Clearside Biomedical Inc (CLSD) 2021 Q2 法說會逐字稿

Good day, everyone, and thank you for standing by. Welcome to the Clearside Biomedical Second Quarter of 2021 Financial Results and Corporate Update Call. (Operator Instructions) And please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Ms. Jenny Kobin, Clearside Investor Relations. Please go ahead.

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. 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; Dr. Thomas Ciulla, our Chief Medical Officer and Chief Development Officer; and Charlie Deignan, our Chief Financial Officer. After our formal remarks, we will open the call up for your questions. During our call today, Dr. Ciulla will discuss the key results from Cohort 1 of our Phase 1/2a clinical trial for CLS-AX that we announced last month. Slides related to this data are available on our website as supporting materials for this earnings call webcast.

Now, I'd like to turn the call over to George.

Thank you, Jenny. Good afternoon, everyone, and thank you for joining us on the call today. We continue to demonstrate our position as the leader in the suprachoroidal space with multiple clinical trials in several different ophthalmic indications, a new drug application for XIPERE currently under FDA review and a recent positive results from our CLS-AX wet AMD clinical trial. We are the first company to develop a clinically tested, non-surgical, repeatable micro-injection technology designed to unlock the potential clinical benefits of administering drugs into the suprachoroidal space.

We have over 85 global patents to protect our platform technology, which includes patents covering our proprietary SCS Microinjector as well as the delivery of therapeutic agents into the suprachoroidal space. Internally, our research team has proven our capabilities to transform existing small molecule drugs into proprietary suspensions for delivery into the suprachoroidal space to target back of the eye diseases. Our first product candidate, XIPERE, is a proprietary suspension of triamcinolone acetonide for the potential treatment of patients with macular edema associated with uveitis.

If approved, excuse me, XIPERE is now under review by the U.S. FDA with the PDUFA action date of October 30, 2021. If approved, XIPERE will be our first commercial product, the first therapy approved for macular edema associated with uveitis and the first product ever approved for suprachoroidal administration. XIPERE will be sold in the U.S. and Canada by our partner, Bausch Health and Bausch and Lomb, its leading global eye health business. In addition, Arctic Vision, our partner in Greater China and South Korea, is planning a confirmatory Phase 3 clinical trial in macular edema associated with uveitis to begin in China later this year with the ultimate goal of commercializing XIPERE in that region.

The lead clinical development candidate in our pipeline is CLS-AX, which combines our proprietary suspension of the tyrosine kinase inhibitor, axitinib for suprachoroidal delivery with our SCS Microinjector. As Tom will discuss in detail, we achieved our safety and tolerability objectives in Cohort 1 of our Phase 1/2a OASIS trial in patients with wet AMD. We are now enrolling Cohort 2 and expect to complete recruitment this month with data by the end of this year. With the pan-VEGF attributes of axitinib delivered to the suprachoroidal space, we have the opportunity to improve the treatment of patients with wet AMD as we believe CLS-AX may offer improved safety and efficacy as well as prolonged durability by reducing the frequency of patient injections.

The clinical experience with our SCS Microinjector is unparalleled. At Clearside, we have tested it in over 1,200 suprachoroidal injections in multiple global clinical trials in a variety of retinal disorders. The safety profile of our suprachoroidal injections is comparable to intravitreal injections with no procedure-related serious adverse events to date. In addition, we have published data that indicates the suprachoroidal injection procedure, utilizing our SCS Microinjector is well accepted by physician investigators and could readily be adopted in clinical practice by retinal specialists.

Further, our technology is currently being used in 3 separate clinical trials being conducted by our 2 clinical development partners for REGENXBIO and Aura Biosciences. REGENXBIO is delivering its AAV-based gene therapy with our SCS Microinjector in 2 ongoing Phase 2 clinical trials in wet AMD and diabetic retinopathy, potentially transforming gene therapy delivery into an office-based non-surgical treatment option.

