Daniel White - CEO Charles Deignan - CFO Glen Noronha - Chief Scientific Officer Dr. Richard Beckman - Chief Medical Officer Stephen Kilmer - IR.

Anupam Rama - JPMorgan Liana Moussatos - Wedbush Securities Annabel Samimy - Stifel Nicolaus Boris Peaker - Cowen & Company Serge Belanger - Needham & Company..

Good day, ladies and gentlemen and welcome to the Clearside Biomedical Inc. Q1 2017 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator instructions]. As a reminder, this call is being recorded.

I would now like to turn the call over to Stephen Kilmer, Investor Relations. You may begin..

Thank you, Michelle. Good morning everyone, and thank you for joining us. 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 most recent annual report on Form 10-K and filed with the SEC, which can be accessed on the Edgar database at www.sec.gov and the other filings we make with the SEC from time to time.

In addition, any forward-looking statements represent our views only 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 at some future point, we specifically disclaim any obligation to do so, even if our views change.

These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today. On the call today representing Clearside are Daniel White, Our President And Chief Executive Officer; Charlie Deignan, our Chief Financial Officer; Glen Noronha, our Chief Scientific Officer; and Dr.

Richard Beckman, our Chief Medical Officer. With that said, I'll now turn the call over to Daniel..

Thank you, Steve. Morning everybody and thank you for joining us for the call today. For the benefit of those of you who are new to Clearside Biomedical’s study, I’d like to take a moment to highlight our company’s mission. Clearside is developing transformative, elegant, precise solutions to restore and preserve vision.

We focus on treatments for diseases affecting the retina and choroid of the eye, especially diseases associated with macular edema and are injected into the suprachoroidal space or I’ll refer to that as the SCS, of the eye using our proprietary SCS microinjector.

By leveraging exclusive access to and proprietary technology for suprachoroidal injection of drugs to access the retina and choroid, we believe that clinicians can more effectively treat diseases like uveitis, Retinal Vein Occlusion or RVO, Diabetic Macular Edema or DME and wet age-related macular degeneration, known as wet AMD.

We believe that administration by suprachoroidal injection provides improved bioavailability to disease areas of the eye which may offer improved onset of action to reach vision goals, fewer injections, additional efficacy and a better risk benefit ratio of our intravitreal injections of the same drug.

With that mission in mind, I'd like to begin with a brief update on our clinical development programs. So let's start with our first and most advanced program, which is the pivotal testing in the United States, CLS-TA via suprachoroidal administration for the treatment of macular edema associated with non-infectious uveitis.

CLS-TA is our preservative-free formulation of the corticosteroid triamcinolone acetonide, specifically designed to be administered suprachoroidally. Non-infectious uveitis is a set of inflammatory conditions of the eye affecting over 350,000 patients in the US alone.

In our Phase 2 Dogwood trial, the results of which we announced in early 2016, we observed significant improvements from baseline in both macular edema and best corrected visual acuity in patients with non-infectious uveitis. We're continuing to enroll in our 150 patient Phase 3 PEACHTREE trial.

Overall, we expect that approximately 90 patients to be randomized into an active treatment arm to receive suprachoroidal CLS-TA, and approximately 60 patients will be randomized into a control arm to receive a sham suprachoroidal procedure with no drug administered. We currently expect to report preliminary results for the PEACHTREE in early 2018.

In our second most advanced program, last year we reported additional topline data from our Phase 2 clinical trial, TANZANITE for macular edema following retinal vein occlusion where patients received suprachoroidal CLS-TA, along with an intravitreal anti-VEGF agent, had improved vision gains with relatively rapid reductions in retinal fluids as compared to outcomes for patients receiving only anti-VEGF monotherapy with an approved agent life trial.

78% of patients in the active arm did not require additional treatments during the three months trial as compared to only 30% of patients in the control arm who did not require additional treatments, a result that was statistically significant.

Based on our positive results from the TANZANITE incorporating feedback from our end of Phase 2 meeting with the FDA, we imitated a Phase 3 clinical trial known as SAPPHIRE in Q1 of 2017, enrolling the first patient in February. SAPPHIRE is the first two multi-center, multi-country, randomized double masked Phase 3 clinical trials in RVO.

