Clearside Biomedical - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue was $0.306M, a modest beat vs Wall Street consensus of $0.294M; GAAP net loss was $7.306M with EPS of $-0.10. EPS also came in better than consensus ($-1.55*) with a narrower-than-expected loss; revenue and EPS beats were driven by lower R&D spending post-ODYSSEY completion and stable G&A. Consensus values from S&P Global*.
• Management completed a successful End-of-Phase 2 FDA meeting, aligning on two pivotal non-inferiority Phase 3 trials in wet AMD for CLS-AX with flexible redosing intervals (12–24 weeks), supported by AI-based OCT biomarkers.
• Liquidity runway improved: cash and cash equivalents of $20.0M at year-end, with runway extended into Q4 2025 (vs Q3 runway guided in Nov.); financing strategies (including potential partnerships) are being pursued to commence Phase 3 in 2H 2025.
• Narrative catalysts: Phase 3 initiation timing and funding clarity, payer receptivity to 3–6 month flexible dosing, and further data releases on ODYSSEY sub-analyses and partner programs (REGENXBIO, Aura, Arctic Vision).

What Went Well and What Went Wrong

What Went Well

• Successful FDA End-of-Phase 2 alignment on Phase 3 plans for CLS-AX in wet AMD; design includes two non-inferiority trials with flexible dosing, targeting real-world maintenance therapy needs.
• Positive ODYSSEY Phase 2b data: stable BCVA and CST through 36 weeks, strong durability (67% intervention-free to 24 weeks) and 84% reduction in treatment burden; favorable safety profile with no ocular/treatment-related SAEs.
• Validating partner progress (Arctic Vision, REGENXBIO/AbbVie, Aura, BioCryst) and expanded regional approvals/NDAs for ARCATUS/XIPERE, underscoring suprachoroidal platform traction. “We continue to have increasing interest among retinal specialists and leading pharmaceutical companies” — CEO George Lasezkay.

What Went Wrong

• Revenue mix normalization vs prior-year milestone/licensing: Q4 2024 license & other revenue fell to $0.306M from $6.345M YoY, driving a higher YoY net loss and underscoring dependence on partner payments timing.
• Financing uncertainty: Management reiterated Phase 3 readiness but noted trial funding is not yet secured; timeline contingent on financing with options under evaluation (including partnerships).
• Operating leverage still limited near-term: while R&D decreased post-ODYSSEY, total OpEx remained significant (Q4 R&D $4.244M; G&A $3.062M), keeping GAAP losses elevated in a low-revenue quarter.

Transcript

Operator (participant)

Welcome to the Clearside Biomedical Fourth Quarter 2024 Financial Results and Corporate Update Call. At this time, all participants are in a listen-only mode, and a question and answer session will follow the formal presentation. 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 Kobin, of Investor Relations. Jenny, the floor is yours.

Jenny Kobin (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, 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 Head of Research and Development, and Charlie Deignan, our Chief Financial Officer. We also have accompanying slides that are available on Clearside's website in the Events and Presentations section. After our formal remarks, we will open the call for your questions. I would now like to turn the call over to George.

George Lasezkay (CEO)

Thank you, Jenny, and good afternoon, everyone. Clearside is the proven leader in the delivery of drugs and drug candidates to the suprachoroidal space. Our SCS Microinjector provides safe and reliable delivery with over 15,000 suprachoroidal injections performed to date. We continue to have increasing interest among retinal specialists and leading pharmaceutical companies in applying our innovative delivery platform to treating serious retinal diseases. We are pleased to announce that the positive results from our Odyssey phase II-B wet AMD clinical trial led to a successful end-of-phase II meeting with the FDA regarding the planned phase III activities for CLS-AX. Based on our interactions with the FDA, we are aligned on a pivotal phase III program that we believe is positioned for success and maximizes the commercial potential for CLS-AX in wet AMD. Victor will elaborate on these plans shortly.

