Clearside Biomedical, Inc.

Good afternoon, ladies and gentlemen. This is your operator. Your conference will begin momentarily. Please continue to stand by. Once again, this is your operator. Your conference will begin momentarily. Please continue to stand by. Good day and thank you for standing by. Welcome to the Clearside Biomedical Fourth Quarter 2021 Financial Results and Corporate Update Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1 on your telephone. If you require any further assistance, please Press star zero. And now it is my pleasure to hand the conference over to your host today, Jenny Coben with the Clearside Biomedical Investor Relations. Thank you. 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 than 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. We expect that our 10-K for the year ended December 31st, 2021, 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 Luzeski, our Chief Executive Officer, Dr. Thomas Chula, our Chief Medical Officer and Chief Development Officer, and Charlie Degnan, 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.

Thank you, Jenny. 2021 was a year of validation for ClearSight and our super-choroidal injection platform. Last quarter, we achieved our first FDA approval with Zypyr, which solidified our position as the leader in delivering drugs into the suprachoroidal space. We have developed a truly innovative therapeutic approach in treating retinal diseases that allows unparalleled access to the back of the eye to directly target the site of disease. Zypyr is being commercialized in the U.S. by our partner Bausch & Lomb for the treatment of macular edema associated with uveitis. Zypyr is the first therapy approved for this indication, and we're honored to make a difference in the lives of these patients battling this potentially blinding condition. Bausch announced last month that they have launched Zypyr in the United States with focused physician training in the use of our proprietary SCS microinjector. Bausch is a well-respected leader in our industry, and we're confident in the strength and capabilities of their commercial team to advance this therapy to patients in need. During 2021, Arctic Vision, our China-based development and commercialization partner, also made great strides with Zypyr, which they refer to as ARBN001, and the brand name Arcadis. Last quarter, Arctic Vision initiated their confirmatory phase three trial in China in macular edema associated with uveitis. Their ultimate goal is to commercialize Arcadis, if approved, in their licensed regions of Greater China, South Korea, Australia, New Zealand, India, and 10 Southeast Asian countries. In addition, last week, Arctic Vision announced that they have dosed the first patient in China in a Phase I clinical trial of ARVN001 for the treatment of diabetic macular edema. The Zypher-related milestones also strengthened our balance sheet. In total, we generated $20 million of non-dilutive funding in the fourth quarter from Bausch and Arctic Vision that will be utilized to advance our internal pipeline programs. While Zypair is our first commercially available product, we also have a broad pipeline of internal programs and collaborations with our development partners targeting multiple indications, including macular degeneration, diabetic retinopathy, diabetic macular edema, and ocular cancer. The approval of Zypyr in the U.S. validates our strategic approach to focus on small molecule suspensions. Our lead internal pipeline product candidate, CLSAX, combines our proprietary small molecule suspension of the tyrosine kinase inhibitor, Exidinib, with delivery by our SES microinjector. In 2021, we reported positive data from cohorts 1 and 2 in our Phase I-IIa OASIS trial in patients with wet AMD. We achieved our primary safety endpoints in these first two cohorts as CLS-AX was well tolerated with no serious adverse events. And we are making progress in cohort three with the 0.5 milligram dose of CLS-AX, and we remain on track to report results from this cohort midyear. As a reminder, OASIS is a dose escalating study to explore a broad range of doses to take into a phase 2B clinical trial. Based on the positive safety profile to date and input from our scientific and clinical advisors, we are planning to add a fourth cohort in this trial. Prior to moving forward with a higher dose in cohort four, we will review the preliminary one-month safety data from cohort three. Unless we see dose-limiting toxicities, we plan to initiate Cohort 4 promptly after this safety data review at a higher dose than we used in Cohort 3. We expect both of these events to occur in the second quarter. Because we will be conducting Cohorts 3 and 4 in an overlapping schedule, we expect to complete the entire OASIS study and begin recruiting a larger Phase 2b clinical trial by the end of this year. I also want to highlight that our gene therapy and oncology partners have made tremendous strides in their superchoroidal clinical trials. Our gene therapy collaborator, Regenexx Bio, continues to advance their two Phase II clinical trials with their asset, RGX314, delivered superchoroidally with our SCS microinjector in patients with wet AMD and diabetic retinopathy. Last month, Regenexx Bio reported positive interim data in patients with diabetic retinopathy, reporting that RGX314 continues to be well-tolerated at six months, with nearly 50% of patients demonstrating a two- or more-step improvement from baseline compared to 0% of patients in the observational control. We look forward to additional data from both their wet AMD and diabetic retinopathy trials later this year. Our ophthalmology oncology partner, Aura Biosciences, is utilizing our SCS microinjector to deliver their viral-like drug conjugate, AU011, for the treatment of choroidal melanoma, the most common intraocular tumor in adults. We expect Aura to disclose more data from their current superchoroidal clinical trials later this year. To date, we have presented and published promising preclinical data on our gene therapy programs, and we are excited about the potential of our superchoroidal injection platform for both viral and non-viral vectors. Gene therapy remains an extremely promising approach to treating retinal disease, and the use of our proprietary SCS microinjector offers the potential to deliver a variety of gene therapy constructs superchoroidally through a non-invasive in-office procedure for the potential treatment of several ocular diseases. We believe that companies with specific gene therapy expertise will be able to advance these programs more rapidly. Therefore, in keeping with our strategic approach to focus on small molecule suspensions, we have decided to consider additional development and commercialization partners for gene therapy. Outside of the specific indications licensed to Regenexx Bio, we are in a position to partner with other companies working on gene therapy using non-viral vectors for any retinal disorder or viral vectors targeting inherited retinal disorders or retinal diseases that are not primarily treated with current anti-VEGF standard of care therapies, such as geographic atrophy. I will now turn over the call to Dr. Tom Chula, our Chief Medical Officer and Chief Development Officer, to discuss our clinical development programs and provide more detail around the data disclosed by our partners. Tom?

