Brion Raymond - Chief Commercial Officer Charles Deignan - CFO & Secretary Daniel White - Founder, President, CEO & Director Glenn Noronha - Chief Scientific Officer Stephen Kilmer - IR Thomas Ciulla - Chief Medical Officer.

François Brisebois - Laidlaw & Company Nicholas Rubino - Stifel, Nicolaus Serge Belanger - Needham & Company Tessa Romero - JP Morgan.

Good day, ladies and gentlemen, and welcome to the Clearside Biomedical Inc. Third Quarter 2018 Financial Results and Corporate Update Call. [Operator Instructions] As a reminder, today's conference may be recorded. I would now like to turn the call over to Stephen Kilmer, Clearside Investor Relations. Sir, you may begin..

Thanks, Victor. 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 for the year ended December 31, 2017, on file 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; Glenn Noronha, our Chief Scientific Officer; Charlie Deignan, our Chief Financial Officer; Brion Raymond, our Chief Commercial Officer; and Dr. Thomas Ciulla, our Chief Medical Officer. With that said, I will now turn the call over to Daniel..

Thank you, Steve. Good morning, everyone. Thank you all for joining us on the call today. Before we begin, let me briefly lay out the agenda for today's call. I'll be catching you up on the Clearside story, Brion will provide an update on our commercial organization as we approach our near-term market opportunity in non-infectious uveitis.

Glenn will take you through some additional PEACHTREE analysis that we presented a couple weeks ago at the American Academy of Ophthalmology, and Tom will provide an update on our pipeline, Charlie will discuss our financial results. And finally, I will summarize our discussions and we will then have time at the and of the call for Q&A.

For the benefit of those who are new to the Clearside Biomedical story, I'd like to take a moment to describe our pipeline, our potential treatments for blinding diseases of eye.

Our lead product candidate, XIPERE, is a proprietary suspension of corticosteroid triamcinolone acetonide formulated for administration to the back of the eye of the suprachoroidal space, which is a space located between the choroid and the outer protective layer of the eye that is the sclera.

XIPERE is being studied as part of Clearside's pipeline of treatments for unmet or underserved sight-threatening eye diseases that manifest in the retina and choroid. Specifically, macro edema associated with uveitis which are lead indication.

Corticosteroids have been demonstrated to be useful in the retina and uveitis specialists' fight against blinding diseases like uveitis, retinal vein occlusion, or RVO, and diabetic macular edema, or DME.

In uveitis, the XIPERE demonstrated in the pivotal Phase III study, called PEACHTREE, a successful strong clinical profile in the treatment of patients with uveitic macro edema. As we have mentioned in the past, we are on plan to submit our first NDA for this indication in the fourth quarter of 2018.

Based upon the review of our Phase II TYBEE data and current utilization steroids in DME patients, we also believe there's an opportunity to help maintain vision in DME patients, a patient population that has been shown to have issues with treatment compliance.

We are evaluating options for clinical trial that can best demonstrate the potential benefit from XIPERE as a monotherapy.

As our CMO, Tom Ciulla, will discuss later in the call, we're also working to select and prioritize new discoveries beyond XIPERE to treat sight-threatening conditions that may benefit from our proprietary suprachoroidal treatment approach. I'll now turn the call over to Brion to provide a brief commercial update on uveitis.

Brion?.

Thanks, Daniel. The global uveitis market is expected to reach about $1 billion by 2024 in the United States and affects approximately 350,000 patients. Macular edema occurs in approximately 1/3 of all noninfectious uveitis eyes and is the leading cause of vision loss in these patients.

Additionally, approximately 50% of patients treated with today's uveitis therapies still have macular edema after their course of treatment. If approved by the FDA, XIPERE will be the first therapy with this indication and a new option for patients with macular edema associated with uveitis.

The recent publication of the points study, while not comparable to the PEACHTREE trial, instilled confidence in our team and may explain the excitement we've been hearing from thought leaders regarding XIPERE's clinical profile.

Additionally, since patients with uveitis in all anatomic locations of the eye were accepted into our trials and considering the uveitic inflammation results presented at AAO for XIPERE, we are confident we'll be able to differentiate our drug should we received FDA approval.

In the past quarter, we have grown our commercial team and assembled a cross functional team that is dedicated to ensuring we're ready for launch should the FDA approve XIPERE.

We're working up a detailed launch playbook to ensure all parts of the Clearside organization remain on track for launch readiness, and we've made significant progress toward our launch preparations, particularly in the most important areas of market access and reimbursement, physician education and training programs, packaging and manufacturing.

Our team brings decades of experience in ophthalmology and broad relationships within the retina and uveitis communities with experience from Genentech, Santen, Novartis, Eyetech and Ophthotech.