Our CSO, Glen Noronha will review the trial design in a few moments. The success of the trial in RVO has also laid the groundwork for us to expand our development programs for CLS-TA to include another retinal vascular condition, Diabetic Macular Edema or DME.

The current standard of care in treating patients with DME is through the use of intravitreal anti-VEGF agents. There's still a significant unmet medical need in this large patient population. That is driven by the fact that approximately 40% of DME patients have insufficient response to VEGF inhibitors.

With this potential to access the retina and choroid in a huge amount, we believe that there is opportunity to more effectively treat DME by administering suprachoroidal CLS-TA concomitantly with intravitreal Eylea when compared to intravitreal anti-VEGF or intravitreal corticosteroids therapies used alone.

To that end, we're very pleased to announce in April of this year, the completion of enrolment in an exploratory clinical trial known as HULK trial in which we are evaluating suprachoroidal CLS-TA with and without intravitreal Eylea for the treatment of DME. Again, Glen Noronha will provide more detail on the HULK study momentarily.

We're also planning a multi-center randomized mass controlled Phase 2 trial called TYBEE to evaluate suprachoroidal CLS-TA along with intravitreal Eylea, compared to intravitreal Eylea only in patients with DME over a six month evaluation period. We expect to enroll the first patient in this trial in mid-2017.

Glen will provide some more details on that trial as well. I'm also very excited that we recently had three additional patents in the United States. These patents further bolster our intellectual property portfolio to help us treat blinding diseases using suprachoroidal delivery of drug to the retina and choroid.

Finally, we continue pre-clinical efforts with multiple collaborations in gene therapy complement inhibition and alternative mechanisms in the treatment of complex retinal diseases. I'll now turn the call over to Glen for a more in depth update and discussion on our pipelines, including our clinical development programs.

Glen?.

Thank you, Daniel. The development teams have had a busy and productive first quarter in 2017. We really appreciate all of their efforts. I’d like to focus my comments today on Clearside’s RVO and DME programs. As Daniel mentioned, we designed and completed a Phase 2 trial, the TANZANITE study in patients with RVO.

This data was presented for the first time at the Retina Subspecialty Session of the American Academy of Ophthalmology annual meeting in October last year, with Dr. David Brown, a prominent retinal physician from Houston in Texas.

In RVO we are exploring that a suprachoroidal CLS-TA, along with intravitreal Eylea as a combination therapy, can provide improved visual acuity, reduce macular edema and reduce treatment frequency as compared to administration of intravitreal Eylea alone used as monotherapy.

Corticosteroids and anti-VEGF agents each have known advantages in the treatment of RVO.

In October 2016, we held an end of Phase 2 meeting with the FDA to discuss the outcomes of the TANZANITE trial and to discuss further developmental efforts to suprachoroidal CLS-TA, along with intravitreal Eylea for the treatment of macular edema due to retinal vein occlusion.

Based in part on these discussions, in February this year, we commenced our first randomized controlled double masked, multi-center, multi country Phase 3 clinical trial for the potential treatment of patients with RVO.

This trial will be conducted at approximately 150 investigational sites across approximately 18 countries and will enroll approximately 460 patients with RVO.

Patients will be randomized to one of two groups, that is through a combination arm in which patients will receive suprachoroidal CLS-TA together with intravitreal Eylea, enrolling approximately 230 patients, or to a control arm in which patients will receive intravitreal Eylea alone, also enrolling approximately 230 patients.

The primary objective of this trial, the SAPPHIRE trial, is to determine the proportion of patients in each arm with the best corrected visual acuity improvement of greater than or equal to 15 letters from baseline at eight weeks after initial treatment.

In the TANZANITE Phase 2 trial, 61% of patients had received a suprachoroidal injection of CLS-TA, along with an intravitreal injection of Eylea, baseline demonstrated a greater than or equal to 15 letters of improvement in (PCP) at eight weeks following baseline, while 39% of patients had received only an intravitreal injection of Eylea at baseline, showed a greater than or equal to 15 letters of improvement in PCP at eight weeks.

