Clearside Biomedical, Inc.

Greetings and welcome to the Clearsight Biomedical Q4 2023 Financial Results and Corporate Update Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jenny Coben of Clearsight Investor Relations. Jenny, you may begin.

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, 2023, that will 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 Lozesky, our Chief Executive Officer, and Charlie Dugnan, 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, and good afternoon, everyone. The tremendous progress that we accomplished in 2023 has propelled us into 2024 and positioned us for an important year. Last year, we advanced our CLSAX Clinical Development Program and WET-AMD, meeting our targeted timeline and budgets. In February 2023, we reported positive results from our OASIS extension study that supported initiation of our Phase IIb clinical trial, Odyssey. Later that year, we initiated and completed enrollment in Odyssey, again, on our targeted timeline and budget. This rapid enrollment was primarily a result of significant enthusiasm from physicians because of the compelling aspects and potential clinical impact of the program. During 2023, each of our licensing partners reported excellent progress in their clinical development programs. Collectively, there are now four assets in clinical development with superchoroidal delivery for five different indications. In addition, we were pleased to announce a new collaboration with Biochrist Pharmaceuticals to utilize our SES microinjector to deliver their proprietary compound, alborlistat, to treat diabetic macular edema. This adds both another asset and another indication to our collaboration pipeline. As we look ahead, 2024 will be a critical year for ClearSight as we execute on two key areas of focus. First, the primary data readout for our Odyssey Phase 2b trial will occur in third quarter this year. Second, we and our partners expect to continue demonstrating the benefits of drug delivery into the supracoroidal space with our SCS microinjector device technology. I'll start with ODYSSEY, our randomized double-masked active control clinical trial in participants with wet AMD. We are utilizing our patented suprachoroidal injection technology to deliver CLSAX, a small molecule suspension of the tyrosine kinase inhibitor, Exidinib. Our proven delivery method, combined with the differentiated mechanism of action and high potency of Exidinib, offers the potential for CLSAX to be a long-term maintenance therapy for wet AMD patients. In Odyssey, we are looking to replicate the excellent safety profile, stable vision, and reduced frequency of injections over six months that we observed in our OASIS extension study. The efficacy and safety results from Odyssey will support the design of our Pivotal Phase III Development Program, or CLSAX. With our focus on extending treatment duration utilizing supercoital delivery of small molecules, I think it's relevant to highlight recent positive real-world outcomes from Zypure usage. This analysis was presented by Dr. Michael Singer at the Macula Society meeting last month. In his presentation, Dr. Singer evaluated nearly 800 eyes utilizing the American Academy of Ophthalmology IRIS registry and open-source claims data. This real-world data showed excellent durability where over 75% of eyes did not require re-treatment for six months after just one dose of Zypyr. This durability is consistent with the Zypyr preclinical pharmacokinetic data and the data from our Phase III, PH3 clinical trial. Importantly, we believe this analysis validates Clearsight's approach to extended small molecule drug release and reduce treatment burden for patients by delivering drug directly to the suprachoroidal space with our SCS microinjector. As we look back over the last several years, I'm thrilled with the progress we have seen leading to the adoption and acceptance of suprachoroidal delivery. As the original pioneers in the space, we are proud that ClearSight's technology has led the way for this important and innovative approach for delivering of drugs behind the visual field directly to the retina. The supracoroidal injection procedure now has a permanent Category 1 CPT code available to help facilitate better access, adoption, and insurance coverage. This CPT code is a major milestone for the procedure itself. Our proprietary SCS microinjector continues to enable reliable, simple, in-office, non-surgical drug delivery, as shown with its use in multiple ongoing clinical trials and with our commercially approved product, Zypera. Most importantly, our SCS microinjector has demonstrated a positive safety profile with over 2,000 injections performed to date. We believe this strong safety profile is due in part to the fact that drug delivery by SCS injection is compartmentalized in the supracoroidal space, keeping it away from non-diseased tissues and entirely behind the visual field. We do not put drug into the vitreous, and we do not place physical inserts or gels in the vitreous that rely on complete bioerosion over time. Since the suprachoroidal injection allows for drug to flow behind the retina to the back of the eye, this limits the risk of vitreous floaters, vitreal or anterior chamber toxicity, or possibly impairing or interfering with the patient's vision. To date, we've established multiple partnerships with leading biopharma companies who have elected to utilize our SCS microinjector over other delivery methods. We believe that superchoroidal delivery may become the delivery method of choice for gene therapy and ophthalmology. Utilizing our SCS microinjector, our partner RegenixBio has demonstrated in their wet AMD clinical trial that there were zero cases of inflammation observed in patients who received just seven weeks of prophylactic topical steroids. In contrast, recently reported data from other gene therapies in development using intravitreal delivery have shown inflammation despite prophylactic steroid treatments of over 20 weeks. These steroid regimens involved injections, oral medications, and in some cases, extended release steroid inserts. So we're excited about the progress Regenexx Bio has made in their two programs utilizing our SCS microinjector. In diabetic retinopathy, Regenexx Bio presented data last November from their altitude trial showing that RGX314 prevented disease progression in non-proliferative DR patients at one year. In wet AMD, they presented data in January 2024 from their ABA trial showing that patients treated with RGX314 continued to demonstrate stable vision and retinal anatomy with a meaningful reduction in treatment burden at six months. Regenexx Bio expects to share new program and data updates for their altitude trial in Q2 of this year and for the ABA trial in mid-2024. Ora Biosciences chose to exclusively use superchoroidal delivery over intravitreal injection for their Phase III COMPASS trial, which is evaluating the safety and efficacy of BELSAR for first-line treatment in adults of early-stage choroidal melanoma.