We're confident if the FDA approves XIPERE, that we will be ready to efficiently reach the uveitis and retina specialists who manage these patients in the U.S. Now I'd like to turn it over to Glenn Noronha to share more about the recent data presented at the AAO..

anterior, intermediate, posterior and pan-uveitis, who are treated with XIPERE, achieved significant visual improvement compared to patients in the control arm.

In the XIPERE treatment group, the main changes on baseline in best corrected visual acuity at week 24 by each of these anatomic locations where improvements of 14.4 letters, 13.4 letters, 15.6 letters, and 12 letters for anterior, intermediate, posterior and pan-uveitis patients, respectively.

This compared to 2.9, 6.7, 1.4 and 1.6 letters for the patients in sham control arm. Each of these changes when comparing the XIPERE arm to the control arm, were statistically significant at week 24. We are on track to submit our NDA for XIPERE for macular edema associated uveitis by the end of this quarter.

We are also on plan to pursue marketing authorizations outside the U.S. subsequent to our filing of the NDA. I'll now turn the call over to our new Chief Medical Officer, Tom Ciulla, to briefly review the rest of our pipeline.

Tom?.

Thanks, Glenn. As many of you know, I'm relatively new to the Clearside team having just joined the organization as CMO in October.

But I've been following the company's suprachoroidal approach to the treatment story for sometime now, and I believe patients and clinicians may be well served by the introduction of new treatment options that this proprietary approach has the potential to provide.

Clearside's proprietary suprachoroidal treatment approach is designed to enable rapid dispersion of medicine to the back of the eye so that adequate medicine reaches and remains at the site of disease, maximizing the potential to act longer. This approach has potential to provide efficacy advantages.

Also, it could reduce treatment burden by requiring fewer treatments and doctors visits. In addition, it could minimize exposure and harm to the surrounding healthy part of the eye that has been associated with other local corticosteroids, whether given topically, intravitreally or periocularly.

As Daniel mentioned, following uveitis, our next most advanced XIPERE developmental program is in diabetic macular edema. In mix, most advanced XIPERE developmental program is in diabetic macular edema.

In May of 2018, we completed a Phase II clinical trial, which we referred to as TIDY, evaluating the safety and efficacy of administering a combination of intravitreal EYLEA and XIPERE to patients with DME as compared to intravitreal EYLEA alone.

This study addressed the very important issues of treatment compliance and treatment burden for DME patients, which are significant barriers to optimal treatment.

When we look at real-world data, for example, the average DME patient only receives three to seven injections in their first year of treatment rather than the eight or approximately monthly intravitreal anti-VEGF injections that are recommended.

These real-world DME patients only gained approximately five letters in vision whereas highly compliant patients have the potential to gain 10 to 12 letters as suggested by Phase III clinical trials. With current anti-VEGF agents, clinical benefit diminishes after six to eight weeks.

Since patient vision was still maintained after three months with XIPERE used in combination with the anti-VEGF EYLEA in the TYBEE trial, these data demonstrate XIPERE has potential to maintain and extend visual gains.

More specifically, in our six month TYBEE trial with quarterly dosing, we've demonstrated that over 10 letters addition could be maintained suggesting that a quarterly dosing paradigm of XIPERE could address this very important treatment burden issue in diabetic macular edema patients.

We have consulted with our scientific and medical advisers to evaluate outcomes of the Phase II TYBEE trial in diabetic macular edema, including the potential to address treatment burden, and we are now developing our plan for the DME program.

Based on recent approvals by the FDA and EMA, we believe there's a regulatory path forward for XIPERE and DME. In addition, I'm very excited about the future of our suprachoroidal platform. As Daniel alluded to, we are conducting nonclinical research and leveraging collaborations to realize the full potential of suprachoroidal delivery.

Of note, the team working with gene therapy companies has demonstrated an ability to transfect and express marker genes in both nonhuman primates as well as rabbits using both viral and nonviral DNA approaches.

We plan to consider this promising preclinical work and we look forward to reporting additional results from these preclinical studies next year. I'll now turn the call over to our Chief Financial Officer, Charlie Deignan, to review our third quarter 2018 financial results.

Charlie?.

Thanks, Tom. And on behalf of everyone at Clearside, welcome to the team. As we reported this morning, our research and development expenses were 20.1 million for Q3 2018 compared to 16.1 million for the same period in 2017.

As expected, we had an increase in R&D costs associated with our clinical development program in retinal vein occlusion and partially offset by a decrease in cost associated with our uveitis program, the PEACHTREE trial that was completed.

While we are still analyzing the full impact from our recent decision to discontinue our SAPPHIRE and TOPAZ trials, it is reasonable to expect that overall research and development expenses will decrease over the next few quarters.

