8. Share-Based Compensation
Share-based compensation is accounted for in accordance with the provisions of ASC 718, Compensation-Stock Compensation.
Stock Options
The Company has granted stock option awards to employees, directors and consultants from its 2011 Stock Incentive Plan (the “2011 Plan”) and its 2016 Equity Incentive Plan (the “2016 Plan”). The estimated fair value of options granted is determined as of the date of grant using the Black-Scholes option pricing model. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period of the awards. Options
Share-based compensation expense for options granted to non-employees are re-measured at each financial reporting period until required services are performed. under the 2011 Plan and the 2016 Plan is reflected in the statements of operations as follows (in thousands):
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Research and development |
| $ | 295 |
|
| $ | 413 |
|
| $ | 606 |
|
| $ | 814 |
|
General and administrative |
|
| 437 |
|
|
| 540 |
|
|
| 833 |
|
|
| 1,054 |
|
Total |
| $ | 732 |
|
| $ | 953 |
|
| $ | 1,439 |
|
| $ | 1,868 |
|
11
The following table summarizes the activity related to stock options during the ninesix months ended SeptemberJune 30, 2017:2023:
|
|
|
|
|
| Weighted |
| |
|
| Number of |
|
| Average |
| ||
|
| Shares |
|
| Exercise Price |
| ||
|
|
|
|
|
|
|
|
|
Options outstanding at January 1, 2017 |
|
| 2,243,575 |
|
| $ | 5.78 |
|
Granted |
|
| 259,250 |
|
|
| 8.21 |
|
Exercised |
|
| (164,285 | ) |
|
| 1.19 |
|
Forfeited |
|
| (64,250 | ) |
|
| 7.93 |
|
Options outstanding at September 30, 2017 |
|
| 2,274,290 |
|
|
| 6.33 |
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2016 |
|
| 500,797 |
|
|
| 0.92 |
|
|
|
|
|
|
|
|
|
|
Options exercisable at September 30, 2017 |
|
| 846,199 |
|
|
| 2.26 |
|
|
|
|
|
| Weighted |
| ||
|
| Number of |
|
| Average |
| ||
|
| Shares |
|
| Exercise Price |
| ||
Options outstanding at December 31, 2022 |
|
| 6,915,330 |
|
| $ | 3.58 |
|
Granted |
|
| 2,550,750 |
|
|
| 1.47 |
|
Exercised |
|
| (24,999 | ) |
|
| 0.40 |
|
Forfeited |
|
| (335,547 | ) |
|
| 2.23 |
|
Options outstanding at June 30, 2023 |
|
| 9,105,534 |
|
|
| 3.05 |
|
|
|
|
|
|
|
| ||
Options exercisable at December 31, 2022 |
|
| 4,223,931 |
|
|
| 4.22 |
|
|
|
|
|
|
|
| ||
Options exercisable at June 30, 2023 |
|
| 5,204,602 |
|
|
| 3.88 |
|
As of SeptemberJune 30, 2017,2023, the Company had $8.9$5.2 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of 2.92.6 years.
Restricted Stock Units
The Company has granted restricted stock units (“RSUs”) to employees from the 2016 Plan. The shares underlying the RSU awards have vesting terms of four years from the date of grant subject to the employees’ continuous service and subject to accelerated vesting in specified circumstances. The fair value of the RSUs granted is measured based on the market value of the Company’s common stock on the date of grant and is recognized ratably over the requisite service period, which is generally the vesting period of the awards.
The total share-based compensation expense related to RSUs is reflected in the statements of operations as follows (in thousands):
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Research and development |
| $ | 163 |
|
| $ | 197 |
|
| $ | 332 |
|
| $ | 304 |
|
General and administrative |
|
| 163 |
|
|
| 186 |
|
|
| 324 |
|
|
| 348 |
|
Total |
| $ | 326 |
|
| $ | 383 |
|
| $ | 656 |
|
| $ | 652 |
|
The following table summarizes the activity related to RSUs during the six months ended June 30, 2023:
|
|
|
|
| Weighted Average |
| ||
|
| Number of |
|
| Grant Date |
| ||
|
| Shares |
|
| Fair Value |
| ||
Non-vested RSUs outstanding at December 31, 2022 |
|
| 1,462,932 |
|
| $ | 3.04 |
|
Vested |
|
| (471,390 | ) |
|
| 3.09 |
|
Forfeited |
|
| (95,876 | ) |
|
| 3.18 |
|
Non-vested RSUs outstanding at June 30, 2023 |
|
| 895,666 |
|
|
| 3.01 |
|
As of June 30, 2023, the Company had $2.1 million of unrecognized compensation expense related to the RSUs which is expected to be recognized over a weighted average period of 1.9 years.
12
Employee Stock Purchase Plan
In January 2016, the Company’s board of directors adopted and approved, and in January 2016 the Company’s stockholders approved, the Clearside Biomedical, Inc.The 2016 Employee Stock Purchase Plan (the “2016 ESPP”) which became effective on June 1, 2016. The first offering period for the 2016 ESPP commenced January 1, 2017. The 2016 ESPP is considered a compensatory plan and the fair value of the discount and the look-back period are estimated using the Black-Scholes option pricing model and expense is recognized over the six monthsix-month withholding period prior to the purchase date. During the nine months ended September 30, 2017, the Company issued 5,127 shares of common stock purchased under the 2016 ESPP.
Share-basedThe share-based compensation expense recognized for options granted under the 2011 Plan and the 2016 Plan and shares purchased under the 2016 ESPP is reflected in the statements of operations and comprehensive loss as follows (in thousands):
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
Research and development |
| $ | 349 |
|
| $ | 134 |
|
| $ | 1,006 |
|
| $ | 375 |
|
| $ | 2 |
|
| $ | 5 |
|
| $ | 5 |
|
| $ | 10 |
|
General and administrative |
|
| 540 |
|
|
| 148 |
|
|
| 1,414 |
|
|
| 401 |
|
|
| 1 |
|
|
| 3 |
|
|
| 2 |
|
|
| 6 |
|
Total |
| $ | 889 |
|
| $ | 282 |
|
| $ | 2,420 |
|
| $ | 776 |
|
| $ | 3 |
|
| $ | 8 |
|
| $ | 7 |
|
| $ | 16 |
|
During the six months ended June 30, 2023, the Company issued 38,954 shares of common stock purchased under the 2016 ESPP.
9. Commitments and Contingencies
Lease Commitment Summary
The Company had previously leased office space under non-cancelable operating leases which expired in March 2017.
In November 2016,2022, the Company signed a newan amended office lease agreement to lease approximately 20,00014,000 square feet of office space in Alpharetta, Georgia for its corporate headquarters. The amended office lease agreement is for a 6.5four year term with a renewal option for onean additional five-year term.38 months. Rental payments are $35,145$30,747 per month subject to an increase of 3%3% per year. Rent expense under this lease is recognized on a straight-line basis over the term of the lease. In addition, the office lease agreement requires payment of the pro-rata share of the annual operating expenses associated with the premises.
The Company relocated to this new space in March 2017.
Total future minimum lease payments were as follows at September 30, 2017 (in thousands):
Year Ending December 31, |
|
|
|
|
2017 |
| $ | 105 |
|
2018 |
|
| 431 |
|
2019 |
|
| 444 |
|
2020 |
|
| 458 |
|
2021 |
|
| 472 |
|
Thereafter |
|
| 860 |
|
Total minimum lease payments |
| $ | 2,770 |
|
Rent expense was $58,000 and $20,000 for three months ended September 30, 2017 and 2016, respectively, and $156,000 and $61,000recognizes a right-of-use asset for the nineright to use the underlying asset for the lease term, and a lease liability, which represents the present value of the Company’s obligation to make payments over the lease term. The renewal option is not included in the calculation of the right-of-use asset and the lease liabilities as the Company has not yet determined if the Alpharetta, Georgia lease will be renewed.
Equipment leases with an initial term of 12 months ended September 30, 2017 and 2016, respectively.or less are not recorded with operating lease liabilities. The Company recognizes expense for these leases on a straight-line basis over the lease term. The equipment leases were deemed to be immaterial.
Contract Service Providers
In the course of the Company’s normal business operations, it has agreements with contract service providers to assist in the performance of its research and development, clinical research and manufacturing. Substantially all of these contracts are on an as needed basis.
10. License and CollaborationOther Agreements
In August 2014,Bausch + Lomb
On October 22, 2019, the Company entered into a royalty-bearing license agreementLicense Agreement (as amended, the "Bausch License Agreement") with NovaMedica LLCBausch + Lomb (“NovaMedica”Bausch”). Under this agreement,Pursuant to the Bausch License Agreement, the Company has granted an exclusive license to NovaMedica the rightBausch to usedevelop, manufacture, distribute, promote, market and commercialize XIPERE using the Company’s intellectual propertyproprietary SCS Microinjector (the “Device”), as well as specified other steroids, corticosteroids and NSAIDs in combination with the Device (together with XIPERE, the “Products”), subject to develop and commercialize the intended products (the “Covered Products”) and to have the exclusive right to sell those products in Russia and specified adjacent territories involving the use of the corticosteroid triamcinolone acetonide as the sole active pharmaceutical ingredient for administrationexceptions, in the SCS. In connection with this royalty-bearing license, NovaMedica made an upfront paymentUnited States and Canada (the “Territory”) for the treatment of ophthalmology indications, including non-infectious uveitis.
