Clearside Biomedical, Inc.

good afternoon everyone 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 so Good day and thank you for standing by. Welcome to the Clearside Biomedical First Quarter 2022 Financial Results and Corporate Update Conference Call. This time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. And now, it is my pleasure to hand the conference over to your first speaker today, Johnny Cobin, Clearside 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 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 31st, 2021, 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 Lazewski, 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. We continue to make steady progress in 2022. In March, we were pleased that Bausch & Lomb announced their U.S. launch of Xypher in the United States as the first therapy approved for macular edema associated with uveitis, a potentially blinding condition. Ahead of the official launch, Bausch worked closely with hundreds of retinal specialists throughout the country to train them on the use of our SCS microinjector, and to build interest in using Zypure to treat their uveitic macular edema patients. Bausch is very active at medical meetings with both a commercial and medical presence at the events, including five presentations at ARVO last week. Bausch continues to be a thoughtful and progressive partner, and we are confident in the strength and capabilities of their commercial team to advance this suprachoroidal therapy to patients in need. Our China-based development and commercialization partner, Arctic Vision, also continues to progress in its development of Zypyr, which they refer to as ARVN001 and the brand name Arcadis. They are currently enrolling two trials in China, a confirmatory phase three trial in macular edema associated with uveitis and a phase one clinical trial for the treatment of diabetic macular edema. We look forward to their continued progress in these two programs. The approval of Zypher in the U.S. validates delivery into the superchoroidal space by our proprietary SCS microinjector and supports our strategy to focus on small molecule suspensions. Our lead internal superchoroidal pipeline product candidate, CLSAX, combines our proprietary small molecule suspension of the tyrosine kinase inhibitor, Exidinib, with delivery by our STS microinjector. As Tom will discuss in more detail, we continue to make progress on our Phase I-IIa OASIS clinical trial targeting patients with wet A&D. OASIS is a single-dose escalating study to explore the safety and tolerability from 30 micrograms to 1 milligram, which is an over 30-fold range of doses. Our safety monitoring committee reviewed one-month initial safety data from Cohort 3, and we are pleased to report that there were no dose-limiting toxicities observed at the 0.5 milligram dose. As a result, we are now enrolling patients in Cohort 4 at a higher dose of 1 milligram, while simultaneously continuing our Cohort 3 enrollment. We are targeting up to 25 patients in total from all four OASIS cohorts. This expanded enrollment of Cohort 3 and the addition of Cohort 4 will allow us to collect more CLSAx patient data in order to help guide our selection of the most appropriate dosing protocol for our planned Phase 2b clinical trial. We now expect to report safety and tolerability data from both Cohorts 3 and 4 in the fourth quarter of this year. This will allow us to report a more comprehensive set of patient data as we will be able to include the complete analysis from all four dosing cohorts of the OASIS trial, in addition to the detailed individual patient data from the final two cohorts. I will now turn the call over to Dr. Tom Chula, our Chief Medical Officer and Chief Development Officer, to discuss our research and development update. Tom will provide more details on the OASIS study and address the progress made by our partners. Tom?

