Clearside Biomedical, Inc.
Q2 2020 Earnings Call Transcript

Published: 10 Aug 2020

[Operator:]

Good afternoon ladies and gentlemen and welcome to the Clearside Biomedical Second Quarter 2020 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host speaker Jenny Kobin, Investor Relations for Clearside. Please go ahead madam.

[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.

[George Lasezkay:]

Thank you, Jenny. Good afternoon to everyone and thank you for joining us on the call today. Over the past year we've worked hard to execute our strategy to reorient Clearside from a single product company to one that has multiple innovative and relevant opportunities targeting unmet medical needs through the suprachoroidal space. As a result we are initiating a new clinical program targeting a large and growing market through suprachoroidal injection of a tyrosine kinase inhibitor. We are also advancing our suprachorical gene therapy and small molecule pre-clinical programs. These actions represent important progress creating value through the expansion of our internal pipeline which we'd like to highlight this afternoon. Also we have selected a new very experienced and highly motivated manufacturing partner to help us obtain her first commercial product approval. I will begin with our new clinical program and lead development asset CLS-AX which is our proprietary suspension of extensive suprachoroidal injection. We are pleased to announce that our investigational new drug application was accepted by the FDA. With this open IND we are now able to progress CLS-AX into human clinical trials. We are targeting the initiation of our phase I/IIa clinical trial by the end of this year in patients with neovascular age-related macular degeneration. Typically referred to as Wet AMD. As many of you know Wet AMD is a serious type of macular degeneration leading to central vision loss that occurs when a protein called vascular endothelial growth factor or VEGF causes abnormal blood vessels to grow and leak in the back of the eye.

[Thomas Ciulla:]

Thank you, George. I'm eager to start by diving a bit deeper into our CLS-AX clinical trial plans and then I will summarize our other pipeline programs. As George mentioned we were pleased to announce today that our IND was accepted by the FDA. With this open IND we are now able to progress CLS-AX into human studies and initiate our phase I/IIa clinical trial in patients with Wet AMD by the end of the year. We are excited to advance this asset for its intrinsic characteristics that can be further leveraged through suprachoroidal delivery. First as a Tyrosine kinase inhibitor or TKI axitinib is designed to achieve pan-VEGF inhibition and independent pre-clinical studies showed that axitinib have more potently inhibited neovascularization than either focused anti-VEGF inhibition or other TKIs. Second, suprachoroidal administered CLS-AX demonstrated targeted hydride concentration in the retina and choroid with lower concentration in the vitreous leading to effective reduction of fluorescein leakage and new vessel growth versus controls in models of Wet AMD. Third, in animal models CLS-AX demonstrated some compartmentalization benefits when administered suprachoroidal sparing the anterior chamber of the eye and the systemic circulation. It was well tolerated with no signs of toxicity at the intended clinical dose. And finally CLS-AX administered suprachoroidal showed multi-month durability in animal models. This supports the potential to address treatment burden in Wet AMD, a large and current unmet need. We look forward to starting our first human clinical trials with CLS-AX. We are planning our phase I/IIa clinical trial in Wet AMD patients to be an open label dose escalation study to assess the safety and tolerability of a single dose of CLS-AX administered through suprachoroidal injection. Eligible patients are those who demonstrate stable visual acuity following two or more previous injections with an individual anti-VEGF agent. For this trial we plan to use a flipper set as our anti-VEGF agent.

[Charles Deignan:]

Thanks Tom. Our financial results for the second quarter were published this afternoon in our earnings press release and are available on our website. Therefore I will summarize our current financial status. As we reported our cash and cash equivalents at the end of June, 2020 totaled $15.1 million. During the second quarter of 2020, we elected to pay off our outstanding bank loan due to various restrictions and other limiting covenants in the agreement. The total amount paid was $5.3 million and included the remaining principal balance accrued interest and final payment fee. As a result we had we now have a very clean balance sheet. We are continually assessing options to preserve cash and are monitoring anticipated revenue from near-term partner milestones. We are evaluating the most advantageous ways to fund our programs, get to our approval milestones and meet our future financial needs. We will monitor market conditions and be opportunistic about increasing our capital resources in multiple ways while always remaining cognizant of maintaining shareholder value with the goal of raising money at the lowest cap cost of capital. We are controlling expenses tightly and continue to prioritize gaining approval of XIPERE while also expanding our internal pipeline. The planned investments in our near-term clinical and pre-clinical work are incorporated into our operating plans and we currently expect to have sufficient resources to fund planned operations into the second quarter of 2021. We look forward to presenting at the Wedbush Pacgrow Virtual Healthcare Conference tomorrow and I will now turn the call back over to George for his closing remarks.

