Clearside Biomedical Inc (CLSD) 2022 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Clearside Biomedical fourth-quarter 2022 financial results and corporate update conference call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jenny Kobin, 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 and 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, 2021, our quarterly report on Form 10-Q for the quarter ended September 30, 2022, and our other SEC filings available on our website. We expect that our 10-K for the year ended December 31, 2022, will be filed tomorrow.

In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change.

On today's call, we have George Lasezkay, our Chief Executive Officer; and Charlie Deignan, our Chief Financial Officer. After formal remarks, we will open the call for your questions. I would now like to turn the call over to George.

Thank you, Jenny. Over the past year, we have reinforced Clearside's leadership position in the delivery of therapeutics into the suprachoroidal space. We've successfully executed on our strategic plans with the launch and commercialization of the first FDA-approved suprachoroidal product XIPERE by our partner, Bausch & Lomb. And we completed and announced positive data from our Phase 1/2a OASIS trial of CLS-AX in wet AMD. We have also seen promising data presented by partners utilizing our proprietary SCS Microinjector to administer gene therapy and oncology agents to treat a variety of retina diseases.

On today's call, I will cover key highlights from the past year and provide a snapshot of our plans for 2023, and we'll begin with our development programs, both internal and with our partners. Last month, we reported exciting data from our lead internal program CLS-AX that combines our proprietary small molecule suspension of axitinib with delivery by our SCS Microinjector.

Axitinib is a highly potent tyrosine kinase inhibitor, or TKI, that achieves pan-VEGF blockade, directly inhibiting VEGF receptors 1, 2 and 3 with high potency and specificity. We believe this broad VEGF blockade may have advantages over existing retinol therapies by acting at a different level of the angiogenesis cascade.

We reported positive data from OASIS, our open-label, Phase 1/2a trial in wet AMD. The trial consisted of four cohorts with escalating doses that monitored participants for three months. This was followed by a three-month extension study in the higher dose cohorts, for a total of six-month follow-up. Participants enrolled in OASIS were heavily anti-VEGF treatment-experienced patients with active disease at screening, which was confirmed by an independent reading center.

In OASIS, we assessed three components: primary endpoint evaluated safety and tolerability of CLS-AX, and we also looked at durability, and biological effect. First, safety. We were very pleased with the safety results we saw with CLS-AX. In all participants in the trial, CLS-AX was well tolerated and demonstrated an excellent safety profile. There were no adverse effects, no dose-limiting toxicities. And because we are injecting behind the retina, we did not have any instances of vitreous floaters, or dispersion of drug into the vitreous.

We anticipated this favorable safety profile as axitinib is a well-characterized small molecule with less propensity for inflammation compared to a biological agent for gene therapy. In addition, the safety of the suprachoroidal injection procedure with our SCS Microinjector has already been assessed through the approval of XIPERE.

Second, durability. OASIS demonstrated that two-thirds of patients may be able to go at least six months without additional treatment, which is a really important element for patients and caregivers managing this disease. For those participants in the extension study that received higher doses in Cohorts 3 and 4, 67% went at least six months without additional treatment; and 50% of participants went beyond six months.

This translates to a 77% to 85% reduction in treatment burden. That's calculated by comparing the number of monthly injections participants had six months before CLS-AX, to the monthly injections they received after CLS-AX. We believe that reduction in treatment burden is the current unmet medical need in the wet AMD space.

Finally, biological effect. In OASIS, our six-month data was encouraging as we observed anatomic signs of biological effect on the OTC -- OCT scans. We also saw stable mean best corrected visual acuity and stable mean central subretinal thickness in the extension study participants. These strong results in all three areas are supportive of axitinib's potency and pan-VEGF blockade.

Furthermore, delivery via our SCS Microinjector into the suprachoroidal space specifically targets the affected chorioretinal tissues for potential efficacy benefits and compartmentalizes drug away from the front of the eye for potential safety benefits. OASIS reinforces our belief that CLS-AX has the potential to reduce treatment burden in patients with wet AMD while maintaining stable visual acuity, which gives us confidence as we advance into our next clinical trial.

Given this favorable OASIS data, we intend to conduct a randomized, controlled, double-masked Phase 2b clinical trial called ODYSSEY with CLS-AX in wet AMD participants. On February 24, the FDA issued draft guidance for the industry on developing drugs for the treatment of wet AMD. In this guidance, they recommend that all trials for this disease should either -- should use either aflibercept or ranibizumab in the comparator arm.

We spoke with the agency regarding its development of the draft guidance and to clarify our understanding of the recommendations. We were fully prepared and ready to open enrollment this quarter in ODYSSEY based on our planned trial design. However, based on our discussion with the agency and in response to this new guidance, we have adjusted the ODYSSEY trial design to use on-label aflibercept dosing in the comparator arm.