General and administrative expenses in the third quarter of 2018 were 3.9 million, up from 2.3 million in the 2017 third quarter. The increase was primarily due to higher employee-related costs and marketing expenditures to support the potential commercialization of XIPERE for uveitis.

The third quarter 2018 net loss was 23.9 million or $0.75 per share compared to 18.3 million or $0.72 per share for the same period in 2017. As of September 30, 2018, cash, cash equivalents and short-term investments totaled 64.9 million.

Based on the estimated reduction in R&D expenses that we expect to come with the previously discussed discontinuation of our combination therapy development and including our anticipated available borrowing capacity under our debt facility, we believe that we will have sufficient resources to fund our planned operations into the first quarter of 2020.

And now I'll turn the call back over to Daniel for his closing remarks.

Daniel?.

Thank you, Charlie. To summarize, at the same time we have been working to advance our commercial readiness, the awareness and acceptance of XIPERE's clinical profile for potential treatment of uveitic macular edema has continued to build among researchers and clinicians.

We are confident that we will complete our objective to file the NDA for XIPERE in the fourth quarter and be ready for a successful launch of XIPERE in 2019 should we receive approval. 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 significant progress we've made in the third quarter. We have a strong and highly capable team of professionals that have consistently delivered on our key goals, and we anticipate our commitment to our mission.

With that, we will now open the call up for questions.

Operator?.

[Operator Instructions] And our first question comes from the line of Anupam Rama from JPMorgan. Your line is now open..

This is Tessa on for Anupam this morning.

Maybe one from our side, what your market research has suggested for the potential pricing bandwidth for XIPERE in uveitis? And commercially, how you are thinking about the size and the scope of a potential sales force here in the U.S.? And then related, what additional training would be required by a retina specialist to use the product?.

Thank you, Tessa. Why don't I let Brion Raymond, our Chief Commercial Officer, answer that question..

We've completed our cost effect in this modeling and our interviews with payers. And while it's a little too early to give a band of pricing, we're encouraged by the results that we've seen. I think the improvement and safety profile gives us decent pricing power, let's say, in the market.

From a sales perspective, we are in the process of looking at our territory alignments. But I'm confident that we will be able to reach this -- reach the retina and uveitis community with between 20 and 30 sales reps at our most efficient sizing. And then finally, the additional training.

Yes, this procedure, it's not an intravitreal injection and it requires some technique. And fortunately, through our trials, many of our top advisers and many retina specialists have already been trained.

But we will -- we are working on a multi-faceted injection training program that we'll put in place immediately at launch to train the remaining retina specialists and uveitis specialists in the community..

And our next question comes from the line of Annabel Samimy from Stifel..

This is Nick Rubino on from Annabel Samimy.

Looking ahead, the potentially new programs to use for your platform, we're interested to see if you've tried the CFC technology with any other compounds? Or if you have any theories or predictions as to what compound this may be valuable with? I know you mentioned some preclinical work you have in gene therapy so maybe some additional color or thoughts behind that work also?.

Nick, I'll let -- why don't I let Tom answer that question? Additionally, maybe, Brion, you can add to it..

As I mentioned in my prepared remarks, I'm very excited about this platform. I think it has real potential to treat some very serious retinal diseases because of its unique access and ability to achieve high drug levels where we need it to the target choroid retinal tissues.

Glenn, our Chief Scientific Officer, can elaborate further, but he's led some very intriguing preclinical work both in rabbits and in nonhuman primates, showing that we can have reporter genes expressed in this preclinical models using our suprachoroidal platform.

Glenn, do you want to elaborate?.

So within our preclinical gene therapy work, we have shown and presented information from our work in rabbits where we've used nonviral methods of getting genetic material with a reporter gene and presented this last -- it's actually earlier this year at the ARVO meeting, which was in Honolulu.

In addition, we have worked in primates, nonhuman primates where have demonstrated the same thing. And we've looked at this both with nonviral as well as viral approaches. And we're working both with the academic as well as other collaborators in terms of doing this kind of work. And we are really pleased with the results, which are reproducible.

And we are planning our programs in multiple areas within this particular facet of gene therapy. In addition, we have multiple small molecule approaches that we are looking at for some of the back of the eye diseases, some of the key back of the eye diseases.

We're not yet ready to disclose what the molecules are and what these particular diseases are, but we have some encouraging preclinical data both in terms of distribution as well as in some of the early pharmacodynamic models..

And our next question comes from the line of Serge Belanger from Needham & Company..

A couple of questions for me.

First, on the point study, can you talk a little bit more about the observations from that study and the potential implications related to XIPERE in uveitis?.

Yes, I think that -- thank you, Serge. Tom, why don't you take....