As Tom will discuss shortly, REGENXBIO continues to make meaningful progress on both of these programs. And Aura Biosciences is delivering their viral like drug conjugate into the suprachoroidal space to treat choroidal melanoma, again, using our SCS Microinjector. We are excited about the progress to date with our partners and look forward to future results from these trials. As such, we believe we are the leader in developing small molecule suprachoroidal products and the partner of choice for the delivery of a variety of other therapeutic agents into the suprachoroidal space.

I will now turn the call over to Dr. Tom Ciulla, our Chief Medical Officer and Chief Development Officer, to delve into our CLS-AX data and review our partners' programs. Tom?

Thank you, George, and good afternoon, everyone. Today, I'm going to focus primarily on our CLS-AX clinical program and the positive safety results we reported last month from Cohort 1 of our OASIS Phase 1/2a clinical trial in patients with wet AMD. As Jenny mentioned at the outset of the call, slides related to this data are available on our website at supporting materials for this webcast.

CLS-AX is our proprietary suspension of axitinib delivered via our SCS Microinjector into the suprachoroidal space. In this program, we are marrying a very highly potent tyrosine kinase inhibitor with the potential benefits of suprachoroidal delivery. Importantly, axitinib is designed to inhibit all of the VEGF receptors as opposed to the currently improved agents that find only the VEGF-A. And with our proprietary SCS Microinjector, we were able to specifically target the affected chorioretinal tissues rapidly and they can compartmentalize our therapy away from unaffected tissues for potential safety benefits.

We've seen the benefits of suprachoroidal delivery with our first product candidate, XIPERE, and now some preliminary signs of benefit in our first data set with CLS-AX. As a reminder, the design of our Phase 1/2a clinical trial is an open-label study to establish the safety and tolerability of escalating doses of CLS-AX in patients suffering from wet AMD. The study involves 3 cohorts of approximately 5 patients each and we started Cohort 1 at a very low dose in order to establish a floor of safety.

Now, I'd like to walk you through the details of the patient journey in our trial. Patients have a diagnosis of wet AMD, which they've received a minimum of 2 prior anti-VEGF injections. Patients have active disease with suboptimally controlled choroidal neovascularization despite multiple doses of the anti-VEGF therapy. Once dean potentially eligible for our trial, patients are screened, which includes standard visual acuity testing and imaging that is ultimately assessed by an independent mass reading center. The patient received a single dose of aflibercept and the reading center confirms eligibility. 1 month later, the patient returns undergoes the same assessments that received a suprachoroidal dose of CLS-AX. Patients have been monitored monthly for 3 months.

What I like about this trial design is that it allows us to assess the patients in a crossover fashion. We are first able to assess how patients perform 1 month after treatment with aflibercept and then compare how the same patients perform 1 month after treatment with CLS-AX. In Cohort 1, the patient's average age was 82, and each was highly treatment experienced. On average, patients had 26 prior anti-VEGF injections and received 9 injections on average in the year prior to screening.

Let me walk you through the summary of the data for each of the most important components we monitoring the trial. Starting with safety, we're pleased to report that no study suspension of stopping rules were met. There were no serious adverse events. And importantly, there were no assign to inflammation, vitreous haze, intraocular pressure safety signals, vasculitis or intravitreal dispersion of CLS-AX. There were 2 treatment-emergent adverse events that were assessed as unrelated to CLS-AX, one with atrial fibrillation and one with sub-conjunctival hemorrhage assessed to be related to the sub-congenital lidocaine anesthetic injection.

Moving now to the outcomes related to best corrected visual acuity. At baseline prior to CLS-AX administration, the main best corrected visual acuity score was 59 letters with a range of 29 to 74. In Cohort 1, we observed important changes in best corrected visual acuity. 1 month after receiving aflibercept, 3 patients worsened and 3 improved, all within 3 letters. Therefore, on average, they worsened by 0.2 letters, indicating that there was no mean change in best corrected visual acuity for patients treated with aflibercept. In contrast, 1 month after receiving a CLX-AX dose, 5 to 6 patients improved by 4 or more letters with the main improvement for the entire body of 6 patients of 4.7 letters. This was statistically significant on post hoc analysis with a p-value of 0.029.