Pursuant to the Bausch License Agreement, Bausch paid the Company an aggregate of $200,000. The$20.0 million in upfront and milestone payments. In addition, Bausch has agreed to pay up to an aggregate of $55.0 million in additional milestone payments upon the achievement of (i) specified regulatory approvals for specified additional indications of XIPERE and (ii) specified levels of annual net sales (as defined in the Bausch License Agreement). Further, during the applicable royalty term, the Company is currently developing product candidates that when completed wouldwill also be entitled to receive tiered royalties at increasing percentages, from the high-teens to twenty percent, based on XIPERE achieving certain annual net sales thresholds in the Territory, in each case subject to this license giving NovaMedicareductions in specified circumstances; provided that the exclusive right to then sellCompany will not receive any royalties on the first $45.0 million of cumulative net sales of all products in the specified geographic territories. In mid-December 2015,Territory. Bausch launched XIPERE in the Company received positive results from the Phase 2 clinical trial relating to the product candidate and determined, based on these results, that the intellectual property could become commercially feasible. BeginningUnited States in the first quarter of 2016,2022. The Company's rights to these royalties and milestone payments have been sold pursuant to the Company began recognizing the $200,000 to revenue over the period of time estimated to complete clinical developmentterms and commercializationconditions of the Covered ProductsPurchase and Sale Agreement described in Note 5 to the beginning of the first set of patent expirations in 2027. The Company recorded $5,000 and $15,000 of license revenue during each of the three and nine months ended September 30, 2017 and 2016, respectively, for this license agreement. NovaMedica is jointly owned by Rusnano MedInvest LLC and Domain Russia Investments Limited.consolidated financial statements.
In April 2015,
13
Arctic Vision (Hong Kong) Limited
On March 10, 2020, the Company entered into a license and collaboration agreementLicense Agreement (the “Spark“Arctic License Agreement”) with Spark Therapeutics, Inc.Arctic Vision (Hong Kong) Limited (“Spark”Arctic Vision”) under which Spark could acquire. Pursuant to the Arctic License Agreement, the Company has granted an exclusive license to Arctic Vision to develop, distribute, promote, market and commercialize XIPERE, subject to specified exceptions, in China, Hong Kong, Macau, Taiwan and South Korea (the “Arctic Territory”). Under the terms of the Arctic License Agreement, neither party may commercialize XIPERE in the other party’s territory. Arctic Vision has agreed to use commercially reasonably efforts to pursue development and commercialization of XIPERE for indications associated with uveitis in the Arctic Territory. In addition, upon receipt of the Company’s consent, Arctic Vision will have the right, but not the obligation, to develop and commercialize XIPERE for additional indications in the Arctic Territory.
Pursuant to the Arctic License Agreement, Arctic Vision paid the Company an aggregate of $8.0 million in upfront and milestone payments. In addition, Arctic Vision has agreed to pay the Company up to $24.0 million in development and sales milestones. Further, during the applicable royalty term, the Company will also be entitled to receive tiered royalties of ten to twelve percent of net sales based on achieving certain annual net sales thresholds in the Territory, subject to customary reductions, payable on a product-by-product and country-by-country basis, commencing at launch in such country and lasting until the latest of (i) the date that all valid claims within the licensed patent rights covering XIPERE have expired, (ii) the date of the loss of marketing or regulatory exclusivity of XIPERE in a given country, or (iii) ten years from the first commercial sale of XIPERE in a given country. The Company's rights to license the Company’s microinjector technologythese royalties and accessmilestone payments have been sold pursuant to the SCS withinterms and conditions of the eye for developmentPurchase and ultimate commercialization of Spark’s gene therapy treatments to be delivered via the microinjector. In conjunction with executing the SparkSale Agreement Spark made an upfront, non-refundable paymentdescribed in Note 5 to the Company of $500,000.consolidated financial statements.
In February 2016, the initial study was completed and Spark elected not to extend the arrangement nor license the technology which terminated the Spark Agreement in accordance with its terms. During the nine months ended September 30, 2016,August 2021, the Company recorded as revenueentered into an amendment to the $500,000 upfront payment asArctic License Agreement to expand the amount was non-refundableterritories covered by the license to include India and the ASEAN Countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam). In September 2021, the Company had no further obligations underentered into a second amendment to the Spark Agreement.
Arctic Vision License Agreement to expand the Arctic Territory to include Australia and New Zealand. The Company hasreceived an aggregate of $3.0 million in consideration for the expansion of the Arctic Territory.
Other
The Company periodically enteredenters into short-term agreements with other short-term collaboration agreementscustomers to evaluate the potential use of its proprietary SCS microinjectorMicroinjector with third-party product candidates for the treatment of various diseases. Funds received from these collaboration agreements are recognized as revenue over the term of the agreement. The Company recorded $150,000 and $275,000 of revenue from these collaboration agreements during the three and nine months ended September 30, 2017, respectively.
11. Available-for-Sale Investments
The following table summarizes the Company’s available-for-sale investments (in thousands):
|
| September 30, 2017 |
| |||||||||
|
| Amortized |
|
| Unrealized |
|
| Fair |
| |||
|
| Cost |
|
| Losses |
|
| Value |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Government bonds and treasury bills |
| $ | 13,727 |
|
| $ | (3 | ) |
| $ | 13,724 |
|
Commercial paper |
|
| 9,512 |
|
|
| — |
|
|
| 9,512 |
|
Certificates of deposit |
|
| 4,885 |
|
|
| — |
|
|
| 4,885 |
|
Corporate bonds |
|
| 8,222 |
|
|
| (5 | ) |
|
| 8,217 |
|
Total available-for-sale investments |
| $ | 36,346 |
|
| $ | (8 | ) |
| $ | 36,338 |
|
12. Fair Value Measurements
The Company records certain financial assets and liabilities at fair value in accordance with the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, on fair value measurements. As defined in the guidance, fair value, defined as an exit price, represents the amount that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants. As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering these assumptions, the guidance defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value.
Level 1—Unadjusted quoted prices in active, accessible markets for identical assets or liabilities.
Level 2—Other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs that are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The Company’s material financial instruments at SeptemberJune 30, 20172023 and December 31, 20162022 consisted primarily of cash and cash equivalents, short-term investments and long-term debt.equivalents. The fair valuevalues of cash and cash equivalents, government bonds and treasury bills, other current assets and accounts payable approximate their respective carrying values due to the short term nature of these instruments and are classified as Level 1 in the fair value hierarchy. The fair value of long-term debtliability related to the sales of future royalties approximates the carrying value due to variable interest ratesthe short period of time that correspondhas elapsed from the origination date and the absence of any identifiable factors that would be reasonably expected to market rates. The Company has determined its short-term investments, comprised of certificates of deposit, corporate bonds and commercial paper, to be Level 2 inmaterially impact the fair value hierarchy. The fair value was determined using a market approach, based on prices and other relevant information generated by market transactions involving similar assets. The short-term investments consist of investments with original maturity dates from date of acquisition of 90 to 365 days and are classified as available-for-sale.the liability.
There were no significant transfers between Levels 1, 2 and 3 during the ninesix months ended SeptemberJune 30, 20172023 and the year ended December 31, 2016.2022.
The following tables summarize the fair value of financial assets that are measured at fair value and the classification by level of input within the fair value hierarchy (in thousands):
|
| September 30, 2017 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Recorded Value |
| ||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and money markets |
| $ | 13,355 |
|
| $ | — |
|
| $ | — |
|
| $ | 13,355 |
|
Restricted cash money market |
|
| 360 |
|
|
| — |
|
|
| — |
|
|
| 360 |
|
Government bonds and treasury bills |
|
| 13,723 |
|
|
| — |
|
|
| — |
|
|
| 13,723 |
|
Certificates of deposit |
|
| — |
|
|
| 5,121 |
|
|
| — |
|
|
| 5,121 |
|
Corporate bonds |
|
| — |
|
|
| 8,217 |
|
|
| — |
|
|
| 8,217 |
|
Commercial paper |
|
| — |
|
|
| 12,211 |
|
|
| — |
|
|
| 12,211 |
|
Total financial assets |
| $ | 27,438 |
|
| $ | 25,549 |
|
| $ | — |
|
| $ | 52,987 |
|
|
| December 31, 2016 |
| |||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Recorded Value |
| ||||
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and money markets |
| $ | 29,928 |
|
| $ | — |
|
| $ | — |
|
| $ | 29,928 |
|
Restricted cash money market |
|
| 360 |
|
|
| — |
|
|
| — |
|
|
| 360 |
|
Government bonds |
|
| 19,027 |
|
|
| — |
|
|
| — |
|
|
| 19,027 |
|
Certificates of deposit |
|
| — |
|
|
| 6,579 |
|
|
| — |
|
|
| 6,579 |
|
Agency obligations |
|
| — |
|
|
| 4,179 |
|
|
| — |
|
|
| 4,179 |
|
Corporate bonds |
|
| — |
|
|
| 7,262 |
|
|
| — |
|
|
| 7,262 |
|
Commercial paper |
|
| — |
|
|
| 16,656 |
|
|
| — |
|
|
| 16,656 |
|
Total financial assets |
| $ | 49,315 |
|
| $ | 34,676 |
|
| $ | — |
|
| $ | 83,991 |
|
13.12. Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding for the period, without consideration of the dilutive effect of potential common stock equivalents. Diluted net loss per share gives effect to all dilutive potential shares of common stock outstanding during this period.