I want to turn our attention now to the other major retinal vascular condition we are seeking to treat, diabetic macular edema or DME, in which we have our third clinical program.

As Daniel had mentioned, in April this year we announced the completion of enrolment in an exploratory Phase 1/2 clinical trial, HULK, where we were using suprachoroidal CLS-TA either with or without intravitreal Eylea for the potential treatment of patients with DME.

HULK is an open label multi-center trial evaluating suprachoroidal CLS-TA both alone and in combination with intravitreal Eylea in patients with DME. We currently expect to report preliminary results from HULK in the second half of 2017.

We're also planning a multi-center randomized masked controlled Phase 2 named TYBEE to evaluate suprachoroidal CLS-TA, along with intravitreal Eylea compared to intravitreal Eylea monotherapy in patients with DME over a six month evaluation period.

In this masked randomized controlled trial, patients with DME will be assigned in a one to one fashion through either a combination arm with suprachoroidal CLS-TA and intravitreal Eylea, or to a controlled arm with only intravitreal Eylea. The trial will have a fixed treatment portion for the first three months, followed by an as-needed portion.

While the safety and efficacy would be evaluated in this trial, the primary outcome measure will be best corrected visual acuity, but the combination treatment data will be compared to the monotherapy data.

We expect to enroll the first patient in this trial in the middle of this year and we expect to report three month preliminary data in the first half of 2018. I’ll now turn the call over to our Chief Financial Officer, Charlie, to review our first quarter 2017 financial results.

Charlie?.

Thanks, Glen. Good morning everyone. As we reported this morning, our research and development expenses were $7.6 million for the first quarter 2017, compared to $4.6 million for the same period in 2016, with the increase driven by our ongoing clinical development programs for CLS-TA and an increase in manufacturing costs.

General and administrative expenses in the first quarter of 2017 were $2.7 million compared to $1.3 million last year.

The increase was primarily due to higher employee related expenses, patent and trademark costs, marketing expenses and costs related to being a public company, including increased directors and officers insurance, professional fees and non-employee director compensation.

In the first quarter, net loss was $10.4 million or $0.41 per share, compared to $5.4 million or $2.05 per share for the same period in 2016. As of March 31, 2017, cash, cash equivalents and short term investments totaled $77.5 million.

As we noted in our press release, the decrease reflects the total operating expenses partially offset by $5.1 million received in early January 2017 from the underwriters’ exercise of their option to purchase additional shares as part of our follow-on public offering that initially closed in December 2016.

As Glen and Daniel highlighted earlier on the call, we have been advancing our suprachoroidal CLS-TA development programs, with a continuing enrolment of the Phase 3 trial for non-infectious uveitis, the enrolment of the first patient in the Phase 3 program for RVO in February of 2017, the completion of enrolment of our Phase 1/2 trial for DME in April 2017, and the preparation for our Phase 2 trial for DME that we are planning to initiate in mid-2017.

As we mentioned on our year-end call, we expect our research and development expenses to continue to increase in tandem with these clinical trials. That said, we currently expect our cash resources to take us forward into the fourth quarter of 2-018. And with that, I’ll turn the call back over to Daniel for his closing remarks.

Daniel?.

Thank you, Charlie. This concludes our prepared remarks for today. Before I open the call to questions, I’d like to express my thanks to the entire Clearside team for the tremendous progress we made during the first quarter of 2017.

We have a strong and highly capable team of professionals that consistently deliver on our key corporate goals and we appreciate your commitment to our mission. With that, we will now open the call up for questions.

Operator?.

[Operator instructions]. Our first question comes from Anupam Rama of JPMorgan. Your line is open. .

Hey guys, thanks so much for taking the question. Just a question on the PEACHTREE trial. Just wondering kind of enrolment curve has looked over the last several months and a little bit more color on your enrolment curve. Thanks so much. .

This is Daniel. We've seen an improved enrollment curve over the last several months and clearly as we’re walking into the last part of this trial, we feel optimistic that we continue to talk about the fact that we have data by first quarter of 2018 given the six month trial. So that’s a positive in our line.

We feel optimistic and hope to continue the enrollment rates where we see it the last few months..

Great. Thanks so much for taking my questions. .