Thank you, George, and good afternoon, everyone. For my segment of today's call, I'm going to focus primarily on our progress at CLSAx and on our OASIS clinical trial and highlight the programs by our development partners. As a reminder, CLSAx is our proprietary suspension of Exitinib for supracordial injection and is currently being studied for the treatment of patients with wet AMD. Our approach combines two key differentiators. First, Exitinib is a tyrosine kinase inhibitor with broad VEGF blockade that we believe may have efficacy advantages over existing VEGFA-focused therapies due to its high potency and pan-VEGF inhibition. Second, delivery via our office-based SCS microinjector expands the supracordial space circumferentially and posteriorly to deliver drugs directly to the macula. This occurs since a natural pressure gradient drives injectate towards the lower pressured posterior supracordial space. In OASIS, the primary endpoints were met in cohorts one and two. CLSAX was well-tolerated with no serious adverse events. There were no treatment emergent adverse events related to a Flibercept, 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. As George mentioned, we announced today that our safety monitoring committee reviewed one month initial safety data from cohort three. The OASIS trial continues to demonstrate positive safety results with no dose-limiting toxicities observed at the 0.5 milligram dose. As a result, we are now enrolling patients in cohort four at the higher dose of one milligram, which is double the cohort three dose. Simultaneously, we are continuing our cohort three enrollment And we are targeting up to 25 patients in total from all four OASIS cohorts. This expanded enrollment of cohort three and the addition of cohort four will allow us to collect more CLSAx patient data in order to help guide our selection of the most appropriate dosing protocol for our planned phase 2B clinical trial. I'd like to note that we are encouraged by the growing interest in this trial. And as a result, we have recently doubled the number of clinical trials to 10. We now expect to report safety and tolerability data from both cohorts three and four in the fourth quarter of this year. This will allow us to report a more comprehensive set of patient data, as we'll be able to include the complete analysis from all four dosing cohorts of the OASIS trial, in addition to the detailed individual patient data from the final two cohorts. To wrap up the discussion on OASIS, I want to emphasize that we've established very stringent criteria in our protocol for patient enrollment that differs from many of our peers. Unlike similar trials ongoing in the wet AMV space, particularly those assessing TKIs, we are only enrolling highly treatment-experienced patients with active disease, verified by the independent reading center. Although these persistently active cases represent more difficult-to-treat patients, we believe that by including only patients with persistent active disease Despite prior anti-VEGF therapy, we can better assess biologic effect of CLSAX. Importantly, this will facilitate dosing selection and help de-risk our later stage clinical trials for CLSAX. As OASIS progresses, we are simultaneously in the initial planning stages for our Phase 2B clinical trial. The OASIS data compilation will help finalize this trial design and protocol so that we can then proceed to this next clinical development stage. Next, I'd like to provide a partner update. At Arvo, Regenexx Bio reported data from both of their phase two gene therapy trials using our SCS microinjector to deliver their product candidate, RGX314, into the subretinal, into the supracordial space. Both the AVIH study targeting wet AMD and the ALTITUDE study targeting diabetic retinopathy have generated promising results to date. Last week, Regenexx Bio also announced timing and status updates on their trials. For AV8, enrollment is expected to be complete in the first half of 2022. Cohorts 4 and 5 are evaluating RGX314 at a third dose level of 1 times 10 to the 12th genome copies per eye. Cohort 5 is evaluating RGX314 in patients who are neutralizing antibody positives. For altitude, enrollment is now complete. Cohorts 2 and 3 are evaluating RGX314 at an increased dose level of 5 times 10 to the 11th genome copies per eye, with cohort 3 evaluating RGX314 in patients who are neutralizing antibody positive. As a reminder, last month, Regenexx Bio presented positive interim data from the altitude trial. Of the patients' dose with RGX314 in cohort 1, 47% demonstrated a two-step or greater improvement from baseline on the ETDRS diabetic retinopathy severity scale at six months, compared to 0% in the observational control group. The continued progress by Regenexx Bio is very encouraging, and we look forward to their ongoing clinical trial results. Over the past two months, we've been very active at medical meetings, including presentations at Sonoma Eye, the Vic Buckel Society, the WET-AMD and DME Drug Development Summit, ASCRS, and, of course, ARVO last week. At ARVO, Dr. Viral Kansara presented an overview of our preclinical data, highlighting the targeting, compartmentalization, and durability of supracordial ejected small molecule suspensions, demonstrating the versatility of our technology platform. As George mentioned, Baosh and Long is also very active at these meetings with several data presentations on Zypyr. At ARVO, Bausch focused presentations on Zypure's approved indication of macular edema associated with uveitis, and at the upcoming Retina World Congress, their presentations will focus on specifics around the Zypure Phase III PH3 trial. Bausch also continues to reach out broadly to train the U.S. retina and uveitis specialists on the use of our technology platform. Tomorrow, I look forward to joining several of my retina physician colleagues to speak on a panel entitled New Pathways in Retinal Diseases at the Retinal World Congress. With that, I'll now turn the call over to our CFO, Charlie Duggan, to review our financial results.