Our commercial and development partners have made excellent progress over the last several months as they continue to validate the broad applicability of suprachoroidal delivery in several indications. Across our partners, suprachoroidal treatments being developed for delivery by our SCS Microinjector are now approved in two Asian territories, under regulatory review in China, and involved in two ongoing or planned phase III trials. Our partner, Arctic Vision, achieved several regulatory milestones in the Asia-Pacific region with Arcatus, or XIPERE, for the treatment of uveitic macular edema. This year, they announced that a new drug application is currently under regulatory review in China and that the product was approved in Australia and Singapore. Importantly, Arctic Vision also entered into a commercial collaboration with Santen Pharmaceuticals for the marketing and distribution rights to Arcatus in China.

In addition, REGENXBIO, in collaboration with AbbVie, announced in January that a global phase III clinical program in diabetic retinopathy for their gene therapy candidate, RGX-314, now referred to as Sura-vec, is planned to start later this year using our SCS Microinjector. In addition, their phase II ALTITUDE suprachoroidal trial is currently enrolling a cohort of patients with center-involved diabetic macular edema, and their phase III AAVIATE suprachoroidal trial is enrolling a cohort in wet AMD at dose level four. Our oncology partner, Aura Biosciences, is enrolling its global suprachoroidal phase III trial of bel-sar for the first-line treatment of patients with choroidal melanoma delivered using our SCS Microinjector. Aura has also initiated a phase II trial in metastasis to the choroid.

Finally, our partner BioCryst recently highlighted plans to initiate clinical testing in 2025 of avoralstat, its plasma kallikrein inhibitor using suprachoroidal administration for the potential treatment of DME. With that, I would now like to turn over the call to our Chief Medical Officer and Head of Research and Development, Dr. Victor Chong, to outline the phase III plans for CLS-AX and other opportunities with our suprachoroidal pipeline. Victor.

Victor Chong (Chief Medical Officer and Head of Research and Development)

Thank you, George, and good afternoon, everyone. As George described, we are excited about the result of Odyssey that supports CLS-AX as a phase III ready asset for the treatment of wet AMD. Today, I would like to share several slides outlining the phase III plans that we believe will position CLS-AX as a leading maintenance treatment for wet AMD if the results are positive. To begin, I will highlight two subgroup analyses from Odyssey that helped inform the current phase III trial design. Some of this data were presented at Angiogenesis and Macula Society last month, which provided an opportunity for us to continue to gather KOL feedback. The first analysis provided the basis for the targeted patient population and supports enrolling treatment-naive patients in phase III trial.

On this graph, we showed that participants solely redosed with CLS-AX at week 24, meaning that they did not receive any additional interventional treatment before or after the second mandatory CLS-AX dose at week 24. As you can see, the subgroup analysis showed even more stable BCVA and CST in these participants to week 36. We believe that by targeting treatment-naive patients in a phase III trial, there may be an even greater percentage of patients reaching six months without the need for any intervention. On the next slide, a second subgroup analysis supported the planned phase III design that excluded participants with non-disease-related changes in visual acuity prior to randomization.

This chart excluded the data at which the visit where the patient's vision had a change of 10 or more letters from their previous visit but did not have a corresponding change in CST of at least 25 microns. What it means is that the patient did not see as well that day on the eye chart, but with those significant OCT changes. This tells us the BCVA changes on that day may not be disease-related. It may just be that the patient did not perform the test well on that day. In running this analysis, we again saw compelling BCVA results. In the phase III trial, by excluding patients who have a 10-letter change just prior to randomization, we may reduce BCVA variability unrelated to wet AMD activities.

Now, I'd like to walk you through the phase III plans and trial design, discussed and agreed with the FDA at our recent end-of-phase II meeting. The plan we presented to the FDA is for two pivotal non-inferiority trials. The trial design is similar to the most recent phase III trial in wet AMD that led to the approval of Eylea high dose and Vabysmo. The design applies the redosing criteria generally utilized in real-world clinical practice, which will feature the ability to flexibly dose CLS-AX. We believe the ability to redose with CLS-AX versus rescuing patients with an anti-VEGF product is an important differentiator compared to other TKI programs currently in development. Slide 9 shows the current planned phase III program designed to potentially reduce regulatory risk and maximize the commercial opportunity for CLS-AX in wet AMD. I will walk through this key design aspect.

