Clearside Biomedical(US:CLSD)2024-03-11 16:00PART I Item 1. Business Clearside Biomedical, Inc. is a biopharmaceutical company focused on developing and commercializing therapies for retinal diseases using its proprietary suprachoroidal space (SCS) injection platform and SCS Microinjector - Clearside Biomedical is a biopharmaceutical company leveraging its proprietary SCS injection platform and SCS Microinjector to deliver therapies to the back of the eye for sight-threatening diseases25116476 - XIPERE (triamcinolone acetonide injectable suspension) was approved by the U.S. FDA in October 2021, marking the first approved therapeutic delivered into the SCS and the first therapy for macular edema associated with uveitis23116477 - The company's lead internal product candidate, CLS-AX (axitinib injectable suspension), is a tyrosine kinase inhibitor (TKI) for wet AMD, currently in a Phase 2b clinical trial (ODYSSEY) with topline data expected in Q3 2024153159168 - The SCS Microinjector has been used in thousands of injections in clinical trials and is commercially accepted, with over 1,200 retinal physicians trained in the U.S. following XIPERE's launch29 - A permanent Category 1 CPT code for suprachoroidal injection of pharmacologic agents was granted on January 1, 2024, which is expected to facilitate better access, insurance coverage, and adoption of the procedure146131 - Clearside has established collaborations with Bausch + Lomb (XIPERE commercialization in US/Canada), Arctic Vision (XIPERE commercialization in Asia Pacific), REGENXBIO (AAV-based gene therapy delivery), Aura Biosciences (ocular oncology), and BioCryst Pharmaceuticals (plasma kallikrein inhibitor for DME)31176188191199208215 - The company's patent estate includes 28 granted U.S. patents and over 80 European and international patents covering SCS delivery technology, devices, and drug formulations, with expected expiration dates between 2027 and 204238156 - As of December 31, 2023, Clearside Biomedical had 30 full-time employees, all located in the United States142 Overview Clearside Biomedical is a biopharmaceutical company focused on revolutionizing therapy delivery to the back of the eye via the suprachoroidal space (SCS) - Clearside Biomedical is a biopharmaceutical company focused on revolutionizing therapy delivery to the back of the eye via the suprachoroidal space (SCS)25 - The company leverages its SCS injection platform for internal R&D targeting retinal diseases and external collaborations with other ophthalmic therapeutic companies23 - XIPERE, the first approved therapeutic delivered into the SCS, was approved by the U.S. FDA in October 2021 for macular edema associated with uveitis23 Our Suprachoroidal Space (SCS) Injection Platform The SCS injection platform is a novel, patented approach for targeted and compartmentalized delivery of pharmacotherapy to the macula, retina, or choroid, using a proprietary SCS Microinjector - The SCS injection platform is a novel, patented approach for targeted and compartmentalized delivery of pharmacotherapy to the macula, retina, or choroid, using a proprietary SCS Microinjector25137 - This non-surgical method uses a one-millimeter needle to inject fluid into the SCS, allowing it to spread posteriorly and precisely target affected cells, potentially improving vision and minimizing harm to non-diseased tissues13714447 - Compared to intravitreal injections, SCS delivery offers potential benefits such as a non-surgical procedure, lower administration frequency, limited exposure to non-targeted tissues, faster therapeutic onset, and an improved safety profile144 Our SCS Microinjector The SCS Microinjector is designed for targeted drug delivery into the SCS, aiming to improve efficacy and compartmentalization while reducing toxic effects on healthy cells - The SCS Microinjector is designed for targeted drug delivery into the SCS, aiming to improve efficacy and compartmentalization while reducing toxic effects on healthy cells55 - It consists of a syringe and two 30-gauge hollow microneedles (approx. 1mm each) within a custom hub, optimizing insertion and suprachoroidal administration30 - The device has been used in thousands of clinical injections and is commercially accepted, with over 1,200 retinal physicians trained in the U.S. following XIPERE's launch29 - A permanent Category 1 CPT code for suprachoroidal injection was granted on January 1, 2024, expected to enhance access, insurance coverage, and adoption146 Our Pipeline Clearside Developed Programs CLS-AX (axitinib injectable suspension) CLS-AX is Clearside's most advanced internal product candidate, a proprietary suspension of the TKI axitinib for suprachoroidal injection, targeting wet AMD, aiming for longer-duration maintenance therapy with pan-VEGF blockade and a favorable safety profile, with Phase 2b ODYSSEY trial topline data anticipated in Q3 2024 - CLS-AX is a proprietary suspension of the Tyrosine Kinase Inhibitor (TKI) axitinib for suprachoroidal injection, developed as a long-acting therapy for wet Age-related Macular Degeneration (AMD)153 - Axitinib offers pan-VEGF blockade by inhibiting VEGF receptors-1, -2, and -3, potentially providing efficacy advantages over existing therapies that primarily target VEGF-A162 - Preclinical studies showed CLS-AX delivered via SCS injection was well-tolerated, demonstrated durability over several months, and achieved up to eleven times higher drug levels in affected tissues compared to intravitreal administration171 - The Phase 1/2a OASIS clinical trial (n=27) for wet AMD met primary endpoints, showing CLS-AX was well-tolerated with no serious adverse events, inflammation, vasculitis, or vitreous floaters163165167 - OASIS extension study data showed promising durability, with 77%-85% reduction in treatment burden compared to pre-CLS-AX injections, and stable mean BCVA and CST to the six-month timepoint173 - OASIS Extension Study: Duration Without Additional Therapy (n=12) | Duration Without Additional Therapy | Number of Participants (n=12) | | :---------------------------------- | :---------------------------- | | ≥ 3 Months | 11/12 (92%) | | ≥ 4 Months | 10/12 (83%) | | ≥ 6 Months | 8/12 (67%) | | > 6 Months | 6/12 (50%) | - The randomized, controlled, double-masked Phase 2b ODYSSEY clinical trial for CLS-AX in wet AMD began enrolling participants in May 2023, completed randomization in December 2023, and expects topline data in Q3 2024168 XIPERE (triamcinolone acetonide injectable suspension) for suprachoroidal use XIPERE, a proprietary, preservative-free suspension of triamcinolone acetonide, is Clearside's first FDA-approved product for macular edema associated with uveitis, offering a targeted anti-inflammatory treatment via SCS injection to minimize systemic side effects - XIPERE is a proprietary, preservative-free suspension of the corticosteroid triamcinolone acetonide (TA) approved by the FDA for suprachoroidal use181 - It is approved for the treatment of macular edema associated with uveitis, a condition affecting approximately one-third of uveitis patients and a leading cause of vision loss182 - SCS delivery of XIPERE aims to treat ocular inflammation effectively while minimizing significant side effects like cataract formation and elevated intraocular pressure (IOP) often seen with other local corticosteroid deliveries181 External Collaborations Pipeline License agreement for commercialization of XIPERE in United States and Canada Clearside has an exclusive license agreement with Bausch + Lomb for the commercialization of XIPERE in the United States and Canada, including upfront, regulatory, and sales-based milestone payments, along with tiered royalties on net sales, though Clearside's rights to these payments have been sold to HCR - Clearside granted Bausch + Lomb an exclusive license to develop, manufacture, distribute, promote, market, and commercialize XIPERE and other specified steroids/NSAIDs using the SCS Microinjector in the U.S. and Canada188880 - Bausch paid Clearside an upfront payment of $5.0 million, a $5.0 million milestone upon FDA approval of XIPERE, and an additional $10.0 million for pre-launch activities183665 - The agreement includes potential additional milestone payments up to $55.0 million for regulatory approvals of new indications and specified annual net sales levels, plus tiered royalties from high-teens to twenty percent on net sales (after the first $45.0 million of cumulative net sales)183665 - Clearside's rights to these royalties and milestone payments have been sold to HealthCare Royalty Management, LLC (HCR) under a Purchase and Sale Agreement183665 License agreement for commercialization of XIPERE in China, Hong Kong, Macau, Taiwan and South Korea, India, ASEAN Countries, Australia and New Zealand Clearside has an exclusive license agreement with Arctic Vision for XIPERE's commercialization in a broad Asia Pacific territory, including China, South Korea, India, ASEAN countries, Australia, and New Zealand, with Arctic Vision actively developing XIPERE (branded as Arcatus) in these regions, and Clearside receiving upfront and milestone payments and tiered royalties, though these rights are also subject to the HCR royalty sale - Clearside granted Arctic Vision an exclusive license to develop and commercialize XIPERE in China, Hong Kong, Macau, Taiwan, South Korea, India, ASEAN Countries, Australia, and New Zealand191185785883 - Arctic Vision paid an upfront payment of $4.0 million and a $4.0 million milestone upon FDA approval of XIPERE in the U.S., plus $3.0 million for territory expansion193185785635 - Arctic Vision is pursuing development of XIPERE (branded as Arcatus), having dosed the first patient in a Phase 1 trial for diabetic macular edema in China and completed enrollment in a Phase 3 trial for uveitic macular edema in China192 - The agreement includes potential development and sales milestone payments up to $22.5 million and tiered royalties of 10% to 12% of net sales in the Arctic Territory193635 - Clearside's rights to these royalties and milestone payments have been sold to HealthCare Royalty Management, LLC (HCR)193635 Gene Therapy Clearside is expanding its SCS injection platform into gene therapy through collaborations, believing it offers a safer, targeted, and non-surgical alternative for ocular gene therapy delivery, avoiding risks associated with subretinal surgery and enhancing patient access to care - Clearside's platform offers potential for safer, targeted ocular gene therapy without the risks of surgery and subretinal administration, enhancing access to care195 - Preclinical studies have shown SCS injection can administer both viral and non-viral gene therapy, achieving expression in the retina and choroid in rabbits and non-human primates197 - Suprachoroidal administration avoids retinal detachment and is an office-based procedure, making it potentially more accessible than current surgical gene therapy deliveries187195 REGENXBIO, Inc. Clearside has partnered with REGENXBIO for the use of its SCS Microinjector in AAV-based gene therapies for retinal diseases, with REGENXBIO conducting Phase 2 clinical trials (AAVIATE for wet AMD and ALTITUDE for diabetic retinopathy) using SCS delivery, showing promising interim data - Clearside granted REGENXBIO an exclusive, worldwide license to its SCS Microinjector for in-office delivery of AAV-based gene therapies for wet AMD, diabetic retinopathy, and other anti-VEGF-treated conditions199852 - REGENXBIO is conducting Phase 2 clinical trials: AAVIATE for wet AMD and ALTITUDE for diabetic retinopathy, evaluating SCS delivery of ABBV-RGX-314201 - Data from the ALTITUDE trial showed prevention of disease progression in non-proliferative DR patients at one year (dose level 2)201 - Data from the AAVIATE trial demonstrated stable vision and retinal anatomy, with a meaningful reduction in anti-VEGF treatment burden at six months201 - Clearside received an option fee of $2.0 million (net $1.5 million) and a $3.0 million development milestone, with eligibility for up to $31.0 million in additional development