Thank you, Tom. Our financial results for the first quarter were published this afternoon in our press release and are available on our website. Therefore, I will summarize our current financial status. We reported in March Zypher's approval provided significant non-diluted funding for ClearSight. We received a total of $20 million of revenues from Bausch & Lomb related to milestone payments with the final 10 million of these payments received in the first quarter of 2022. Going forward, we will primarily receive payments related to sales-based milestones and royalties. As a reminder, for our agreement with Bausch, we do not receive any revenue for the first $45 million in product sales. Our cash and cash equivalents as of March 31st, 2022 for approximately $34 million. This capital will be utilized to advance our clinical development pipeline anchored by CLS-AX. With our current operations and planned spend on our broader R&D pipeline, we expect to have sufficient resources to fund our operations for at least the next 12 months. We continue to be involved within the investment community, and we look forward to participating in the upcoming J&P Healthcare Conference next month and keeping abreast of our progress. I will now turn the call back over to George for his closing remarks.

Thank you, Charlie. With the FDA approval of Zypyr last year and the use of our SCS injection technology platform in six ongoing suprachoroidal clinical trials, we continue to solidify our position as the leader in delivering drugs into the suprachoroidal space. Our technology platform, which combines the SCS microinjector with a variety of therapeutic modalities, is truly an innovative approach in treating retinal diseases by allowing unparalleled access to the back of the eye through the supracoroidal space. We believe 2022 will be another year of advancement for ClearSide. We expect the final data readout of our OASIS clinical trial in Q4 of this year. This will position us to gear up the Phase 2b trial by the end of this year and enable us to begin enrolling patients soon thereafter. We're excited to keep moving forward as we believe CLSA-X may be a promising treatment option for patients suffering from wet A&D. We also look forward to the additional progress and data readouts from all our clinical development and commercialization partners throughout the remainder of the year. I would now like to ask the operator to open the call for questions.

Thank you, sir. We will now begin the question and answer session. If you would like to ask a question, please press star. one on your telephone keypad. Again, please press star followed by the number one on your telephone keypad. If you wish to withdraw from the key, just press the pound key. Please stand by while we compile the Q&A roster. Your first question is from Zegbi Jallah with Froth Capital Partners. Please go ahead.

Thank you for taking my question and congrats on the progress. I think the first question for me here It's just about the expectations for efficacy in cohort four. I know you mentioned that you were essentially doubling the dose from cohort three to cohort four, and so I was just wondering if we should expect some sort of efficacy from that cohort based on your preclinical studies.

Tom, I think that's best directed to you.

Sure. Thanks for the question, Sigba. Well, as you know, our first priority is in this phase 1 to 8 study remains safe. As you know, Exitinib is a well-established small molecule, and we don't expect inflammation based on our preclinical studies, as well as the fact that it's not a biologic. And so far, as we reported in cohorts 1 and 2, there's been a very robust safety profile. And this allows us to continue to escalate, as we've announced, up to a milligram in cohort 4. As we've discussed in prior calls, Exitinib has already been shown by independent labs to successfully inhibit corneal, retinal, and colloidal angiogenesis in a variety of animal models, all published from a variety of labs. And so basically leveraging its highly potent pan-VEGF effect with our microinjector to achieve very high immediate targeted level in the core retinal tissues while minimizing exposure to the front of the eye. So we think this has real potential to show efficacy. And, you know, as we escalate, we expect to start to see some biologic signals. I also mentioned in my prepared remarks that our trials in rolling patients who are treatment experienced yet show some activity based on independent reading center confirmation. So in essence, we're enrolling those difficult to treat refractory cases. And this sets a little bit of a higher bar, but also allows us to assess for these biologic signals and make a better informed choice of dose in our upcoming phase 2B trial.