As part of our planning process, we had considered and evaluated various clinical trial scenarios, including using aflibercept as a comparator. As a result, we are able to smoothly and seamlessly transition to an adjusted ODYSSEY trial design utilizing aflibercept. We anticipate this changeover will take a relatively short period of time to complete as we make the necessary paperwork and operational adjustments with our clinical research organization partner. We now plan to open the trial for enrollment next quarter and currently expect data in the second half of next year.

Our clinical team is led by our Chief Clinical Officer, Dr. Susan Coultas, who joined us last year as a member of the leadership team with overall operational responsibility for conduct and execution of our clinical trials. She has substantial prior experience in advancing ophthalmic therapies from the early clinical development stages through final approval for commercialization, which is an important and valuable asset for us at this stage.

We've had a smooth handoff related to our clinical operations, as Dr. Tom Ciulla has transitioned to the role of Chief Medical Adviser-Retina and Chair of our Scientific Advisory Board. We are pleased that Tom continues to provide his expert advice and counsel on Clearside's suprachoroidal development programs, including the ODYSSEY Phase 2b trial.

I would also like to highlight the progress being made with XIPERE, Clearside's first FDA-approved product and the first commercial product using the suprachoroidal delivery. XIPERE was launched in the United States almost a year ago by our commercialization partner, Bausch & Lomb. They've done an excellent work getting the drug into the hands of physicians, and they continue to expand outreach and training to healthcare providers. We estimate that over 1,000 retina physicians have been trained to date in the use of the SCS Microinjector. In addition, Bausch & Lomb recently filed for XIPERE regulatory approval in Canada, so we're looking forward to market expansion in that additional territory.

Our Asia Pacific commercial partner for XIPERE is Arctic Vision, a leading China-based ophthalmic company. Arctic Vision is currently enrolling a confirmatory Phase 3 trial in macular edema associated with uveitis, and Arctic Vision just completed a Phase 1 clinical trial for the treatment of diabetic macular edema. Data from this trial is expected to be made public in the near future, and we look forward to their progress in these programs and future data readouts.

As part of our corporate strategy, we value partnerships to expand the benefits of suprachoroidal delivery utilizing our SCS Microinjector outside our core areas of expertise. Our current SCS Microinjector partners are focused on ocular oncology and gene therapy. Our oncology partner, Aura Biosciences, is utilizing our SCS Microinjector to deliver their viral-like drug conjugate, bel-sar, for the treatment of choroidal melanoma, a serious disease that is the most common intraocular tumor in adults with no approved therapies.

At the Macula Society Annual Meeting last month, Aura presented positive interim efficacy data from their ongoing Phase 2 study. The data presented showed very favorable safety profile, along with an excellent response to the therapy with 89% to 100% tumor control. Based on their promising data, Aura announced final plans for its global Phase 3 trial utilizing the suprachoroidal route of administration. They expect to begin enrollment in that trial this year.

Our gene therapy partner, REGENXBIO, continues to advance two Phase II clinical trials with their asset, RGX-314, delivered suprachoroidally with our SCS Microinjector. These programs are being developed in collaboration with AbbVie. Recently, REGENXBIO announced cohort expansions in both the AAV8 and ALTITUDE suprachoroidal clinical trials.

The AAV8 clinical trial in wet AMD continues to enroll patients in Cohort 6 at the third dose level. REGENX (sic - "REGENXBIO") has announced new interim data demonstrating that RGX-314 was well tolerated, with a meaningful reduction in treatment burden at six months observed across all dose levels.

The ALTITUDE trial in diabetic retinopathy continues to enroll patients in two new cohorts at a higher third dose level. REGENXBIO has announced new data demonstrating that RGX-314 was well-tolerated and BCVA remained stable through six months. Patients treated with RGX-314 demonstrate clinically meaningful improvements in disease severity and less disease worsening versus observational control at six months.

Last week, REGENXBIO reported that both the wet AMD and diabetic retinopathy suprachoroidal clinical trials are on track to be completed in the first half of 2023, with additional interim trial data expected in the second half of 2023. With our XIPERE approval, our successful OASIS trial, and the ongoing clinical development programs by our partners in the US and China, suprachoroidal drug delivery via our SCS Microinjector is now more widely accepted than ever by retinal community.

I will now turn over the call to our CFO, Charlie Deignan, for a financial update. Charlie?

Thank you, George, and good afternoon, everyone. Our financial results for the fourth quarter and full year were published this afternoon in our press release and are available on our website. In addition, we expect to file our annual report on Form 10-K tomorrow.