Regarding central subfield thickness of the macula, patients had a main CST of 231 microns just prior to receiving CLS-AX. I would like to highlight here that this is essentially a normal value and creates a floor effect with CST. In other words, if patients start on average of normal values, they are unlikely to improve. Importantly, the mean CST was stable 1 month post CLS-AX. Durability is an important component of our treatment plan and we are encouraged by the preliminary signs of potential durability that we saw in Cohort 1 in these highly treatment experienced patients, especially given the low starting dose of CLS-AX.

We have 3 criteria to determine if patients need additional therapy. These include a loss of 10 or more letters from best measured visual acuity at any point in the trial, an increase in CST by greater than 75 microns and/or a vision-threatening macular hemorrhage. With the best corrected visual acuity measurement, I'd like to emphasize that we are assessing from the patient's best vision at any point in the trial, including after receiving aflibercept or CLS-AX. As a result, patients are more likely to be retreated in our trial, which is focused on safety.

Importantly, in Cohort 1, after receiving CLS-AX, at 1 month no patients required additional treatment. At 2 months, 4 patients required retreatment with aflibercept. At 3 months, 2 patients or 33% of the patients did not require additional treatment. In these 2 patients, their vision actually improved 1 by 5 and 1 by 7 letters. With these results from Cohort 1, we have now advanced a Cohort 2 at a dose of 0.1 milligram. This is a 3.3-fold increase compared to the Cohort 1 data. And ultimately, we expect the Cohort 3 dose of 0.3 milligrams, which is a tenfold increase over the Cohort 1 dose.

In Cohorts 2 and 3, we're also adding a 3-month extension study to follow patients over a longer period of time. As George mentioned, we are very pleased with the progress in enrollment for Cohort 2 and expect to complete recruitment this month. We expect to report data from Cohort 2 by the end of the year. With respect to partner programs, as George mentioned, REGENXBIO continues to advance their programs utilizing our SCS Microinjector in both of their Phase 2 clinical trials, evaluating the efficacy, safety and tolerability of suprachoroidal delivery of their gene therapy agent, RGX-314.

The first trial entitled AVA is targeting the treatment of patients with severe wet AMD who are responsive to anti-VEGF treatment. In their second quarter earnings announcement yesterday, they reported all 3 of their cohorts in the trial. For Cohort 1, they will report interim data at the Retina Society Scientific Meeting that will take place on September 29 to October 2 this year. For Cohort 2, they expect to report interim data in the fourth quarter of 2021. And for Cohort 3, they have completed dosing in patients who are positive for neutralizing antibodies.

The second RGX-314 clinical trial is a Phase 2 trial for the treatment of diabetic retinopathy entitled ALTITUDE. For this trial, REGENXBIO has completed enrollment of diabetic retinopathy patients in Cohort 1 and expects to report initial data in the fourth quarter of 2021. REGENXBIO is also reported that enrollment of patients in Cohort 2 has begun. They have also announced plans to enroll diabetic retinopathy patients in the third cohort of ALTITUDE, which will evaluate RGX-314 in patients who are positive for neutralizing antibodies.

As in previous cohorts, patients will not receive prophylactic immunosuppressive corticosteroid therapy before or after administration of RGX-314. The continued progress by REGENXBIO was very encouraging and we look forward to their data presentations later this year. In addition, we're very excited about the status of our clinical development programs and the progress from our partners. We will remain active within the retina physician community over the second half of the year as we plan to have presentations at the Retina Society Meeting, The Meeting of the American Society of Retina Specialists and the American Academy of Ophthalmology Medical Meeting as well as participation in other ophthalmic industry events. Ultimately, we believe that CLS-AX may improve the overall patient experience with a more durable treatment and a favorable tolerability profile, and we look forward to keeping you updated.

I will now turn the call over to our CFO, Charlie Deignan, to review our financial results.