Thank you, George, and good afternoon, everyone. I'd like to begin by saying that as a retina physician, I believe we have truly redefined the treatment of retinal diseases. ClearSight studied the supracordial space, developed the SCS microinjector device to offer unprecedented access to the back of the eye, achieved the first approval of a therapy delivered to the supracordial space, and with our partners, developed therapeutics for supracordial delivery of being studied in multiple indications. At the forefront of our accomplishments is Zypyr, the first FDA-approved product for supracordial administration. This is the first and only therapy for macular edema associated with uveitis, and we are proud to have developed an innovative treatment option for patients suffering from this serious and potentially blinding disease. Since Zypyr approval in October, we've been working very closely with Bausch & Lomb to support their commercial medical affairs teams on Zypyr and the FCS microinjector. Bausch is focused on educating U.S. retina specialists on the platform and training them on the injection procedure as part of their extensive product launch program. And Zypure is just the beginning. We've shown in preclinical models that small molecule suspensions are durable when delivered into the supracordial space. In addition to triamcinol and acetinide, we've tested exitinib, a complement inhibitor, and a plasmacalapine inhibitor that have also shown durable drug levels in the RPE-chloride sclera at 1,000 times higher than the respective in vitro IC50, a standard used to describe the half-maximal inhibitory concentration. Our current lead development asset is a proprietary suspension of Exitinib, a small molecule suspension that we have formulated for supracordial delivery. We made steady progress in our CLSAx program last year, and our efforts are continuing in 2022. As a reminder, CLSA-X combines the potential benefits of a pan-VEGF inhibitor with the targeting, compartmentalization, and durability of supracordial delivery. Exitinib is a highly potent tyrosine kinase inhibitor and is shown to effectively inhibit corneal, retinal, and choroidal angiogenesis in numerous animal models. We believe that supracordial administration may further leverage these potential benefits of Exitinib by more directly targeting the affected retinal and choroidal tissues. In December, we reported safety and tolerability data from cohort two, as well as the combined data on cohorts one and two from our ongoing phase one to a clinical trial with CLSAX entitled OASIS. OASIS is a multicenter open label study to establish a safety and tolerability of escalating doses of CLSAX administered by supracordial injection in patients suffering from wet AMD. The primary endpoint for the trial is to assess safety and tolerability for three months following supracordial administration of CLSAX. To date, the primary endpoints have been met in cohorts one and two of OASIS. CLSAX was well-tolerated with no serious adverse events. There were no treatment emergent adverse events related to a Flibbercept, CLSAX, or the supracordial injection procedure. And there was no dispersion of drug into the vitreous. In addition, there were no adverse events related to intraocular pressure, inflammation, or vasculitis. In cohort two, five patients were enrolled at a dose of 0.1 milligrams. All were heavily treatment experienced with numerous injections of standard of care anti-VEGF treatments prior to entering the OASIS trial. At three months post-CLSAx dosing, one patient did not require any retreatment, and one other patient was retreated per protocol-defined retreatment criteria. Two patients were retreated at month two, and one patient was retreated at month one, Although based on independent reading center assessment, the protocol defined retreatment criteria were not met in these three patients. In the combined cohorts one and two, 11 patients were enrolled and all were heavily treatment experienced prior to entering the OASIS trial. The mean best corrected visual acuity score and the mean change in central subfield thickness of the macula were stable in the combined cohorts. We also saw promising signs of durability in this early part of the study. In particular, four patients, or 36% of the total, went at least three months post-COSAX dosing without retreatment. Six patients, or 55% of the total, went two months without retreatment, and one patient, or 9% of the total, was retreated at month one. As George mentioned, we've made progress with cohort three of the trial. As a reminder, we've established stringent criteria in our protocol for patient enrollment. Unlike similar trials ongoing in the wet AMD space assessing TKIs or tyrosine kinase inhibitors, we are only enrolling treatment-experienced patients with active disease based on reading center confirmation. We remain on track to report results from cohort 3 mid-year. We also plan to add cohort 4 to explore a broad range of doses to evaluate in a phase 2b trial. This decision was based on input from our scientific and clinical advisors, combined with the positive safety results with no dose-limiting toxicities in cohorts 1 and 2. Prior to moving forward with the higher dose in cohort 4, we will review the preliminary one-month safety data from cohort 3. Unless we see dose-limiting toxicities, we plan to initiate cohort 4 at a higher dose. We expect this data review and initiation of cohort 4 to occur in the second quarter of this year, and therefore cohort 3 and 4 will overlap. We expect to report data from Cohort 4 later this year. We've begun planning for our Phase 2B clinical trial, and we are targeting to opening enrollment for this trial by the end of the year. We've also been working on another small molecule program utilizing supracordial administration of an integrin inhibitor suspension, which we are referring to as CLS301. Integrins play a role in pathogenic processes such as inflammation, angiogenesis, and fibrosis. We believe that integrin inhibition may play a role in the treatment of certain diseases, including diabetic macular edema and macular degeneration. We believe that integrin inhibition could potentially serve as primary therapy, adjunctive therapy to anti-MHF agents, or secondary therapy in refractory cases of diabetic macular edema and macular degeneration. Supracortical delivery of an integrin inhibitor suspension could provide targeting and compartmentalization, and durability advantages over topical individual delivery, similar to what we've observed in other preclinical studies of small molecule suspensions. Therefore, we are assessing ocular tolerability, distribution, and pharmacokinetics of our integrated inhibitor suprachordal suspension. Our initial preclinical data has shown that the agent is well tolerated with favorable ocular distribution targeting the chorial retina, and we've seen encouraging initial signs of durability. We are optimizing the formulation and expect to start a second preclinical study soon. We expect to have results from the study in the second half of this year. Moving now to our partner programs. 2021 was a clinically impactful year for our supracoital delivery platform as the first ever data was presented in both gene therapy and ocular oncology. Both of our development partners, Regenexx Bio and Ora Biosciences, have reported promising results from several trials using our SCS microinjector to deliver their product candidates into the supracordial space. I'll start with Regenexx Bio. We're not only excited about the promising early results from the Regenexx Bio trials, but also the fact that supracordial injection may offer these patients the option for one-time gene therapy treatment with the simple in-office injections. Regenexx Bio is running two multi-center, open-label, randomized controlled dose escalation studies evaluating the efficacy, safety, and tolerability of supracordial delivery of RGX314. Importantly, patients in these trials do not receive prophylactic immune-depressive corticosteroid therapy before or after administration of RGX314. As reported in November for the ADA trial for the treatment of patients with wet AMD, Supercoital delivery of RGX314 continues to be well-tolerated, and positive interim efficacy data was reported at six months for cohorts 1, 2, and 3. Last week, Regenexx Bio updated the enrollment status for AV8. Enrollment is complete in cohort 4 and expected to be completed in cohort 5 in the first half of 2022. Cohort 3 and cohort 5 are evaluating RGX314 in patients who are neutralizing antibody positives. In addition, last month at the Endogenesis Conference, Regenexx Bio updated their positive interim data from the Phase II altitude trial in patients with diabetic retinopathy and reported the following from Cohort 1 at six months. Supercoital delivery of RGX314 was well-tolerated in 15 patients with no drug-related serious adverse events and no intraocular inflammation observed. And importantly, 47% of patients demonstrated a two- or more-step improvement from baseline on standardized diabetic retinopathy severity scale at six months, compared to 0% of the patients in the observational control. This is an increase from 33% of patients at the three-month time point. Enrollment is expected to be completed in the altitude trial in the first half of 2022 for cohorts two and three. Cohort three is evaluating RGX314 in patients who are neutralizing antibody positives. In addition, our partner, Ora Biosciences, presented the first set of data utilizing supracordial delivery to treat chordal melanoma, the most common primary ocular cancer in adults. Ora reported their interim phase two safety data for AU011 delivered via our SES microinjector. The data showed a favorable safety and tolerability profile with no treatment-related serious adverse events, dose-limiting toxicities, or grades three, four adverse events. We expect Ora to disclose more data from its current supracoital clinical trials later this year. The continued progress by Regenexx Bio and Ora Biosciences is very encouraging, and we look forward to their ongoing clinical trial results. 2021 was a year of extensive engagement with retina specialists with attendance at eight medical congresses featuring 30 presentations delivered on our supracoital injection platform and our clinical development programs. Last month, I delivered a presentation entitled supracordial space and supracordial delivery for clinicians to my physician colleagues at the Baskin Palmer Eye Institute's Antigenesis, Exudation, and Degeneration Conference. The presentation described the preclinical and clinical data demonstrating the methodology and benefits of supracordial delivery, including advantages over intervictual delivery, the durability potential of small molecule suspensions, and the possible suitability of supracordial delivery for gene therapy. We plan to continue this momentum in 2022 as we engage and educate the retina community. I look forward to keeping you updated on our clinical progress this year. I will now turn the call over to our CFO, Charlie Degnan, to review our financial results.

