Clearside Biomedical, Inc. (NASDAQ:CLSD) Q3 2023 Earnings Call Transcript

Clearside Biomedical, Inc. (NASDAQ:CLSD) Q3 2023 Earnings Call Transcript November 13, 2023

Clearside Biomedical, Inc. beats earnings expectations. Reported EPS is $-0.15, expectations were $-0.16.

Operator: Greetings, and welcome to the Clearside Biomedical Third Quarter 2023 Financial Results and Corporate Update Call. At this time, all participants are in a listen-only mode and a question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Jenny Kobin of Clearside Investor Relations. Ma’am, the floor is yours.

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, 2022, our quarterly report on Form 10-Q for the quarter ended September 30, 2023 to be filed today, 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; and Charlie Deignan, our Chief Financial Officer. After our formal remarks, we will open the call for your questions. I would now like to turn the call over to George.

George Lasezkay: Thanks, Jenny, and good afternoon, everyone. Today, I’m excited to discuss several recent value creating achievements related to our suprachoroidal platform. We’ve had two weeks of really good news. We completed enrollment in ODYSSEY, our Phase 2b wet AMD clinical trial, with top line data expected in the third quarter of 2024. We announced a new partnership with BioCryst Pharmaceuticals to expand our external development pipeline with a plasma kallikrein inhibitor for the treatment of diabetic macular edema. Both of our other suprachoroidal collaboration partners, REGENXBIO and Aura Biosciences, recently presented positive safety and efficacy data through Phase 2 with their respective compounds using our SCS microinjector.

As for our XIPERE partners, Bausch & Lomb announced that XIPERE has been granted a permanent Category 1 CPT code in the U.S. to help facilitate better access and adoption of the product. And Arctic Vision completed enrollment in their Phase 3 clinical trials Arcadis, also known as XIPERE, in uveitic macular edema in China. So let me start with discussing our lead program, CLS-AX. Last month, we completed recruitment in our ODYSSEY Phase 2b clinical trial evaluating the safety and efficacy of CLS-AX, our highly potent tyrosine kinase inhibitor delivered by our patented SCS microinjector. As a reminder, ODYSSEY is a randomized, double masked, active controlled, multicenter study in participants with wet AMD. One of the most encouraging aspects of our CLS-AX program is the feedback that we receive from the medical community.

Multiple leading retinal physicians have presented data from our OASIS Phase 1/2a clinical trial of CLS-AX in wet AMD at top ophthalmic meetings, including the recent AAO, ASRS, and Retina Society meetings. These presentations highlighted the excellent safety profile, stable vision, and reduced frequency of injections observed for up to six months. These presentations also created significant interest in our program from clinical trial participants, investigators, and sites that help drive strong recruitment for our ODYSSEY Phase 2b trial. The completion of recruitment is a critical accomplishment for us as the final participants in the study advance to randomization, either to the CLS-AX treatment arm or the on-label aflibercept comparator arm.

We expect randomization to be completed by the middle of December 2023 and we remain on track to report top-line data from ODYSSEY in the third quarter of 2024. Our goals for the ODYSSEY trial are to demonstrate an excellent safety profile, stable visual acuity and a lower treatment burden in the CLS-AX arm. The efficacy and safety results from ODYSSEY will then guide our pivotal Phase 3 development program, or CLS-AX. We believe the differentiated mechanism of action and high potency of axitinib, combined with safe and reliable delivery into the suprachoroidal space, has the potential to be a best-in-class approach for long-term maintenance therapy for individuals with wet AMD. We were thrilled to start this month by announcing our new global licensing partnership with BioCryst Pharmaceuticals.

This collaboration expands the reach and demonstrates the versatility of our suprachoroidal injection platform by adding another compound to be delivered with our proprietary SCS microinjector. The agreement includes $5 million in an upfront license fee plus the potential for future milestone payments and sales royalties. The partnership with BioCryst is focused on the development of their proprietary small molecule, avoralstat to be administered via the suprachoroidal injection the treatment of diabetic macular edema. DME is the most common cause of vision loss in individuals with diabetes, and we believe there’s a significant market opportunity in this indication. Avoralstat has high potency and low solubility, which are characteristics that are well suited for suprachoroidal administration and important to achieving potential efficacy with reduced dosing frequency.