Thanks, Tom. Our financial results for the second 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 June 30, 2021, totaled approximately $26 million. This includes approximately $7 million in aggregate net proceeds from the use of our ATM facility in the quarter, providing an additional quarter of cash runway. Our quarterly cash burn is primarily due to the work on the activities related to our CLS-AX program and have gaining approval for XIPERE. Investments in our broader research pipeline are also incorporated into our operating plans.

Based on our current funding and planned spend, we expect to have sufficient resources to fund our operations into the second quarter of 2022. Importantly, this estimate does not include additional milestone payments we may receive under our current partnership agreements. As XIPERE is approved, we expect to receive up to $15 million from Bausch and Lomb and approval in pre-launch milestones. And additionally, we will receive a milestone payment from Arctic Vision of $4 million. Thus, we may 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 investor events this month, the Wedbush PacGrow Healthcare Conference tomorrow and the H.C. Wainwright Ophthalmology Conference next week.

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

Thanks, Charlie. We believe Clearside is well positioned for future growth with the potential approval of XIPERE, recent positive data from our OASIS study targeting large wet AMD market and multiple clinical and commercial partnerships with top companies in their respective field. Our innovative platform makes us the clear leader in the delivery of drugs into the suprachoroidal space with a reliable non-surgical office-based treatment approach. We continue to make meaningful progress as we execute on our internal corporate milestones, work closely with our partners and look forward to making a difference for patients suffering from a broad range of potentially blinding diseases.

I would now like to ask the operator to open the call up for questions.

(Operator Instructions) And we begin with our first question is coming from Zegbeh Jallah from ROTH Capital Partners.

Just have a couple here. The first one, just wondering if Tom can just clarify his statement around the study being more likely to have patients retreated.

So the question is about our treatment criteria. And as I mentioned in my prepared remarks, we have 3 criteria, one of which is a loss of 10 letters. And we measured a loss of 10 letters from best measured within the trial. Some other companies are measuring loss 10 letters from baseline. So in our trial where we had patients improve at the 1-month visit post axitinib, that sets a higher bar from where we start our measurement of lots of letters. So theoretically, in this example, patients could gain numerous letters after receiving axitinib. For example, they could gain, let's say, 9 letters. And then they could, on the next visit, lose 11 letters, and they would qualify for retreatment. But in essence, they'd only be a couple of letters worse than baseline. So in other trials they would not have been treated. And in fact, we've mentioned that 4 patients were retreated at month 2 after axitinib. Actually, 1 of those 4 patients would not have been treated if we use criteria of loss of 10 or more letters from baseline.

And then the other one is, can you just describe the details of the extension period in Cohort 2 and Cohort 3? I mean, what can possibly glean from them?

The question is about the extension study that we plan to add to both Cohorts 2 and 3. Essentially, we'll be following patients for an additional 3 months to have the total follow-up after axitinib be for 6 months post dosing.

And then the last one is just about expectations for the readout by the end of the year. I know you mentioned the data that we did see was really encouraging in terms of efficacy. But I think the only thing was durability. So I was just wondering what kind of gives you confidence that this two and threefold increase could result in greater durability and how you plan to leverage that data in terms of designing future studies?

The question about expected durability. So we're basing that on our pre-clinical studies and in our current corporate deck, we have some slides that address this. One of the slides is from a paper we just published in translational vision science and technology. This is one of the official ARVO Journal, the Association for Research in Vision and Ophthalmology, it's a peer-reviewed medline indexed paper. But in that journal article and also in our corporate deck, we showed data in our rabbit PK model, where we have levels -- several orders of magnitude greater than the IC50 for the VEGF 2 receptor going out to 6 months. So I always want to -- I always caution when I get this question, that we know the rabbit model is not directly translatable to humans, but it's directionally important. It gives us a lot of confidence that we can get multiple months of durability once we achieve the correct doses.

And our next question is from Annabel Samimy, Stifel.