Charlie? Thank you, Tom. As George and Tom mentioned, Zypere's approval has had a broad impact on our company. Our financial results for the fourth quarter and full year were published this afternoon in our press release and are available on our website. Therefore, I will summarize our current financial status. Our progress over the course of last year significantly strengthened our balance sheet with non-dilutive funding. In 2021, we generated nearly $30 million in revenue, primarily from Zypure development and approval-related milestones. From Bausch & Lomb, we recorded a total of $20 million of revenues in 2021 related to milestones, including the recognition of the previously deferred revenue of $5 million from their upfront payment. On a cash basis, $5 million was received in 2021 and $10 million was received in quarter one 2022. From our division, we received a total of approximately $9 million in 2021 based on the approval of Zypure, their phase three trial initiation in China, and the expansion of their licensed territory. Therefore, our cash and cash equivalents as of December 31st, 2021 totaled approximately $30 million. As a reminder, this does not include the $10 million we received in first quarter of 2022 from Bausch & Lomb related to the Zypher milestone. This additional capital will be utilized to advance our clinical development pipeline led by CLSAX. In 2022, our cash burn will focus on funding our current operations planned spend on our broader research pipeline. And we expect to have sufficient resources to fund our operations into the second quarter of 2023. We remain very active in the investment community with participation in the healthcare, Cowan Healthcare Conference earlier this week, and we look forward to joining the upcoming Roth and Needham conferences as well. We greatly appreciate the interest and support from all of our stakeholders as we obtained our first FDA approval last year, and we look forward to advancing our suprachoroidal injection platform in 2022. I will now turn the call back over to George for his closing remarks.