Delivering avoralstat into the suprachoroidal space and behind the visual field could allow avoralstat to inhibit plasma kallikrein directly at the location where the edema forms with a desirable durability of effect. BioCryst expects to continue conducting formulation and nonclinical work into 2024 and begin clinical trials in 2025. The versatility of our suprachoroidal injection form was on display at this month’s American Academy of Ophthalmology medical meeting, where two of our other partners, REGENXBIO and Aura Biosciences presented very promising data with their respective compounds utilizing our SCS microinjector. REGENXBIO reported the results of their Phase 2 ALTITUDE trial evaluating their gene therapy, ABBV-RGX-314 in diabetic retinopathy, the leading cause of vision loss in adults between 24 and 75 years of age worldwide.

314 continues to be well tolerated and 50 patients from dose levels 1 and 2 with no drug related serious adverse events. At the second dose level, 314 prevented disease progression and reduced vision threatening events in non-proliferative diabetic retinopathy at one year. REGENXBIO has indicated they believe that a one-time in office suprachoroidal injection of 314 gene therapy has the potential to stabilize and improve diabetic retinopathy severity score and reduce the long-term risk of vision threatening events. Aura Biosciences reported positive clinical efficacy updates from its ongoing Phase 2 clinical trial with suprachoroidal administration of Belsar for the first line treatment of early stage choroidal melanoma. Their Phase 2 trial is assessing the safety and preliminary efficacy of single and multiple ascending doses of Belsar for up to three cycles of treatment.

The Phase 2 data with 90% of their patients at 12 months of follow-up demonstrated 80% tumor control and 90% visual acuity preservation for patients that have been treated with three cycles of Belsar and that meet the Phase 3 enrollment criteria. Safety profile continues to be favorable with no significant or treatment related serious adverse events. This is very encouraging, as most of these patients had tumors close to the fovea or optic disc and would likely have experienced severe and irreversible vision loss with the current standard of care. Auras also announced agreement with the FDA under a special protocol assessment for the design and planned analysis of their Phase 3 COMPASS trial. We plan to dose the 1st patient in this trial this quarter.

In addition to the R&D progress over the last few months, our commercial partnership with XIPERE, have also announced important achievements. Bausch & Lomb announced that the American Medical Association has granted a new Current Procedural Terminology or CPT code for XIPERE with support from the American Academy of Ophthalmology and the American Society of Retina Specialists. Category 1 codes for the suprachoroidal injection procedure will help facilitate better access and adoption of XIPERE in the United States. The new CPT Category 1 code will be effective on January 1, 2024, replacing the current miscellaneous Category 3 code. At AAO, Bausch & Lomb also presented survey data on positive physician experience using XIPERE in the treatment of uveitic macular edema, indicating that physicians found XIPERE suprachoroidal injection easy to learn with patient outcomes consistent with clinical trial data.

Our Asia Pacific partner, Arctic Vision, also accomplished a major milestone with completion of enrollment in China of its Phase 3 randomized double blind placebo controlled clinical trial with XIPERE in uveitic macular edema. As a reminder, XIPERE is referred to as Arcadis in China. If positive, the data from the Phase 3 trial will allow Arctic Vision to apply for marketing approval in China. In addition, earlier this year, Arctic Vision applied for marketing approval of Arcadis in Australia. We appreciate the commitment of both Bausch & Lomb and Arctic Vision to expand the use of XIPERE and look forward to further updates. I’ll now turn over the call to our CFO, Charlie Deignan, to provide a financial update. Charlie?