As I mentioned previously, the plan is to enroll treatment-naive patients, which we believe can potentially expand the commercial value of CLS-AX with a broader patient population. From a statistical perspective, we know it is important to reduce variability in a non-inferiority study. The plan is to optimize our study population. We know from previous studies, patients with poor vision and/or thicker retinas have higher variability in their outcome. Therefore, at screening, participants will be required to have a BCVA reading between 20/80 to 20/32. In addition, the CST reading on the OCT must be less than 500 microns. These components are designed to minimize enrollment of highly variable patients to potentially increase the probability of success of the trial. Between the third and the fourth injection of CLS-AX, we do not normally see a change of vision or anatomy.

Therefore, the plan is to exclude participants who had more than a 10-letter change or a CST increase of more than 100 microns from their previous visit. These criteria were strongly recommended by KOLs on our scientific advice report and are designed to increase the probability of success by further reducing variability. On day one, participants will then be randomized one-to-one to CLS-AX 1 mg or aflibercept 2 mg. Participants in the aflibercept arm will receive treatment every eight weeks per standard dosing label up to the primary endpoint at week 52. In a CLS-AX arm, week 12, 16, and 20, participants will undergo an assessment for disease activity to determine the personalized treatment interval, or PTI. Based on their PTI, participants will be assigned to a treatment regimen of every 12, 16, or 20 weeks.

The plan is to employ in-office OCT biomarker that will be determined using an AI tool to improve consistency in assessing the need for redosing. For those patients who did not meet the criteria at week 20, they will be assigned to a treatment regimen of every 24 weeks. Once a dosing interval is established for each participant during the PTI period, the participant will stay at that interval until the primary endpoint at week 52. This is the fixed dosing period. For example, if the participant met their PTI criteria at week 16, they will be given CLS-AX every 16 weeks in the fixed dosing period. After the primary endpoint is reached, the trial will continue for another year as a safety follow-up period to produce the data required by the FDA for a new drug application. In a CLS-AX arm, the fixed dosing interval will end.

The participant will then continue and be treated with variable dosing according to anatomical signs based on the PTI criteria. In the Eylea arm, patients will cross over to receive CLS-AX every 16 weeks, which will provide additional safety and efficacy data in an anti-VEGF treatment experienced patient population. It will also provide experience in moving patients from Eylea to CLS-AX as a maintenance therapy. Wet AMD is a chronic disease requiring numerous injections to maintain vision and stabilize the disease. We are targeting CLS-AX as a maintenance treatment, which accounts for the majority of the wet AMD treatment market. We know from clinical experience that patients require differing frequency of treatment to achieve stable vision. We are the only TKI in development with multi-dosing data from our phase II-B trial and the only TKI in development with the ability to redose before six months.

Therefore, we expect minimal to no anti-VEGF rescue in phase III, which could reduce our regulatory risk and prove to be a clear and important differentiator. All in, we believe this important feature of the phase III trial supports a strong regulatory and commercial strategy for the success of CLS-AX. On slide 17, we have laid out the competitive landscape related to dosing flexibility in the wet AMD market. The initially approved anti-VEGF drugs to treat wet AMD work well but have lower durability and less flexibility in dosing regimen. The next generation has moderate durability and a more flexible dosing regimen. We have heard from numerous physicians that the dosing flexibility of one-to-four-month was important to them. In contrast, the protocol for other TKI currently in development only allows for dosing at 24-week intervals, and participants will need to be rescued if they cannot go that long.

With durability up to six months and flexible dosing regimen, we believe CLS-AX will have a potential versatile and commercially appealing label and would be well-positioned to compete in the wet AMD market, which represents over $12 billion in annual sales. Before I turn the call to Charlie, I want to take a minute to review our pipeline opportunities. We continue to be excited about the broad potential for suprachoroidal delivery with our SCS Microinjector. Internally, I see a great potential opportunity beyond wet AMD, where delivering of small molecules via the suprachoroidal space could make a tremendous impact in the treatment of retinal disease. Our research team is currently evaluating two approaches with certain specific small molecules for in vivo models for the potential suprachoroidal treatment of geographic atrophy.

