Curis, Inc. (CRIS) Earnings Call Transcript & Summary

Thanks for joining us for Curis' earnings call for the second quarter of 2020. To start, I'd ask that you visit the Investors area of our site, www.curis.com, where the earnings release for Q2 2020 along with the associated financial tables can be found. I also want to note that management will present forward-looking statements on this call, which reflect our present expectations and beliefs; such statements carry certain risks and uncertainties, and actual results could differ materially. For more information, please refer to our SEC filings. With me today are Jim Dentzer, our President and Chief Executive Officer, and Bob Martell, who leads our R&D efforts. A question-and-answer session will follow at the conclusion of the call. At this point, I'll hand things over to Jim Dentzer, Curis' CEO. Jim?

Thanks, Bill. Hello, everyone, and thanks for being with us this afternoon. Many of you are aware that Curis's mission involves creating the next generation of targeted cancer therapies so that patients' lives can be meaningfully improved and extended. Our team's know-how and its capacity to spot untapped oncology targets—targets we think hold substantial promise for addressing unmet patient need—are what drive our novel pipeline. During the second quarter, we delivered on clinical and financial objectives alike, making meaningful headway toward key goals for the year; in our ongoing CA-4948 study, the IRAK4 program, we moved dose escalation forward in patients with relapsed or refractory non-Hodgkin's lymphoma, or NHL. A second IRAK4 trial was launched in patients with relapsed or refractory acute myeloid leukemia, or AML, and high-risk myelodysplastic syndromes, or MDS. During the same quarter, we also got FDA clearance to move ahead on the investigational new drug application for CI-8993, our monoclonal anti-VISTA antibody. Finally, we closed a sizable financing transaction with a number of fundamental health care investors. For Curis, the quarter was extremely eventful. Taken together, these achievements position us for exciting data catalysts later in the year and sustained momentum as we head toward 2021. At Curis, we're charging ahead at full speed, and I'm eager to build on this progress during the third quarter; with that, let's turn to our clinical development programs, beginning with CA-4948, our small molecule IRAK4 kinase inhibitor. As a reminder, CA-4948 is presently being assessed in an ongoing Phase I dose escalation study for treating patients who have relapsed or refractory non-Hodgkin's lymphoma, or NHL, among them patients with diffuse large B-cell lymphoma, Waldenström's macroglobulinemia, and Oncogenic MYD88 mutations. In this Phase I study, we are right now assessing patients receiving 300 milligrams of CA-4948 twice daily, after clear dose response and tumor reductions were observed at earlier dose levels. Enrollment pace decelerated during the second quarter, since numerous clinical sites put enrollment on hold temporarily because of the COVID-19 pandemic. Fortunately, after new guidance and protocols came out, several of our Phase I study sites have reopened and are actively enrolling new patients; thus, although the data aren't mature enough yet for us to declare a recommended Phase II dose today, we're confident that by the end of this year we'll be able to provide updated safety and efficacy data and also finalize the recommended Phase II dose. Even so, the tumor reduction data we've observed thus far are highly encouraging. With these data in hand, we're excited to announce today our plan to launch the combination study of CA-4948 with ibrutinib, the market-leading BTK inhibitor; in preclinical models, inhibiting both IRAK4 and BTK has been shown to deliver significant anticancer benefit. As you'd expect, given their differing mechanisms of action, they also seem to be highly synergistic. Our team and the clinical investigators we work with can't wait to find out whether the efficacy this combination therapy showed before entering trials carries over into patients, the way the single-agent results already have. With what we announced today, we're kicking off collaboration with our clinical sites and with the FDA, and we anticipate that enrollment will open in a Phase I trial of CA-4948 given together with ibrutinib prior to the close of this year. Let's now turn to leukemia — our CA-4948 study involving individuals who have relapsed or refractory AML along with high-risk MDS, among them patients whose spliceosome mutations drive expression of the oncogenic long isoform of IRAK4. One month ago, we reported that the first patient had been dosed in our open-label Phase I dose escalation trial evaluating CA-4948 as a monotherapy in these populations; we had been anxious to get this trial going from the moment Dr. Amit