Thank you, Charlie. ClearSight is revolutionizing the delivery of therapies to the back of the eye through the suprachoroidal space. Our superchoroidal injection platform is a novel, patented approach for ocular drug delivery that offers numerous advantages over other types of administration. And now, with our first drug approved for superchoroidal administration and well over 1,200 clinical superchoroidal injections to date, we have validated the clinical utility of this innovative technology and demonstrated our leadership in this increasingly important space. But our work does not stop there. In conjunction with our partners, there are currently six ongoing clinical trials targeting multiple indications. We continue to advance CLSA-X and expect to complete our OASIS trial this year. And we look forward to additional progress and data readouts from all of our development and commercialization partners throughout the year. Last week, we were also pleased to announce that Dr. Ben Yerxa has joined our Board of Directors. Ben was an initial founder of ClearSides, And as the current CEO of Foundation Fighting Blindness, he brings deep scientific ophthalmic research and clinical development expertise to our board. He has a unique perspective on patient needs, the global retina disease treatment landscape, and our technology. We look forward to leveraging his expertise as we advance ClearSight's internal pipeline and external strategic collaborations. In closing, I would like to thank all of our stakeholders, including the ClearSight team, our shareholders, and clinical investigators whose broad support helped us accomplish several major milestones last year. We are excited about the future and inspired to bring additional therapies to patients with sight-threatening diseases. I would now like to ask the operator to open the call up for questions.

Thank you, sir. We will now begin the question and answer session. As a reminder, to ask a question, you will need to press star 1 on your telephone. Again, that's star 1 on your telephone keypad. However, if your question has been answered and you wish to withdraw from the queue, please press the pound key. Stand by while we compile the Q&A roster. Your first question is from Annabelle Samini with CIFL. Your line is open.