You touched on this in just the last question in terms of what level of durability can you expect with the higher doses. But what are you actually aiming for? I guess, in other words, is there a sweet spot, whether it be 6 months or 12 months for patients when you think about this drug? Commercially, what ophthalmologists might want in terms of foot traffic and monitoring of patients? What durability are you -- do you think is ideal?

Tom, do you want to discuss that? I mean, we've talked about this internally and I think you can answer that question. Please give some directional guidance.

So the question is about desired durability. And the simple answer is you want the most possible. But it's much more complicated than that. I think, first of all, there are no approved agents that have very significant tolerability. And anything better than several months will be better than what we have currently. So I think the bar right now is rather low. And then the other aspect to realize is that, right now the model involves -- the retina practice model involves patients returning to the physician for examination assessment in possible retreatment. So to go from the current system to say you're going to have one and done is really disruptive of the current system and it may not be completely realistic for all patients.

So I think anything more than 3 to 4 months would be very meaningful in this current setting. And certainly, somewhere between 3 to 6 months, what I think would be the sweet spot where you could decrease the treatment burden, but also patients will be coming back to the doctor anyway for reassessment. And I think it's less disruptive to the current retina practice model. The other aspect about our therapy is that it is a pan-VEGF inhibitor. And there's some evidence preclinically and also clinically that pan-VEGF inhibition may have potential efficacy benefits over current focused VEGF-A inhibition. So we're obviously targeting multi-month durability, but we also have potential for better efficacy outcomes in current therapy with what seems so far to be a favorable safety profile.

And also, as far as the program going forward, how are you thinking about future trial design? Obviously, it seems like you're going to be able to find an appropriate dose with the Phase 1/2 trial. But when you think about the next trial, are you looking again at treatment-experienced patients, naive patients in combination with an active control with the placebo, how are you thinking about this trial? And I guess following to that and your last comment, how high is the bar? Are you going to be looking for superiority or non-inferiority?

Well, before Tom says anything on that, I would just say that those are discussions we're having, those are ongoing discussions in the company. And we haven't really worked out our final plan on that. But I'm sure that Tom can give you some color around some of the issues at least related to that trial design in the Phase 2b.

It's very data dependent. We only have data from our lowest dose Cohort 1. And obviously, we're going to be looking at Cohorts 2 and 3. We'll have a better idea about the durability, the potential treatment effect, and that will inform the next trial. So as George mentioned, we're having those discussions now. And ultimately, it will be data dependent.

And our next question is from Andreas Argyrides of Wedbush Securities.

This is Andreas on for Liana. Just a quick one here. When it comes to Cohort 1 and the patient baseline characteristics, did -- how did those help inform Cohort 2s the enrollment of Cohort 2 -- the patients in Cohort 2? Could you provide a little bit of color on that?

We didn't change any of the criteria for enrollment in Cohort 2. Generally, in clinical trials, it's best not to change patient populations as this is being explored. So we kept our criteria very consistent. Our criteria, a very strict in terms of BCVA, patients requiring -- patients have prior treatment, have to have persistent activity based on reading center. And we essentially didn't change any of the criteria we went into Cohort 2.

So let me rephrase the question. Just so I ask it correctly from my perspective. Were the results from Cohort 1, were you able to enrich the patient selection for Cohort 2 based on some of the results, maybe that you saw, let's say, patient subjects, #2 and 6 who were responders that had durable responses. That seems the criteria, but what you're able to enrich in that.

Well, we didn't change criteria and I'm not sure what you mean by enriching, but we really kept the criteria the same. The clinical trial sites are the same. We try to keep everything pretty much the same except for the dosing.

And our next question is from Yi Chen, H.C. Wainwright.

I don't know if you can comment on Bausch Health's commercial preference for the potential launch of XIPERE once approved? And how quickly you can access formularies of various insurance payers?

That's really a question better directed to the Bausch team. We have not -- we've worked very closely with them on the preparation of the NDA, dealing with the FDA, their med affairs team in terms of injection training and all that, but we have not really gotten into -- we know a little bit about what they think they're going to do with the product. But the kind of questions you're asking, especially accessing formularies and reimbursement related questions are really best addressed to Bausch. Not something that we're really dealing with as this product, once approved, will be their product to move forward and to deal with all of those issues. So I think that's a Bausch question. That's directed to them.