The design of this trial is covered under a special protocol assessment written agreement with the FDA.

Aura is currently enrolling participants in their COMPASS trial. We're also looking forward to continued progress by our Asia-Pacific partner, Arctic Vision, who's developing Zypyr, which they have branded as Arcadis. This year will include completion of their Phase III trial in China in uveitic macular edema and data from their Phase I DME trial. In addition, they plan to announce the results of their new drug application submission in Australia and additional NDA submissions in other Asia-Pacific territories. In our most recent partnership development, we expanded the use of the SES microinjector with a new small molecule. Last November, we entered into an exclusive worldwide license with BioQuest Pharmaceuticals to use our SES microinjector for the delivery of their proprietary plasma calocrine inhibitor of Orlistat for DME. This partnership provided us with an upfront license fee of $5 million. Additionally, the agreement includes $77.5 million in potential clinical, regulatory, and post-approval sales-based milestone payments and tiered mid-single-digit royalties on net product sales. We are working closely with the Biochrist team as we collaboratively conduct formulation and non-clinical work this year, with a target of Biochrist initiating clinical work in 2025. We are very encouraged by the continued progress in all five supercoroidal development collaboration programs. I'll now turn over the call to our CFO, Charlie Degnan, to provide a financial update. Charlie?

Thank you, George, and good afternoon, everyone. Our financial results for the fourth quarter and year-end 2023 were published earlier in our press release and are available on our website. Therefore, I will only provide a summary of our financial status on today's call. As of December 31st, 2023, our cash and cash equivalents totaled approximately $29 million. Subsequent to the end of the fourth quarter, we completed a registered direct offering of stock and warrants, which generated $15 million in gross proceeds. With this combined cash balance, we believe we will have sufficient resources to fund our planned operations into the third quarter of 2025. This takes us through the anticipated data readout for the Odyssey trial this year and supports our planning for CLSA Act Phase 3 program. In terms of investor outreach, we will be participating in the upcoming Needham Healthcare Conference and Citizen J&P Securities Life Science Conference. We look forward to keeping the investment community updated on our progress. I will now turn the call back over to George for his closing remarks.

Thanks, Charlie. As I highlighted, we have two key areas of focus this year. We expect to complete our ODYSSEY Phase 2b clinical trial in wet AMD and report top line data in the third quarter of this year. We believe that the data readout may demonstrate that CLSAx could be a valuable addition to the treatment regimen for patients with wet AMD. In addition, we'll continue our leadership in the suprachoroidal space as we and our partners generate additional data demonstrating the benefits of drug delivery with our SCS microinjector. We remain steadfastly committed to developing new treatments and collaborating with leading healthcare companies to improve vision for individuals living with sight-threatening diseases. I would now like to ask the operator to open the call for questions.