Our next question comes from Liana Moussatos of Wedbush Securities. Your line is open. .

Thank you for taking my question. In a press release there's a section on collaborations.

Can you talk about if any of the collaboration could end up with license deals by the end of the year?.

Thank you, Liana. Right now I can't promise any kind of deals by the end of the year. I’m still - the further we've gone at the clinic, we've seen a major uptick in interest from other companies to evaluate their proprietary compounds, as well as interest in our own programs outside the United States.

And as we evaluate each opportunity, we typically like to determine if the opportunities are going to be successful as we see scientifically. So we are evaluating a number of different collaborations, have dedicated a team to these collaboration because this was too much to handle from the company’s point of view.

So we didn't want to distract from our core efforts around our pipeline and this team is quite busy. So we really - I’d love to say today that we're going to have a deal by the end of the year, but we want to have the right deal. So I don't - I can't promise in that respect.

Thank you. .

Our next question comes from Annabel Samimy of Stifel. Your line is open..

Hi guys. Thanks for taking my questions. Can I just ask you, in the Phase 3 protocol, did FDA ask you for any long term safety studies beyond the three months or the six months that you're doing right now? We’ve had the recent experience of FDA sometimes changing their mind on these things.

And then secondly, what division at the FDA is going to be reviewing this product? Is it going to be a drug device? Are you going to be filing any kind of that information? Can you just help us out there? Because again we've had experience where FDA changed their mind there. So if you could answer, that would be great. .

Annabel, this is Daniel. Before I turn this question over to Glen, because I want him to answer it, I want to commend the FDA for working with us anyway. I think they’ve been collaborative and responsive and the experience has been a positive one to date. So Glen, if you would answer Annabel’s question, that would be great..

Thank you, Daniel. Thanks for the question, Annabel. Your first question I assume pertains to non-infectious uveitis. So we have discussed and agreed on six months of safety. We of course cannot predict if the FDA changes their minds.

Our intention is to give them all our safety data from the six months and that's the current agreement that we have with them. Now, obviously we'll be giving them all the other data that we have as well as we go along and any longer term information that we have, but our only commitment right now is to six months of safety.

With regard to your second question, in the US, we are regulated as a drug and there is a specific guidance in the Court of Federal Regulations that is specific to ophthalmology that says when you co-package a dispensing device along with a drug, it's got to meet certain requirements, but it's regulated as a drug.

Now of course again, if the FDA decides to change their mind at some point, that would be different, but as Daniel pointed out, we've had a really good working relationship with the FDA and we assume that we're going to continue to submit as a drug.

We'll have all the information ready if they require something else, but that's our assumption right now, and has been the case for all the discussions that we've had subsequent to the early discussions we’ve have had on this being regulated as a drug..

Okay, and if I could just follow up on - so the six - you have all the six months safety.

Is it - I mean given it's triamcinolone, is it going to be a 505(b)(2) where you can reference the safety of triamcinolone from prior studies that have been done from triamcinolone it’s been out in the market already?.

That's correct. So we are going to be submitting a clinical study report with all the literature as part of our submission and all the literature on macular edema associated uveitis with the use of triamcinolone that's available in the entire medical and scientific literature. We will be submitting those data to the FDA. .

Okay, great. Thank you. .

[Operator instructions]. Our next question comes from Boris Peaker of Cowen. Your line is open..

Great. Thanks for taking my question. I just want to probe a little more in the RVO study, and I apologize.

I dialed a little late, so I don't know if you've made comments, but what has been the initial physician feedback from the Phase 3 RVO clinical trials? Is there any particular challenges in enrolling it or is there any kind of feedback on the device itself? Just curious kind of initial thoughts. .

Thanks, Boris. This is Daniel. Before I turn this over to Rick, I think it would be appropriate for him to try to answer the kinds of physician interactions.

If you recall in the data, just to summarize very quickly, we’re seeing or saw in the TANZANITE study that 51% of these patients in combination arm had a three line improvement in vision compared to 39% with Eylea alone.

Also we saw this decreased - dramatic decrease in the amount of injections required over that three month period, that where we saw 18 to 23 patients did not have the injection or rescue in the control arm. And then where seven only in the - have had additional injections.