As George mentioned, the growing acceptance of our suprachoroidal delivery platform has provided several opportunities for Clearside. Last year, we were able to secure royalty financing that provided meaningful non-dilutive capital by leveraging a portion of our future royalties from XIPERE and certain SCS Microinjector license agreements. This transaction was achievable because of the successful US FDA approval for XIPERE and the subsequent commercial launch of the product by Bausch & Lomb.

As of December 31, 2022, our cash and cash equivalents totaled approximately $48.3 million. Based on our current outlook, we expect to have sufficient resources to fund our planned operations into the second quarter of 2024. As we finalize our Phase 2 clinical trial plans for CLS-AX, we will provide an update, if there is any, on any impact on our current cash runway guidance.

Over the next few months, we will be participating at several investor conferences, including the Needham Virtual Healthcare Conference and the JMP Life Science Conference. We look forward to these interactions and keeping you updated on our progress.

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

Thank you, Charlie. 2022 was a successful and productive year for Clearside, and we are carrying this momentum forward into 2023. Our team continues to stay engaged with the medical community with attendance at 15 medical congresses last year, featuring more than 40 posters and podium presentations, delivered on our suprachoroidal injection platform and our clinical development programs.

Our SCS Microinjector has been used in well over 2,000 suprachoroidal injections, in multiple clinical trials in a variety of retinal disorders, continuing to demonstrate a clinical safety and tolerability profile comparable to intravitreal injection. Importantly, it is commercially accepted by retinal physicians following the launch of XIPERE.

With our positive OASIS data and the upcoming ODYSSEY trial, we have a solid plan to advance CLS-AX as a potential treatment option for patients with wet AMD. We look forward to initiating ODYSSEY and to the data readouts from all our development and commercialization partners throughout the year. We will continue building on the promising opportunities ahead for Clearside, delivering therapies to the back of the eye and leveraging our SCS platform technology for patients with sight-threatening diseases.

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

(Operator Instructions) Annabel Samimy, Stifel.

Hi, thanks for taking my question. So I noted the change that you had in the ODYSSEY trial comparing it against aflibercept. You've been studying your product against this current standard of care but faricimab seems to be possibly taking over as -- in that position. And so I'm just wondering if you have any sense as to how CLS-AX may do against faricimab based on what you're hearing.

And as for a second question, I guess you noted about 1,000 retina specialists have been trained on SCS delivery. I guess how are you sensing the increased appetite in terms of licensing your technology now that you're seeing some success in administration across this program, XIPERE, as well as additional programs and real-world experience? Is there any additional activity on the licensing? Thanks.

Well, thanks for the question, Annabel. I want to make sure I understand your -- the first part of that question correctly. We were excited about the idea of going against faricimab. But given the recent guidance coming out from the FDA and in discussions with the FDA, we thought it was the better course of action to better prepare us for a Phase 3 trial to change to the comparator being aflibercept instead of faricimab.

We felt very confident against faricimab. We thought it was an innovative and forward-looking approach. But with the FDA's position in the -- at least expressed in the draft guideline, that the comparators should either be ranibizumab or aflibercept, we thought since this trial had not yet started, it was best to make this small adjustment and move forward with an aflibercept comparator.

Because faricimab and aflibercept basically -- faricimab was approved as being non-inferior to aflibercept, we feel pretty good about the switch to comparators. So it's good as we did before so we're glad to make that switch to be more in line with their guidelines.

You asked about licensing interest. That's an interesting question. We, as you know, really out-licensing has not been a key part of our strategy. It was very strategic early on several years ago, but we have noted that we've had more interest -- a little bit more interest recently and people wanting to work with us using our suprachoroidal microinjector and approaching drugs by delivering them into the suprachoroidal space. So we continue to have those conversations with multiple other parties right now. And if a deal makes sense, we'll do it. If not, it's good to know that other people are starting to accept suprachoroidal injection as a more commonplace mode of administration.

Okay. Fair enough. Thank you.

Okay. Thanks, Annabel.

Serge Belanger, Needham & Company.

Hi. Good afternoon. A couple of questions.

Hi.

Hi, George. First one on the changes in the ODYSSEY trial, how does that change the loading dose portion at the start of this trial and maintenance? And then does it also change the sizing and statistical powering of the study?

Okay. So the comparator arm will be -- just like it was before we were using faricimab on label, we're going to be using aflibercept on label. So that's what I can tell you that that will be the loading doses on label, and then it will be dosed every two months as per its label. And now -- and that's consistent with the draft guidelines from the FDA. So we'll be loading in both arms, both the investigative arm and in the comparator arm on label with aflibercept.