Thank you. At this time, we'll be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker recruitment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star 1 if you have a question at this time. And please hold while we poll for questions. And the first question today is coming from Annabelle Samimi from Stiefel. Annabelle, your line is live.

Hi, thanks for taking my question. Congratulations on the rapid enrollment. It's great. I just was hoping maybe you can clarify something for me. I guess it's a little bit more bigger picture, but I'm a little confused as to how each of these Phase II trials were designed, not just yours, but just in general the TKR inhibitors, you know, obviously yours has a loading dose for two, two ILEA loading doses, then you treat, iPoint has three, Ocular Therapeutics is now doing a superiority trial. And I guess, you know, one of the other things you noted was that yours is not powered for non-inferiority or statistical significance and just, it's just really to identify duration. So, I guess the question is, how are we supposed to read all these data and really understand how it fits into the evolving landscape for TKIs? And at what point do you think there might be some harmonization of all these trials? Not just for our clarification, but for physicians who need to choose between these different treatments, right, as a maintenance therapy. So I was hoping maybe you can sort of discuss this a little bit more big picture.

Well, it's an interesting point that you raise, and there does need to be, I mean, I'm not sure there needs to be, but perhaps there will be some harmonization over time. We're in the process right now, and about our phase two trial is three loading doses, just to be clear. I think I heard you say something different. Right, right. Yeah, our injection of CLSAX is concurrent with the second loading dose, and then there's a third loading dose a month later. Yeah. Ocular really kind of throws us for a loop a little bit, you know, because they're just basically doing one dose of each, theirs and Aflibirseb, and then waiting to see who needs to be retreated. And I understand, I'm learning more and more about why they've done it that way. But we're in the process now to try to harmonize things. We're in the process now, we'll begin it over the next couple of months, to discuss what our pivotal program would look like. And so you're right about what we're looking at in Odyssey is we want to measure duration. Where do we think the best dosing regimen would be to go into phase three? But that doesn't really get to your question, which is how do we harmonize how these TKIs are being used? Because each one of us is using some Aflibirsev or some anti-VEGFA, but slightly differently. We're timing our TKI administration slightly differently. And it looks like iPoint is going for non-inferiority. Ocular is clearly going for superiority. Those trials are very different in design. when we disclose our phase three we'll see if we match up with one or the other or we come up with a third design so i can appreciate where you're having a bit of a problem but as we learn more about how the tkis work and where they fit in i think you'll begin to see this come together and i don't think that necessarily the the loading doses are going to be that big a deal over time to harmonize The thing is with ocular, you know, they're going after treatment-naive patients. And so, you know, I'm a little bit puzzled why they didn't do a bigger, you know, more on-label loading dose with oblibiceb. But I think I understand why. why they're trying to do it this way, and we'll see what happens. But I can't guarantee we're going to harmonize, but I think over time what you will see between the three different studies, I think you will see that the tyrosine kinase inhibitors as a group are going to be a very important addition to the treatment alternatives that physicians have for their wet AMD patients in particular. I think you're going to see that. I don't think I think that's going to be very clear that we have a place in that treatment regimen. And, you know, we have to wait for the data to come out. But I think if you talk to the other two companies, I think they would believe the same thing. And most of the physicians that we talk to believe that as well. So we have to go out and we have to demonstrate it. We may all demonstrate it in a slightly different way. But I think you're going to see that the tyrosine kinase inhibitors have duration, have effect, Mechanistically, they're very competitive, excuse me, not competitive, but they conform very nicely with anti-VEGF-A because they don't compete and they kind of help and supplement the anti-VEGF-A mechanism of action by blocking receptors instead of just binding with circulating VEGF. There's a theoretical reason why they should work. I think we've all seen data in our clinical trials that indicate that they have extended duration. And I think as we go through all of our additional clinical trials, the place for the TKIs is going to be very clear.