[George Lasezkay:]

Thank you, Charlie. To sum up, we believe strongly in the versatility of our suprachoroidal injection platform and its use in small molecules in gene therapy. We have an array of valuable assets our proprietary SCS Microinjector, lead clinical development program CLS-AX, multiple pre-clinical programs as well as our lead commercial product XIPERE, all of which are well protected with related intellectual property. We lead the industry with our experience in targeting the suprachoroidal space and maintaining strong relationships with researchers and clinicians in the ophthalmic community. We continue to transition from one product company to an ophthalmology company with exciting clinical collaborations and an innovative and expanding internal pipeline. Importantly, there will be three novel assets delivered via our SCS Microinjector in four clinical trials by the end of this year. We are positioning ourselves to have a strong year in 2021 with potential FDA approval of XIPERE and the initial data from our phase I/IIa CLS-AX clinical trial and Wet AMD as well as progress on our other pre-clinical programs. Our team is very energized and optimistic about our growing pipeline with the potential to improve patient outcomes through our innovative suprachoroidal technology. I would now like to ask the operator to open the call for questions.

[Operator:]

First question is from the line of Liana Moussatos of Wedbush. Your line is open.

[Unidentified Analyst:]

This is for Liana. Thank you for taking my question and congrats on all the progress. What are some of the steps remaining for resubmission of XIPERE NDA and how long will it take for the new CMO to manufacture egistration batches and COVID-19 had any impact on the new CMO's daily operations? Thank you.

[George Lasezkay:]

Okay. Thanks Liana. I will take that question. First of all to the best of our knowledge and our discussions with the new CMO COVID has not had any significant impact on their operations. So that does not seem to be a significant factor. Secondly, what needs to be done is we need to manufacture registration batches and put them on three-month real-time stability in order to resubmit our NDA and we're working with the CMO now, the new CMO on a very aggressive timeline to make that happen. As I said we're still working out those details of exactly when the registration batches will be made but they've given us a very aggressive timeline and there's incentives in place to go even faster. We're moving as fast as we possibly can and they possibly can to get the registration batches made. I think as we indicated already the technology transfer is already underway. We've purchased the necessary equipment, wasn't too much but we purchased that equipment. It's already on site and the teams are already working to put it in place and start to make batches.

[Unidentified Analyst:]

Thank you.

[Operator:]

Your next question comes from the line of Annabel Samimy of Stifel. Your line is open.

[Unidentified Analyst:]

Hey everyone This is on for Annabel. Congrats on all the new developments. We have two questions if you may. The first is on axitinib. Are you actively exploring partnership opportunities or has there been any interest externally and secondly regarding OpEx, how should we or what are your expectations for R&D expenses through 2020 and 2021 now that there are multiple programs underway? Thanks.

[George Lasezkay:]

Okay. Let me take the first part of that question and then Charlie you can answer the second part of that question. Currently at this point in time we have not explored partnership relationships around axitinib. We intend to push axitinib forward into clinical trials by ourselves at this point in time. So we have not had those discussions. We've not sought those discussions at this time. Charlie you want to answer the second part of that question?

[Charles Deignan:]

Sure. Yes. As I said on the call we have just over $15 million in cash. Currently we will be receiving potentially some milestones from our partners. So I would look at R&D, spending, the trials not, they're phase Ia, IIa studies not significant big studies 30-35 patients. So I wouldn't expect a dramatic increase in R&D, slight increases and we will also see some of the manufacturing costs are starting to decline next year. So I wouldn't see a big jump. We can manage the progress is what we have getting into Q2 of next year.

[Unidentified Analyst:]

Awesome. Thank you and congrats again.

[Charles Deignan:]

Thank you.

[George Lasezkay:]

Thank you.

[Operator:]

Next question is from the line of Boris Peaker of Cowen. Your line is open.

[Boris Peaker:]

Great. My question is on the CLS-AX. You mentioned that initial data is expected in the middle of next year. I'm just curious how many patients should we expect to see and also is it reasonable based on this patient number to see some initial efficacy as well?

[George Lasezkay:]

Tom, I think that's your question to handle.

[Thomas Ciulla:]

Sure. Well, thank you for the question Boris. As you know it's a phase I/IIa study, the primary endpoints are really geared around safety. This is the first time in man that axitinib has been injected suprachoroidally and so again the primary endpoint will be safety. Obviously we're going to start at the lowest dose but we will be looking at a safety signal some of the usual signals that you might face efficacy on, for example the need for retreatment, visual acuity and central subfield thickness are some of the parameters that we'll be assessing.

[Boris Peaker:]

Got you and in terms of the actual number of patients?

[Thomas Ciulla:]

There will be five patients per cohort and there will be three cohorts is what we're planning.

[Boris Peaker:]

Got you. Great. Thank you very much for taking my question.

[Thomas Ciulla:]

Thank you for the question.

