CLEARSIDE BIOMEDICAL, INC. Certain statements contained in this Quarterly Report on Form 10-Q may
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The words or phrases "would be," "will allow," "intends
to," "will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions, or the negative of such words or
phrases, are intended to identify "forward-looking statements." We have based
these forward-looking statements on our current expectations and projections
about future events. Because such statements include risks and uncertainties,
actual results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause or contribute to these
differences include those below and elsewhere in this Quarterly Report on Form
10-Q and our other filings with the
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited financial statements
and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q
and with our audited financial statements and related notes for the year ended
Overview
We are a biopharmaceutical company focused on revolutionizing the delivery of therapies to the back of the eye through the suprachoroidal space, or SCS®. Our novel SCS injection platform, utilizing our proprietary SCS Microinjector®, enables an in-office, repeatable, non-surgical procedure for the targeted and compartmentalized delivery of a wide variety of therapies to the macula, retina or choroid to potentially preserve and improve vision in patients with sight-threatening eye diseases. Our SCS injection platform can be used in conjunction with existing drugs designed for delivery to the SCS, novel therapies and future therapeutic innovations. We believe our proprietary suprachoroidal administration platform has the potential to become a standard for delivery of therapies intended to treat chorioretinal diseases.
We are leveraging our SCS injection platform by building an internal research
and development pipeline targeting retinal diseases and by creating external
collaborations with other companies. We are developing our own pipeline of small
molecule product candidates for administration via our SCS Microinjector, and we
also strategically partner with companies developing other ophthalmic
therapeutic innovations to be administered using our SCS injection platform. Our
first product, XIPERE® (triamcinolone acetonide injectable suspension) for
suprachoroidal use, was approved by the
We believe that we are creating a broad therapeutic platform for developing product candidates to treat serious eye diseases.
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The current development status of our pipeline of internal product candidates and external collaborations is summarized in the chart below:
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Internal Pipeline
XIPERE
Our first product, XIPERE, is a proprietary, preservative-free suspension of the corticosteroid triamcinolone acetonide, or TA, for suprachoroidal use. Corticosteroids are the standard of care in uveitis. They are effective at treating the inflammatory aspect of ocular disease, but when delivered locally, either topically as drops, intravitreally or by periocular injection, they have been associated with significant side effects, such as cataract formation or exacerbation and elevated intraocular pressure, or IOP, which can lead to glaucoma. XIPERE is delivered into the suprachoroidal space via a novel route of administration utilizing our SCS Microinjector. XIPERE was approved by the FDA for the treatment of macular edema associated with uveitis.
We are evaluating options for potential submissions to regulatory agencies to seek regulatory approval of XIPERE for the treatment of patients with macular edema associated with uveitis in additional territories outside of territories licensed by Arctic Vison and Bausch.
CLS-AX
CLS-AX, our most advanced product candidate, is our proprietary suspension of the tyrosine kinase inhibitor axitinib for suprachoroidal injection delivered via our SCS Microinjector. CLS-AX is an inhibitor of vascular endothelial growth factor receptor-1, -2 and -3 that we believe may benefit patients who respond sub optimally to current anti-VEGF therapies. We are developing CLS-AX for administration to the SCS as a long-acting therapy for retinal diseases.
In
We enrolled 27 patients in total in all four OASIS cohorts. Our enrollment
allowed us to collect more CLS-AX patient data to help guide our selection of
the most appropriate dosing protocol for our planned Phase 2 clinical trial. We
expect to report individual patient safety and tolerability data from both
Cohort 3 and Cohort 4 as well as the complete analysis from all four dosing
cohorts of the OASIS trial in
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from OASIS will position us to initiate activities by the end of the year for our Phase 2 trial, which will enable us to begin enrolling patients soon thereafter.
CLS-301
We have initiated another small molecule program utilizing suprachoroidal administration of an integrin inhibitor suspension, which we refer to as CLS-301. Integrins are multi-functional cell-adhesion molecules that regulate critical cellular processes. Integrins play a role in pathologic processes, such as inflammation, angiogenesis and fibrosis. Integrin inhibition has had some recent preliminary validation in preclinical models and clinical studies of diabetic macular edema and macular degeneration conducted by others. We believe that integrin inhibition could potentially serve as primary therapy, adjunctive therapy to anti-VEGF agents or secondary therapy in refractory cases of diabetic macular edema and macular degeneration. Suprachoroidal delivery of an integrin inhibitor suspension could provide targeting, compartmentalization and durability advantages over topical or intravitreal delivery, similar to what we have observed in other preclinical studies of small molecule suspensions, such as triamcinolone acetonide and axitinib. Therefore, we are assessing ocular tolerability, distribution and pharmacokinetics of our integrin inhibitor suprachoroidal suspension in a series of preclinical studies. Our initial preclinical data has shown that the agent is well-tolerated with favorable ocular distribution targeting the chorio-retina, and we have seen encouraging initial signs of durability. We are optimizing the formulation and have initiated a second preclinical study. We expect to have results from this study by the end of 2022.
