Clearside Biomedical, Inc.
Q3 2019 Earnings Call Transcript

Published: 10 Nov 2019

[Operator:]

Greetings, and welcome to the Clearside Biomedical Third Quarter 2019 Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host, Jenny Kobin, Clearside Investor Relations. 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, 2018, our quarterly report on Form 10-Q for the quarter ended June 30, 2019, and our other SEC filings available on our website.

[George Lasezkay:]

Thank you, Jenny. Good afternoon, everyone, and thank you for joining us on the call today. I'm pleased to report that we have made meaningful progress on our overall corporate strategy to broaden the reach of our suprachoroidal space injection platform. A component of this strategic plan is the establishment of key external collaborations. Over the last three months, we have secured three significant partnerships that validate and will potentially expand the reach of our suprachoroidal injection platform. Two weeks ago, we announced that Bausch Health and its Ophthalmic division, Bausch + Lomb, acquired an exclusive license for the commercialization and development of XIPERE in the United States and Canada. As a reminder, XIPERE is our proprietary suspension of triamcinolone administered suprachoroidally with our SCS Microinjector for the treatment of macular edema associated with uveitis. We are thrilled to have licensed XIPERE to such a high-quality organization with a well-established and well-regarded presence in the ophthalmology community. Bausch has the right to pursue development and commercialization of XIPERE for additional ophthalmic indications. And they also have the right to develop and commercialize our proprietary SCS Microinjector in combination with certain other specified corticosteroids and nonsteroidal anti-inflammatory drugs in the field of ophthalmology. Licensing XIPERE to Bausch has achieved our primary corporate goal of finding a partner with an experienced ophthalmic sales force that can bring XIPERE to market more efficiently and cost effectively if approved. They also have the resources to potentially develop additional indications for XIPERE. We believe this is a win for patients and for Bausch and also a win for Clearside as validation of the potential benefits of our proprietary method of accessing the suprachoroidal space.

[Thomas Ciulla:]

Thank you, George. This afternoon, I'll provide a summary of clinical and scientific information related to our XIPERE NDA resubmission, our REGENXBIO partnership and our internal R&D progress. As background on XIPERE, it's helpful to understand the delivery approach. Suprachoroidal injection is a novel drug-dispensing approach that employs proprietary piston syringe and a 30-gauge needle about 1 millimeter in length. The suprachoroidal injection procedure allows drugs to be administered into the transition region between the choroid and the sclera called the suprachoroidal space. Suprachoroidal injection provides almost direct drug access to the retina, the retinal pigment epithelial cells and the choroid. Over the course of the development life cycle for XIPERE, Clearside made quality enhancements to the drug product manufacturing process. While the formulation of the triamcinolone acetonide suspension has not changed, the FDA wants to verify the stability profile between the batches we submitted and the intended commercial product to ensure that the process enhancements have not affected the drug product. During our meeting with the FDA in August, the agency provided clear guidance on the chemistry, manufacturing and controls or CMC data to be included in the NDA resubmission. We've been working closely with our contract manufacturer to produce the required material and to obtain the requested stability data.

[Charles Deignan:]

Thank you. Thank you, Tom. I would like to provide a summary of key financial developments. General and administrative expenses were $3.8 million for the quarter ended September 30, 2019, compared to $3.9 million for the quarter ended September 30, 2018. The research and development expenses for the quarter ended September 30, 2019, were $2.7 million compared to $20.1 million for the quarter ended September 30, 2018. We expect R&D expenses to increase over the next several quarters as we complete the work to resubmit our NDA for XIPERE and submitting an IND for CLS-AX. As of September 30, 2019, our cash and cash equivalents totaled $22.6 million. As we disclosed in our 8-K filing last month, in conjunction with our XIPERE licensing deal, we amended our loan agreement with Silicon Valley Bank, repaid $5 million of the outstanding principal balance and extended the period of interest-only payments up to an additional year. Based on this debt repayment, upfront licensing payments and our planned increase in R&D expenses, we expect that our existing cash and cash equivalents will enable us to fund our operating expenses into the third quarter of 2020. This does not include any additional partnership-related payments that we may gain from the achievement of development milestones. We look forward to ongoing engagement with the investment community at upcoming events, including the Stifel Healthcare Conference. Now I am pleased to turn the call back over to George for his closing remarks.

[George Lasezkay:]

Thank you, Charlie. It was a productive quarter for Clearside, and we are proud to align ourselves with some of the leaders in the ophthalmology space. We expect to satisfy the request from the FDA and resubmit our XIPERE NDA in the first quarter of next year. We are also excited to submit a new IND for axitinib and continue to expand our internal development pipeline. We appreciate the support of our shareholders over the last year and look forward to making additional progress. I would now like to ask the operator to open the call up for questions.

[Operator:]

. We do have our first question from the line of Liana Moussatos from Wedbush.

[Liana Moussatos:]

Congratulations on all your progress. So I remember from covering Clearside for a while that axitinib was part of a pipeline a few -- a couple of years ago. And in, I don't know, in 2017, it was discontinued because competition failed. So what has happened since then that makes you so confident about your current formulation?