milestones and $102.0 million in sales-based milestones, plus mid-single digit royalties206852 - Clearside's rights to these royalties and milestone payments have been sold to HealthCare Royalty Management, LLC (HCR)206852 Ocular Oncology Clearside is exploring the application of its SCS Microinjector in ocular oncology, particularly for choroidal melanoma, offering a potential non-surgical alternative to highly invasive treatments like radiotherapy, aiming to improve safety and access for patients - Ocular cancers, such as choroidal melanoma, are rare, life-threatening conditions with approximately 11,000 patients per year in the U.S. and Europe202203 - Current treatments like radiotherapy are highly invasive and often result in major vision loss and comorbidities, highlighting a need for less invasive options202203 - The SCS Microinjector offers a potential non-surgical alternative for delivering oncology drug candidates, aiming to improve safety and expand access for choroidal melanoma treatment215 Aura Biosciences, Inc. Clearside has a licensing agreement with Aura Biosciences for the use of its SCS Microinjector to deliver Aura's viral-like drug conjugate, bel-sar, for choroidal melanoma, with recent Phase 2 clinical trial updates showing positive safety and efficacy, leading to the initiation of a global Phase 3 trial - Clearside licensed its SCS Microinjector to Aura Biosciences for delivering Aura's proprietary drug candidates, including bel-sar, into the SCS for ocular cancers like choroidal melanoma215 - Clearside received $1.6 million in upfront license fees and development milestones, and is eligible for up to $19.5 million in additional development/regulatory milestones, plus low to mid-single digit royalties on net sales215 - Aura reported positive Phase 2 clinical safety and efficacy updates for bel-sar via SCS administration, showing an 80% tumor control rate and 90% visual acuity preservation rate at 12 months for patients in specific cohorts215 - Aura initiated its global Phase 3 clinical trial (CoMpass) for bel-sar in December 2023215 - Clearside's rights to these royalties and milestone payments have been sold to HealthCare Royalty Management, LLC (HCR)215 BioCryst Pharmaceuticals, Inc. Clearside entered into a license agreement with BioCryst Pharmaceuticals for the exclusive, worldwide use of its SCS Microinjector to deliver BioCryst's avoralstat, a plasma kallikrein inhibitor, for diabetic macular edema (DME), including an upfront payment, potential clinical, regulatory, and sales-based milestones, and tiered royalties, with Clearside responsible for supplying the SCS Microinjectors - Clearside granted BioCryst Pharmaceuticals an exclusive, worldwide license to its SCS Microinjector for delivering BioCryst's avoralstat (plasma kallikrein inhibitor) for diabetic macular edema (DME)208693816 - Clearside received an upfront license fee of $5.0 million and is eligible for up to $30.0 million in clinical/regulatory milestones and up to $47.5 million in sales-based milestones (up to $2.0 billion in sales)218564854 - BioCryst will pay tiered mid-single digit royalties on annual global net product sales, with the highest rate for sales over $1.5 billion218564854 - BioCryst is responsible for all development, regulatory, and commercialization activities for avoralstat, while Clearside supplies the SCS Microinjectors209668 - Clearside's rights to these royalties and milestone payments have been sold to HealthCare Royalty Management, LLC (HCR)218564854 Royalty Purchase and Sale Agreement Clearside, through its subsidiary Royalty Sub, sold certain rights to future royalty and milestone payments from its license agreements (Arctic Vision, Bausch, Aura, REGENXBIO, BioCryst) to HealthCare Royalty Management, LLC (HCR) for up to $65 million, including an initial payment and potential additional milestone payments, with a cap on total payments to HCR - Clearside's wholly-owned subsidiary, Royalty Sub, sold rights to receive royalty and milestone payments from its license agreements (Arctic Vision, Bausch, Aura, REGENXBIO, and future out-license agreements for XIPERE/SCS Microinjector) to HCR for up to $65 million28210610 - Royalty Sub received an initial payment of $32.1 million (net of expenses) and an additional $12.5 million was initially held in escrow, which was later waived and released to HCR211224830831 - The agreement includes a potential $20 million milestone payment to Royalty Sub upon achieving a second pre-specified sales milestone related to 2024 XIPERE sales211830 - Payments to HCR will cease when HCR receives 2.5 times the aggregate payments if the second milestone is met by Dec 31, 2024 (Initial Cap), or 3.4 times if not (Alternative Cap)211611 - After the Purchase and Sale Agreement expires, all rights to receive the Royalties return to Royalty Sub213611 Manufacturing Clearside Biomedical relies entirely on Contract Manufacturing Organizations (CMOs) for the formulation and production of its drug candidates and the SCS Microinjector - Clearside does not own manufacturing facilities and utilizes CMOs for drug candidate formulation, production, and SCS Microinjector manufacturing225336 - Active pharmaceutical ingredients are procured from third-party suppliers225 - A supply agreement with Gerresheimer Regensburg GmbH is in place for the SCS Microinjector, with an initial five-year term and three-year renewal increments226689 Competition Clearside faces intense competition in the biotechnology and pharmaceutical industries from major companies, specialty firms, and research institutions, with its products competing with existing therapies and new treatments for eye diseases, and competition also extending to devices for SCS access and the recruitment of personnel and clinical trial participants - The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary drugs32 - XIPERE competes with other commercially available forms of triamcinolone acetonide (TA) and other topical, injectable, and implantable corticosteroids, none of which are approved specifically