[Operator:]

Next question comes from the line of Jonathan Wolleben of JMP Securities. Your line is open.

[Jonathan Wolleben:]

Hi, good afternoon. Thanks for taking the questions. Just another follow-up on CLS-AX. What are you expecting, going in this study as far as the durability of response with a single injection and then also I guess onset of responses is something that you're going to be able to see in this interim readout it's not from the first cohort maybe the second?

[Thomas Ciulla:]

So a couple of things about axitinib. First of all, as a Tyrosine kinetics inhibitor it has pan-VEGF inhibition and there is been numerous independent pre-clinical studies assessing it in animal models of retinal, corneal and coronal neovascularization and it shows very robust inhibition of neovascularization. It shows an addition of leakage and actually one study where not only does it cause inhibition but it actually causes regression of this established corneal vascularization. There are studies suggesting that it's more potent inhibitor of neovascularization other TKIs and other studies suggesting that it's a more potent inhibitor of neovascularization than a focused anti-VEGF approach. So intrinsically it has some very desirable qualities and we're going to leverage that further with suprachoroidal delivery where we know we can get very high levels targeted to the affected tissues to the retina and chloride. We know we can compartmentalize the drug there and keep it away from the anterior segment to minimize any off-target effects that we've seen with other TKIs that have previously been assessed. And we know in our own animal models that we have multi-month durability. So we're hoping that this will be a very durable, very efficacious therapy and I think the second part of your question is what can we expect out of this first cohort or even the second cohort and as I just mentioned it's really geared towards safety. This is a first time in man axitinib been injected suprachoroidally but I think we'll have some signals as to its potential efficacy. I don't know if that'll be with the lowest dose or what with the next dose but we're eagerly looking forward to starting this trial because we think this is truly a differentiated or has potential to be a differentiated therapy in terms of its pan-VEGF inhibition, its durability and potential safety of benefits due to the fact that it's compartmentalized and targeted to the affected tissues.

[Jonathan Wolleben:]

Got it. That's helpful and then just a quick question on the pre-clinical program you announced today. I'm wondering what other work needs to get done before we can get these in the clinic and could that be something we see maybe next year? Thanks.

[Thomas Ciulla:]

Well, I'll start that and George can finish. These are pre-clinical programs. We're very excited about the potential. As you know Integrin inhibitor has some very early validation and some early clinical trials. It's a novel target in retinal diseases. Due to its unique mechanism of action, it actually may have a role in patients who don't respond well to anti-VEGF, it could be adjuncted to anti-VEGF. So we're very excited about that but again these are just pre-clinical programs and we'll have a data-driven approach to progression of that as well as the DNA nanoparticle gene therapy programs and George may be able to give more specifics about plans and intentions.

[George Lasezkay:]

Well, Tom I just echo what you said is that they are pre-clinical. We have to do some more work. There may be some more optimization that's required but we have a kind of strong scientific underpinnings to these programs. So we really think that there is the potential to do something very interesting certainly with the therapeutic biofactory approach and Integrin has a reasonable validation as a target. So we think that those two programs in particular have a lot of promise but we're being very upfront about these are early pre-clinical programs. We're encouraged. We think they're a good direction for us to go but it's going to take some additional pre-clinical work before we know whether we can really take these things on and start any kind of clinical trials. So I think that's a little premature to discuss that seriously right now.

[Jonathan Wolleben:]

Got it. All right. Thanks again for taking the question.

[Operator:]

Next question is from the line of Zegbeh Jallah from Roth Capital Partners. Your line is open.

[Zegbeh Jallah:]

Good afternoon. Thanks for taking my question and congrats on the IND. Just a couple of questions here for me are starting with CLS-AX just kind of wanted to know what additional steps are required before you can begin treating patients at the end of the year and how many sites do you plan to activate things like that. And then a follow-up question here is, who will manufacture CLS-AX? Are you going to be using the new CMO that's doing your XIPERE manufacturing or who's going to be handling that and then another follow-up question with regards to the study design just wanted to know why a is being used as the baseline treatment which I think is interesting but any clarifications there and finally here, is there any limitations on what you can use or what indications you can explore for your gene therapy nanoparticle delivery since you do have some existing agreements. I was just wondering if that provided any limitations and then maybe if you can even provide any ideas to what indications might be pursued initially?

[George Lasezkay:]

Well, Zegbeh thanks for a four-parter. I hope Tom was writing as fast as I was writing there. Let me take several parts of that question then I'll turn it over to Tom. First of all in terms of the manufacturer for CLS-AX that is a different, entirely different CMO. It is not the previous CMO for XIPERE and it's not the new CMO. That's a completely separate CMO that we've been working with for some time. I'm very happy with how things are working there. So that will be a different contract manufacturing organization that will manufacture CLS-AX. I've already forgotten one part of your question that I was going to answer, about the indications. We're going to proceed and we are not very restricted in terms of how we can proceed using our nonviral vector therapy, in terms of the indications we could explore and decide to go after if our preclinical data supports it. We're fairly open to where we can go. We're not as restricted as you might think in terms of potential indications as long as we're in the nonviral vector area. So I'll let Tom, if he was writing down answer the other two parts of your question. And if you require more amplification on that I'm glad to give it to you Zegbeh.