As you know, XIPERE, the point study randomized 235 patients to OZURDEX, intravitreal triamcinolone, a periocular triamcinolone. And in the intraocular approaches, that is OZURDEX and intravitreal triamcinolone, there was a 9-letter improvement versus the periocular approach where there's a 4-letter improvement.

In terms of side effects, 32% at 8 weeks and 39% at 24 weeks required medications to treat ocular hypertension. And although it's not completely appropriate to conduct cross-trial comparisons, we often do as clinicians, because it helps us guide treatment in the clinic.

And the -- our uveitis program, our PEACHTREE trial results compared favorably to the point study.

Glenn, do you want to elaborate?.

So PEACHTREE itself, as you're well aware, we have talked multiple times about the data from PEACHTREE. And PEACHTREE showed close to 14-letter main improvement in visual acuity, really terrific reductions in macular edema, improvements for those who had 20/40 vision as well as our safety profile was quite useful.

And if you look at the safety profile, we had 11.5% increase in intraocular pressure. So we are really encouraged in terms of PEACHTREE, in terms of both the efficacy and the safety data.

We also had two third of the patients, as I was mentioning during my prepared remarks, two third of the patient showed resolution in their signs of inflammation within our study.

So the overall profile of XIPERE in looking at -- in terms of looking at signs of uveitis, in terms of reductions in macular edema, in terms of improvements in vision as well as the associated safety are really encouraging pieces of information to us and makes XIPERE rather unique in terms of its profile, both from an efficacy and a safety standpoint..

Because what it did is it created a debate among the uveitis specialist in the treatment of macular edema across different steroid approaches. So it helped them kind of understand what these different nuances might be.

I would say that from the conversations I've been having with KOLs that I think there is an openness to new approaches and new changes in this space. But just comparing steroids across any indication, I think, is very interesting that the study was -- there's some new changes in the space.

Well, just comparing steroids across any indication, I think, is very interesting that the study was run..

And as you think of XIPERE and its monotherapy -- a potential monotherapy role in DME and RVO, what does the clinical development pathway look for those indications? And should we think it will follow in the steps of an OZURDEX or an ILUVIEN?.

That's a great question. I think in the past few months, we've been talking with many of our thought leaders as well as considering many of the regulatory potential pathways for this product. I think we're in the process of finalizing our thinking around that.

We haven't made a commitment yet to that trial as we're completing our design, trying to understand what will happen there. And I think that's something that we will update in the coming year..

[Operator Instructions] Our next question comes from the line of François Brisebois from Laidlaw..

A couple have been answered here.

But so I'm just wondering, how comfortable are you with -- I saw launch mentioned in 2019? Is that very much towards the later part of the year? Or is this not set in stone kind of guidance right now?.

That -- as far as our guidance is concerned, we have to -- we can only say that we're going to file our NDA by fourth quarter. I think we need to look toward what the FDA is going to decide on next steps, I can't speak for them.

But we feel confident that we're in the process of -- we feel confident that we're going to file our NDA by the fourth quarter..

Okay, great. That's what I was thinking. And so in terms of DME and RVO, I know Serge asked on the monotherapy.

But I was just wondering, you compare it to an OZURDEX or whatnot, with the anti-VEGFs having an effect in both DME and RVO, is this something that you guys would go more, thinking more of a second line therapy?.

So we have not yet finalized the appropriate approach, and we have been really transparent. So what we have, what we're going to do, we'll be talking about this when we're ready to do that. We've not decided on the exact course of action in terms of the specific study designs..

But I will say, you're right, Frank. Steroids are often used in these diseases. So we've been able to compare favorably when we think about uveitis. And so we're going to take that same concept as far as durability and safety and to our decision-making concepts..

And then the last one might because you guys aren't giving much yet on the -- not much information on the monotherapy effort here.

I was just wondering in terms of the cost saving, Charlie, did I hear that on the R&D side, this would be a couple of months, I was just wondering if you guys do go into DME, RVO, the timing of that when that would pick back up because, obviously, these trials would be pretty expensive?.

Yes. Frank, so as we said, we're allocating our resources primarily focused on the NDA filing and launching in uveitis. If funding were to become available as we achieve our milestones in 2019, we could see an amount of trials in the possibility. But what I want to say about our burn is we spent approximately 20 million in R&D in Q3.

And of that 20 million R&D, 14 million was related to RVO trials. So we'll see a pretty significant reduction in our expenses. And shutdown of these trials, we're going to do properly and sufficiently as we can. So it's probably two or three months of that remaining.

But again currently, we don't have any planned clinical trials budgeted for DME or RVO..

And I'm not showing any further questions. I'd like to turn the call back to Daniel White for closing remarks..

Thank you once again for joining us on the call today. We appreciate your continued interest in Clearside. And we look forward to updating you on our progress in the months ahead. Operator, you may 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..