Hi. Thanks for taking my question. I just want to... get a little bit more color around the decision to add the fourth cohort to CLS-AX and how at this point you're going to choose the upper limit. So in terms of the feedback you've gotten from your advisors, was it something that they saw in other exigent trials? Is it strictly driven by safety? And should we read anything into this decision about it being a question of efficacy or duration that you're seeing in the first cohort? So just A little color behind that decision would be great. Thank you. And then I'll follow up with a second after that.

Okay. Well, thanks, Annabelle, for the question. This is George. I'll let Tom give you the details on that, on the questions that you're asking around cohort four. We think this is an important move on behalf of the whole overall program. And I'll let Tom explain to you the rationale and where we are in that. Tom?

Sir, thanks for the question. You basically shouldn't read too much into this. You know, since we haven't seen any dose-limiting toxicities to date, we wanted to explore the broadest range of doses that would be most effective as we consider Phase 2b, the take-in to Phase 2b. Given the positive safety profile in cohorts one and two, and, you know, as you alluded to, the input from our scientific and clinical advisors, we simply decided to add a fourth cohort to continue the dose escalation. And we're going to do this while we continue to evaluate the cohort three dose. So there'll be an overlapping schedule, I think, as George mentioned. You know, throughout the process of initiating and conducting OASIS, we've highlighted that there is room to escalate dose levels further if we believe it's appropriate. We believe the FDA and IRB is supportive of a broader range of doses. based on our preclinical toxicity data. And as I alluded to, the decision is not based on any information from cohort three. We're still enrolling and dosing patients in cohort three.

Okay, got it. And then just bigger picture as far as the wet AMD landscape is concerned, I guess there's quite a bit of development in wet AMD, a number of programs in panVEGF. There's bispecific antibodies, gene therapy. How do you see this market bifurcating between who's appropriate for vent VEGF, pan VEGF treatment versus gene therapy? And do you have any sense as to how things might break down, assuming that these are successful?

Yeah, that's a great question as well. You know, there's been some major failures and commercial issues with wet AMD treatments lately. And, you know, if you'd asked me a few years ago, I wouldn't have predicted some of these. So, you know, it's hard to predict going forward, but I think that what we have is differentiated from many of the therapies out there because pan-VEGF inhibition has potential to show better efficacy. Exitinib is a small molecule, and we expect it to continue to be very safe with less potential for an immune response like you'd see with a biologic or a gene therapy. We also think that supracordial delivery will leverage some of these features even further because we can target the affected core retinal tissues and get very rapidly high levels that may potentiate efficacy. We can compartmentalize away from the front of the eye to potentially enhance safety. And we know from our preclinical studies that we have potential for many months of durability. So I think overall, going forward, our therapy is very differentiated, not only as a mechanism of action being PAN-VEGF, but also because of potential safety benefits being a small molecule that left potential for immune response, and, of course, supracordial delivery with the potential for the targeting compartmentalization and durability benefits. So, you know, ultimately it could be used, you know, as maintenance therapy in patients who have ongoing established therapy. It could be potentially used for patients who are somewhat refractory to current anti-VEGF-A-focused therapy, and it could even be used as primary monotherapy. And, you know, we're still obviously sorting that out with this dose escalation study.

Got it. And as far as gene therapy, is there a population that would be more appropriate for gene therapy versus just traditional VEGF therapy?

Well, you know, I think some of the inclusion and exclusion criteria from some of the gene therapy programs are somewhat telling because, you know, patients have to be treatment responsive to current therapy and potentially, you know, treatment dependent. So the ideal patient for gene therapy would be a patient that, as I mentioned, you know, is responsive to current therapy and is highly dependent. Superchoroidal CLSAX potentially could serve that role with its durability, but there's potential for a broader role because of the pan-VEG inhibition. It may, you know, as I mentioned, have better efficacy. It may be used for treating refractory patients. And the durability has potential to be quite attractive. We think that having dosing somewhere between the three- and six-month intervals is consistent with, you know, the current practice model and retina specialist practice. And we even think that our therapy could potentially be, you know, adjuncted to patients who have undergone gene therapy and have breakthroughs, for example.

Got it. Great. Thank you.

Your next question is from Andreas Argyridis with Wedbush. Your line is open.

Good afternoon, and thanks for taking our questions. I have a couple here. So to start, with the Phase 2B in planning, does that suggest you're getting close to finding a go-ahead dose, or is there a possibility of adding a fifth cohort if safety is positive and you can potentially maximize efficacy? And then what details of the design of the Phase 2B can you share at this moment? And then lastly, do you also plan to present data from the extension study at the same time you present cohort three results?

Thanks. Tom, I think you can take all of those questions right up your alley. Okay. Sorry, Tom. If you can't, I will, but I think you can do that.