for macular edema associated with uveitis227395 - Key competitors for XIPERE include Bristol-Myers Squibb (Kenalog, used off-label), Alcon (Triesence), Allergan (Ozurdex), Bausch (Retisert), and Alimera (Yutiq)227395 - CLS-AX faces competition from anti-VEGF drugs (current standard of care for wet AMD), including Genentech's Lucentis, Avastin, Susvimo, and Vabysmo, as well as Regeneron's Eylea and Novartis' Beovu22834383 - Other companies like Ocular Therapeutics and Eyepoint are investigating TKIs for ocular use, and gene therapies from REGENXBIO, Adverum, and 4D Molecular Therapeutics could also compete with CLS-AX22235396397 - The SCS Microinjector faces competition from other devices being developed by companies like Oxular Limited and Everads to access ocular posterior tissues via the SCS43398 - Competitive factors include efficacy, safety, administration method, convenience, price, and availability of coverage/reimbursement; competitors with greater resources or earlier regulatory approval pose significant challenges231398400 Intellectual property Clearside's success relies heavily on its intellectual property portfolio, which includes 28 granted U.S. patents and over 80 international patents covering SCS delivery devices, methods, and drug formulations, and the company also licenses key patents from Emory University and Georgia Tech Research Corporation, with recent amendments to the Georgia Tech License Agreement adjusting sublicense percentages and annual maintenance fees - Clearside's intellectual property portfolio includes 28 granted U.S. patents and over 80 European and international patents broadly directed to the SCS Microinjector, SCS drug administration, and product candidates15638 - Patents and applications related to SCS delivery technology, drug candidates, and therapeutic uses are expected to expire between 2027 and 204238 - The company licenses 8 issued U.S. patents, 4 pending U.S. applications, and 23 issued foreign patents related to microneedle drug delivery from Georgia Tech Research Corporation and Emory University38 - An amendment to the Georgia Tech License Agreement on January 31, 2024, reduced the sublicense percentage payable to the Licensor from a low double-digit to a high single-digit percentage for payments received after July 1, 20235251563694 - Revised annual license maintenance fees were agreed upon, ranging from $250,000 (2023-2025) to $500,000 (2028)58563695 - Clearside's trademark portfolio includes numerous registered and pending trademarks in various countries for its business and products59 Government regulation Clearside's product development and commercialization are subject to extensive regulation by the FDA in the U.S. and comparable foreign authorities, including rigorous preclinical and clinical testing, NDA submission, and post-approval requirements like cGMP compliance and marketing restrictions, while also navigating complex laws regarding fraud and abuse, data privacy, and healthcare reform, which impact pricing, coverage, and reimbursement - Drug and device products, including combination products like Clearside's, are regulated by the FDA under the Food, Drug and Cosmetic Act (FDCA) and its implementing regulations6760 - The regulatory process involves preclinical studies, IND application, multi-phase clinical trials (Phase 1, 2, 3), NDA submission, FDA review and approval, and cGMP compliance for manufacturing149626364797072 - Post-approval requirements include ongoing FDA surveillance, recordkeeping, periodic reporting, advertising/promotion regulations, and potential post-marketing studies or Risk Evaluation and Mitigation Strategies (REMS)73747581152302 - Clearside may pursue the Section 505(b)(2) NDA pathway, which allows reliance on existing safety/effectiveness data, potentially reducing the need for some preclinical or clinical trials89271 - The company is subject to federal and state fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA) and data privacy laws (e.g., HIPAA, EU GDPR, CCPA, CPRA), which impose strict compliance requirements and potential penalties102103104105106108109117119120121324326 - Coverage and reimbursement policies from third-party payors (government and private) are critical for commercial success, with a new Category 1 CPT code for SCS injection potentially facilitating better access113123131448401 - Healthcare reform initiatives, including the Affordable Care Act and the Inflation Reduction Act, aim to control costs and may impact reimbursement for products, potentially reducing revenues125126127139140367331332333334 - The Foreign Corrupt Practices Act (FCPA) prohibits improper payments to foreign officials, impacting international operations and collaborations130134292 Employees and Human Capital Resources - As of December 31, 2023, Clearside Biomedical had 30 full-time employees, all located in the United States142 - The company emphasizes recruiting and retaining talented employees by fostering an inclusive and diverse work environment with meaningful compensation, benefits, and wellness programs141 - None of the employees are represented by a labor union or covered by a collective bargaining agreement, and the company considers its relationship with employees to be good142 Corporate Information - Clearside Biomedical, Inc. was incorporated in Delaware in May 2011135 - Its principal executive offices are located in Alpharetta, Georgia135 Available Information - The company's annual reports (Form 10-K), quarterly reports (Form 10-Q), current reports (Form 8-K), and amendments are available free of charge on its website (www.clearsidebio.com) and the SEC's website (www.sec.gov)[235](index=235&type=chunk)236 Item 1A. Risk Factors Clearside Biomedical faces significant risks from substantial losses, funding needs, market acceptance challenges for its novel SCS platform, uncertain product development, third-party dependencies, intellectual property vulnerabilities, extensive regulatory compliance, and stock volatility - The company has incurred significant losses since