Our team is doing the necessary work to potentially advance one or both of these candidates toward an investigational treatment drug application. In GA, we are currently evaluating two mechanisms of action that could potentially be used as an add-on to complement-based therapy. Administered suprachoroidally, this smaller molecule suspension can treat both sides of the Bruch's membrane, including the retina, RPE, and the choroid. With suprachoroidal administration of the agents, we expect to achieve a higher concentration of drug in the choroid. As a result, we believe this molecule will improve choroidal perfusion to improve retinal function directly and slow progression. Moderating post-inflammatory cells can reduce the root cause of complement activation. With that, I will 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 fourth quarter and year ended 2024 were published earlier in our press release and are available on our website. Therefore, I will just provide a summary of our financial status on today's call. As of December 31st, 2024, our cash and cash equivalents totaled approximately $20 million. We believe we have sufficient resources to fund our planned operations into the fourth quarter of 2025. We are actively pursuing options to fund the CLS-AX phase III program, including potentially partnering with one or more third parties. We look forward to participating in the Needham Virtual Healthcare Conference and the JonesTrading Conference next month. I will now turn the call back to George for his closing remarks.

George Lasezkay (CEO)

Thank you, Charlie. We remain focused on our small molecule suprachoroidal pipeline led by CLS-AX for the treatment of wet AMD.

We have seen increasing interest among retinal specialists and leading pharmaceutical companies in applying the suprachoroidal delivery approach to treat serious retinal diseases. Our broad formulation, development, and regulatory expertise in the delivery of agents to the suprachoroidal space makes us well-positioned in the overall treatment landscape for retinal diseases. We are grateful for the hard work and dedication of our Clearside team and the ongoing support from our stakeholders as we continue to advance our suprachoroidal delivery pipeline. I would now like to ask the operator to open the call up for questions.

Operator (participant)

Thank you. At this time, we'll be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question is coming from Jon Wolleben with Citizens. Your line is live.

Jon Wolleben (Managing Director)

Hey, good afternoon, and thanks for taking the questions. I'm wondering if—Hi, George. The subpopulation and the amendments you're making to the planned phase III, I'm wondering if you could give any context about how you think that might improve the results from what you saw in phase II.

George Lasezkay (CEO)

Victor, there?

Victor Chong (Chief Medical Officer and Head of Research and Development)

Sure. Can you hear me?

Jon Wolleben (Managing Director)

You there, Victor? Okay.

Victor Chong (Chief Medical Officer and Head of Research and Development)

Can you hear me?

Jon Wolleben (Managing Director)

Yes. I can.

Victor Chong (Chief Medical Officer and Head of Research and Development)

Yeah. Yeah. I think that in the plan for phase III, we tried to exclude the patient with higher variability. I think that one to think about it is on the phase II, we're deliberately selecting the patients who are very difficult to treat, and we believe that moving to a more general population, we would have better results. In one of the subgroup analyses, the first one that we mentioned, that those who actually don't need any extra treatment. One of the concerns was that could be undertreated, but in fact, they were not. They were actually doing extremely well. We believe that when we move to the general population, that segment that only needs every six months injection would be actually higher. I don't know whether that is what you're referring to because the second subgroup analysis changed the population slightly in a different way.

Jon Wolleben (Managing Director)

Sort of helpful. I'm wondering, maybe it's a difficult question to answer, but maybe moving on to two other ones. How long do you think it could take to enroll? How long do you think it would take to enroll the treatment-naive population? Last one for me, did FDA say you need a certain number of patients in each of these treatment intervals to have a sufficient size to show efficacy and safety, or will it be purely on the individual assessment of the response and wealth?

Victor Chong (Chief Medical Officer and Head of Research and Development)

Yeah, I think the first question for us is how long do we expect it to enroll? Usually, this kind of trial will be around 12 months or slightly under 12 months. Indeed, we see the recent trial in other phase III doing pretty well. We would expect that would be probably just under 12 months.