Well, I think you asked about the dosing. So, you know, We have, as Ed mentioned, we want to have the broadest range of possible doses. And if you recall, we started at 0.01. So we've actually escalated, you know, quite meaningfully already and even higher in cohort four. And we expect to see, you know, some biologic response. We expect that cohort three or cohort four dosing will be one or the other would be what we would potentially use in a Phase 2B study. So we don't anticipate adding a fifth cohort at this point. I think your next question was a little bit about the Phase 2B trial design. And we're still in the planning phases for that. It would be premature to comment on it. And I think your final question was on extension study results, and we would plan to release the extension study results from cohort two when we announce cohort three data in mid-2022. Okay, great.

Thanks, Tom.

Your next question is from Yichen with HC Wainwright. Your line is open.

Hey, this is Chait on behalf of Yi. We just have three quick questions. Based on your initial conversations with Bosch and Long, any feedback from physicians, any immediate feedback from physicians during their educational programs and, you know, launch plans? And the second question is, in your OASIS study, what can we expect from the cohort three data presentation later this year? compared to the data that you've shown so far? And I'm sorry if I missed this, but do we know the potential dose that you would want to explore in cohort four? And lastly, I know you spoke about potential licensing agreements. Are you in contact or are you in discussions with potential companies already? Thank you so much.

Tom, do you want to comment on the, I think the first question had to do with the Boush reaction and more comment specifically on what you've done with Boush in terms of their training and what we know about how they intend to roll out this training and the reaction to the physicians in the training program in particular. Sure.

Absolutely. Great question. So we've been very involved with Bausch & Lomb, assisting with the development of their training program. They've developed a very nice, robust program. Their goal is to train all of the retina specialists and uveitis specialists in the United States. They've adopted a train-the-trainer program, so it'll be a peer-to-peer program. They'll be retina specialists training other retina specialists. So the ClearSight team was involved with some of these initial sessions in which some of the key trainers, retina specialist trainers were trained. And that went extraordinarily well. They're very excited and positive about the training. They feel it's very effective. And then they in turn will then train retina specialists regionally. And we've gotten very positive feedback from the program. Physicians feel that well-trained and feel quite capable of being able to administer supracordial therapies in the office. I think your second question was the formatting or the sort of results, you know, we could expect from cohort three. So I think the format of those results is similar to what you know, we've presented previously. You know, just a reminder, this single-dose escalating study is really about safety, and that's what the focus, you know, has to be and will be. But we'll be presenting, you know, similar data sets as to what we've presented previously. I think you asked about... Go ahead.

I'm sorry. No, no, I was going to say, Tom, I think the other one was, have we decided on a dose for cohort four?

Right. And we have not finalized that yet. It'll be higher than cohort three, but we have not finalized that yet.

Thank you so much for that. And the last one on potential licensing agreements, have you already started discussions and

Well, I would answer that one. And I'd say, listen, we have interest from a number of companies contact us and talk about potential licensing. So it's a regular feature of our ongoing business. I've said before that partnering going forward is not immediately critical strategically for us, but As we also said in our remarks, for gene therapy, this is something that if we're going to go any farther in gene therapy than we've done with Regenexx Bio or our biosciences, it would have to be with a partner. That is not something we're going to focus on as part of our internal pipeline. So all I can tell you is we do have discussions from time to time, and we're exploring possible relationships But it's just a matter of ongoing business like any company in our position would do. I can't make any more comments than that except that we do talk to people and we are talking to multiple people about potential collaborations.

Great. Thank you so much.

Sure.

Your next question is from Zegbi Jalal with Roth Capital Partners. Your line is open.

Thank you for taking my question and congrats on the progress. I think a lot of the questions have been asked, so I'm just going to ask a couple of cheeky ones here. And I think the first one for me is just trying to get a good understanding of the exposure that's being achieved with the dose being used in cohort three, meaning are you, you know, saturating your receptors with cohort three and could you really get much more by going higher?

Well, Tom, you want to attempt to answer Zegba's question?

Sure. No, Zegba, that's a great question. And there's two aspects of the dose escalation. Well, three. Obviously, safety is number one, but efficacy, as you alluded to. But the other aspect that we need to think about is the supracordial space acts like a natural drug reservoir. And it is possible, as we escalate, you know, we may achieve, we may saturate inhibition of the tyrosine kinase receptors and may not be able to inhibit more, but as we add more drug to the space, we're basically filling the reservoir further, and that has potential to provide us more durability. So we have to look at safety, obviously, efficacy, or in this case, biologic effect in the small single-dose escalating study, but also as we escalate the dose, there's potential for more and more durability. One of the fascinating features of Exitinib is that it's a very highly potent tyrosine kinase inhibitor. It's more potent than some of the other tyrosine kinase inhibitors that have been assessed and are being assessed currently. The interesting part of that is that that also can facilitate durability because you know, as we continue to dose escalate and ultimately over time as the drug levels start to decay on a, you know, microgram per microgram basis, we still have efficacy because of the high potency. So to answer your question, even if we do potentially saturate in terms of the potential for efficacy, we also have potential to enhance durability with a greater dose.