For all periods presented, the Company’s potential common stock equivalents, which included stock options, restricted stock units and stock purchase warrants, have been excluded from the computation of diluted net loss per share as their inclusion would have the effect of reducing the net loss per share. Therefore, the denominator used to calculate both basic and diluted net loss per share is the same in all periods presented.
The Company’s potential common stock equivalents that have been excluded from the computation of diluted net loss per share for all periods presented because of their antidilutive effect consisted of the following:
|
| Six Months Ended |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Outstanding stock options |
|
| 9,105,534 |
|
|
| 7,471,217 |
|
Non-vested restricted stock units |
|
| 895,666 |
|
|
| 1,590,476 |
|
Stock purchase warrants |
|
| 29,796 |
|
|
| 29,796 |
|
|
|
| 10,030,996 |
|
|
| 9,091,489 |
|
14
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Outstanding stock options |
|
| 2,274,290 |
|
|
| 1,414,594 |
|
|
| 2,274,290 |
|
|
| 1,414,594 |
|
Stock purchase warrants |
|
| 29,796 |
|
|
| 55,770 |
|
|
| 29,796 |
|
|
| 55,770 |
|
|
|
| 2,304,086 |
|
|
| 1,470,364 |
|
|
| 2,304,086 |
|
|
| 1,470,364 |
|
14. Subsequent Event
On October 31, 2017, the Company entered into an amendment to its loan agreement (see Note 5) with the Lenders. Pursuant to the amendment to the loan agreement, if the Company becomes eligible to draw the remaining $7.0 million tranche under the loan agreement, the Company will be able to draw such funds at its discretion until the earlier of (i) March 31, 2018 and (ii) the occurrence of an event of default under the loan agreement. The Company paid a fee of $35,000 to the Lenders in connection with entering into the amendment.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions, or the negative of such words or phrases, are intended to identify “forward-looking statements.” We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those below and elsewhere in this Quarterly Report on Form 10-Q particularly in Part II – Item 1A, “Risk Factors,” and our other filings with the Securities and Exchange Commission, or SEC.SEC, under the heading “Risk Factors”. Statements made herein are as of the date of the filing of this Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 20162022 appearing in our Annual Report on Form 10-K filed with the SEC on March 16, 2017.14, 2023.
Overview
We are a late-stage clinical biopharmaceutical company developing first-in-class drugfocused on revolutionizing the delivery of therapies to treat blinding diseasesthe back of the eye. Our current product candidates focus on treatments for diseases affecting the retina and choroid, especially diseases associated with macular edema, and are injected intoeye through the suprachoroidal space, or SCS using®. Our novel SCS injection platform, utilizing our proprietary SCS Microinjector. WithMicroinjector®, enables an in-office, repeatable, non-surgical procedure for the targeted and compartmentalized delivery of a wide variety of therapies to the macula, retina or choroid to potentially preserve and improve vision in patients with sight-threatening eye diseases. Our SCS injection platform can be used in conjunction with existing drugs designed for delivery to the SCS, novel therapies and future therapeutic innovations. We believe our proprietary suprachoroidal administration platform has the potential to become a standard for delivery of therapies intended to treat chorioretinal diseases.
We are leveraging our SCS injection procedure,platform by building an internal research and development pipeline targeting retinal diseases and by creating external collaborations with other companies. We are developing our own pipeline of small molecule product candidates are more directlyfor administration via our SCS Microinjector, and we also strategically partner with companies developing other ophthalmic therapeutic innovations to be administered tousing our SCS injection platform. Our first product, XIPERE® (triamcinolone acetonide injectable suspension) for suprachoroidal use, was approved by the retinaU.S. Food and choroidDrug Administration, or the FDA, in October 2021. Approval of XIPERE was a significant milestone for us as compared to other ocular drug administration techniques such as intravitreal injections.it is the first approved therapeutic delivered into the SCS, the first commercial product developed by us and the first therapy for macular edema associated with uveitis. We believe treatmentthat we are creating a broad therapeutic platform for developing product candidates to treat serious eye diseases.
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The current development status of eye disease viaour pipeline of internal product candidates and external collaborations is summarized in the chart below:
Commercial Product
XIPERE® (triamcinolone acetonide injectable suspension) for suprachoroidal injection may provide a number of benefits, including lower frequency of necessary administrationuse, was approved by the U.S. Food and faster onset ofDrug Administration, or the FDA, in October 2021. XIPERE is the first approved therapeutic effect. We hold the exclusive rights to develop and commercialize drugs for treatment via injectiondelivered into the SCS. OurSCS, the first commercial product developed by us and the first therapy for macular edema associated with uveitis. XIPERE commercialization rights are licensed to Bausch + Lomb in the U.S. and Arctic Vision in Asia.
Clinical Development Pipeline
CLS-AX (axitinib injectable suspension)
CLS-AX, our most advanced product candidates are based on commonly used ophthalmic drugs, which we believe will allow us to more efficiently and predictably pursue the regulatory approval of these product candidates under Section 505(b)(2)candidate, is our proprietary suspension of the Federal Food, Drug, and Cosmetic Act.
TKI axitinib for suprachoroidal injection delivered via our SCS Microinjector. We are developing CLS-TA, our proprietary, preservative-free formulationCLS-AX for administration to the SCS as a long-acting therapy for neovascular age-related macular degeneration (wet AMD), a retinal degenerative disease that causes a progressive loss of central vision.
In February 2023, we announced the corticosteroid triamcinolone acetonide, or TA, to be administered suprachoroidally, or suprachoroidal CLS-TA,final, positive results from the OASIS Phase 1/2a clinical trial in wet AMD. CLS-AX was well-tolerated and demonstrated a favorable safety profile across all cohorts. The full extension data for Cohorts 3 and 4 showed promising durability and signs of biologic effect.
Based on the results from the OASIS trial, we are conducting a randomized, controlled, double-masked, Phase 2b clinical trial of CLS-AX for the treatment of patients with non-infectious uveitis. We have completed enrollment of 160 patients with macular edema associated with non-infectious uveitis in a pivotal Phase 3 clinical trial,wet AMD, which we refer to as PEACHTREE,ODYSSEY. ODYSSEY will compare CLS-AX suprachoroidal injection and expect to report preliminary data from this trial in the first quarter of 2018. We believe, based on our end-of-Phase 2 review with the Food and Drug Administration, or FDA, in May 2015, that only one Clearside-sponsored, pivotal Phase 3 clinical trial will be required to support the filing of a New Drug Application, or NDA, to the FDA. If we receive positive data from PEACHTREE, we intend to file an NDA for CLS-TA for the treatment of patients with non-infectious uveitis by the end of 2018.
We are also developing CLS-TA along with an anti-VEGF agent for the treatment of macular edema associated with retinal vein occlusion, or RVO, a sight-threatening disorder resulting from the blockage of a retinal vein. We are exploring whether suprachoroidal CLS-TA together with anaflibercept intravitreal injection of Eylea, an inhibitor of vascular endothelial growth factor, or VEGF, can provide improved visual acuity, reduced macular edemaover 36 weeks and reduced injection frequency, as comparedis expected to administration of intravitreal Eylea alone.