Charlie Deignan: Thank you, George, and good afternoon, everyone. Our financial results for the third quarter were published earlier in our press release and are available on our website. Therefore, I will just provide a summary of our financial status. As of September 30, 2023, our cash and cash equivalents totaled approximately $29 million. Subsequent to the end of third quarter, we entered into the licensing agreement with BioCryst. We will receive $5 million in non-dilutive capital in the form of an upfront license fee. With this combined cash balance, we believe we have sufficient resources to fund our planned operations into the fourth quarter of 2024, which moves us past the expected completion of our ODYSSEY trial and the related top-line data announcement.

In terms of investor outreach, we look forward to participating in the Stifel Healthcare Conference on Wednesday of this week and BTIG’s 3rd Annual Ophthalmology Day later this month. We look forward to keeping the investment community updated on our progress. And I’ll now turn the call back over to George for his closing remarks.

George Lasezkay: Thanks, Charlie. The level of awareness and usage of suprachoroidal administration continues to grow with the progress from both our internal programs and our suprachoroidal development commercialization partners. When it comes to the adoption of new therapeutic treatments, we know that safety is the top priority for physicians and their patients. Our suprachoroidal approach is already a proven method of delivery with a very clean safety profile, both commercially and in clinical development. Including our new partnership with BioCryst, we now have five collaboration partners actively targeting the suprachoroidal space for treatment of multiple serious retinal diseases using our SCS microinjector. We believe this represents significant future value for Clearside and for our shareholders. I would now like to ask the operator to open up the call for questions.

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Q&A Session

Operator: [Operator Instructions] Our first question is coming from Serge Belanger with Needham & Company. Your line is live.

Serge Belanger: I guess first one on the ODYSSEY trial. You completed enrollment, I think your target was 60 patients. Just curious, if you overshot that number and you’re assuming some level of attrition to get through a 36 trial, 36-week trial? And then secondly, maybe just talk about potential inflection points for the REGENX and Aura partnership?

George Lasezkay: Let me take the first one. We had a very healthy recruitment rate in ODYSSEY. We had 32 sites signed up, 30 sites recruited at least one subject. So, we had really good participation across all our sites. We’re very happy about that. We have our target, as you know, was 60 patients, a 2:1 randomization, 40 into the CLS-AX group and 20 in the on label aflibercept comparator group. And when we terminated our recruitment, we had exceeded that slightly. So, we’re a little over that goal. We may have some attrition as you normally do during the conduct of the clinical trial, but right now, we’re very happy with where we are. We’ve got more than 60 in the trial, and so we’re very grateful and very thankful to the sites and the KOLs and the investigators that participated. Like I said, it was a really, very, very robust screening and recruitment program, and we were glad for everybody’s participation. Your other questions were…

Serge Belanger: Regarding potential inflection points for the REGENXBIO and Aura partnership?

George Lasezkay: Well, the most important one is, I’ll start with Aura first is Aura is already got the FDA foregoing to Phase 3. I think the FDA looked at their Phase 2 data, felt very comfortable about that, and they’re looking to recruit their first patient. So the start of Phase 3 is going to be very meaningful to them as well as to us, and that should happen sometime this quarter. We’re very hopeful on that. And they are going to be not restricted to the United States. They’re going outside the United States as well to do their recruitment. For REGENX, the REGENX file comes in two stages. First, their DR from their ALTITUDE trial, and then they’ll have their wet AMD data, I think, early next year. But we were very, very happy with what they were reporting in terms of what they saw in Phase 2 for diabetic retinopathy.

So the next big inflection point is a decision as to exactly when and how they’re going to go into Phase 3. But I think that data looks very encouraging to them, and you’d have to ask them a little bit more what — they’re the ones that really know their plans, but then declaring a start of Phase 3 in one or both of those indications would be a very meaningful certainly for them and for AMD, but it would be very meaningful for Clearside as well. But we’ll see what they say when they take more questions on that and they put together their final clinical development plans. I think we were very encouraged by what we saw in the Phase 2 data in DR.

Operator: Our next question is coming from Jon Wolleben with JMP Securities. Your line is live.