In terms of the agency, this is the type of analysis very, very similar to what the two recent approvals with Eylea high dose and faricimab. We do not expect that they would be separating the adverse event rates in different groups on different frequencies, and it is really the drug as an overall. It is just a similar expectation that using the drug when we get to market would be on different intervals. I would not expect that. I think the agency was quite clear that it would be considered as one arm. The whole adverse event assessment would be merged together. I think that is a very similar modality that they use for Eylea high dose and faricimab.

Jon Wolleben (Managing Director)

Okay. Got it. All right. Thanks for taking the questions.

Operator (participant)

Thank you. Our next question is coming from Serge Belanger with Needham. Your line is live.

Serge Belanger (Senior Analyst)

Hi, good afternoon. I guess my first question now that the phase III trial plan has been finalized, can you give us an estimate of the overall cost of such a program? I guess, is it feasible? We're talking about 900 patients total here for Clearside to run such a large program. Thanks.

Victor Chong (Chief Medical Officer and Head of Research and Development)

I'll answer the second part, and I'll let Charlie answer the first part. Yes, we would, using a global CRO. We believe that it's something that we would be able to manage. Although it's a relatively large trial, at the same time, that wet AMD trial is relatively straightforward from both the endpoint and the investigation needed. I'll let Charlie answer the first part about the cost.

Charlie Deignan (CFO)

Yeah. Serge, I'll also just remind you, back we ran two phase III concurrent RVO studies years ago, so we know how to run phase III trials here. In terms of cost, we're not giving specifics on the cost, but I think some of the other phase IIIs, I think I've seen they're around $55 million-$60 million for each study. We haven't given out an estimate for our numbers for our trials.

Serge Belanger (Senior Analyst)

Okay. Thanks. I guess one for Victor. Just curious, and as you set up the design of the phase III, whether you considered emulating one of your potential competitors and running a superiority trial and what were the pros and cons and why you decided to go forward with two non-inferiority studies? Thanks.

Victor Chong (Chief Medical Officer and Head of Research and Development)

The two non-inferiority studies were true and tested, and the agency has reflected that multiple times. This is a lot more risky if the two trials are not the same. I can't comment on a competitor, why they decided to do something different. That is their decision. I think from our point of view and also our interaction with the agency, the two non-inferiority trials are proven and tested. Virtually, if not every single retinal drug was approved based on the two non-inferiority trials, other than obviously the first one. Lucentis was a superior trial.

Serge Belanger (Senior Analyst)

Thank you.

Operator (participant)

Thank you. Our next question is coming from Debanjana Chatterjee with JonesTrading. Your line is live.

Debanjana Chatterjee (VP of Healthcare)

Hi. Thanks for taking my question. I was wondering if you could provide any additional color on your financing strategy for phase II, phase III, and how should we think about the timeline of the study initiation? I know you were planning initiation in the second half. Is that still the plan?

Charlie Deignan (CFO)

George, let me take this.

George Lasezkay (CEO)

Yeah. Go ahead, Charlie. That's fine.

Charlie Deignan (CFO)

Yeah. So we're still, in terms of study, we're gearing up to continue to be ready to start the study in the second half of the year. Obviously, we need to fund the clinical part of the study. As we said, we're pursuing all our options to get the study funded, including potentially partnering with one or more third parties. That's about all the information I can give you at this point. As soon as we have some clarity, we'll let everybody know. That's all we can say right now.

Debanjana Chatterjee (VP of Healthcare)

Thanks for that. I have a quick follow-up. If I understood correctly, the sham in the study is being administered monthly. I was just curious as to the design of why would you choose that instead of every two weeks. Is that to kind of merge it with the PTI phase?

Victor Chong (Chief Medical Officer and Head of Research and Development)

The way that we want to do the study is in every single visit, the patient will be given an assessment. After the assessment, they will have a procedure. That would be how we agree with the agency on masking the study so that the patient will not know which arm they would be in. From a patient perspective, they will have an assessment, and then they will have a procedure. The procedure could be a suprachoroidal injection, could be a sham, and could be a aflibercept injection. Again, that is depending on the PTI that I mentioned earlier or if they have met the rescue criteria.