Thanks, Tom. And as a follow-up here for cohort three, is the point to show some efficacy or is it similar to cohort two where you're just wanting to show some kind of clean safety profile?

Well, I think, you know, obviously we have to focus on safety. We want to show a clean safety profile. It would also be helpful to see some biologic sign. And you may recall that we had a web conference at the end of cohort two and had Peter Kaiser, who's an extraordinarily well-respected KOL retina specialist, on with us. And he observed that even between cohorts one and two, there was potentially already a bit of a dose response because he felt that the CSTs, you know, we provide subject-level data, and he felt that the CSTs appeared to be more stable in cohort two than in cohort one. And he thought that may suggest the beginnings of a dose response. So as we escalate, you know, we think we're in that dose response curve, and we may start to see more and more signs like that, which would be, you know, helpful as we start to think about doses for Phase IIb.

Thanks, Tom. And related to that, as it relates to efficacy, is the goal really to show superiority over at LEA or to show maintenance of efficacy being achieved by at LEA but with longer durability? You know, something like you said, Dr. Kaiser mentioned, just maybe even or just slightly better maintenance in CSD or something like that, but with greater durability.

You know, with such a small study and even smaller numbers per cohort, it's hard to really make any inferences to compare this to ILEA. So I think really we want to focus on safety. We'd like to see the beginnings of some biologic effect, which would help guide us in terms of, you know, dose selection. But I think But really, you know, the comparison to ILEA, although, you know, it's intriguing to speculate, we really can't make any inferences with just such small sample sizes and really without a, you know, a control group.

I guess what I'm trying to get at is trying to understand what you need to see to kind of feel confident that you have a program with a differentiated profile.

I think we're going to have to, you know, study that further in a Phase IIb study. But bear in mind, you know, as I mentioned in my prepared remarks, we are selecting patients in a way who are refractory. So these are patients who are generally highly treatment experienced. And as you recall, they have to have had, you know, two prior doses within the four months to study entry. And then at screening, they have to have reading center-confirmed activity. So in a way, we're selecting patients who are almost by definition treatment refractory. And, you know, if we see a biologic effect, I think that, you know, could potentially be very exciting because these are the These patients represent the 30% to 40% of patients who respond suboptimally to current therapy. And that's what we're essentially selecting. There are other trials currently that don't require reading-centered confirmation of activity, but our study does. And this will help inform us a bit about Phase IIb. So to answer your question, I think we're confident that this approach you know, has potential for nice safety given the fact that this is a well-characterized molecule. It's a small molecule. It's not a biological potential for immune response. And as you know, immune response has been a big deal in recent AMD trials. And then the PanVEGF, in addition, you know, really may have a potential, particularly in these patients who are treatment refractory. And then we think the durability potential is there. As you know, we've published data recently showing that we could achieve levels, several log orders above the IC50 in a rapid model for up to six months. So we think the safety, the efficacy, and the durability of this approach are quite attractive, and this could be a really very helpful therapy for retina specialists who deal with patients with wet AMD.

So I think that's what I was trying to get at, you know, in terms of how refractive these patients are and the magnitude of efficacy or magnitude of response that investors can kind of hope to see because it may not be as high because of the patient population you're working with. And then my last question here is just about the Phase IIb. I know you haven't really made any plans yet. But, you know, as we're talking about this, you know, heavily appreciated patient population, and then thinking about that relative to a naive patient population, you know, regarding your decision as to whether or not you should go into a pre-treat or naive setting, what are some things that you think, you know, might be prioritized? Maybe there's another question for George. Is it going to be the size of the market opportunity, you know, the indication or the patient population that can lead to a faster path to market? You know, what are some things that you think you'll be prioritizing to kind of help make that decision?