Okay, got it. And if I can just add one more question to that. As you discuss this with more of the retinal community, does it seem that the TKIs are kind of landing in this maintenance treatment sort of domain, or is ocular therapeutics essentially going to blow that up if they're looking at treatment naive? You know, what's their mindset as far as where anti-VEGF serves and where TKIs will be best served?

Where we've studied this and where everybody's studied this, and maybe ocular will change things. Again, they're going treatment naive. So we'll see how that works. In particular, we'll see how it works early on in their therapy in the first couple of months after they put their insert in. But I think most people right now would look at us and the way where most of us have been studying this is more maintenance therapy than first-line monotherapy. But that, you know, maybe Ocular will show that where they're doing their trial. I don't know. But I can tell you that I think most people look at this as extended duration maintenance therapy is where we go and that the two drugs mechanistically, the anti-VEGFA and the TKI should work very nicely. They should complement one another. I always draw the comparison, I believe, to cancer chemotherapy or even antidepressant therapies. is you're trying to affect an outcome, better vision, improved, you know, or treating cancer, better vision, you know, treating people who are depressed and making them not depressed. And so physicians have multiple approaches in cancer chemotherapy and antidepressant. They haven't really had that. They've had multiple different approaches to the same mechanism of action from, you know, the old days of Macugen going to Lucentis, going to ILEA, and even Vibismo. So they're principally going after anti-VEGF A approach. That allows for the overexpression of C and E that doesn't get taken care of. That doesn't account for binding all of the circulating VEGF A that's circulating. So I think that the two drugs could work very nicely together finding circadian VEGF-A, but blocking A, C, and E if there's overexpression at the receptor level. So I see them as, I think physicians should look at this, and I think companies should look at this as a real opportunity to add complementary therapy to wet AMD rather than seeing it one replacing the other necessarily. And over time, as it gains usage, we'll see what happens. But I think Right from the start, I think it's a very complementary approach, and I think patients will be the main beneficiary of this complementary approach.

Okay, great. Thank you.

Sure.

Thank you. The next question is coming from John Wollaben from GMP. John, your line is live.

Hey, John.

Hi, this is Catherine. On for John. I've had a few questions on the Odyssey trial and just how your population compares to other mid-stage wet AMD studies. I know you talked about just generally some color on that. And then another one just on how you think about safety of the suprachoroidal administration approach that clear-sides how that compares to other wet AMD candidates.

Okay. In Odyssey, We made a very determined attempt to enroll patients who had been diagnosed with wet AMD, had had some treatment experience, so they were more or less lightly treatment experienced, so they weren't patients that were naive. And importantly, we've tried to make sure that they either had the presence of intraretinal fluid or subretinal fluid or both, or leakage of that was documented on fluorescein angiography. So what we did was, and I don't know that any of the other TKI companies have done this, but we made a very concerted effort to make sure that the patients that we were enrolled had had some experience but were clearly had fluid on enrolling into the trial. We did not want to enroll and tried very hard not to enroll patients who had been diagnosed but were dry. And that's certainly been the case to some degree in previous trials by other companies because the dry patient can get in there and kind of artificially inflate your positive results because you can see a dry patient and they may not require any real intervention for many months. So we wanted to make sure that the patients that are in our trial had fluid, required therapy, had responded to some degree in the past, but weren't like our OASIS patients that our KOLs would call anti-VEGF addicts. They were responsive, but they needed a lot more anti-VEGF intervention than you might expect, so they were getting their lucentas or their ileas far more frequently than you would expect. So we wanted patients that had some response, had some experience there, but weren't overly dependent on a lot of anti-VEGFA. And when enrolled in the trial, they had the documented presence of fluid documented by an independent reading center. So that's one thing we've tried to do. I don't know that the other companies have been that careful about that enrollment criteria, but that was very important to us, and we believe that's the right thing for us to do. You had a second question on safety. That was on safety. We've had very good luck with the suprachoroidal injection from a safety perspective. We've looked at it over time, compared it to intravitreal injections in terms of complications in patients, and we found that they're essentially the same. We've had no particular safety issues that I'm aware of in the OASIS, our Phase 1-2A trial. from an injection procedure point of view, our safety results in OASIS were very, very good. We had no inflammation, no dose-limiting toxicities. But if you just look at the injection procedure itself, we had no issues there. And so the safety from suprachoroidal injection has been Very good. With proper training, the physicians do it well. It's not really a big issue for them. The prep time for patients is basically the same as it would be for an intravitreal injection, and we don't see anything. And there was no demonstrable difference in safety between supracroital and intravitreal when we've gone back and looked at quite a number of clinical trials. We can compare them both. We feel very good about the safety of the procedure itself. We feel very good about the safety of the TKI excedinib itself. And so hopefully that's an answer to your question.