Has Bausch indicated that they would pursue other indications for XIPERE once approved? And how long do they still have the option to do so?

If you're speaking about indications, there's been discussions about additional indications, no decision's been made there, but we've had exchange of information on additional indications. They can pursue an indication under the contract that we have with them, the license agreement we have with them at any time. So there's no timing restrictions on their -- reasonable timing restrictions on them in terms of when or if they would pursue additional indications. They have the right to do that, but not an obligation to do that.

(Operator Instructions) Next is John Wolleben of JMP Securities.

Congrats on the progress. One maybe for Tom on the CLS-AX data. Just wondering when we're looking at the BCVA change when these patients have come in with pretty dry eyes and we're not seeing a decrease in fluid, would you expect to see increases like this in BCVA or is this perhaps a function of being open-label or some patient motivation or just wondering if you could comment what might be going on mechanistically here to give the visual benefits.

It's well-known among retina clinical trialists that Central South fill thickness correlates really poorly with visual acuity, especially in wet AMD. And so I think it may suggest disease activity, but doesn't really correlate with visual acuity. And so it's not too surprising, especially because we're up against a floor effect that we really didn't see much change in the CST. And that is a function of the fact that we are recruiting patients who are highly treatment experience. So I wouldn't have expected them to have very thick maculas. The best correct visual acuity on the other hand, averaged 59 letters at study entry. So that's roughly in the 20/60 range. So there's room for improvement there. Even though there may -- one could argue it's a little bit of a floor effect, there's still room for improvement there. So I think that explains a little bit of this. And obviously, we need more patients and more data to collaborate it.

And can you talk about when you're able to start dosing the third cohort? Do you have to wait to see the second cohort data or is that something that can happen sooner?

Well, as you know, the sense of the trial is a 4-month trial. We've been discussing the fact that we plan to have data by the end of the year. We won that through our safety monitoring committee and then hope to start the third cohort at the beginning of next year. And if you just march out the study time lines, you could readily guess when we would -- should be done with Cohort 3.

I think Charlie mentioned the potential payments on the XIPERE approval. Can you remind us of the development milestones that you're eligible for from REGENX and maybe within the context of what you've already received and what triggered those?

Charlie, as to the REGENX milestones, I don't know that we've done anything other than disclose the total milestones that might be available.

That's right. We've -- there's $34 million in additional development milestones and then about $102 million in sales milestones, but that's all the detail we can give out on that.

And our next question is from Serge Belanger from Needham & Company.

First one for Tom. Just a follow-up on the prior questions related to the CST. How important is it for CLS-AX to show the ability to have an impact on CST? And it sounds like you're not tweaking the patient entry criteria. So do you expect you'll be able to show some differences in the next couple of cohorts here?

Obviously, we're looking at multiple anatomic parameters. We're looking at angiographic parameters as well. And traditionally, in wet AMD trials, we've looked at region area, C&D area, leakage area in addition to CST, and there's other parameters as well that we have in the reading Serge. So we'll have a really comprehensive battery of anatomic assessments. CST is nice because it's quick. It's non-invasive. It's convenient. It's quite precise. But it really doesn't tell the whole picture with respect to the best corrected visual acuity.

And I guess the next one for George. I think at the start of your prepared comments, you mentioned that Arctic Vision was starting a Phase 3 trial of XIPERE in China. Just curious if there's any milestone payment associated with that advancement of clinical development.

There is, but there is not -- it's nothing that we've disclosed due to the nature of the agreement. But that's a Phase 3 currently set to start this year in macular edema associated with uveitis. There is a milestone associated with that, but not one that we've been able to disclose the amount.

And that concludes the question-and-answer session. At this point, I would like to hand it over to our CEO, Mr. George Lasezkay.

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

Thank you. And this concludes today's conference call with the Clearside. Thank you, everyone, for participation. You may now all disconnect.