External Collaborations Pipeline
In addition to growing our internal pipeline, we are also focused on collaborating with other companies to provide access to the suprachoroidal space.
During the second half of 2019, we entered into three license and other
agreements that we believe validate and expand the reach of our suprachoroidal
injection platform. In
In
In
In
These partnerships enable us to expand the use of our suprachoroidal injection
platform to other indications and geographies globally. Under these license
agreements, we are eligible to receive up to an aggregate of more than
We have incurred net losses since our inception. In recent years, our operations
have consisted primarily of conducting preclinical studies and clinical trials,
raising capital and undertaking other research and development initiatives. To
date, we have not generated any revenue to sustain present activities, and we
have primarily financed our operations through public offerings and private
placements of our equity securities, issuances of convertible promissory notes,
loan agreements and license agreements. As further described in Note 13 to the
financial statements, on
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we sold our rights to receive royalty and milestone payments due to us related
to XIPERE and certain SCS Microinjector license agreements in exchange for up to
We expect to continue to incur significant and increasing operating losses at least for the next several years. We do not expect to generate significant product or license and other revenue unless and until XIPERE is successfully commercialized by our licensees or until we successfully complete development of, obtain regulatory approval for and commercialize additional product candidates, either on our own or together with a third party. Our financial results may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We expect clinical trial expenses to increase during the remainder of 2022 as a result of our ongoing Phase 1/2a clinical trial of CLS-AX, the preparation of a Phase 2 clinical trial of CLS-AX, as well as continuing our pipeline development. We also will continue our efforts to seek to discover, research and develop additional product candidates. Based on our current research and development plans, we expect to have sufficient resources to fund our planned operations for at least the next twelve months.
Impact of COVID-19 on Our Business
Our financial results for the three and six months ended
Components of Operating Results
License and Other Revenue
We have not generated any revenue from the sale of XIPERE, and we do not expect
to generate any until Bausch has reached the first
Research and Development
Research and development expenses consist primarily of costs incurred for the research and development of our preclinical and clinical product candidates, which include:
•
employee-related expenses, including salaries, benefits, travel and share-based compensation expense for research and development personnel;
•
expenses incurred under agreements with contract research organizations, or CROs, as well as contract manufacturing organizations and consultants that conduct clinical trials and preclinical studies;
•
costs associated with nonclinical activities and development activities;
•
costs associated with submitting regulatory approval applications for our product candidates;
•
costs associated with training physicians on the suprachoroidal injection procedure and educating and providing them with appropriate product candidate information;
•
costs associated with technology and intellectual property licenses;
•
costs for our research and development facility; and
•
depreciation expense for assets used in research and development activities.
We expense research and development costs to operations as incurred. These costs include preclinical activities, such as manufacturing and stability and toxicology studies, that are supportive of a product candidate itself. In addition, there are expenses related to clinical trials and similar activities for each program, including costs associated with CROs. Clinical costs are recognized based on the terms of underlying agreements, as well as an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations and additional information provided to us by our vendors about their actual costs occurred. Expenses related to activities that support more than one development program or activity, such as salaries, share-based
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compensation and depreciation, are not classified as direct preclinical costs or clinical costs and are separately classified as unallocated.
The following table shows our research and development expenses by program for
the three and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
2022 2021 2022 2021
XIPERE (uveitis program) $ 77 $ 402 $ 198 $ 1,875
CLS-AX (wet AMD program) 1,671 763 2,779 2,041
CLS-301 (DME program) 257 256 630 445
Total 2,005 1,421 3,607 4,361
Unallocated 3,425 2,639 6,359 5,189
Total research and development expense
Our expenses related to clinical trials are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services received and efforts expended under contracts with research institutions, consultants and CROs that conduct and manage clinical trials on our behalf. We generally accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity according to the protocol. If future timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we would modify our estimates of accrued expenses accordingly on a prospective basis.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical programs and clinical trials of our product candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our current or future product candidates.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that may include, among others:
•
the costs associated with process development, scale-up and manufacturing of our product candidates including the SCS Microinjector for clinical trials and for requirements associated with regulatory filings;
•
the number of trials required for approval and any requirement for extension trials;
• per patient trial costs;
•
the number of patients that participate in the trials;
•
the number of sites included in the trials;
•
the countries in which the trials are conducted;
•
the length of time required to enroll eligible patients;
•
the number of doses that patients receive;
•
the potential impact of the COVID-19 pandemic on the enrollment in, and timing of, our clinical trials;
•
the drop-out or discontinuation rates of patients;
•
potential additional safety monitoring or other studies requested by regulatory agencies;
•
the duration of patient follow-up; and
•
the efficacy and safety profiles of the product candidates.
In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate's commercial potential.
