Clearside Biomedical - Q1 2024

Executive Summary

• Q1 2024 delivered modest license revenue ($0.230M) with a wider net loss ($11.8M; $0.17 EPS) as ODYSSEY Phase 2b trial costs and warrant-related items weighed on results.
• Pipeline and clinical momentum intact: ODYSSEY topline remains on track for end of Q3 2024; management reiterated Phase 3 planning workstreams tied to the readout.
• Organizational and financing catalysts: new CMO (Dr. Victor Chong) and director (Tony Gibney) added; February 2024 registered direct offering raised $15M gross; new permanent Category 1 CPT code for XIPERE effective Jan 1, 2024.
• Liquidity runway extended: cash and cash equivalents $35.4M at quarter-end; company guides funding into Q3 2025, covering ODYSSEY readout and Phase 3 planning.
• Street consensus comparison: S&P Global estimates for Q1 2024 EPS and revenue were unavailable due to request limit; no beat/miss determination can be made (will revisit when accessible).

What Went Well and What Went Wrong

What Went Well

• ODYSSEY timing intact and Phase 3 planning underway: “ODYSSEY… remains on track for the end of the third quarter of this year… as we begin planning our CLS-AX Phase 3 clinical development program.”.
• Strengthened leadership: “We added Dr. Victor Chong… as our Chief Medical Officer… [and] appointed Tony Gibney… to our Board of Directors.” Dr. Chong emphasized CLS-AX’s potential 6‑month durability and a differentiated, multi-dose Phase 2b design.
• Platform validation and structural tailwinds: new permanent Category 1 CPT code for XIPERE; multiple positive partner/real‑world data presentations highlighting suprachoroidal delivery durability (≥75% of eyes with no retreatment for 6 months after one XIPERE dose).

What Went Wrong

• Increased loss and expense line items: net loss widened to $11.8M (from $9.3M YoY) driven by higher R&D (ODYSSEY trial costs), and $1.5M “Other expense” tied to offering issuance costs and warrant liability fair value change.
• Non-cash interest expense elevated: $2.4M vs $2.2M YoY from imputed interest on the royalties liability and issuance cost amortization.
• Minimal top-line contribution: license and other revenue remained small at $0.230M, underscoring reliance on future milestone/license flows and clinical catalysts rather than product sales in Q1.

Transcript

Operator (participant)

Greetings and welcome to the Clearside Biomedical First Quarter 2024 Financial Results and Corporate Update Conference Call. As a reminder, this conference call is being recorded. I would now like to introduce your host, Remy Bernarda, Clearside Investor Relations. Please go ahead.

Remy Bernarda (Head of Investor Relations)

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, 2023, that was filed March 12th, 2024, and our other SEC filings available on our website. In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date.

While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change. On today's call, we have George Lasezkay, our Chief Executive Officer, Dr. Victor Chong, our Chief Medical Officer, and Charlie Deignan, our Chief Financial Officer. After our formal remarks, we will open the call for questions. I would now like to turn the call over to George.

George Lasezkay (CEO)

Thank you, Remy, and good afternoon, everyone. As we near the midpoint of 2024, I'm excited with the progress we have made to date, which has positioned Clearside for an important year. Recently, we added two key positions to our team who are having an immediate and meaningful impact on our organization. In March, we welcomed Dr. Victor Chong as our Chief Medical Officer. Victor is a well-respected, board-certified retinal specialist with more than 25 years of experience advancing drug candidates through all stages of development, including the development of ranibizumab and aflibercept for wet AMD. Most recently, Victor served as Global Head of Retina at Johnson & Johnson, and prior to that, he was Global Head of Medicine in Retinal Health at Boehringer Ingelheim.

Victor's extensive experience is extremely valuable as he spearheads our product development activities led by the upcoming ODYSSEY data analysis and the planning for our CLS-AX phase III program. Victor will be discussing these shortly. Last month, we also added seasoned Biotech Executive Tony Gibney to our board of directors. Tony has a deep understanding of the biotechnology business and combined with recent and relevant ophthalmology experience at Iveric Bio, where he was Chief Business and Strategy Officer. Tony has broad expertise in collaborations, finance, and M&A that will help guide our strategic and business development initiatives as we explore future value-creating opportunities at Clearside. These personnel additions are important as we continue to build on our leadership position in suprachoroidal delivery.

Our SCS Microinjector technology has been used in thousands of injections in the clinic and continues to demonstrate a strong safety record that includes no cases of endophthalmitis to date. As the pioneers in delivery to the suprachoroidal space, we are proud of the breadth and depth of our pipeline that includes our internally developed assets as well as those from our collaborators in a broad range of retinal diseases. With that, I'd like to now introduce our new Chief Medical Officer, Victor Chong, who will provide his perspectives on joining Clearside and our programs. Victor?