Thanks, Tom. And as a follow-up to that, I was just wondering, you know, just given the evolving competitive landscape, have you guys decided to some degree if you'll be pursuing these pre-treated patients or treatment-naive patients? And then the last bit here is just if you can comment on, you know, what are some of the additional factors driving this growing interest, you know, in patients? in the program. I know you guys are doing a lot of things, I'm sure you're presenting at conferences, you know, vouchers training, you know, folks across the country. So I suppose you can just comment on the plethora of activities that you think are kind of driving, you know, this growing interest in the CLSCX program. Thanks again.

Sure. So, you know, with respect to your first question, whether this is primary identity primarily going to be used in treatment-naive patients or in treatment-experienced patients. We're still working that out. It has potential to be used in both populations, but we're still working out the best approach. As we've discussed previously, Exitinib as a TKI is very broad or pan-VEGF inhibition. So it has potential to be more efficacious than current therapies and may actually be have a role in treating these somewhat refractory patients. However, it also could potentially be used as primary monotherapy in the future. And again, we're working that out. And then with respect to your second question, you know, why the growing interest? And I think, you know, the answer is several fold. I think our approval of Zypyr helps to support our platform. There has been lots of interest in the retina community to be trained with the microinjector. Bausch is planning to train all U.S. retina and uveitis specialists, and I think the adoption of training has gone well so far. Also, Regenexx Bio has reported some very encouraging results in both of their Phase II studies, which has attracted further interest, especially because it's a gene therapy, which always attracts interest. Aura has gone public, and there's a lot of interest in their Phase II trial using our SCS microinjector to treat coital melanoma, which is the most common interocular malignancy in adults. And that historically has had not very good treatment with radiation therapy. So I think All of those factors have generated interest. And then finally, as you mentioned, we've been very active at a variety of retina congresses and also in publications, which has furthered the interest.

Thanks again, Tom.

Your next question is from John Wallaban with J&P Securities. Please go ahead.

Hey, thanks for taking the question. Just wondering about, you know, what data we're going to get in the fourth quarter. I'm guessing it might be six-month follow-up from cohort three and three months from cohort four. I previously had planned on starting that phase two B by year end, so I was hoping to get an update on, you know, what data and follow-up we'll get in the fourth quarter, and then, you know, how much time we'll need to make a decision, and is it going to be primarily based on that three-month time point?

Yeah, so great question. As we discussed in our prepared remarks, we're enrolling cohorts three and four simultaneously. So that data will be presented at the same time, along with the totality of the data, including cohorts one and two. I believe at that time, we will be able to present the extension study from cohort two But I don't think we'll have data from the extension study in cohorts three and four. In terms of informing our phase two B study, we will have the three-month data from each of the cohorts, which will help inform, and we'll have some of the extension data. And so we'll use that to help inform the trial design. for our Phase IIb study.

Got it. And, Tom, you talked a little bit about the duration in the suspension staying in the suprachordal space in your prepared remarks. Wondering if with the higher dosing, does that change the volume administered or the suspension in any way that gives longer duration as well? Just wondering how to think about, you know, how higher dosing may affect duration of effect here.

Yeah, that's a great question. So we're injecting the same volume but a higher concentration. And basically you can think of the supracordal space as nature's drug depot, and we're essentially loading it up with more drug. And so it should provide more durability. It also has potential to provide more efficacy. Although this is not an efficacy study, we have a higher likelihood of seeing a biologic effect. And then with respect to safety, and of course, this is a safety study, so that's the primary goal here. As I mentioned, we've had a very robust safety profile so far. Our preclinical studies support this dose. And again, since this is a small molecule and not a biologic, and a small molecule that's been well characterized, we don't anticipate major safety issues. But of course, we have to do the trial to prove that.

Very helpful. Thanks for taking the questions.

Your next question is from Yi Chen with HC Wainwright. Please go ahead.

Thank you for taking my questions. At this point, would you be able to comment on the initial commercial feedback for Zypere, and when do you expect the initial sales to exceed the 45 million marks so that the royalties can kick in.