Well, I think, Zegba, you just listed all the ones that we have to consider. We obviously have to consider, we have to look at competition. We have to look at size of market. We have to look at, is there a better path forward? You know, we go through, you know, do you, you know, going for a moonshot? Do you try to get something that's approved? There's a lot of things that are going to go into the decision around phase 2B, which will lead to to hopefully setting up Phase III clinical trials. As you said, as we've said, we're in the middle of that planning now. We have not finalized a Phase IIb plan yet, but we have lots of input. We're considering a lot of different factors. in deciding how we want to approach phase to be with ultimate approval in mind, you know, so You have to be very sensitive and take into account all of the things that you've just mentioned. Which one's more important? That'll be which one is the deciding factor. That's going to be, that's still, we're still having that conversation and waiting for some of the data that comes out of the OASIS trial to, you know, make a final determination of that. Tom, if you have anything to add to that. Thanks.

Yes, perfect. And congrats on all the progress. Nice to have all this optionality regarding licensing the platform.

Well, thank you, Zegda. We always appreciate your support.

Your next question is from Rohit Basin with Needham. Your line is open.

Hi, this is Rohit on for search. Thanks for taking my question. In regards to the Arctic vision trials, can you provide some color about the studies and if the trials are doing anything different? And then for the integrin inhibitor program, what indications are you looking to market with this mechanism of action? Thanks.

Well, I'll let Tom comment. He's probably closer to what Arctic's doing than I am. But regarding integrin inhibitor, You know, that's still very early stage, and we have a number of ways we could go in terms of indications. Currently, we're thinking of diabetic macular edema, but that's not necessarily carbon style. We think that integrin, as we carry that forward, could have some other potential opportunities to be pursued. So that's still an opportunity. That's not a well-defined or a decision that's been, you know, carved in stone at this point in time. But, Tom, do you want to comment on Arctic Vision on their two trials that they've started in China?

Sure. So they're doing a uveitic macular edema trial in China, and it's essentially very similar to our Peachtree registration trial. And that's underway. I believe they've announced dosing of their first patients. They've also announced dosing of a patient in their diabetic macular edema trial. And this is a phase one study, so it's still early for them. I believe they're calling it a pharmacokinetic study. But as you know, corticosteroids have been approved for the treatment of diabetic macular edema. Their use is often limited because of the potential to cause cataract progression and ocular hypertension, we think by compartmentalizing the corticosteroid in the supracordial space and away from the front of the eye, we can minimize the risk of ocular hypertension and cataract development. So there's potential for Zypyr to have a role in diabetic macular edema in addition to uveotic macular edema. We're very excited about the trials. have a great relationship with Arctic Vision. Our clinical teams and biostatistician, you know, have open dialogue with them. It's an excellent relationship. And, you know, we wish them lots of success.

And I'll just echo what Tom said about Arctic Vision. They've been a very engaged and a terrific partner. And we're very happy to to be working with them. They're very aggressive, but appropriately so. And I think they see the potential of Zyper, they call Arcadis, in their territories. And so I think we have a terrific partner in the overall Asia, Australia, and New Zealand region. They've just been really wonderful to work with. Very happy about that.

Great. Thank you.

And your last question is from John Wallabin with JMP Securities. Your line is open.

Hey, thanks for taking the question. Just two for me. You talked about the Phase 2B and what A and B, but wondering what expansion for CLSAX and the other indications might look like. And then also with Zype here, wondering if we should expect any meaningful royalties this year, if I remember right, the first $450 million expansion is royalty-free, just hoping to confirm that for expectations for this year. Thanks.

Thanks, John. Charlie, you want to take the royalty question first?

Hey, John, yeah. The first $45 million you write is royalty-free for about, so I can't talk about their guidance, but they definitely, you know, we'll start earning royalties once we get a dollar past $45 million in their sales.

And then, Tom, a John asked about other potential indications for a phase 2B trial for CLSAX. I believe that was it, John. And currently our thinking in OASIS, obviously we're doing it in wet AMD patients.

Yeah, absolutely. So there's potential in diabetic macrodema, diabetic retinopathy. And, you know, retinal vein occlusion-related macular edema, those are sort of the other, you know, classic indications for this sort of therapy. So, you know, we discussed those and, you know, haven't made any firm decisions at this point.

Those are all basically VENGF-mediated disorders. Correct, Tom?

Yes, absolutely. They're all VEGF-mediated disorders. And, you know, we think with the durability potential of this approach and also the targeting, particularly the peripheral retina, we think there's real potential here for diabetic retinopathy as well. You know, we can get targeted at high levels to the retinal periphery where diabetic retinopathy tends to start. So there's a lot of potential with this approach. And again, we haven't made any, you know, obviously any firm decisions yet.

Okay. We might have lost John.

That was the last question.

Yeah, George, why don't you give your closing remarks?

Okay. All right. Well, all right. Since that was the last question, 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.

Thank you. Thank you. As a reminder to all participants, you may now disconnect. Have a good day. Stay safe and well.