Victor Chong (Chief Medical Officer)

Hello George and good afternoon, everyone. Let me begin by saying it is a pleasure to speak with all of you today as a member of the Clearside team. I have been on board for almost two months now, and I'm extremely excited by the prospect of our drug delivery technology as well as our broad pipeline. I wanted to share some of the reasons I chose to join Clearside from J&J. First, I believe the suprachoroidal platform is an important but undervalued approach to treat retinal diseases. Clearside is leading the way in the suprachoroidal delivery by a very big margin, including having the only FDA-approved product for suprachoroidal use. With my background as a physician scientist combined with almost a decade in large pharma, I look forward to leading our team as we approach our Odyssey data readout and begin planning our phase III program for CLS-AX.

Finally, I can utilize my translational expertise in advancing new molecules into the clinic. I see many opportunities to see our company's device and formulation platform to potentially expand our pipeline into areas such as geographic atrophy. Today, I want to focus on CLS-AX and the differentiators for the drug and the ODYSSEY clinical trial. The current wet AMD market is driving more than $12 billion annually in sales. While the existing approved therapies are effective, including ranibizumab and high-dose aflibercept, they are delivered individually and only last up to four months in some patients. We believe CLS-AX may extend the time between doses for up to six months for most patients, which could meaningfully reduce the treatment burden for patients, caregivers, and payers. I find the ODYSSEY trial to be a compelling design that is differentiated from many of the other mixed-phase wet AMD studies.

First, the trial was designed to allow retreatment with our own drug candidate if needed prior to six months, which is similar to the anti-VEGF currently on the market. In addition, the protocol mandates participants in the CLS-AX arm to be redosed at month six if not previously retreated. Wet AMD is a chronic disease and retreatment is essential. This multi-dosing data will help inform our CLS-AX phase III development program. Second, the trial duration of 36 weeks allows us to follow patients beyond six months. This is close to the duration required for primary endpoint by the FDA for phase III trial in wet AMD. It allows us to translate our CLS-AX phase II-B results to phase III trial design more easily. And finally, ODYSSEY is treating patients with confirmed active disease, so we will have a dataset on patients who definitely need retreatment.

I'm pleased to report that ODYSSEY is progressing as planned, and we expect to have top-line results at the end of the third quarter of this year. Our target profile for CLS-AX is to maintain visual acuity without the need for retreatment for potentially up to six months. We expect that the final phase II-B data will provide important insight to create a robust phase III development program for CLS-AX. I am looking forward to this journey at Clearside and will now turn the call over to our CFO, Charlie Deignan, to provide a financial update.

Charlie Deignan (CFO)

Thank you, Victor, and good afternoon, everyone. Our financial results for the first quarter 2024 were published earlier in our press release, and they are available on our website. Therefore, I will just provide a summary of our financial status on today's call. As of March 31st, 2024, our cash and cash equivalents totaled approximately $35 million. We believe we 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 planning our CLS-AX phase III program. We will be participating in the JMP Securities Life Sciences Conference next week, and we look forward to keeping you updated on our progress. I will now turn the call over to George for his closing remarks.

George Lasezkay (CEO)

Thank you, Charlie. We expect 2024 will be a transformative year for Clearside. We are committed to maintaining our leadership role in the suprachoroidal space as we and our partners generate additional clinical data demonstrating the potential benefits of drug delivery with our SCS Microinjector. We believe that the data readout from ODYSSEY later this year will demonstrate that CLS-AX could be a valuable addition to the treatment regimen in the multi-billion-dollar wet AMD market. Our efforts in developing suprachoroidal drug delivery have the potential to change the treatment paradigm for serious retinal diseases and provide a lasting positive impact for patients, physicians, and our shareholders. I would now like to ask the operator to open the call up for questions.

Operator (participant)

At this time, we will conduct the question-and-answer session. If you have a question at this time, please press star then the number one on your telephone keypad, and you will be placed in the queue in the order received. Once again, to ask a question, please press star then the number one on your telephone keypad now. Your first question comes from Jon Wolleben with JMP Securities. Your line is open.

Jon Wolleben (Managing Director)

Hey, good afternoon, and thanks for taking the questions.

George Lasezkay (CEO)

Hey, Jon.

Jon Wolleben (Managing Director)

Hey, George. I was hoping to just get a reminder on what constitutes active disease as the inclusion criteria for ODYSSEY and how that differs from other mid-stage wet AMD trials?

George Lasezkay (CEO)

Okay. Victor, I think that's a great question for you, so why don't you take that one?

Victor Chong (Chief Medical Officer)

Yeah, Jon, how are you? On the protocol, we would require the patient that still has subretinal fluid or intraretinal fluid or the fluid in angiogram is showing leakage. So that is what we would define as still remains to have active disease because some patients would have been treated, and then they were already dry and might not need further treatment.

Jon Wolleben (Managing Director)

Okay. Can you talk a little bit about how you think about CLS-AX in comparison to the other TKIs in development? And then also, what if we talk a lot about durability, but how do you feel about the data package you'll provide and what is most important for investors to keep in mind as they're interpreting the readout in 3Q?