General and Administrative
General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in executive, finance and administrative functions. General and administrative costs historically included commercial
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pre-launch preparations for XIPERE, and also include facility related costs not otherwise included in research and development expenses, as well as professional fees for legal, patent, consulting, and accounting and audit services.
Other Income
Other income consists of the gain on the extinguishment of the PPP Loan and accrued interest and interest income earned on our cash and cash equivalents. Interest income is not considered significant to our financial statements.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in
We define our critical accounting policies as those accounting principles
generally accepted in
Results of Operations for the Three Months Ended
The following table sets forth our results of operations for the three months
ended
Three Months Ended
June 30, Period-to-Period
2022 2021 Change
(in thousands)
License and other revenue $ 384 $ 780 $ (396 )
Operating expenses:
Research and development 5,430 4,060 1,370
General and administrative 2,791 2,816 (25 )
Total operating expenses 8,221 6,876 1,345
Loss from operations (7,837 ) (6,096 ) (1,741 )
Other income 24 1 23
Net loss $ (7,813 ) $ (6,095 ) $ (1,718 )
License and other revenue. In the three months ended
Research and development. Research and development expense increased by
General and administrative. General and administrative expense was
Other income. Other income for the three months ended
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Results of Operations for the Six Months Ended
The following table sets forth our results of operations for the six months
ended
Six Months Ended
June 30, Period-to-Period
2022 2021 Change
(in thousands)
License and other revenue $ 731 $ 814 $ (83 )
Operating expenses:
Research and development 9,966 9,550 416
General and administrative 6,248 5,709 539
Total operating expenses 16,214 15,259 955
Loss from operations (15,483 ) (14,445 ) (1,038 )
Other income 26 999 (973 )
Net loss $ (15,457 ) $ (13,446 ) $ (2,011 )
License and other revenue. In the six months ended
Research and development. Research and development expense increased by
General and administrative. General and administrative expenses increased by
Other income. Other income for the six months ended
Liquidity and Capital Resources
Sources of Liquidity
We have funded our operations primarily through the proceeds of public offerings
of our common stock, sales of convertible preferred stock, the issuance of
long-term debt and license agreements. As of
On
In
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borrowed. On
In
In
We have entered into an at-the-market sales agreement, or the ATM agreement,
with
Funding Requirements
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, research and development costs to build our product candidate pipeline, legal and other regulatory expenses and general overhead costs. In addition, we have certain contractual obligations for future payments. Refer to Footnote 9 to our financial statements included in this Quarterly Report on Form 10-Q.
The successful development of our product candidates is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of CLS-AX or any future product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from product sales. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:
•
successful enrollment in, and completion of, clinical trials;
•
receipt of marketing approvals from applicable regulatory authorities;
•
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
•
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates; and
•
launching commercial sales of the products, if and when approved, whether alone or in collaboration with others.
A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that candidate.
Until such time, if ever, as we can generate substantial product revenue, we
expect to finance our cash needs through a combination of equity offerings, debt
financings and potential collaboration, license and development agreements.
Other than potential payments we may receive under our license and other
agreements, we do not currently have any committed external source of funds,
though, as described above, we may also be able to sell our common stock under
the ATM agreement with Cowen subject to the terms of that agreement and
depending on market conditions. We expect that we will require additional
capital to fund our ongoing operations. Additional funds may not be available to
us on a timely basis, on commercially reasonable terms, or at all. Our ability
to raise additional capital may be adversely impacted by potential worsening
global economic conditions and the recent disruptions to, and volatility in, the
credit and financial markets in
If we raise funds through additional collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, including any future collaboration or licensing arrangement for XIPERE outside of the territories in which we have previously licensed or granted options to license XIPERE, we may be required to relinquish additional rights to our technologies,
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future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
We also incur costs as a public company, including costs and expenses for fees
to members of our board of directors, accounting and finance personnel costs,
directors and officers insurance premiums, audit and legal fees, investor
relations fees and expenses for compliance with reporting requirements under the
Exchange Act and rules implemented by the
Outlook
We have suffered recurring losses and negative cash flows from operations since inception and anticipate incurring additional losses until such time, if ever, that we can generate significant milestone payments and royalties from XIPERE and other licensing arrangements or revenues from other product candidates. We will need additional financing to fund our operations. Our plans primarily consist of raising additional capital, potentially in a combination of equity or debt financings, monetizing royalties, or restructurings, or potentially entering into additional collaborations, partnerships and other strategic arrangements.
Based on our cash and cash equivalents as of the filing date,
Cash Flows
The following is a summary of the net cash flows provided by (used in) our operating, investing and financing activities (in thousands):
Six Months Ended
June 30,
2022 2021
Net cash provided by (used in):
Operating activities $ (1,572 ) $ (12,509 )
Investing activities - -
Financing activities 69 21,536
Net change in cash and cash equivalents
During the six months ended
During the six months ended
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