Jon Wolleben: A couple on the BioCryst partnership. Just wondering about your current responsibilities and the handoff to BioCryst, I think you said sometime mid next year. Wondering what kind of work’s been done already? And then, what else do you think needs to get done before getting this in the DME patients? And then I have a follow-up on CLS-AX.

George Lasezkay: Sure. And remind me of the follow-up, Jon. So I’ll often forget as I’m talking about this. But in terms of BioCryst, we have been working with BioCryst for some time on formulation work in some early preclinical work that encouraged them to move ahead and take the license. That kind of work will continue into next year, as I said in my prepared remarks. We will be collaborative with them probably through next year doing IND enabling studies, but the real handoff and we’ll really probably be at IND, and they will take it forward from there. So, we’re going to work with them on some more animal studies and some fine tuning the formulation. But once that’s done the IND is filed, it’s their molecule and their product to take forward. So, that’s it on BioCryst. So now remind me of the follow-up.

Jon Wolleben: To your comments, it does seem like we’re getting to a critical mass on suprachoroidal news flow and then also in the TKI space and wet AMD, with some readouts coming soon, with expectations there. Can you remind us of what you want to see in ODYSSEY and what you think a competitive profile will be? And how any competitive dynamics may change that before ODYSSEY reads out?

George Lasezkay: Well, I’ve said this before. I said this to you almost a year ago. I remember us sitting together and talking about this. And he said I hope that eye point has good readout on their data. I hope the same thing for ocular, too. I think all three of the companies really are in a position that we’re trying to prove that tyrosine kinase inhibitors have a place. We’re all coming at it slightly differently. There’s two tyrosine kinase inhibitors. Three different ways of administering them. Our Chief Medical Consultant, Retinal Consultant, Tom Ciulla, we still talk to on a regular basis. I always said people knew that tyrosine kinase inhibitors would have a place. It was just a matter of how to deliver them properly.

So I think all of us have that approach, and we’re looking forward to that. I think that we believe in talking to our KOLs and our medical consultants, that if we have maintenance therapy that can guarantee from patients four to six months. We think we have a very good product to be part of the overall treatment paradigm for wet AMD patients. Personally, in our trial, I’m looking — I’m hopeful and very encouraged. I just believe that going to get more than that, we’re going to get at least five to six months, but the data will be the data. But I think any kind of data that supports that the dosing is four to six: months, five to six months, when you look at where the anti-VEGF-As are right now, they can’t really guarantee everybody gets to four months.

They can’t even guarantee everybody gets to three months if you look at the VABYSMO label, and even the high dose IVA label. So we look at this as we believe we’re going to have it this extended duration. We think it’s going to have a place. And the other thing I would say to you is, I keep telling people, I look at the future of wet AMD in particular as more like cancer chemotherapy and that there’ll be different mechanisms of action, different places where the drugs work in the retina. And I think combination therapy is really going to be very important for a number of the patients right now. We know that anti-VEGF only under serves a certain amount of patients. There’s a certain number of patients that don’t respond very well, don’t respond at all, or over time, become somewhat refracted to that single mechanism of action.

So we think there’s a very good place for a different mechanism of action. In our particular case, we think we have a very safe and reliable way to administer. It doesn’t cause any problems in the front of the eye in terms of impairment of vision or anterior chamber toxicity, and certainly no systemic problems. So, we think we have a very good chance to become an important part of treating the wet AMD patient population as long as we’re in that five-, six-month duration.

Operator: Our next question is coming from Jack Padovano with Stifel. Your line is live.

Jack Padovano: This is Jack calling on for Annabel. So for ODYSSEY, have you powered the study to see non-inferiority at three months or six months? And how are you now accounting for rescue treatment? Because I know that in the OASIS study, there were some patients who were rescued per protocol and there were some others who were rescued because the investigator got a little nervous. So how are you handling that?