We have completed60 total participants with a Phase 2 clinical trial in 46 patients with macular edema associated with RVO. In this trial, 23 patients in the active arm initially received suprachoroidal CLS-TA together with an intravitreal injection of Eylea, or intravitreal Eylea, and 23 patients in the control arm initially received only intravitreal Eylea. The objective of the trial was to determine whether patients receiving suprachoroidal CLS-TA together with intravitreal Eylea could sustain this improved visual acuity over the three months of the clinical trial while requiring fewer additional Eylea treatments than patients receiving intravitreal Eylea alone. Patients in each arm were evaluated at months one, two and three after the initial treatment using pre-specified criteria to determine if they continued to experience macular edema or reductions in visual acuity and therefore required additional intravitreal Eylea treatments.2:1 randomization. The primary objective of the trial was met, with patientsoutcome measure is a mean change in the active arm requiring an aggregate of 60% fewer additional Eylea treatments than patients in the control arm over three months, a result that was statistically significant (p=0.013). In addition, 18 of the 23 patients, or 78%, in the active arm of the trial did not require additional treatments during the three-month trial compared to 7 of the 23 patients, or 30%, in the control arm, a result that was also statistically significant (p=0.003). In the same Phase 2 trial, patients in the active arm experienced greater improvement in visual acuity than those in the control arm, with patients in the active arm experiencing mean
BCVA improvements at months one, two and three of 16, 20 and 19 letters, respectively, compared to improvements of 11, 12 and 11 letters, respectively, in the control arm at the same time points. Based on the results of this trial and after incorporating feedback from an end-of-Phase 2 meeting with the FDA held in late 2016, we began to enroll patients in a Phase 3 clinical trial, which we refer to as SAPPHIRE, in the first quarter of 2017.
We are continuing to enroll patients in SAPPHIRE, a multicenter, randomized, masked, controlled trial, to assess the efficacy and safety of suprachoroidal CLS-TA together with intravitreal Eylea in patients with RVO. Patients in the combination treatment arm will receive suprachoroidal CLS-TA together with intravitreal Eylea at the beginning of the trial, intravitreal Eylea alone at week 4, and suprachoroidal CLS-TA together with intravitreal Eylea at weeks 12 and 24. Patients in the control arm will receive intravitreal Eylea alone at the beginning of the trial and follow-up intravitreal Eylea alone every four weeks through and including week 24. After 24 weeks, patients will be followed for approximately an additional six months. The primary objective of this trial will be to determine the proportion of patients in each arm with a best corrected visual acuity improvement of at least 15 letters from baseline at eight weeks after initial treatment. There will be severalto week 36. The secondary efficacyoutcome measures are changes in visual function and safety endpoints that will also be evaluated.ocular anatomy, need for supplemental treatment and treatment burden as measured by total injections over the trial duration. We anticipate total enrollmentbegan enrolling participants in May 2023 and randomized our first participants in July 2023. As of approximately 460 patientsAugust 14, 2023, we have nearly all of our planned 30 sites open to enroll participants in the trial. We expect to report preliminary results from SAPPHIRE in the first quarter of 2019. In addition, topline data in the third quarter of 2017, we began2024.
Preclinical
We have an experienced team of scientists and researchers evaluating small molecules that may be utilized as potential treatment options for back of the start-up activitieseye diseases utilizing our SCS Microinjector for a second Phase 3 clinical trial in patients with RVO, which we refer to as TOPAZ. We expect to enroll the first patient in TOPAZdelivery in the first quartersuprachoroidal space.
External Collaborations Pipeline
In order to expand the global reach of 2018.our suprachoroidal injection platform, we have strategically partnered some of our assets for development and/or commercialization and intend to continue partnering our assets. By entering into these partnerships, we have
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been able to expand the use of our suprachoroidal injection platform to other indications and geographies globally. We are also developingcurrently have collaborations with Bausch Health, Arctic Vision, REGENXBIO, Inc., and Aura Biosciences.
In July 2023, Arctic Vision announced the acceptance in Australia of its new drug application for suprachoroidal CLS-TAuse of Arcatus® (known as XIPERE in the U.S.) for the treatment of diabeticuveitic macular edema,edema.
ISO Certification
We have received the International Organization for Standardization (ISO) Certification EN ISO 13485:2016 for “The design, development, and manufacture of sterile piston syringes, needles, and associated accessories for the area of ophthalmology.” The certificate is available on our website. The information contained on our website is not incorporated by reference into this Quarterly Report on Form 10-Q.
Royalty Purchase and Sale Agreement
On August 8, 2022, or DME.the Closing Date, we, through our wholly-owned subsidiary Clearside Royalty LLC, a Delaware limited liability company, or Royalty Sub, entered into a Purchase and Sale Agreement, or the Purchase and Sale Agreement, with entities managed by HealthCare Royalty Management, LLC, or HCR, pursuant to which Royalty Sub sold to HCR certain of its rights to receive royalty and milestone payments payable to Royalty Sub under the Arctic Vision License Agreement, the Bausch License Agreement, that certain License Agreement, effective as of July 3, 2019, by and between the Company and Aura, or the Aura License Agreement, the REGENXBIO Option and License Agreement and any and all out-license agreements following the Closing Date for, or related to XIPEREor the SCS Microinjector technology (to be used in connection with compounds or products of any third parties delivered, in whole or in part, by means of the SCS Microinjector technology), excluding, for the avoidance of doubt, any in-licensed or internally developed therapies following the Closing Date, or the Royalties, in exchange for up to $65 million. In November 2016,connection with this transaction, we began enrolling patientsassigned the Arctic Vision License Agreement, Bausch License Agreement, Aura License Agreement, REGENXBIO Option and License Agreement, our license agreement with DMEEmory University and The Georgia Tech Research Corporation and related intellectual property rights to Royalty Sub.
Under the terms of the Purchase and Sale Agreement, Royalty Sub received an initial payment of $32.1 million, representing the $32.5 million to which we were entitled, net of certain of HCR's transaction-related expenses which we agreed to reimburse. An additional $12.5 million was deposited by HCR in an open-label, multi-center Phase 1/2 clinical trial,escrow account to be released to Royalty Sub upon attainment of a pre-specified XIPERE sales milestone achieved no later than March 31, 2024. The terms of the Purchase and Sale Agreement also provide for an additional $20.0 million milestone payment to Royalty Sub upon attainment of a second pre-specified sales milestone related to 2024 XIPERE sales, or the Second Milestone Event.
The Purchase and Sale Agreement will automatically expire, and the payment of Royalties from the Royalty Sub to HCR will cease, when HCR has received payments of the Royalties equal to 2.5 times the aggregate amount of payments made by HCR under the Agreement if the Second Milestone Event is achieved on or prior to December 31, 2024, or the Initial Cap. If the Second Milestone Event is not achieved on or prior to December 31, 2024, payment of Royalties from Royalty Sub to HCR will cease when HCR has received Royalties payments equal to 3.4 times the aggregate amount of payments under the Purchase and Sale Agreement, or the Alternative Cap. In the event of a change in control, acquiror will have the option to make a payment to HCR of the Initial Cap or the Alternative Cap, depending on which we referis then in effect, less the aggregate amount of Royalty payments made by Royalty Sub to HCR under the Purchase and Sale Agreement as HULK,a one-time payment at which time, payment of Royalties to obtain safety data and to observe efficacy outcomes from administering a combination of intravitreal Eylea and suprachoroidal CLS-TA, as well as suprachoroidal CLS-TA alone, over a six-month evaluation period. In April 2017, we completed enrolling 20 patients and initial results suggest encouraging efficacy with a trend toward durability, particularlyHCR will cease. Alternatively, in the combination treatment arm. Suprachoroidal CLS-TA, both alone,event of a change in control, the acquiror will have the option to make an initial payment of 1.0 times the aggregate amount of payments made by HCR under the Purchase and Sale Agreement as of the date of such change in combination with intravitreal Eyleacontrol, then in that event, payment of Royalties from Royalty Sub to HCR will cease when HCR has been well toleratedreceived total Royalties payments (including the initial payment) equal to date.the Alternative Cap. After the Purchase and Sale Agreement expires, all rights to receive the Royalties return to Royalty Sub.
We also commenced a Phase 2 clinical trial, which we refer to as TYBEE, in the second quarter of 2017 to evaluate the safety and efficacy of administering a combination of intravitreal Eylea and suprachoroidal CLS-TA to patients with DME, as compared to intravitreal Eylea alone. We completed enrollment of 71 patients in this trial in October 2017. Patient follow-up in TYBEE is six months after initial treatment and we expect to report preliminary data in the second quarter of 2018.Operating Outlook
We are also conducting nonclinical studies both internally and with multiple collaborations in development areas such as gene therapy for inherited retinal disorders, neovascular age-related macular degeneration, also known as wet AMD, and other ocular diseases that may benefit from a suprachoroidal administration of treatment approach.
If any of our product candidates are approved, we plan to commercialize them with a specialty team of 30 to 40 sales and medical marketing professionals to target the approximately 1,700 retinal specialists in the United States, and we may also pursue collaborations with third parties to commercialize any of our drugs approved for marketing outside the United States.
We have incurred net losses since our inception in 2011. Ourinception. In recent years, our operations to date have beenconsisted primarily focused on undertaking nonclinicalof conducting preclinical studies and conducting clinical trials, of our most advanced product candidates.raising capital and undertaking other research and development initiatives. To date, we have not generated any revenue, other than license and collaborationother revenue, and we have primarily financed our operations through public offerings and private placements of our equity securities, issuances of convertible promissory notes and loan agreements. As of SeptemberJune 30, 2017,2023, we had an accumulated deficit of $107.7$306.8 million. We recorded net losses of $18.3$9.1 million and $5.6$7.8 million for the three months ended SeptemberJune 30, 20172023 and 2016,2022, respectively, and $42.5net losses of $18.4 million and $16.2$15.5 million for the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, respectively. We anticipate that a substantial portion of our capital resources and efforts in the foreseeable future will be focused on completing the necessary development for and obtaining regulatory approval and preparing for potential commercialization of our product candidates.candidates, as well as discovering compounds and developing proprietary formulations to utilize with our SCS Microinjector.
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We expect to continue to incur significant and increasing operating losses at least for the next several years. We do not expect to generate significant product or license and other revenue unless and until XIPERE is successfully commercialized by our licensees or until we successfully complete necessary development for, andof, obtain regulatory approval for oneand commercialize additional product candidates, either on our own or more of our product candidates.together with a third party. Our net lossesfinancial results may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate thatexpect clinical trial expenses to increase in the remainder of 2023 as a result of our expensesPhase 2b clinical trial of CLS-AX, as well as continuing our pipeline development. We also will increase as we:
completecontinue our ongoing PEACHTREE, SAPPHIRE, HULK and TYBEE clinical trials;
initiate and conduct our planned future clinical trials, including our TOPAZ clinical trial;
efforts to seek to discover, research and develop additional product candidates;
seekcandidates and regulatory approvals in additional regions for any product candidates that successfully complete clinical trials and other developmental efforts necessary to seek such approvals;XIPERE for the treatment of macular edema associated with uveitis.
|
|
maintain, expand and protect our intellectual property portfolio;
hire additional non-clinical and clinical, manufacturing, medical and scientific personnel;
add operational, financial and management information systems and personnel, including personnel to support our development and potential future commercialization efforts; and
operate as a public company.
Components of Operating Results
License and Other Revenue
We have not generated any revenue from the sale of any drugs,XIPERE and we do not expect to generate any other product revenue unless or until we obtain regulatory approval of and commercialize our other product candidates. In 2014, we executedcandidates, either on our own or with a third party. The revenue received under the Bausch license agreement, with NovaMedica LLC, or NovaMedica,as well as other certain payments from our licensees, will be recorded as non-cash revenue until we have fulfilled our obligations under the Purchase and Sale Agreement. Our revenue in 2015, we executed arecent years has been generated primarily from our license agreement with Spark Therapeutics, Inc., or Spark. In connection with these agreements, we received up-front payments of $200,000 from NovaMedica and $500,000 from Spark.agreements. We deferred recognizing these payments through 2015. In the first quarter of 2016, we began recognizing revenue relatedare seeking to the NovaMedica payment and we recognized the entire payment from Spark. In the second quarter of 2017, we enteredenter into additional collaborationlicense and other agreements with third parties to evaluate the potential use of our proprietary SCS microinjectorMicroinjector with third-partythe third party’s product candidates for the treatment of various eye diseases. We recognized $150,000These agreements may include payments to us for technology access, upfront license payments, regulatory and $275,000 in collaboration revenue from these agreements during the threecommercial milestone payments and nine months ended September 30, 2017, respectively.royalties.
Research and Development
Since our inception, we have focused on our development programs. Research and development expenses consist primarily of costs incurred for the research and development of our nonclinicalpreclinical and clinical product candidates, which include:
employee-related expenses, including salaries, benefits, travel and share-based compensation expense for research and development personnel;
expenses incurred under agreements with contract research organizations, or CROs, as well as contract manufacturing organizations and consultants that conduct clinical trials and nonclinicalpreclinical studies;
costs associated with nonclinical activities and development activities;
costs associated with submitting regulatory approval applications for our product candidates;
costs for our research and development facility; and
depreciation expense for assets used in research and development activities.
We expense research and development costs to operations as incurred. TheThese costs for some of our developmentinclude preclinical activities, such as manufacturing and stability and toxicology studies, that are supportive of a product candidate itself. In addition, there are expenses related to clinical trials and similar activities for each program, including costs associated with CROs. Clinical costs are recognized based on the terms of underlying agreements, as well as an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations and additional information provided to us by our vendors about their actual costs occurred.
Expenses related to activities, such as manufacturing and stability and toxicology studies, that are supportive of a product candidate itself, are classified as direct non-clinical costs. Expenses related to clinical trials and similar activities, including costs associated with CROs, are classified as direct clinical costs. Expenses related to activities that support more than one development program or activity, such as salaries, share-based compensation and depreciation, are not classified as direct clinicalpreclinical costs or non-clinicalclinical costs and are separately classified as unallocated.
For the three and nine months ended September 30, 2017, substantially all of our research and development expenses were related to the clinical development of our product candidates, consisting of four ongoing clinical trials and a fifth clinical trial for which start-up activities began during the third quarter of 2017.
The following table shows our research and development expenses by program for the three and ninesix months ended SeptemberJune 30, 20172023 and 20162022 (in thousands).
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
XIPERE (uveitis program) |
| $ | 48 |
|
| $ | 77 |
|
| $ | 71 |
|
| $ | 198 |
|
CLS-AX (wet AMD program) |
|
| 1,977 |
|
|
| 1,671 |
|
|
| 3,337 |
|
|
| 2,779 |
|
Total |
|
| 2,025 |
|
|
| 1,748 |
|
|
| 3,408 |
|
|
| 2,977 |
|
Unallocated |
|
| 2,923 |
|
|
| 3,682 |
|
|
| 5,991 |
|
|
| 6,989 |
|
Total research and development expense |
| $ | 4,948 |
|
| $ | 5,430 |
|
| $ | 9,399 |
|
| $ | 9,966 |
|
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|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
CLS-TA (uveitis program) |
| $ | 3,331 |
|
| $ | 1,506 |
|
| $ | 9,534 |
|
| $ | 5,326 |
|
CLS-TA (RVO program) |
|
| 8,593 |
|
|
| 165 |
|
|
| 16,292 |
|
|
| 1,583 |
|
CLS-TA (DME program) |
|
| 1,909 |
|
|
| — |
|
|
| 2,853 |
|
|
| — |
|
Wet AMD program |
|
| — |
|
|
| 898 |
|
|
| 247 |
|
|
| 2,507 |
|
Total |
|
| 13,833 |
|
|
| 2,569 |
|
|
| 28,926 |
|
|
| 9,416 |
|
Unallocated |
|
| 2,217 |
|
|
| 1,113 |
|
|
| 6,192 |
|
|
| 3,068 |
|
Total research and development expense |
| $ | 16,050 |
|
| $ | 3,682 |
|
| $ | 35,118 |
|
| $ | 12,484 |
|
Our expenses related to clinical trials are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services received and efforts expended under contracts with research institutions, consultants and CROs that conduct and manage clinical trials on our behalf. We generally accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity according to the protocol. If future timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we would modify our estimates of accrued expenses accordingly on a prospective basis. Historically, any such modifications have not been material.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase over the next several years as we progress our product candidates through clinical development. However, it is difficult to determine with certainty the duration and completion costs of our current or future nonclinicalpreclinical programs and clinical trials of our product candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our current or future product candidates.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors that may include, but are not limited to, the following:among others:
the costs associated with process development, scale-up and manufacturing of CLS-TA andour product candidates including the microinjectorSCS Microinjector for clinical trials and for requirements associated with regulatory filings associated with approval;
the number of trials required for approval and any requirement for extension or additional trials;
per patient trial costs;
the number of patients that participate in the trials;
the number of sites included in the trials;
the countries in which the trials are conducted;
the length of time required to enroll eligible patients;
the number of doses that patients receive;
the drop-out or discontinuation rates of patients;
potential additional safety monitoring or other studies requested by regulatory agencies;
the duration of patient follow-up; and
the efficacy and safety profiles of the product candidates.
In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each product candidate, as well as an assessment of each product candidate’s commercial potential.
General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation, for personnel in executive, finance and administrative functions. General and administrative costs historically included commercial pre-launch preparations for XIPERE, and also include facility related costs not otherwise included in research and development expenses, as well as professional fees for legal, patent, consulting, and accounting and audit services.
We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities, potential commercialization of our product candidates and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. Additionally, we anticipate increased costs associated with being a public company including expenses related to services associated with maintaining compliance with NASDAQ listing rules and SEC requirements, director and officer insurance, and investor and public relations costs.
Other Income (Expense)
Other income consists of the accrued interest and interest income earned on our cash and cash equivalents and short-term investments.equivalents. Interest income is not considered significant to our financial statements.
Other expense primarily consistsNon-cash Interest Expense on Liability Related to the Sales of Future Royalties
Non-cash interest expense under our loan agreements and, for the three and nine months ended September 30, 2016, changes in the value of aon liability related to a warrant to purchase preferred stock, which warrant automatically converted into a warrant to purchase common stock in connection with our initial public offering in June 2016. After such conversion, no further income or expense was recognized in connection with changes in the fairsales of future royalties consists of imputed interest on the carrying value of that warrant, which was subsequently exercised in October 2016.the liability and the amortization of the related issuance costs.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of
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America, or U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the balance sheets and the reported amounts of expenses during the reporting periods. In accordance with U.S. GAAP, we evaluate our estimates and judgments on an ongoing basis. Significant estimates include assumptions used in the determination of share-based compensation and some of our research and development expenses. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We define our critical accounting policies as those accounting principles generally accepted in the United States of America that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. During the ninesix months ended SeptemberJune 30, 2017,2023, there were no significant changes to our critical accounting policies disclosed in our audited financial statements for the year ended December 31, 2016,2022, which are included in our Annual Report on Form 10-K, as filed with the SEC on March 16, 2017.14, 2023.
Results of Operations for the Three Months Ended SeptemberJune 30, 20172023 and 20162022
The following table sets forth our results of operations for the three months ended SeptemberJune 30, 20172023 and 2016.2022.
|
| Three Months Ended |
|
| Period-to-Period |
| ||||||
|
| 2023 |
|
| 2022 |
|
| Change |
| |||
|
| (in thousands) |
| |||||||||
License and other revenue |
| $ | 1,018 |
|
| $ | 384 |
|
| $ | 634 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
| |||
Cost of goods sold |
|
| 213 |
|
|
| — |
|
|
| 213 |
|
Research and development |
|
| 4,948 |
|
|
| 5,430 |
|
|
| (482 | ) |
General and administrative |
|
| 3,127 |
|
|
| 2,791 |
|
|
| 336 |
|
Total operating expenses |
|
| 8,288 |
|
|
| 8,221 |
|
|
| 67 |
|
Loss from operations |
|
| (7,270 | ) |
|
| (7,837 | ) |
|
| 567 |
|
Other income |
|
| 458 |
|
|
| 24 |
|
|
| 434 |
|
Non-cash interest expense on liability |
|
| (2,294 | ) |
|
| — |
|
|
| (2,294 | ) |
Net loss |
| $ | (9,106 | ) |
| $ | (7,813 | ) |
| $ | (1,293 | ) |
|
| Three Months Ended September 30, |
|
| Period-to-Period |
| ||||||
|
| 2017 |
|
| 2016 |
|
| Change |
| |||
|
| (in thousands) |
| |||||||||
License and collaboration revenue |
| $ | 155 |
|
| $ | 5 |
|
| $ | 150 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
| 16,050 |
|
|
| 3,682 |
|
|
| 12,368 |
|
General and administrative |
|
| 2,298 |
|
|
| 1,629 |
|
|
| 669 |
|
Total operating expenses |
|
| 18,348 |
|
|
| 5,311 |
|
|
| 13,037 |
|
Loss from operations |
|
| (18,193 | ) |
|
| (5,306 | ) |
|
| (12,887 | ) |
Other expense, net |
|
| (143 | ) |
|
| (339 | ) |
|
| 196 |
|
Net loss |
| $ | (18,336 | ) |
| $ | (5,645 | ) |
| $ | (12,691 | ) |
Revenue. In each of the three months ended SeptemberJune 30, 20172023 and 2016,2022, we recognized $5,000$1.0 million and $0.4 million, respectively, of revenue associated with our agreement with NovaMedica. Inlicense agreements, which includes revenue for the sales of our SCS microinjector kits to our licensees.
Cost of goods sold. For the three months ended SeptemberJune 30, 2017,2023, we also recognized $150,000$0.2 million in cost of revenue associated withgoods sold related to the sales of our other collaboration agreements.SCS Microinjector kits to our licensees.
Research and development. Research and development expense increaseddecreased by $12.4$0.5 million from $3.7$5.4 million for the three months ended SeptemberJune 30, 20162022 to $16.1$4.9 million for the three months ended SeptemberJune 30, 2017.2023. This was primarily attributableis due to ana $0.2 million decrease in employee related costs, a $0.2 million decrease in recruiting costs and a $0.6 million decrease in costs related to our other preclinical programs. This is partially offset by a $0.5 million increase in costs related to the CLS-AX program, which includes costs for ODYSSEY, our Phase 2b clinical programs. Costs for our uveitis program increased $1.8 million,trial and the final costs for our RVO program increased $8.4 million, which included purchases of Eylea for SAPPHIRE and start-up costs for TOPAZ, and costs for our DME program increased $1.9 million. In addition to the increase in the cost of our clinical trials, we also incurred a $0.4 million increase in the cost of producing drug product for the registration batches to support an NDA filing, a $0.2 million increase in other research and development activities and a $0.6 million increase in employee-related costs due to an increase in headcount to support the increasedOASIS Phase 1/2a clinical trial activities. These increases were partially offset by a $0.9 million decrease in costs resulting from the discontinuation of nonclinical development under our wet AMD program in the first quarter of 2017.and OASIS extension study.
General and administrative. General and administrative expenses increased by $0.7$0.3 million, from $1.6$2.8 million for the three months ended SeptemberJune 30, 20162022 to $2.3$3.1 million for the three months ended SeptemberJune 30, 2017.The increase2023. This was primarily attributable to ana $0.4 million increase of $0.6in professional fees, partially offset by a $0.2 million of employee-related costs and an increase of $0.1 milliondecrease in patent-related expenses.employee related costs.
Other expense, net. income. Other expense, netincome for the three months ended SeptemberJune 30, 20172023 and 2022 was $143,000, primarily consistingcomprised of interest income from cash and cash equivalents. The increase is due to the higher interest rates earned on long-term debt, the amortization of financing costs, the accretion of warrantsour cash and the final paymentcash equivalents.
Non-cash interest expense on liability related to the loan agreements, partially offset bysales of future royalties. Non-cash interest income from our short-term investments. Other expense neton liability related the sales of future royalties for the three months ended SeptemberJune 30, 20162023 was $339,000, primarilycomprised of imputed interest on the resultliability related to the sales of an increase in the mark-to-market warrant liabilityfuture royalties and the accelerationamortization of the final payment under our loan agreement.associated issuance costs.
20
Results of Operations for the NineSix Months Ended SeptemberJune 30, 20172023 and 20162022
The following table sets forth our results of operations for the ninesix months ended SeptemberJune 30, 20172023 and 2016.2022.
|
| Six Months Ended |
|
| Period-to-Period |
| ||||||
|
| 2023 |
|
| 2022 |
|
| Change |
| |||
|
| (in thousands) |
| |||||||||
License and other revenue |
| $ | 1,022 |
|
| $ | 731 |
|
| $ | 291 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
| |||
Cost of goods sold |
|
| 213 |
|
|
| — |
|
|
| 213 |
|
Research and development |
|
| 9,399 |
|
|
| 9,966 |
|
|
| (567 | ) |
General and administrative |
|
| 6,285 |
|
|
| 6,248 |
|
|
| 37 |
|
Total operating expenses |
|
| 15,897 |
|
|
| 16,214 |
|
|
| (317 | ) |
Loss from operations |
|
| (14,875 | ) |
|
| (15,483 | ) |
|
| 608 |
|
Other income |
|
| 950 |
|
|
| 26 |
|
|
| 924 |
|
Non-cash interest expense on liability |
|
| (4,461 | ) |
|
| — |
|
|
| (4,461 | ) |
Net loss |
| $ | (18,386 | ) |
| $ | (15,457 | ) |
| $ | (2,929 | ) |
|
| Nine Months Ended September 30, |
|
| Period-to-Period |
| ||||||
|
| 2017 |
|
| 2016 |
|
| Change |
| |||
|
| (in thousands) |
| |||||||||
License and collaboration revenue |
| $ | 290 |
|
| $ | 515 |
|
| $ | (225 | ) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
| 35,118 |
|
|
| 12,484 |
|
|
| 22,634 |
|
General and administrative |
|
| 7,259 |
|
|
| 3,872 |
|
|
| 3,387 |
|
Total operating expenses |
|
| 42,377 |
|
|
| 16,356 |
|
|
| 26,021 |
|
Loss from operations |
|
| (42,087 | ) |
|
| (15,841 | ) |
|
| (26,246 | ) |
Other expense, net |
|
| (395 | ) |
|
| (355 | ) |
|
| (40 | ) |
Net loss |
| $ | (42,482 | ) |
| $ | (16,196 | ) |
| $ | (26,286 | ) |
Revenue. In each of the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, we recognized $15,000 of revenue associated with our agreement with NovaMedica. In the nine months ended September 30, 2017, we also recognized $275,000 of revenue associated with our other collaboration agreements. In the nine months ended September 30, 2016, we also recognized $0.5$1.0 million and $0.7 million, respectively, of revenue associated with our license and collaboration agreement with Spark.agreements, which includes revenue for the sales of our SCS microinjector kits to our licensees.
Cost of goods sold. For the six months ended June 30, 2023, we recognized $0.2 million in cost of goods sold related to the sales of our SCS Microinjector kits to our licensees.
Research and development. Research and development expense increaseddecreased by $22.6$0.6 million, from $12.5$10.0 million for the ninesix months ended SeptemberJune 30, 20162022 to $35.1$9.4 million for the ninesix months ended SeptemberJune 30, 2017.2023. This decrease was primarily attributabledue to ana $0.4 million research and development tax credit received in the current period, a $0.6 million decrease in costs related to our other preclinical programs, a $0.2 million decrease in recruiting costs and a $0.1 million decrease in lab supplies. This is partially offset by a $0.6 million increase in costs related to our clinical programs. Costs for our uveitisthe CLS-AX program, increased $4.2 million,which includes the final costs for our RVO program increased $14.7 million, which included purchases of Eylea for SAPPHIREOASIS Phase 1/2a clinical trial and start-upOASIS extension study, and the startup costs for TOPAZ, and costs forODYSSEY, our DME program increased $2.9 million. In addition to the increase in the cost of ourPhase 2b clinical trials, we also incurred a $1.3 million increase in the cost of producing drug product for the registration batches to support an NDA filing, a $0.6 million increase in other research and development activities, a $1.7 million increase in employee-related costs due to an increase in headcount to support the increased clinical trial activities and a $0.3 million increase in travel-related costs. These increases were partially offset by a $1.9 million decrease resulting from the completion in 2016 of the Phase 2 clinical trials for CLS-TA and a $2.3 million decrease in costs resulting from the discontinuation of nonclinical development under our wet AMD program in the first quarter of 2017.trial.
General and administrative. General and administrative expenses increased by $3.4were $6.3 million from $3.9and $6.2 million for the ninesix months ended SeptemberJune 30, 2016 to $7.3 million for the nine months ended September 30, 2017. The increase2023 and 2022, respectively. There was primarily attributable to an increase of $1.7$0.6 million in professional fees, offset by a decrease of employee-related$0.4 million in employee related costs a $0.3 million increase in patent and trademark costs, a $0.3 million increase for marketing expenses and a $0.7decrease of $0.1 million for insurance costs.
Other income. Other income for the six months ended June 30, 2023 and 2022 was comprised of interest income from cash and cash equivalents. The increase is due to the higher interest rates earned on our cash and cash equivalents.
Non-cash interest expense on liability related to the costssales of operating as a public company, including an increase in director and officer insurance premiums, professional fees and non-employee director compensation.
Otherfuture royalties. Non-cash interest expense net. Other expense, neton liability related to the sales of future royalties for the ninesix months ended SeptemberJune 30, 20172023 was $395,000, compared to $355,000 for the nine months ended September 30, 2016, in each case primarily consistingcomprised of imputed interest on long-term debt,the liability related to the sales of future royalties and the amortization of financing costs, the accretion of warrants and the final payment related to the loan agreements, partially offset by interest income from our short-term investments.associated issuance costs.
Liquidity and Capital Resources
Sources of Liquidity
We have funded our operations primarily through the proceeds of public offerings of our common stock, sales of convertible preferred stock and the issuance of long-term debt. As of SeptemberJune 30, 2017,2023, we had cash and cash equivalents and short-term investments of $52.6$35.0 million. We invest any cash in excess of our immediate requirements primarily with a view to liquidity and capital preservation. As of SeptemberJune 30, 2017,2023, our funds were held in cash and money market funds, certificates of deposit, commercial paper, corporate bonds, government bonds and treasury bills.funds.
On June 30, 2017,In May 2023, we entered into anterminated our at-the-market sales agreement with Cowen and Company, LLC or Cowen,(the "ATM Agreement"). During the six months ended June 30, 2023, prior to the termination of the ATM Agreement, we sold 515,959 shares of its common stock for net proceeds of $0.7 million under the ATM Agreement.
In May 2023,we entered into a Controlled Equity OfferingSM Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co. ("Cantor") under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $50.0 million through Cowen actingCantor as our sales agent. As ofDuring the date of this report,six months ended June 30, 2023, we have not sold any26,316 shares of our common stock for net proceeds of $32,000 under the at-the-market facility.
On September 28, 2016,Sales Agreement. Subsequent to June 30, 2023, we entered intosold an amended and restated loan and security agreement, which we subsequently amended on October 31, 2017, or as amended the Loan Agreement, with Silicon Valley Bank, or SVB, and entities affiliated with MidCap Financial Services, which we refer to collectively with SVB as the Lenders. The Loan Agreement amended and restated in its entirety our prior loan and security agreement with SVB. The Loan Agreement provides for new term loans of up to $15.0 million, with a floating interest rate equal to 7% plus the greater of (i) the 30-day U.S. LIBOR, reported in the Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, or (ii) 0.50%. We borrowed an initial tranche of $8.0 million on September 28, 2016, of which $5.3 million was used to repay all amounts outstanding under our prior loan agreement with SVB. The remaining $7.0 million will become available beginning on the date on which the Lenders have received evidence, in form and substance reasonably satisfactory to them, that we have produced clinical trial data sufficient to file an NDA for CLS-TA for the treatment of macular edema associated with non-infectious uveitis. Once the draw period for the remaining $7.0 million has commenced, we may draw funds at our discretion until the earlier of (i) March 31, 2018 and (ii) the occurrence of an event of default under the Loan Agreement. We are required to pay accrued interest only through December 31, 2017 on the outstanding amount, followed by 30 equal payments of principal and accrued interest. We have the option to prepay the outstanding balance of the term loans in full, subject to a prepayment fee of 2% of the original principal amount of the aggregate term loans for any prepayments through May 31, 2020. A final payment of $0.5 million, or 6.50% of the aggregate borrowed amount, is due at maturity of loan on June 1, 2020, or upon the prepayment of the facility or the acceleration of amounts due under the facility as a result of an event of default.
The term loans under the Loan Agreement are secured by substantially alladditional 283,894 shares of our assets, except that the collateral does not include any of our intellectual property. However,common stock pursuant to the Sales Agreement for net proceeds of $0.3 million.
On August 8, 2022, or the Closing Date, we, through our wholly-owned subsidiary Clearside Royalty LLC, a Delaware limited liability company, or Royalty Sub, entered into a Purchase and Sale Agreement with entities managed by HealthCare Royalty Management, LLC, or HCR, pursuant to which Royalty Sub sold to HCR certain of its rights to receive royalty and milestone
21
payments payable to Royalty Sub under the Arctic Vision License Agreement, Bausch License Agreement, that certain License Agreement, effective as of July 3, 2019, by and between us and Aura Biosciences, Inc., that certain Option and License Agreement, dated as of August 29, 2019, by and between REGENXBIO Inc. and us, and any and all out-license agreements following the Closing Date for, or related to XIPERE or the SCS Microinjector technology to be used in connection with compounds or products of any third parties delivered, in whole or in part, by means of the SCS Microinjector technology, excluding, for the avoidance of doubt, any in-licensed or internally developed therapies following the Closing Date, in exchange for up to $65 million. Under the terms of the Purchase and Sale Agreement, Royalty Sub received a negative pledge arrangement,payment of $32.1 million, representing the $32.5 million to which we have agreed not to encumber anywere entitled less certain expenses. There were additional issuance costs of our intellectual property.
In connection with the Loan Agreement, we issued warrants$1.5 million related to the LendersPurchase and Sale Agreement resulting in net proceeds of $30.6 million. An additional $12.5 million was deposited in an escrow account by HCR to purchase upbe released to 29,796 sharesRoyalty Sub upon attainment of common stock at a price per sharepre-specified XIPERE sales milestone achieved no later than March 31, 2024. The terms of $10.74. The warrants expire in September 2026, or earlierthe Purchase and Sale Agreement also provide for an additional $20 million milestone payment to Royalty Sub upon the occurrenceattainment of specified mergers or acquisitions of our company, and are immediately exercisable.a second pre-specified sales milestone related to 2024 XIPERE sales.
In connection with the prior loan agreement, we issued a warrant to SVB to purchase 25,974 shares of our convertible preferred stock at an exercise price of $7.70 per share. These warrants were net exercised in October 2016.
Funding Requirements
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, laboratory and related supplies, clinical costs to build our product candidate pipeline, legal and other regulatory expenses and general overhead costs. In addition, we have certain contractual obligations for future payments. Refer to Note 9 to our consolidated financial statements included in this Quarterly Report on Form 10-Q.
The successful development of our product candidates is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the remainder of the development of CLS-TACLS-AX or any future product candidates, although we will require additional funding to complete our Phase 3 clinical program for CLS-TA as a potential treatment, together with intravitreal Eylea, for RVO.candidates. We are also unable to predict when, if ever, material net cash inflows will commence from product sales. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:
successful enrollment in, and completion of, clinical trials;
receipt of marketing approvals from applicable regulatory authorities;
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates; and
launching commercial sales of the products, if and when approved, whether alone or in collaboration with others.