Victor Chong (Chief Medical Officer)

Yeah. So when you think comparing different companies, there's two TKIs in play. axitinib is the one that we have sharing with Ocular Therapeutix, and then EyePoint has another TKI. And in terms of that, we believe that anti-VEGF is most important. And then among the anti-VEGF, the IC50 is significantly lower in axitinib. And in other words, that they're much more potent. In terms of, sorry, I missed the second question. Can you just quickly repeat that?

Jon Wolleben (Managing Director)

Yeah. We talk about durability as a key thing to look at in these late-phase trials. But should we worry more about BCVA, burden of treatment? If you had to think about the endpoints you'll be giving us, what should we focus on?

Victor Chong (Chief Medical Officer)

Yeah. So I think that that's a very good question, but I think that at the moment, we are still waiting for our phase II results at the same time that would help us to inform our phase III design. But I think that, as I mentioned in my webcast discussion earlier already, at least that we have data that have retreatment. So every patient in Odyssey will be at least retreated once, even if they have been doing okay up until six months. So that retreatment data will get us to nine months and longer, and also our trial is also nine months. So again, that's closer to the FDA requirement for the primary endpoint. I would say visual acuity, end of the day, is the most important.

I think that will be something that we will be focusing on, how that we can measure the visual acuity that will require that will meet the requirements of the FDA as well as other agencies around the world.

Jon Wolleben (Managing Director)

Okay. That's helpful. Thanks again for taking the questions.

Victor Chong (Chief Medical Officer)

Thank you, John.

Operator (participant)

Once again, to ask a question at this time, please press star then the number one on your telephone keypad. Your next question comes from Jayed Momin with Stifel. Your line is open.

Jayed Momin (Biopharma Equity Research Associate)

Hi. Thanks. This is Jayed. I'm calling in for Annabelle. I had two questions for you. First question, realizing that you're still in phase II trials with CLS-AX, have you given any further thought to the phase III design in light of some of your competitors running superiority trials to standard of care?

George Lasezkay (CEO)

Well, let me say first that what we're doing now while we're waiting for our phase II-B data to come in is we are undergoing internal planning for phase III depending on how the data comes out. So we're already looking at that. We're discussing phase III trial designs with our consultants, and that's all under evaluation at this time. But Victor, do you want to add anything to that?

Victor Chong (Chief Medical Officer)

Yeah. So I think that, as I mentioned earlier, that we are still working on it, and there is a number of options that we are considering. But at the end of the day, the key difference for us to someone is that we can retreatment based on our own drugs. So that could be a major difference in the study design that some other TKI companies might not be able to do. So again, surrounding that is something that we will see how that we can maximize our advantage at the same time providing future retinal specialists in the future to use our drug more easily.

Jayed Momin (Biopharma Equity Research Associate)

Great. Thank you for that. And just one more.

George Lasezkay (CEO)

You had a second question?

Jayed Momin (Biopharma Equity Research Associate)

Yeah, I did. Thank you. The second question was, in regards to the FDA, have they come any closer to establishing new clinical trial guidelines based on the shifting treatment paradigm, namely bevacizumab?

George Lasezkay (CEO)

You mean have they started to come close to finalizing their previous draft guidance that was over a year ago for wet AMD trials? Is that what you're talking about? Victor, you might be more up to date on where you think the FDA is based on our recent conversations.

Victor Chong (Chief Medical Officer)

Yeah. I think that when the guidelines are more than a year old and they're still not finalized, and obviously that the community has some potential concern. But yet, that is not unusual for FDA to have a draft guideline for a long time as well. So it's hard to predict, but that suggests that some of the point on the guideline was inconsistent with practice. So again, those are something that I think everyone is discussing in multiple different conferences in multiple different platforms. But again, exactly when that draft guideline will become finalized or moving to interim, it's still difficult to be sure. And especially as you know that there's a recent leadership change in FDA as well, whether that might be late things as well.

George Lasezkay (CEO)

Obviously, as we go forward, before we announce any phase III plans, we will have been engaged at least once, if not multiple times, with the agency to discuss phase III trial designs. We'll get the most up-to-date reading from the agency in our conversations with them as our planning continues.

Jayed Momin (Biopharma Equity Research Associate)

Got it. Thank you. Thank you for your thoughtful answers.

George Lasezkay (CEO)

Okay.

Operator (participant)

I would now like to turn the call back to George Lasezkay for any further remarks.

George Lasezkay (CEO)

Well, I want to thank everybody for being on the call today. We look forward to keeping you apprised of our progress. With that, I would say that the operator, you can end the call.

Operator (participant)

This concludes today's Clearside Biomedical First Quarter 2024 Financial Results and Corporate Update Call. Thank you for attending, and have a wonderful rest of your day.