And one of the number one market problems is that this frequency of intravitreal injections compared - or in this particular disease, which is one of the most aggressive VEGF related diseases that we deal with. So having that backdrop, why don’t I let Rick talk a minute about the patient or the physician feedback we’ve been getting today..

Thanks, Daniel. Yes. So what's been happening and we just got back and I know Daniel and Glen are still there from the (indiscernible) conference, there's a tremendous amount of buzz about our RVO study, and I'm not just talking about here in the United States, but throughout the world.

The basic comments that people have is they like the technology and they want to be involved in the study. So we're getting cards every day from investigators who want to be involved. With regard to the United States clinical trial, people are very excited about it and enrollment is brisk..

And remind me, how many centers do you have currently and how many do you plan to have ultimately for the study?.

So the total number of sites I believe, this can be anywhere of 150 and maybe Glen has a better number than I have. I think that we have somewhere in the range of 30 or so sites open in the United States right now, but I’m not positive..

We're going to have a total of 60 in the US and the rest are going to be global sites. That’s correct, Rick, what you said. .

Great. Okay. Well, thank you very much for taking my question..

Our next question comes from Serge Belanger of Needham & Company. Your line is open. .

Good morning. Just had a couple of questions. First on these upcoming results from the HULK study, just wanted to see if you could provide maybe a preview of what you expect, especially the difference between some of the naïve patient and some of the treatment experience patients.

And how does the HULK study fit into the design of the Phase 2 TYBEE study that you're initiating in a couple of months?.

Thanks, Serge.

Why don’t I let Glen answer that question?.

Thank you, Daniel and thank you for the question, Serge. So the HULK study has two arms. The treatment naïve patients can skip the combination. Those who have already received treatment previously get only the monotherapy CLS-TA given suprachoroidally.

So the commonality is that in the TYBEE study, the treatment arm with the combination is similar to the one that went HULK. So what we're looking to gain out of the HULK study is to get an initial read on what the combination does in treatment naïve patients.

And that arm as I mentioned, will be common within the TYBEE, the Phase 2 study, except of course the control randomization is different because the Phase 1 study is not controlled and randomized. So the treatment experience patients, all the treatment naïve patients, we don't know how they're going to do.

that's why we’re doing the experiment and once we get the information, we'll be able to better inform you and everybody else in terms of how patients respond to monotherapy, how patients respond to combination therapy in terms of using suprachoroidal CLS-TA along with intravitreal Eylea..

Okay.

How long is the treatment period in the HULK study?.

In HULK it’s six months. .

Okay. And then moving on to, in terms of manufacturing, starting at mid-year you'll be in three trials. Just wanted to get an update on where you are in terms of capacity for manufacturing the device and where you are in terms of costs per unit. .

Great. This is Daniel. So we set forth this effort in developing a microinjector, we put a lot of effort now on manufacturing. And we see some example in this business where people have had some hiccups when it comes to that.

So that's been a large focus and we often talk about our clinical results, but that does not mean we don't have our eye on the eye on the manufacturing side. We have two contract manufacturers, one for the device and one for the drug product for (transference).

Both facilities are ahead of schedule in fact on developing the final commercial lots and packaging for the clinical trial with supporting stability and supporting efforts.

And we've been able to do this at a cost of goods that we often comment somewhere between high capacity, somewhere - where we’re somewhere around the less than $10 range and very low volumes, basically just over $10. And so given that cost of goods, we leave a lot of economics around what we can do with price.

And we've been looking at different models. We hired a new market access person who’s developing our - who has since developed relationships with key providers and we're beginning the process to really start to narrow down where we would sit in the overall story, particularly with the high cost of multiple injections of VEGF inhibitors.

So we feel like this is an area that we are on top of early. And the manufacturers are superb. I mean they’re just - so we feel like they're going to be - there's nothing, any type of a hiccup or challenge in the manufacturing side..

Okay. Thanks for the update. .

There no further questions. I’d like to turn the call back over to Daniel White, CEO, for any closing remarks. .

Well, thank you once again for joining the call today. We appreciate your continued interest in Clearside and we look forward to updating you on progress in the months ahead. Operator, you can now disconnect..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day..