Throughout the study, there will be a patient that has a aflibercept injection. Sometimes it could be just in the beginning, only just in the beginning for the AXR. Then the patient would have the injection in the aflibercept arm. We have discussed that in detail with the agency, and the agency felt that would be an adequate masking or blinding in the way that some other therapeutic areas use. That is how we think that was the right thing to do. I'm not sure about the two weeks that you mentioned, but this is going to be done every month, every visit, other than some visits that there would be no procedure needed.

Debanjana Chatterjee (VP of Healthcare)

Okay. Thank you so much.

Operator (participant)

Thank you. Our next question is coming from Yi Chen with H.C. Wainwright. Your line is live.

Yi Chen (Managing Director of Equity Research)

Thank you for taking my questions. My first question is, what are the potential factors that could contribute to a BCVA change over a 10-letter without the CST change?

Victor Chong (Chief Medical Officer and Head of Research and Development)

Yeah. What we have known in the clinic, in fact, is that a lot of clinicians do not even believe the vision in the clinic because it is just that it is such a high variability. BCVA is slightly more reliable. In fact, the agency also always talks about this 15-letter; it is only 15-letter is real. I think that this understanding that a lot of our patients are pretty elderly, and then you could have a bad day that they could not really see better that day or the test. They just could not deal with it. That is something that we know in routine clinical practice. In a clinical trial, there are some of these data points affecting our data.

What we have done in the subgroup analysis that I show is that, if the OCT anatomy has not changed at all, and normally, if your vision got worse, your OCT will get worse or vice versa. The 25-micron is just a kind of way to think that, if you have not even a 25-micron change, which is a very small change, then your vision might not be reliable. We just think that this was a post-hoc analysis. We took that out, but just that, not the whole patient. Obviously, that would take out a lot of data points.

Just that one data point, and then as you can see on the chart, that makes our result even better, although all our results are already good anyway, but this is just making it even better, explaining that sometimes some patients just don't do it well; it could be a problem. Translating to our phase III design, obviously, we can't do this in a real study because it's a post-hoc analysis to understand. What we decided is that, as I mentioned in the call, between the third and the fourth injection, and again, we have a lot of historic data that during those two visits, the vision doesn't change normally. Again, if this changes, that means that that patient is an unreliable patient. We believe that by removing those patients before randomization will help us to reduce the variability.

Yi Chen (Managing Director of Equity Research)

Okay. By implementing these criteria before randomization, do you expect to have any negative impact on enrollment speed or future market adoption when the CLS-AX eventually reaches the market? Thank you.

Victor Chong (Chief Medical Officer and Head of Research and Development)

Yeah. I do not think that it would affect the label in a meaningful way. Again, obviously, that is something that we cannot really discuss in detail now. We have seen that in other approved products that they have particular inclusion/exclusion criteria, but then the label is still the same as wet AMD or neovascular AMD. We discussed with the agency, and the agency did not really raise any concern on the way that we want to do the study. In fact, I think that reducing variability to truly show whether the drug works or not is scientifically justified.

I think from that point of view, the label discussion is too early to talk about it, but we believe from past experience that should not be a key problem. In terms of the recruitment and other things, we actually did some analysis on a dataset that I have access to during my academic time. The number of patients that would get rejected between the third and the fourth injection should be less than 10%. It will not be a major impact, but we believe that 10% can create a lot of variability. By removing them, it would give us a better, more consistent result. Again, the agency agreed to that.

Yi Chen (Managing Director of Equity Research)

Okay. Thank you very much.

Operator (participant)

Thank you. Our next question is coming from Andreas Argyrides with Oppenheimer. Your line is live.

Eka Gigauri (Equity Research Director)

Hi. Thanks for taking our questions. This is Eka on for Andreas. Can you talk about the powering assumption and the phase III trial? And also, if you would share, do you have any insights on how payers think about reimbursement for a potential three to six-month flexible dosing label for CLS-AX compared to competitors? Thank you.

Victor Chong (Chief Medical Officer and Head of Research and Development)

I go to the second question first. It might be a little bit easier question. I think the first question is probably quite technical. The second part is we have done some payer research, and the payer research has supported our assessment, how that we can potentially put a commercial value to it. I think that the simplest way to think about it is that some of our competitors would do something different to us potentially. On the other hand, from our point of view, is we have the flexible dosing.

