm just wondering when you might be publicly discussing those in more detail with any data. And then if you've characterized which integrins are going after? And then how you think about the opportunity there? And I think you said DME or DR versus expanding CLS-AX into those indications.

[Thomas Ciulla:]

I'll take the latter two questions and let George discuss disclosure. But we adopted this integrin inhibitor that targets integrins alpha v beta 3, alpha v beta 5 and alpha 5 beta 1. And these are the key integrins that have been implicated in diabetic macular edema, diabetic retinopathy in AMD. As you know, there's been preclinical and early clinical data suggesting a role for integrin inhibitors in these large disorders. So we're currently formulating our integrin inhibitors as a small molecule suspension. We're doing further preclinical testing to assess the ocular tolerability distribution in pharmacokinetics. And we hope to share that sometime this year. In terms of portfolio planning, I'll defer that to George in terms of how it fits in with CLS-AX.

[George Lasezkay:]

Well, Jon, I think, you never can have enough shots on goal. And so we think that we have an opportunity with integrin to have another shot on major retinal diseases, take your point that you could consider something like a CLS-AX to go after some of those similar diseases. But we're looking at different – we're trying to diversify our pipeline based on mechanism of action as well as anything else. And we just think there's – it makes perfect sense to us to be able to formulate integrin as a small molecule. It's our sweet spot in research and development or small molecule suspensions of molecules that are relatively insoluble. And so it's another opportunity for us. And when we're talking about these kinds of indications now that doesn't mean that's where we're going to end up. Tom and I have constant discussions about other potential applications for both of these products, both CLS-AX, and integrin. So this is where we're initially looking, but it may not be where we end up. And so we have some pretty robust discussions about that in the company. And as Tom mentioned, in terms of the preclinical data, we're hoping to have some preclinical data to be able to disclose before year-end on the integrin.

[Jonathan Wolleben:]

Perfect. Looking forward to it. Thanks again for taking the questions.

[George Lasezkay:]

Sure. Thank you.

[Operator:]

I'm showing no further question at this time. I would like to turn the conference back to CEO, Mr. George Lasezkay for closing remarks.

[George Lasezkay:]

Thanks. Well, thank all of you for joining us on the call this afternoon. We really appreciate your continued interest in Clearside and what we are doing, and we look forward to updating you on our progress throughout the rest of the year. Operator, now you may disconnect the call. And thanks again for everybody participating.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and have a wonderful day.