inception ($32.5 million in 2023, $32.9 million in 2022) and expects to continue incurring losses, requiring substantial additional funding beyond Q3 2025 to complete CLS-AX development and pursue business objectives239356357478479 - The SCS injection approach is novel and may fail to achieve and sustain market acceptance by physicians, patients, and third-party payors, even with XIPERE's FDA approval20259262276 - Clinical drug development is a lengthy, expensive, and uncertain process with a high risk of failure, including potential delays, negative results, or unforeseen side effects that could prevent regulatory approval or commercialization20284286313 - Reliance on third-party collaborators for development and commercialization of XIPERE and other product candidates, and on CMOs for manufacturing, introduces risks of non-performance, delays, and loss of control over critical activities20300317320336337 - The company's ability to obtain and maintain patent protection for its technology and product candidates is crucial but faces risks from challenges, infringement claims, and changes in patent law, potentially leading to expensive litigation or loss of exclusivity20223234240241242345346349497498501502503 - Extensive and evolving regulatory requirements, including those for drug-device combination products, post-marketing surveillance, fraud and abuse, data privacy, and healthcare reform, pose significant compliance challenges and could lead to penalties, delays, or restrictions on commercialization275289290292302303304307308309310324326327330367368369370 - The common stock's trading price may be volatile due to operating results, industry trends, competition, and macroeconomic conditions, with potential for dilution from future equity issuances and risks related to Nasdaq listing compliance384387389390391 Risks Related to Our Financial Position and Capital Needs - Clearside has incurred net losses of $32.5 million in 2023 and $32.9 million in 2022, with an accumulated deficit of $320.9 million as of December 31, 2023239478 - The company expects to incur significant operating losses for several more years and may never achieve or maintain profitability, as successful development and commercialization of product candidates are highly uncertain239354356479 - Substantial additional funding will be required beyond Q3 2025 to complete clinical development of CLS-AX and other business objectives, with financing potentially coming from equity offerings, debt, or collaborations, which could dilute stockholders or impose restrictive covenants357363342479598765 - The Royalty Purchase and Sale Agreement with HCR, where rights to future royalties and milestones were sold for up to $65 million, includes a cap on payments to HCR (2.5x or 3.4x initial payments) and various covenants, a violation of which could materially affect financial condition252254255364 - Adverse macroeconomic conditions, including inflation, interest rate increases, and geopolitical events, could negatively impact operations, liquidity, and the ability to raise capital256257258480455 Risks Related to the Development of Our Product Candidates - The SCS injection approach is novel and may not gain adequate patient benefit or acceptance from physicians, patients, or third-party payors, despite XIPERE's FDA approval259262276 - The successful development of product candidates like CLS-AX is highly uncertain, with no guarantee of safety or efficacy in humans or regulatory approval278284 - Clinical drug development is a lengthy, expensive, and uncertain process, with high risk of failure at any stage due to unforeseen events, negative results, or side effects284286313 - Delays or difficulties in patient enrollment for clinical trials could significantly delay regulatory approvals or require abandonment of programs, increasing development costs296299 - The company's strategy to build a pipeline of product candidates may not be successful, as identified candidates may not be safe, effective, or suitable for clinical development283 - Limited resources may lead to focusing on certain product candidates or indications, potentially missing more profitable opportunities314 Risks Related to Our Dependence on Third Parties - Dependence on third-party collaborators for XIPERE's development and commercialization (e.g., Bausch) means Clearside's revenue generation is largely outside its control, and failure of these collaborations could materially harm the business300317 - Risks with collaborators include discretion over efforts, non-performance, delays in clinical trials, development of competing products, disagreements, and potential termination of agreements318 - Reliance on Contract Research Organizations (CROs) for clinical trials reduces direct control, but Clearside remains responsible for regulatory compliance (GCPs) and data integrity, with potential for delays or rejection of applications if CROs fail to perform320321322335 - The company relies on third-party manufacturers for clinical and commercial supplies of drug candidates and the SCS Microinjector, increasing risks of insufficient quantities, unacceptable costs, or quality issues, and potential delays if manufacturers fail to comply with cGMP regulations336337339360 - Inability to establish additional collaborations for product candidates may force Clearside to curtail development, delay commercialization, or undertake activities at its own expense, requiring additional capital362375 Risks Related to the Commercialization of Our Product Candidates - If Clearside does not out-license commercialization rights, it must establish its own sales and distribution capabilities, which is expensive, time-consuming, and risky, potentially leading to lower product revenues and profitability377378379 - XIPERE and other approved product candidates may fail to achieve sufficient market acceptance by physicians, patients, and third-party payors due to the novelty of SCS injection, competition, pricing, or perceived advantages of alternative treatments380 - The company faces substantial competition from major pharmaceutical and biotechnology companies, as well as smaller firms, with greater resources and expertise, potentially leading to competitors developing or commercializing products more successfully or rapidly382398400 - XIPERE and CLS-AX face competition from existing anti-VEGF drugs, other corticosteroids, and emerging gene therapies, with off-label use of cheaper alternatives (e.g., Kenalog, Avastin) posing significant pricing pressure395398 - Unfavorable pricing regulations, third-party coverage, and reimbursement policies (including Medicare and Medicaid) or healthcare reform initiatives could limit market access, reduce reimbursement levels, and adversely affect revenues401402403404449450451 - Product liability lawsuits related to XIPERE or product candidates could result in substantial liabilities, decreased demand, reputational harm, and significant costs, potentially exceeding current insurance coverage452453493 Risks Related to Our Intellectual Property - Inability to obtain and maintain broad patent protection for technology and product candidates, or if licensed patents are not maintained, could allow competitors to commercialize similar drugs, impairing Clearside's ability to compete497498501 - Patent prosecution is expensive and time-consuming, with uncertainties regarding issuance, scope, validity, and enforceability of patents, and potential for challenges (e.g., opposition, inter partes review) that could narrow or invalidate rights498501502503 - Changes in U.S. or foreign patent law (e.g., Leahy-Smith Act, European unitary patent system) could diminish patent value, increase prosecution costs, and create uncertainty regarding enforcement242243366501502 - The company may become involved in expensive and time-consuming lawsuits to protect or enforce its patents, or defend against third-party infringement claims, which could result in monetary damages, loss of rights, or delays in commercialization345346347348349 - Failure to comply with obligations under existing intellectual property licenses (e.g., Emory/GT License) could lead to loss of critical license rights, impacting product development and commercialization351 - Some in-licensed intellectual property may be subject to U.S. government rights (Bayh-Dole Act), including non-exclusive licenses for governmental purposes and potential 'march-in rights' or domestic manufacturing requirements263 - Inability to protect trade secrets through non-disclosure agreements could harm competitive position if proprietary information is disclosed or independently developed by competitors264265 - Trademarks may be infringed or challenged, forcing rebranding and loss of brand recognition249 Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters - Failure or delays in obtaining regulatory approvals (FDA, EMA, etc.) for product candidates will prevent commercialization and materially impair revenue generation, as the approval process is expensive, lengthy, and uncertain266269270 - If the FDA does not permit the Section 505(b)(2) regulatory pathway for product candidates as anticipated, it could lead to significantly longer development times, higher costs, and greater risks, potentially delaying or preventing approval271272273274 - Co-packaging drug-device combination products adds complexity and may require additional time or separate device authorization submissions, causing delays275289 - Failure to obtain marketing approval in international jurisdictions would prevent product candidates from being marketed abroad, with varying regulatory requirements and potential for delays290 - International operations are subject to additional risks, including differing regulatory requirements, economic instability, foreign currency fluctuations, and compliance with anti-corruption laws like the FCPA291292 - Approved products are subject to continuous post-marketing regulation, and non-compliance or unanticipated problems (e.g., adverse events, manufacturing issues) could lead to restrictions, recalls, withdrawal from the market, or significant penalties302303304306307 - Misconduct by employees, contractors, or partners (e.g., non-compliance with FDA regulations, healthcare fraud and abuse laws) could result in substantial civil/criminal penalties, exclusion from government programs, and reputational harm310312324 - Recently enacted and future healthcare legislation (e.g., Affordable Care Act, Inflation Reduction Act) may increase the difficulty and cost of obtaining marketing approval, restrict post-approval activities, and negatively impact pricing and reimbursement330331332333334367368369 - Governments outside the U.S. often impose strict price controls, which could delay commercial launch and negatively impact revenues370 Risks Related to Ownership of Our Common Stock - The trading price of Clearside's common stock is volatile and influenced by operating results, industry trends, economic conditions, and company announcements, potentially leading to substantial losses for investors384 - The issuance of additional stock and equity-linked securities (e.g., warrants) in financings or acquisitions will dilute existing stockholders and could depress the stock price387389405 - Failure to maintain Nasdaq listing requirements (e.g., minimum bid price) could result in delisting, reducing liquidity and market price, and negatively impacting the ability to raise equity financing390391 - Sales of a substantial number of common stock shares by stockholders could cause a significant decline in market price392 - Provisions in corporate charter documents and Delaware law (e.g., staggered board, no stockholder written consent, anti-takeover provisions) may prevent or frustrate attempts to change management or acquire a controlling interest, potentially lowering the stock price406407393 - The company's amended and restated certificate of incorporation designates the Delaware Court of Chancery as the exclusive forum for certain litigation, which may limit stockholders' ability to choose a favorable judicial forum409 - As a 'smaller reporting company,' Clearside has reduced disclosure and governance requirements, which may make its common stock less attractive to some investors and affect trading prices410411412802 - The company does not anticipate paying cash dividends in the foreseeable future, making capital appreciation the sole source of gains for investors414469 General Risk Factors - Compromises to information technology systems or data (internal or third-party) from cybersecurity threats could lead to regulatory investigations, litigation, fines, business disruptions, reputational harm, and financial losses417418419424 - Remote work and business transactions (e.g., acquisitions) increase cybersecurity risks and vulnerabilities420421 - Failure to comply with environmental, health, and safety laws and regulations could result in fines, penalties, or substantial costs, and potential liability from hazardous materials use427428429 - Changes in tax laws (e.g., Tax Act, CARES Act, Inflation Reduction Act) could adversely affect business and financial condition, impacting corporate tax rates, foreign earnings, and deductibility of expenses430 - The company's ability to use federal and state Net Operating Loss (NOL) carryforwards to offset future taxable income may be limited by ownership changes under Section 382 of the Code, potentially increasing tax liabilities432434162875 - Failure to maintain proper and effective internal controls over financial reporting could impair the ability to produce accurate financial statements, leading to stock price decline and regulatory sanctions435436437 - Being a public company incurs significant legal, accounting, and compliance costs, and evolving regulations may divert management's attention and resources438439 - Climate change, extreme weather events, and other natural disasters could adversely affect business operations441 - Adverse global economic conditions and geopolitical tensions (e.g., conflicts in Ukraine, Middle East) could negatively impact business, financial condition, and liquidity by increasing costs, limiting capital access, and disrupting supply chains455 Item 1B. Unresolved Staff Comments Clearside Biomedical, Inc. has no unresolved staff comments from the SEC - The company has no unresolved staff comments456 Item 1C. Cybersecurity Clearside Biomedical has implemented various information security processes to identify, assess, and manage cybersecurity risks to its critical systems and data, with oversight from the audit committee, and the cybersecurity function, led by the Senior Director of IT, employs technical, physical, and organizational measures, and utilizes third-party service providers for threat management and risk assessments - Clearside maintains information security processes to identify, assess, and manage material cybersecurity risks to its critical computer networks, hosted services, communication systems, hardware, software, and data (including intellectual property, confidential information, and clinical trial data)442 - Cybersecurity risk management is integrated into the company's overall risk management processes, with the cybersecurity function prioritizing and mitigating threats likely to materially impact the business443457 - Measures include incident detection and response, a vendor risk management program, employee training, data encryption, access controls, physical security, network security controls, systems monitoring, cyber insurance, and asset management457 - Third-party service providers are used to assist in identifying, assessing, and managing cybersecurity threats, including professional services firms, threat intelligence providers, and cybersecurity software providers458 - The board of directors, through the audit committee, oversees the company's cybersecurity risk management processes, receiving annual updates and timely notifications of significant incidents446462 - The Senior Director of Information Technology, with over 23 years of IT management experience, leads the cybersecurity function, with the CFO approving budgets and processes459460 Item 2. Properties Clearside Biomedical's principal offices are located in Alpharetta, Georgia, occupying approximately 14,000 square feet under a lease extending until November 2026 with a renewal option, and the company believes its current facilities are adequate and plans to expand as needed - Clearside's principal offices are in Alpharetta, Georgia, occupying approximately 14,000 square feet463 - The office space is leased under an agreement with an initial term until November 2026, with a renewal option for an additional three-year term463628 - The company believes its current leased facilities are suitable and adequate for its needs and plans to add or expand facilities as employee numbers grow464 Item 3. Legal Proceedings Clearside Biomedical is not currently involved in any material legal proceedings and is unaware of any pending or threatened legal actions that could significantly impact its business, operating results, or financial condition - Clearside Biomedical is not currently a party to any material legal proceedings465 - The company is not aware of any pending or threatened legal proceedings that could have a material adverse effect on its business, operating results, or financial condition465 Item 4. Mine Safety Disclosures Clearside Biomedical, Inc. is not subject to the disclosure requirements of Item 4, Mine Safety Disclosures - Item 4, Mine Safety Disclosures, is not applicable to Clearside Biomedical, Inc466 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Clearside Biomedical's common stock is listed on The Nasdaq Global Market under the symbol "CLSD", with 74,721,139 shares outstanding held by 7 record holders as of March 5, 2024, and the company has never declared or paid cash dividends, intending to retain earnings for business development, with no recent sales of unregistered securities or issuer purchases of equity securities - Clearside Biomedical's common stock is listed on The Nasdaq Global Market