We believe that we're quite likely to model from the flexible dosing drugs such as Eylea high dose and Vabysmo. One way to think about it is that because we have a small molecule and the device is made by our own device, our cost of goods will be very low. It will be actually lower than the biologic, so we can be potentially pricing it very competitively. I think that is something that for further down the road, we have explored on the payer research and what would be the best way to get into the market. The first question is really a standard phase III, kind of the assumption that we took some of the assumptions that are very similar to Vabysmo. We were changing to potentially around a 14-letter variability.

We believe that our variability is probably a little bit lower. However, we're looking at a very similar to Vabysmo type of number. We use the four-and-a-half-letter margin as suggested by the agency. To get to the 90%, as you would expect on the phase III study.

Eka Gigauri (Equity Research Director)

Thank you.

Operator (participant)

Thank you. Our next question is coming from Daniil Gataulin with Chardan. Your line is live.

Daniil Gataulin (Senior Research Analyst)

Hey, guys. Thank you for taking my question. Victor, I have one for you. Can you please elaborate on redosing criteria, which, as I understand, relies on OCT biomarkers and how these interplay with the rescue criteria of the BCVA loss and the fluid gain? Also, where does the physician's discretion come in in redosing decision? Because I think that's always a big variability factor. Thank you.

Victor Chong (Chief Medical Officer and Head of Research and Development)

Yeah.Thank you for that question and allowing me to spend time to explain that. Redosing and rescue is two different things in our position. Redosing is similar to what we have seen with Eylea high dose and Vabysmo. They have a certain criteria, and the two companies have different criteria. I'm not going to go into detail of their criteria. Again, neither of those are really used in clinical practice. We have spent quite a lot of time talking to a lot of KOL, including mys elf, that we consider that just the thickness is not really that reliable. In fact, that's something what we call intraretinal fluid, meaning the fluid is actually inside the retina to subretinal fluid, which is the fluid just underneath the retina, so not in the retina.

Over the years that we learned that intraretinal fluid, the fluid is actually inside the retina, they cause more damage, as one would expect it, and also cause more visual loss. Subretinal fluid, in fact, is actually not as much harm, and some debate that even some subretinal fluid is good for you. What we have decided is that because now that we can really map out not just the thickness, but we can actually map out the intraretinal fluid and subretinal fluid. The exact criteria we have not openly shared yet, but we can share is that if we have intraretinal fluid returning, that would be used to redosing the patient earlier. For subretinal fluid, we will allow a little bit more. That is similar to, as I mentioned, Eylea high dose and Vabysmo.

They have vision criteria, and they have so-called CST increase criteria, but we're just doing it a little bit more scientific, a little bit more technical. I think that is what we would plan to do, and that's what we're referring to. Luckily, we now have AI tools that can do that. The second part about rescue is, again, just like Eylea high dose and Vabysmo, they were very, very rare that they have rescue. In fact, we have agreed with the agency the criteria for rescue. That is different. That is something that the patient is losing vision as well as anatomy is getting worse. Again, this is something that we have agreed with the agency. That is very different and even different probably in some of our competitive trials.

Obviously, as you said, a physician can always so-called rescue a patient when they wanted to. We can't control that. On the other hand, what we believe is similar to Eylea high dose and Vabysmo. In fact, if anything, our redosing criteria are tighter, in other words, easier. We believe that because of that, we will have no rescue, very similar to Vabysmo and Eylea high dose. That is what we believe. We believe that that design is particularly useful because it has been proven by other drugs already. By doing that and by eliminating rescue, we believe that we can also reduce our regulatory risk and improve our possibility of success.

Operator (participant)

Thank you. As we have no further questions in the queue at this time, I would like to hand the call back over to Mr. Lasezkay for any closing remarks.

George Lasezkay (CEO)

I want to thank everyone for joining us on the call this afternoon. We greatly appreciate your continued interest in our company, Clearside, and we look forward to updating you on our progress. Operator, you may now disconnect the call.

Operator (participant)

Thank you, sir. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation.