FDA Alignment And Phase 3 Trials Will Advance AMD Therapy

Key Takeaways

• FDA alignment on CLS-AX for wet AMD and Phase 2b outcomes may boost revenues and market leadership upon approval.
  
• Global partnerships and SCS technology expansions could enhance international market presence and revenue streams.
  
• Financial constraints and dependency on securing additional funding or partnerships pose risks to Clearside Biomedical's operations and future revenue from drug development.

Catalysts

A biopharmaceutical company, focuses on the revolutionizing the delivery of therapies to the back of the eye through the suprachoroidal space.

• The alignment with the FDA for the pivotal Phase 3 program of CLS-AX for wet AMD, following positive Phase 2b results, is a significant catalyst. This could potentially enhance future revenues if CLS-AX is approved and commercialized, positioning it as a leading maintenance treatment in the growing wet AMD market.
  
• The successful regulatory milestones achieved by partners, including approvals and ongoing regulatory reviews in Asia for products using Clearside's suprachoroidal delivery platform, indicate a potential increase in future international revenues and market presence.
  
• Planned partnerships and collaborations, such as Arctic Vision's alliance with Santen Pharmaceuticals, can boost Clearside's revenue streams by expanding marketing and distribution capabilities in key markets like China.
  
• Upcoming Phase 3 trials by partners using the SCS Microinjector for various indications, including retinal diseases and choroidal melanoma, suggest a broader application of Clearside’s delivery platform, potentially leading to new revenue channels and partnerships.
  
• The advancement of internal pipeline opportunities, such as potential new treatments for geographic atrophy using the SCS Microinjector, could result in expanded product offerings and increased earnings through successful development and commercialization.

Clearside Biomedical Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Clearside Biomedical's revenue will grow by 129.7% annually over the next 3 years.
• Analysts are not forecasting that Clearside Biomedical will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Clearside Biomedical's profit margin will increase from -2064.4% to the average US Pharmaceuticals industry of 20.0% in 3 years.
• If Clearside Biomedical's profit margin were to converge on the industry average, you could expect earnings to reach $4.0 million (and earnings per share of $0.05) by about May 2028, up from $-34.4 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 147.9x on those 2028 earnings, up from -1.9x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 17.2x.
• Analysts expect the number of shares outstanding to grow by 3.23% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Clearside Biomedical Future Earnings Per Share Growth

Risks

• The company's cash and cash equivalents totaled approximately $20 million as of December 31, 2024, but they only have sufficient resources to fund operations into the fourth quarter of 2025. This indicates potential financial constraints that could impact revenue and overall earnings if additional funding is not secured soon.
  
• The completion of the Phase 3 clinical trials for CLS-AX, which are critical for commercial launch, depends on securing additional funding or partnerships, posing a risk to projected future revenues.
  
• If the planned CLS-AX Phase 3 trials encounter delays or fail to meet endpoints, this could negatively impact regulatory approval and therefore the revenue potential of the drug.
  
• The necessity for flexible dosing regimens and redosing criteria that are still under development might increase the complexity and cost of delivering CLS-AX, potentially affecting net margins.
  
• The plan to exclude patients with high variability in vision from the Phase 3 trials might slow down enrollment, delaying potential revenue realization and impacting the bottom line.

Valuation

• The analysts have a consensus price target of $5.833 for Clearside Biomedical based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $8.0, and the most bearish reporting a price target of just $4.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $20.2 million, earnings will come to $4.0 million, and it would be trading on a PE ratio of 147.9x, assuming you use a discount rate of 6.4%.
• Given the current share price of $0.84, the analyst price target of $5.83 is 85.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.