A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that candidate.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings and potential collaboration, license and development agreements. WeOther than potential payments we may receive under our license and other agreements, we do not currently have any committed external source of funds, other thanthough, as described above, we may also be able to sell our common stock under the LoanATM Agreement subject to the terms of that agreement and depending on market conditions. We expect that we will require additional capital to fund our ongoing operations. Additional funds may not be available to us on a timely basis, on commercially reasonable terms, or at all. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the at-the-market sales agreement with Cowen.recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from macroeconomic conditions, such as inflation. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional funds through additional collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, including any future collaboration or licensing arrangement for XIPERE outside of the territories in which we have previously licensed or granted options to license XIPERE, we may be required to relinquish valuableadditional rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
22
We will also incur costs as a public company, that we have not previously incurred or have previously incurred at lower rates, including but not limited to, increased costs and expenses for fees to members of our board of directors, increasedaccounting and finance personnel costs, increased directors and officers insurance premiums, audit and legal fees, investor relations fees and expenses for compliance with reporting requirements under U.S. securities lawsthe Exchange Act and rules implemented by the SEC and NASDAQ.Nasdaq.
Outlook
We have suffered recurring losses and negative cash flows from operations since inception and anticipate incurring additional losses until such time, if ever, that we can generate significant milestone payments and royalties from XIPERE and other licensing arrangements or revenues from other product candidates. We will need additional financing to fund our operations. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date of this report. Our plans primarily consist of raising additional capital, potentially in a combination of equity or debt financings, monetizing royalties, or restructurings, or potentially entering into additional collaborations, partnerships and other strategic arrangements.
Based on our research and developmentcurrent plans and our timing expectations related to the progress of our programs, including our ability to control spending by delaying, reducing or eliminating research and development programs or reducing administrative
expense while still advancing clinical trials for key product candidates,forecasted expenses, we expect that our existing cash and cash equivalents and short-term investmentsas of the filing date, August 14, 2023, will enable us to fund our planned operating expenses and capital expenditure requirements into the fourththird quarter of 2018.2024. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources sooner than we expect. We will require additional capital in order to complete clinical development of CLS-AX.
Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result should we be unable to continue as a going concern.
Cash Flows
The following is a summary of the net cash flows provided by (used in) our operating, investing and financing activities (in thousands):
|
| Six Months Ended |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Net cash provided by (used in): |
|
|
|
|
|
| ||
Operating activities |
| $ | (12,555 | ) |
| $ | (1,572 | ) |
Investing activities |
|
| (1,212 | ) |
|
| — |
|
Financing activities |
|
| 354 |
|
|
| 69 |
|
Net change in cash and cash equivalents |
| $ | (13,413 | ) |
| $ | (1,503 | ) |
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
Net cash (used in) provided by: |
|
|
|
|
|
|
|
|
Operating activities |
| $ | (35,990 | ) |
| $ | (16,253 | ) |
Investing activities |
|
| 12,162 |
|
|
| (20,068 | ) |
Financing activities |
|
| 5,293 |
|
|
| 52,914 |
|
Net change in cash and cash equivalents |
| $ | (18,535 | ) |
| $ | 16,593 |
|
During the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, our operating activities used net cash of $36.0$12.6 million and $16.3$1.6 million, respectively. The use ofnet cash used in each period primarily resulted from our net losses. The increase in net lossoperating activities for the ninesix months ended SeptemberJune 30, 2017 as compared2023 was due to the nine months ended September 30, 2016 was primarily attributable to the higherongoing research and development expenses described above.
Duringto develop our pipeline and startup costs for ODYSSEY, the nine months ended September 30, 2017, our net cash provided by investing activities was $12.2 million, compared toPhase 2b clinical trial for CLS-AX, as well as the supporting general and administrative costs. The net cash used in operating activities for the six months ended June 30, 2022 was primarily due to research and development expenses related to the preclinical and clinical programs and general and administrative expenses offset by the receipt of the $10.0 million milestone payment received from Bausch in connection with pre-launch activities for XIPERE.
During the six months ended June 30, 2023, our investing activities used net cash of $20.1$1.2 million forand consisted of the prior year period. In each period, cash flows from investing activities related primarily to purchasesacquisition of property and maturities of short-term, available-for-sale investments.equipment.
During the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022 our net cash provided by financing activities was $5.3$0.4 million and $52.9 million,$69,000, respectively. The net cash provided by financing for the nine months ended September 30, 2017 was primarily comprised of the net proceeds received from the underwriters’ exercise of their option to purchase additional shares as part of our public offering of common stock that initially closed in December 2016. During the nine months ended September 30, 2016, our net cash provided by financing activities for the six months ended June 30, 2023 consisted primarily of $51.4$0.7 million inof net proceeds from the sale of shares of our initial public offeringcommon stock under the ATM Agreement and the borrowing of the initial tranche under the LoanSales Agreement partially offset by a payment of $0.4 million related to the repayment in fullPurchase and Sale agreement. The cash provided by financing activities for the six months ended June 30, 2022 consisted of all amounts owedstock option exercises and the sale of common shares under the prior loan agreement with SVB.an employee stock purchase plan.
Contractual Obligations
As of September 30, 2017, there were no significant changes to our contractual obligations from those presented as of December 31, 2016 in our Annual Report on Form 10-K.
We have no material non-cancelable purchase commitments with contract manufactures or service providers, as we have generally contracted on a cancelable purchase order basis.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.
Recent Accounting Pronouncements
See Item 1, “Financial Statements – Note 2, Significant Accounting Policies” for a discussion of recent accounting pronouncements and their effect on us.
JOBS Act
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Section 107(b) of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.
Item 3. Quantitative and QualitativeQualitative Disclosures about Market Risk
The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of September 30, 2017 and December 31, 2016, we had cash and cash equivalents of $16.3 million and $34.8 million, respectively. We generally hold our cash in interest-bearing money market accounts. As of September 30, 2017 and December 31, 2016, we had short-term investments of $36.3 million and $48.8 million, respectively. The short-term investments included certificates of deposit, commercial paper, corporate bonds, government bonds and treasury bills. Our primary exposure to market risk is interest rate sensitivity, which is affectedare a smaller reporting company as defined by changes in the general level of U.S. interest rates. Due to the short-term maturities of our cash equivalents and short-term investments and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents and short-term investments.
We do not engage in any hedging activities against changes in interest rates. Our outstanding debt instruments carry a floating interest rate that is 7.0% plus the greater of (i) the 30-day U.S. LIBOR, reported in the Wall Street Journal on the last business dayRule 12b-2 of the month that immediately precedesExchange Act and are not required to provide the month in which the interest will accrue, or (ii) 0.50%. We estimate that a one percentage point increase in the prime rate would have resulted in a $60,000 and $80,000 increase in interest expense for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively.information required under this item.
We do not have any foreign currency or other derivative financial instruments.23
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to a company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report at the reasonable assurance level.
Changes in Internal ControlsControl over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended SeptemberJune 30, 20172023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal control over financial reporting.
24
PART II – OTHEROTHER INFORMATION
From time to time, we may be subject to litigation and claims arising in the ordinary course of business. We are not currently a party to any material legal proceedings and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors described below and in “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2022, filed with the Securities and Exchange Commission on March 16, 2017. There14, 2023. Except as set forth below, there have been no material changes to the risk factors described in that report.
Our consolidated financial statements have been prepared assuming that we will continue as a going concern.
We have incurred recurring losses from operations since inception which raises substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements, and it is likely that investors will lose all or a part of their investment. In addition, if there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms, or at all.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
| Sales |
None.
|
|
On June 1, 2016, our registration statement on Form S-1, as amended (File No 333-208916) was declared effective by the SEC in connection with our initial public offering, or IPO, pursuant to which we sold 8,148,843 shares of common stock, $0.001 par value per share at a public offering priceUnregistered Securities
None.
Issuer Purchases of $7.00 per share, including the partial exercise by the underwriters of their option to purchase additional shares.Equity Securities
We received net proceeds of $51.4 million, after deducting underwriting discounts and commissions and offering expenses borne by us. None of the expenses incurred by us were direct or indirect payments to any of (i) our directors or officers or their associates, (ii) persons owning 10 percent or more of our common stock, or (iii) our affiliates. The joint managing underwriters of the IPO were Cowen and Company, LLC and Stifel, Nicolaus & Company, Incorporated.None.
There has been no material change in the planned use of proceeds from our IPO from that described in the final prospectus related to the offering, dated June 1, 2016, as filed with the SEC, except that we no longer expect to use the proceeds from our IPO to prepare an IND and complete a Phase 1/2 clinical trial for our wet AMD program.
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Item 6. Exhibits
Exhibit No. | Description | |
3.1 | ||
3.2 | ||
3.3 | ||
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| Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act. | |
31.2* | Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act. | |
32.1** | ||
101.INS | Inline XBRL Instance Document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Filed herewith. |
** | These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Clearside Biomedical, Inc. | |||
Date: | By: | /s/ Charles A. Deignan | |
Charles A. Deignan | |||
Chief Financial Officer | |||
(On behalf of the Registrant and as | |||
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