Thank you so much. That's really helpful. Sure.

Yeah, sure. No problem.

Thank you. And the next question is coming from Serge Bellinger from Needham & Company. Serge, your line is live.

Hi, everyone. This is John on for surge and thank you for taking our questions. I'd like to hit on a couple different points. First, going back to the Oasis trial, you guys had mentioned a slightly higher degree of need for off protocol or early rescues for patients at the one milligram dose. Knowing this going into Odyssey, is there any degree to which you guys have higher expectations for potential patient dropouts, and if you have any kind of color, at least at this point, into whether or not your expectations are being reflected where the trial stands now. And then kind of moving past Odyssey and wet AMD, are you guys starting to explore any additional indications for the use of CLSAX, whether it be DME or things like diabetic retinopathy? Thanks.

Well, let me answer the last one first. Right now, we don't have any plans to look into DME or DR for CLSAX. So we're focusing entirely our efforts on wet AMD. If I go back to the early off-protocol rescues that were seen in OASIS, when we looked at that, there were a couple of things. First of all, it was an open-label trial, so there was no blinding And it was the first time that people had injected tyrosine kinase inhibitor into the suprachoroidal space in these wet AMD patients. So there was a little bit of nervousness, I think, and it was kind of site-specific when we really looked at it. There was no good reason why one milligram should have had these early rescues and the half milligram didn't. And, I mean, there's no logical reason for that. But when we looked in the cohort four, that one milligram dose, it seemed to be more of a site-specific issue. And I think there was a little nervousness about injecting and not having any experience with tyrosine kinase inhibitors and kind of jumping the gun on some early rescues. After that first couple of early rescues in cohort four with the one milligram dose, Basically, in cohorts three and four, they had about the same. They had a couple of off-protocol rescues. But the majority were in the first month in that cohort four. And I think that was, best we can tell, was kind of a site-specific issue for a particular investigator. So we've designed our Odyssey trial to not... You talked about expectations. Our expectation is we should not see a very limited number of off-protocol. We worked very hard with our sites and through our training and our materials and our onsite people to make sure that they're very well educated in terms of the retreatment criteria. In addition, this Odyssey trial has three loading doses of Aflibiceb, as I was talking about with Annabelle earlier, and we think that that and dosing on the second loading dose, we think, will eliminate any nervousness about a very early rescue. So we really don't have an expectation of early rescues here. We have an expectation that the patients are going to do quite well on this regimen, and we're going to see extended duration of of treatment. And just to be very clear, I have no insight into that. I'm totally blinded on the data. So I have no idea whether our expectations are being met or not. So those are my expectations. I don't know whether they're being met, but we'll find out later this year.

Great. Yeah. Thanks for the clarification on that. And if I could just follow up real quickly. Do you guys have any color on how the Xperia is performing so far regarding volume and sales?

Is Ipe here? Yeah. Charlie, I'll let you handle that one if you want.

Yeah, so again, as we talked previously, until Bausch announced his sales, we can't get ahead of them. If you remember the first $45 million in sales from Zypyr is excluded from royalties. So until they get past that $45 million, we don't have any revenues to report yet.

Great. Thank you.

Thank you. And at this time, I would now like to turn the call back to Clearsight CEO, George Lozesky, for closing remarks. And at this time, I would now like to hand the call back to George Lozeski for closing remarks.

Yeah, George, you may be having a phone issue. You got it?

Yeah, I'm here. Sorry, I was on mute for a minute. Okay, well, I want to thank everybody for joining us on the call this afternoon. We certainly appreciate your continued interest in ClearSight, and we look forward to updating you on our progress. Operator, you may now discontinue.

Thank you. This does conclude today's conference. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.