George Lasezkay: First of all, let me make a clarifying remark about powering. This trial is not designed to be a non-inferiority trial. It is not designed to be a superiority trial. What we’re doing is just comparing two groups. We have a single dose. What we’re trying to determine is what is the optimal duration of effect that we would then go into establishing a Phase 3 trial that would be powered appropriately either for non-inferiority or superiority compared to standard of care. And we’re still not even really sure what the standard of care might be by the time we get there. We don’t know whether VABYSMO will be included in the standard of care like Lucentis and like EYLEA are currently now. So, we’re just trying to what we’re trying to do is see how far can we go, how much duration can we effect and not be substantially different than the best corrected visual acuity in the comparator group.

So, it’s not really powered. Statistically speaking, it’s not powered for non-inferiority or superiority. What we try to do and you’re right about OASIS, and I was looking at the OASIS data again the other day, and in our two high dose cohorts, so the 0.5 milligram and the 1 milligram. And we’re using the 1 milligram in ODYSSEY. Actually, most of the off protocol or early rescues happen one month in to our highest dose, and it didn’t happen in the lower dose, the 0.5, for some odd reason. I think that was just a matter of small numbers and randomization and what have you. But we were very concerned about that because we thought, well, in some cases, the doctors didn’t have a lot of experience with this, and they pulled the trigger early even though we had very strict criteria.

It was the first time they were using CLS-AX. They may not have known what to expect. A couple of things I would say about off protocol treatments now. Our study design with the three loading doses giving CLS-AX with the second loading dose, we think will help prevent those off protocol, near-term supplemental treatments. Second, this time around, we spent a lot of time in multiple meetings training the site investigators, going over the OASIS data and really training them that the CLS-AX, they don’t have to worry about it too much early on. They need to stick strictly to the criteria that we’ve given them in terms of rescue or supplemental therapy. And I think the increased familiarity with many of these physicians that were in the previous number of them were in the previous OASIS trial.

Now with that increased familiarity with the change in the study design with our loading doses, I think that we’re going to do a very good job of minimizing off protocol early re-treatments.

Operator: [Operator Instructions] Our next question is coming from Yi Chen with H.C. Wainwright. Your line is live.

Yi Chen: In view of the recent FDA draft guidance on wet AMD and the Phase 3 trial design from your competitors. Can you comment on what parts of the ODYSSEY trial design need to be changed in the future pivotal trial?

George Lasezkay: Thanks for the question. The answer is I don’t know right now because we want to see what the data is that — the data from the ODYSSEY trial will dictate a lot of how we go to the FDA and propose to do a Phase 3 trial. I think the draft guidance, and we’re waiting for the guidance to be finalized, by the way. The draft guidance, the Phase 3 trials are probably going to have to be at least nine months long. They’re going to have to have multiple dosing, and they’re going to have to have some comparison to a standard of care. That we know. Where I think there needs to be some clarification is part of the draft guidelines, and I know a number of companies have probably commented on this, about the dosing of the comparator to be the same dosing as the treatment.

And I think that’s been a question of how to deal with that when what you’re trying to do is dose much less frequently than the standard of care. And we’ve seen ocular go in a direction where they’re saying, well, we’re going to give one dose of aflibercept and one dose of our axitinib. A lot of questions about that trial design, what went into that trial design, what was the thinking and the conversations with the FDA. So, it’s a little early for us to do that. We’re very committed to this current trial design of ODYSSEY as Phase 2b. The way we’ve set it up, we have talked to the FDA about this trial. We did make a change because you may remember one of the things we were going to do is use VABYSMO as a comparator. In view of the draft guidelines, we moved it back to doing aflibercept on label.

We think that makes sense, and we think that’s the thing that is the most relevant is to compare yourself to an on label standard-of-care, and that’s what we think makes the most sense. So, we’ll see what the data comes out of ODYSSEY as the data comes out and as we evaluate that data, that will really guide how we go to the FDA with the proposal for Phase 3.

Operator: Thank you. As we have no further questions in queue at this time. I will hand back to Mr. Lasezkay for any closing remarks he may have.

George Lasezkay: I want to thank everyone 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 the call. Thank you again.

Operator: Thank you. This concludes today’s conference, and you may disconnect your lines at this time. We thank you for your participation.