under the symbol "CLSD"469 - As of March 5, 2024, there were 74,721,139 shares of common stock outstanding, held by 7 record holders4470 - The company has never declared or paid any cash dividends on its common stock and anticipates retaining all future earnings for business operation and expansion469414 - There have been no recent sales of unregistered securities or purchases of equity securities by the issuer or affiliated parties471472 Item 6. [Reserved] Item 6 is reserved and contains no information - Item 6 is reserved473 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Clearside Biomedical, with XIPERE approved and CLS-AX in Phase 2b, reports significant operating losses, relies on license revenue, anticipates needing additional capital beyond Q3 2025, and applies critical accounting policies with complex estimates amid macroeconomic and cybersecurity risks - Clearside Biomedical is a biopharmaceutical company focused on revolutionizing therapies for retinal diseases through its SCS injection platform, with XIPERE approved and CLS-AX in Phase 2b clinical trials476477 - The company has an accumulated deficit of $320.9 million as of December 31, 2023, and recorded net losses of $32.5 million in 2023 and $32.9 million in 2022478 - Revenue is primarily generated from upfront and milestone payments related to license agreements, with no significant product revenue expected until further product commercialization478482 - Research and development expenses increased by $1.2 million (from $19.6 million in 2022 to $20.8 million in 2023), primarily due to costs for the CLS-AX ODYSSEY trial and related manufacturing582505 - General and administrative expenses increased by $0.1 million in 2023, mainly due to higher professional fees offset by lower patent and insurance costs639 - Other income increased in 2023 due to higher interest rates on cash and cash equivalents688 - Non-cash interest expense from the royalty purchase and sale agreement increased significantly in 2023 due to a full year of imputed interest compared to five months in 2022716 - The company expects existing cash and cash equivalents to fund operations into Q3 2025 but will require additional capital to complete CLS-AX clinical development479598765 - Critical accounting policies involve significant estimates and judgments, particularly for royalty financing obligations, revenue recognition (milestone payments, licenses), accrued expenses, share-based compensation, and tax valuation allowances512513514517521523530531600 - Macroeconomic conditions (inflation, interest rates, geopolitical conflicts) and cybersecurity threats are identified as potential risks to business growth and financial results480134549 Overview Clearside Biomedical is a biopharmaceutical company focused on revolutionizing therapies for retinal diseases through its SCS injection platform, with XIPERE approved and CLS-AX in Phase 2b clinical trials - Clearside Biomedical is a biopharmaceutical company focused on revolutionizing therapies for retinal diseases through its SCS injection platform, with XIPERE approved and CLS-AX in Phase 2b clinical trials476477 - The company has an accumulated deficit of $320.9 million as of December 31, 2023, and recorded net losses of $32.5 million in 2023 and $32.9 million in 2022478 - The company expects to incur significant operating losses for several more years and will require additional capital beyond Q3 2025 to complete CLS-AX clinical development479765 Macroeconomic Considerations - Unfavorable macroeconomic conditions, including rising inflation, increased interest rates by the U.S. Federal Reserve, and geopolitical conflicts (Ukraine, Russia, Middle East), create global economic uncertainty480 - These conditions may negatively affect business growth, financial results, and could harm the company's business, financial condition, and results of operations480 Components of Operating Results - Revenue is primarily generated from license agreements, including technology access, upfront payments, regulatory and commercial milestone payments, and royalties482 - Research and development (R&D) costs are expensed as incurred, covering preclinical activities, clinical trials, regulatory applications, physician training, intellectual property licenses, and facility costs483484486 - R&D expenses are estimated based on patient enrollment, clinical site activations, and vendor data, with adjustments made for changes in clinical trial protocols or scope of work484485 - General and administrative expenses include salaries, share-based compensation for executive/finance/administrative personnel, facility costs, and professional fees (legal, patent, consulting, accounting)508 - Other income consists of gains on extinguishment of the Paycheck Protection Program (PPP) Loan and accrued interest, and interest income from cash and cash equivalents509 - Non-cash interest expense on the liability related to the sales of future royalties includes imputed interest on the liability's carrying value and amortization of issuance costs511 Critical Accounting Policies and Significant Judgments and Estimates - The preparation of financial statements requires significant estimates and judgments, particularly for royalty financing obligations, share-based compensation, and research and development expenses512513 - Revenue recognition follows ASC 606, involving identifying performance obligations, determining transaction price (including variable consideration like milestone payments), allocating price, and recognizing revenue as obligations are satisfied514515516517519520568 - Accrued expenses, especially for clinical trials, are estimated based on contract terms, patient enrollment, and progress of specific tasks, with periodic adjustments521522 - Share-based compensation is measured at fair value using the Black-Scholes option pricing model for stock options and the market value for restricted stock units (RSUs), expensed over the vesting period523524525527528793836 - The liability related to the sales of future royalties is