[George Lasezkay:]

Liana, this is George. And I'll start, and I'll also have Tom chime in. But in the past, you're correct that axitinib was part of the pipeline several years ago. And the work on it was put on hold. The company at that time had limited R&D resources, and it was singularly focused at that time on expanding the indications for XIPERE. So when -- this summer, we started a review internally, and it makes sense to review your internal assets or any assets periodically from time to time as the science progresses and new data comes out. And based on our recent assessment of both what we had done internally and what we've seen in the scientific community, we think that axitinib used in the suprachoroidal space really offers us an exciting development opportunity with a large market and a high unmet need, as Tom explained. And I'll have Tom chime in and contribute more detail on, again, the rationale for making this move back to axitinib and taking it forward and filing the IND. Tom?

[Thomas Ciulla:]

Thanks, George. So I've worked with our team to take a fresh look at our prior data as well as preclinical data from scientific researchers in the ophthalmology community. We believe there's evidence of potential treatment advantages using this therapy. Axitinib demonstrates intrinsic high potency and achieves pan-VEGF inhibition to receptor blockade and therefore, may have efficacy advantages over existing therapies. We also know that in preclinical work done by independent investigators that axitinib has shown promising results in numerous ocular models. We also believe that recent data on VEGF regulation indicates that there may be improved outcomes with broad VEGF blockade. And our own preclinical data has demonstrated durable drug levels as well as efficacy in preclinical models. So we believe we have one of the most potent tyrosine kinase inhibitors. And when we combine it with suprachoroidal delivery, we can target the drug at the location of the disease while achieving durable drug levels. Ultimately, we believe that axitinib and suprachoroidal suspension can reduce treatment burden and might even improve visual outcomes over current therapies, which predominantly focus on VEGF blockade or VEGF-A blockade, not broad VEGF blockade through VEGF receptor inhibition.

[Liana Moussatos:]

Okay. Any comments on the competition problems 2, 3 years ago?

[George Lasezkay:]

In past years, is that your question?

[Liana Moussatos:]

Right. The reason why was -- that it was discontinued and this is February 2017 press release was mentioned because competition had failed. And everything you said sounds good, but do you have any insight right now or maybe we can follow-up later on why you guys look like it could succeed where the competition failed?

[Thomas Ciulla:]

I'm glad you asked that question. That's a good question. So the past trials you're referring to involves platelet-derived growth factor inhibitors added to VEGF-A therapy. And the company was looking at that as a combination therapy. But basically, I think it's not the perfect analogy. But we have -- with a fresh look, we can see that we can completely inhibit VEGF. We achieved broad VEGF inhibition. Current therapies, as you know, focus on VEGF-A inhibition. And there's now some reports suggesting that when you inhibit VEGF-A, you have up-regulation of other members of the VEGF family. And that's been shown both in AMD patients and also in metastatic cancer patients. So when you have up-regulation of these other factors, that could potentially lead to treatment resistance and insufficient response. So while that analogy was made a couple of years ago, I don't think it's a perfect analogy. I think it's more about pan-VEGF inhibition or broad VEGF blockade. And there's also some clinical -- early clinical data suggesting that, that may actually achieve better visual outcomes in AMD patients. So we're very excited about the prospect, not only because we can achieve broad VEGF blockade, but we can also target the suprachoroidal space, achieve high levels at the affected tissue level -- layers and also achieve durable drug levels.

[Operator:]

. We do have a follow-up question from Liana Moussatos from Wedbush.

[Liana Moussatos:]

Now I have a couple of questions for Charlie. So well, operations spend in Q4 versus the Q3 and will 2020 be higher than 2019? And do you anticipate an increase in collaboration revenue in Q4 or in 2020 over Q3?

[Charles Deignan:]

You broke up a little bit on me. I think I heard you ask if R&D is going to go up. Did I hear?

[Liana Moussatos:]

Up.

[Charles Deignan:]

Yes. So as I said earlier, well, we have some R&D costs related to wrapping up our NDA resubmission. So it will creep up not significantly. And as I said, we have guidance that says our current cash takes us into Q3 next year. So you can kind of do the math on the burn there. R&D, I think I heard revenue. So we have -- yes, we signed these 2 deals. The Bausch deal came in and the REGENX option. I can't tell you today the proper accounting of that. We're still doing our research. The rules have changed. It's a little more complex on how you record those kind of revenues, but we will have received the cash this year.

[Liana Moussatos:]

Okay. And do you anticipate collaboration revenue to go up in 2020 over what we saw this year so far?

[Charles Deignan:]

Well, the Bausch deals we announced was $20 million total in upfront, $5 million by signing. And then the other $15 million comes in around approval.

[Operator:]

I'm showing no further questions at this time. I'm turning now the call back to Dr. George Lasezkay.

[George Lasezkay:]

Thank you once again for joining us on the call this afternoon. We appreciate your continued interest in Clearside, and we look forward to updating you on our progress. Operator, you may now disconnect.

[Operator:]

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