[Zegbeh Jallah:]

No, that was helpful. Thank you. Perfect.

[Thomas Ciulla:]

Yes. Thanks for the questions Zegbeh. So I'll take, I think the first question and essentially you were asking about steps required to get to the phase I/IIa trial by the end of the year. So we've gone through a number of steps. We did all the pre-clinical work that's been completed. We filed the IND. We've announced acceptance. We finalized the protocol already. That protocol has been reviewed by our which I mentioned on my remarks earlier a great, a cohort of world renowned retina specialists who found the trial design to be very appropriate. In terms of going forward, we've identified sites. They've filled out site feasibility questionnaires. What we looked for in sites or sites that are experienced with phase 1 trials, experience with Wet AMD trials on sites that are experienced with suprachoroidal injection. Many of these sites were previous sites in our prior trials with XIPERE . So they're familiar with supercritical suprachoroidal injection very familiar with it and then we have to have approval, a site initiation study and we feel confident that we can initiate this trial before the end of the year.

[Zegbeh Jallah:]

Awesome and then Tom just the follow-up here was with regards to using as the baseline therapeutic for the trial?

[Thomas Ciulla:]

Yes. So the trial design is very similar to other sponsors that have done Wet AMD trials with new assets. So we've spoken about REGENXBIO, their trial design involves initial anti-VEGF injection to assess responsiveness. Our primary goal initially because we feel this may be a very durable treatment, is really to assess durability and maintenance of visual acuity after anti-VEGF therapy initially and that's the reasoning for that. Again it's very similar to what other companies have done and as I mentioned the protocol was reviewed carefully by our and they found it to be very acceptable and appropriate.

[Zegbeh Jallah:]

Thank you. Appreciate it.

[Operator:]

Your next question comes from the line of Serge Belanger of Needham. Your line is open.

[Unidentified Analyst:]

Hey thanks for the question. This is for Serge and congrats on the progress. I just had a couple questions. So the first one is on XIPERE. In terms of the FDA review timeline, so I guess based on the new CMO are you still expecting a six-month review or could it be faster. Just thinking about the potential likelihood for the approval and how this might impact your agreement with Bausch and then in terms of the milestone payments I think you've got about $15 million that are tied to pre-launch and regulatory milestones with Bausch. Is there any, I guess, impact from the fact that you're using a new CMO to your ability to get this milestone payment? Thank you.

[George Lasezkay:]

Thanks Serge. I'll take the first part of that and then I'll kind of share the second part with Charlie because it does go to the cash runway. In the first part, we believe that we transfer essentially the same process that was in existence at our previous CMO which is exactly what we intend to do that the conditions that we need to meet and the requests that were made in the CRL that we received last year will remain the same and that the most important one there is the three-month real-time stability on the registration batches. So we have a very strong belief that as long as there's no significant change in the manufacturing process that exists today. once it goes into the new CMO that the CRL will be the requirements of the will hold and we'll be able to submit with three month real-time stability data. On the second question about the milestone payments you're right, just from Bausch we expect around approval to get in approximately 15 million bucks from them and some additional monies from other partners. Obviously we do expect that we'll get a six-month review date as well after we resubmit. So that's the issue about getting to the point where we can collect that milestone. I'll let Charlie talk to you about how we how we intend to do that manage our cash runway so we're sure to get there.

[Charles Deignan:]

Yes. Thanks George. Yes so as we said depending on when our approval is and at this point we don't know when that is, we do get north of $15 million in from those approval milestones but until we know when we get this resubmitted that I can't predict when approval is. Hopefully like you said it is faster than six months but we can't commit to that and we're monitoring our expenses and looking at our runway and doing everything we can to extend it.

[Unidentified Analyst:]

Got it.

[Charles Deignan:]

And we will be up, yes thanks.

[Operator:]

All right. There are no further questions. I will turn the call back over to Dr. Lasezkay.

[George Lasezkay:]

Thank you. Once again, I want to thank all of you for joining us on this call this afternoon. I think you can tell we're excited about some of the new developments that have taken place here at Clearside. We certainly appreciate your continued interest in Clearside and we look forward to updating you on our progress. Operator you may now disconnect the call and thanks again.

[Operator:]

Ladies and gentlemen this concludes today's conference. Thank you for your participation. Have a wonderful day. You may all disconnect.