Thank you. Thanks for the question. We've been very happy with what Bosch has been doing so far. They focused initially on training, which we agree with. They trained hundreds of retinal physicians so far and will continue to train more. They've been doing a slow rollout on this. So we think that their approach, it makes perfect sense. They've got this multi-step approach to training and rolling it out, getting people used to the product, getting people used to using the product. And so we're very happy with what they've done so far and what we do know of their plans. What we don't know is we have no insight into their forecasts. So it's very hard to answer the question that you asked about the $45 million in cumulative sales. Charlie, do you have anything more to add to that?

Yeah, I agree. You know, we can't get ahead of Bausch and, you know, we'll let them provide guidance for the product.

Okay. When you start to receive the raw taste, do you expect the raw taste to be based on the current quarter of life of sales, or there will be a quarter or maybe two-quarter lag?

So we're still working through the accounting of that, but we'll receive weather reports 60 days after the end of the quarter, so the question is do we put an estimate in or use a quarter in arrears, but we're still working through that accounting.

Okay, thank you.

Your next question is from Serge Bellinger with Needham. Please go ahead.

Hi, good afternoon. I guess a couple questions for Tom first. Based on the safety assessment of cohort three, there was no dose-limiting toxicity. So just curious how the one milligram dose was chosen and whether there are any restrictions, either from a volume perspective or formulation, to go higher than that. And then secondly, there's been a change here in how you intend to report the data. You want to report both cohorts at the same time in the fourth quarter. Just curious what that was driven by, if it was slower enrollment or just to have a more substantial data readout at one time. Thanks.

Thanks for the question, Serge. So, as I mentioned, the Safety Monitoring Committee only reviewed the one-month safety data from Cohort 3. and they determined that there was no dose-limiting activity, and they agreed that we could move forward to the higher dose of one milligram. We chose the one milligram dose because our preclinical studies support that dose with respect to safety, and it seemed that, you know, doubling was an appropriate amount of increase. Since they assessed only the one-month safety data, we decided to continue to advance and progress the program as fast as possible, so we opened up recruitment to cohort four. Since there's only a small gap between the end of cohort three and cohort four, we thought it was prudent to report all the data at once. And I think, was there a question?

Yeah, just had one more. I guess with the launches right here, you know, the suprachordal injection platform goes a little more mainstream with the launch of the product. Just curious if you If you think that could be the genesis of the additional collaborations going forward.

Well, go ahead, Tom. You can weigh in if you want.

Well, I think, you know, clearly that helps support the platform. I think that patients are eager to be trained, to try that. I have gotten a lot of unsolicited emails from physicians who have tried tried Zypera in their patients and are excited about the results. So certainly it does help support the platform. And, you know, I think that would naturally tend to inspire collaboration. And I'll just turn this back over to George.

Yeah, the only thing I would add to what Tom was saying is that it has increased interest by other companies in Zypera. considering collaborations with us. I've mentioned on other calls that while partnering is not the lead concept in our strategy, we do have chats with a number of companies that are interested in potentially collaborating, and that really focuses on the approach of gene therapy, delivering gene therapy into the supracoroidal space. in areas not otherwise covered by the Regenexx bio agreement. So we do have those conversations. It has sparked additional interest now that they've seen the injector system as part of Zypyr is approved and that physicians, a wide variety of physicians are being trained. That has clearly made other companies interested in talking about potential partnerships with us. Thank you.

Your next question is from Annabelle Samini with Stifel. Please go ahead.

Hi, this is Stacy calling in for Annabelle. Congrats on all the OASIS development, and thanks for taking our question. So on CLS-AX, given that you have the opportunity to push the dose higher in the fourth cohort, Can you tell us whether you'll be seeking longer duration than three months? I realize that that's how often people go in to see their retinal specialist, but the development market is pushing for six months or longer now. And also, now that you're working with a pan-VEGF mechanism, is there any aspiration to have more efficacy than just a single anti-VEGF target? Could there possibly be anticipation for superiority? Thank you.