There should be no difference in the way we look at this. We powered this more for estimation purposes. We're looking for mean corrected visual acuity -- best corrected visual acuity, that we're trying to see that they're not dissimilar, but that we've reduced the treatment burden by having fewer maintenance doses compared to now where it'd be every other month of aflibercept. So in terms of the overall statistical approach, it will be the same as the previous ODYSSEY trial designs.

Okay. And then second question is kind of a broader strategy one. Just curious if you have any plans to explore CLS-AX beyond wet AMD? I think Tom had previously spoken about diabetic retinopathy. Is it possible to run additional small cohorts to do those evaluations in parallel with this ODYSSEY trial?

Right now, we want to focus simply on the ODYSSEY trial. I think, as Tom has said in the past, and I agree with him, CLS-AX could have interesting potential in diabetic retinopathy. But with our resources, we've made a decision to focus in a singular fashion on ODYSSEY in wet AMD patients at this point in time.

Great. Thanks for the updates.

Okay. Sure.

Jon Wolleben, JMP Securities.

Hey. Thanks for taking the question.

Hi, Jon.

Hi, George. A couple other follow-ups on ODYSSEY. I know with the prior design, you're using the faricimab re-treatment criteria, wondering if that changes at all with the new comparator? And then also what's your estimated cost for ODYSSEY as well? Thanks.

Let me tell you when we had -- we're still putting, as you might imagine, the guidelines came out. They were actually published on February 27. So we've been able to adjust -- make the beginning adjustments to the protocol. When we have a more detailed and a more complete a set of information, we'll let you -- we'll update you on that. But right now, we're still going -- we still have some stuff that's preliminary that we're working through in terms of the actual details -- the kind of details that you're talking about right now.

But that's the best I can tell you right now, Jon, is we're making the switch over and aflibercept on label as our comparator. But we will be updating once we come out and finalize the new protocol. We'll give you more detail as it becomes available.

Okay.

Is there a follow-up to that?

Just wondering about the estimated cost for ODYSSEY.

Yes. So Jon, this is Charlie. We don't give out the total cost. Again, the protocol is still being finalized, but these wet AMD studies usually run, let's say, 150,000 to 200,000 patients. And so, you can use that as a guidepost.

That's helpful. Thanks, George. Thanks, Charlie.

Andreas Argyrides, Wedbush.

Hi, good afternoon. This is Caroline on for Andreas. Thanks for taking our questions and just one from us. So even though you don't plan to use faricimab in the Phase 2b, do you think it would eventually be necessary to show CLS-AX compared to faricimab or perhaps in combination with faricimab from a commercial standpoint?

Well, thanks for the question. I mean, some of that's a little out of our control. It's kind of what the FDA will allow. But I do think that over time, and we've always thought this, and that was our original trial design had faricimab in there, that with the acceptance of faricimab by the retinal community, it is going to be an important part of the treatment regimen here in the near term.

And I think it's very possible, over time, that we will end up having to compare ourselves to some degree to faricimab. But that's right now under the draft guidelines. It's pretty clear what the FDA is expecting going into -- especially going into the registration trials. And that does not include faricimab. It's our understanding that it just hasn't been out long enough for them to feel comfortable indicating that that could be a comparator arm. But I think that's certainly possible in the future. And if it is possible, I'd be more than happy to put CLS-AX in a trial versus faricimab.

Okay, great. Thank you so much.

(Operator Instructions) Yi Chen, H.C. Wainwright.

Thank you for taking my question. Just for the revenue recorded in fourth quarter, is it solely based on sales of the SCS Microinjector?

Yeah, Yi. Our revenues can be -- we have a supply agreement, surface agreements, training. So those are revenues related to all of our partners. So it is included in there, but there's also other service agreements we're doing, helping with training and design and engineering with our partners. So it's not just the product sales or just the SCS Microinjector sales.

So it's not proportional to the sales of XIPERE recorded by (multiple speakers) correct?

That's correct. That's correct.

Okay.

And then, that could be -- it wasn't this quarter, but there could be milestone payments in that line also.

Okay. Okay. Got it. I see. And can you also comment on the level of operating expenses we should expect to see in 2023?

Our guidance, as we said, our cash could get us into 2024, second quarter 2024. I wouldn't expect to see major increases in our operating lines other than the cost for a Phase 2 program. So the organization's pretty lean and we can continue to stay that way.

Okay. Thank you.

Thank you. And I'm currently showing no further questions at this time. I'd like to hand the conference back over to Mr. George Lasezkay for closing remarks.

Thank you, operator, and thank you all 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 throughout the year. Operator, you may now disconnect the call.

Thank you, and this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.