Great question. As we continue to escalate the dose, we would naturally expect additional durability. I think that there is interest in much longer duration, six months and longer. I think for the vast majority of what's approved and what's in development, that's a bit aspirational. I think the reality is that most of these injectable therapies last on the order of three months. And so, you know, it's possible that we may see more than that, and certainly we're going to assess for that in our extension study. So that's, you know, our thoughts around durability. And with respect to efficacy, you know, as you touched upon, with the pan-VEGF effect, we may actually have additional efficacy over a focused VEGF-A inhibitory strategy. And certainly, with the supracordial injection platform, we can achieve very high levels in the targeted core retinal tissues very rapidly. And that may further leverage the pan-VEGF effect to enhance efficacy. But again, I don't want to get ahead of myself. The OASIS study is really about safety. These patients, as I mentioned, are all patients who have been treated in the past and they have persistent active disease based on independent reading centers. So these are difficult to treat refractory cases. And I just wanna be cautious about putting guidance out there that we're gonna see better efficacy in this very small first in man single dose escalating trial. But certainly we're gonna assess for all this and look for those signals.

Amazing. Thank you so much.

Your last question is from Julian Harrison with BTIG. Please go ahead.

Hi, congrats on all the recent progress, and thank you for taking my questions. Most of mine have already been asked, and you've made some comments related to this topic already, but just wondering if you could talk more about how important you think brand recognition and general familiarity with your microinjector device is among physicians across all your opportunities from Zypure and beyond. Thanks.

Tom, do you want to comment on that first?

Sure, I can start. You know, I think when it comes to supercritical delivery, you know, we're obviously the first in class, best in class. We've been very, very active in all of the retina congresses for the last four years. I think last year we had over 35 presentations at retina congresses, very active in publications and speaking. And I think we are building up a very good brand recognition, and certainly the approval of Zypure and training of all the U.S. retina and uveitis specialists enhances that. As I mentioned earlier, there's always a lot of interest in gene therapy, so I think Regenexx BIOS 2 Phase 2 studies have attracted a lot of interest. as have ORAS studies and colloidal melanoma. So I think that the brand recognition continues to develop. As George mentioned, we receive an increasing number of inbound calls and inquiries about, you know, potentially working with other companies. And I guess the last thing I want to say before turning it over to George is right now, if you include Arctic Vision, which is assessing CLSTA or Zypere in China, we currently have in clinical trials a corticosteroid being assessed with our SCS microinjector, a tyrosine kinase inhibitor being assessed with our microinjector, a gene therapy, and a virus-like drug conjugate. And I think that really enhances the brand. It really showcases the versatility of the platform. And it's really, I think, a very exciting time for supracordial delivery.

I wish I could add something to that, Tom, but I can't. I think that's the perfect answer to that. And that brand recognition will continue to grow, especially as those trials progress and especially as Bausch continues its training program to train um, the vast majority of retinal specialists in the United States, we're going to have, we'll end up with hundreds and hundreds and if not into over a thousand physicians, at least in the United States that have been exposed to it, they've been exposed to the training on it. And, um, when you talk to them, once they're trained, they're, they're always amazed at the simplicity and the reliability of the delivery system. So, um, And again, just to emphasize what Tom said on the versatility, we've got four different therapeutic modalities and six different clinical trials right now. So it really is demonstrating the versatility and the flexibility of the system as well as the reliability and ultimately the simplicity but the reliability of the system. So we're very excited about the growing awareness of the system and the approach. So it's very exciting for us, very rewarding.

Exciting all around. Thank you very much. Sure.

And that concludes the question and answer session. I will now turn the call back over to George Lasiskey, President and CEO, for any final comments.

I just want to thank everybody for joining us on the call this afternoon. As always, we appreciate your continued interest in Clearside Biomedical, and we look forward to updating you on our progress in the future. Operator, you may now disconnect the call. And thank you again, everyone.

Thank you, sir. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Stay safe and well. Have a great day.