Verma and Dr. Daniel Starczynowski gave their landmark presentation at last year's ASH Conference, where they pinpointed particular spliceosome mutations as drivers of disease through their role in causing expression of the long isoform of IRAK4. The short isoform of IRAK4, they showed, is normal, whereas the long isoform is oncogenic. They went on to show that blocking IRAK4 by treating with 4948 produced a dramatic decrease in the formation of leukemic blasts. By identifying IRAK4-L as the first and only known driver of disease affecting more than half of patients with AML and MDS, their work transformed the landscape of these diseases. Armed with the discoveries of Dr. Verma and Dr. Starczynowski, along with preliminary data from our NHL trial, we moved swiftly alongside our clinical investigators and the FDA to craft a trial of CA-4948 in the AML and MDS population. And we're delighted that only six months afterward, we've dosed our first patient. This Phase I dose escalation trial is enrolling a minimum of three patients at each dose level, beginning at 200 milligrams twice daily. As I noted earlier, we're thrilled to launch this trial at a dose level that may be therapeutic, following the FDA's sign-off, since 200 milligrams twice daily was found to be both safe and able to achieve encouraging biologic activity and clinical efficacy in our Phase I NHL study. The primary objective here is to establish the maximum tolerated dose and the recommended Phase II dose of CA-4948, drawing on safety and tolerability dose-limiting toxicities together with pharmacokinetic and pharmacodynamic findings. We couldn't be happier that this trial is now running, and we look forward to sharing initial data before this year is over; next I want to discuss our VISTA program and CI-8993, our first-in-class monoclonal anti-VISTA antibody. This is a target that excites us a great deal. Once activated, VISTA serves a critical function in suppressing T cell activity. On the flip side, research done before human trials has demonstrated that if you block VISTA, T cell suppression gets prevented, which brings antitumor immune function back to life. There's also promise, in our view, for going after VISTA together with an inhibitor of PD-1, PDL1, or even CTLA-4, since preclinical work indicates that shutting down VISTA makes those checkpoint regulators work much better. Many of you will recall that a small molecule aimed at both PDL1 and VISTA was something we created in the past. That small molecule was active, yes, but the efficacy it delivered couldn't compete with the monoclonal antibodies being developed at that moment for the population we were targeting; our belief was that this likely came down to 2 reasons. First, being a large molecule, a monoclonal antibody gives you full coverage of a receptor over multiple binding regions. A small molecule, when you compare it, blocks just 1 or 2 contact points on a target receptor. Second, monoclonal antibodies have a tendency to hold tightly around a receptor, nearly the way Velcro does, whereas a small molecule keeps bouncing on and off what it targets. Because of those reasons, we launched a hunt last year for the strongest IP, the finest library of drug candidates, and the deepest grasp of VISTA biology. In ImmuNext, we came across a partner possessing all 3. Then in January of this year, we signed an option and license agreement with them covering development and commercialization of CI-8993, and right away we started working to develop it. In June, a mere 5 months afterward, our IND application for CI-8993 got cleared by the FDA, which makes it the sole anti-VISTA antibody in development right now to move into human testing. The interest and excitement coming our way from the clinical community regarding this program pleases us, and our belief is that CI-8993 could potentially be a game-changing cancer therapy. Later this year, we look forward to kicking off a Phase I study of CI-8993 in patients who have solid tumors. To wrap up, our clinical progress so far this year has us very excited. We hope the coming few months will move us even closer to creating meaningful therapies for patients fighting cancer. With that, I'll hand the call back to Bill so he can review our financial results for the quarter. Bill?

Thanks, Jim. For Q2 2020, Curis posted a net loss of $6.7 million, equal to $0.17 per share, on both a basic and diluted basis. That compares with a net loss of $7.2 million, or $0.22 per share on a diluted basis, during the same quarter in 2019. Revenue in the second quarter of 2020 came in at $2.4 million, versus $2.1 million for the same period 2019. In both periods, revenue mainly consisted of royalties recorded on Genentech and Roche's net sales of Erivedge. Operating expenses for Q2 2020 totaled $7.8 million, compared with $8.2 million for the same period 2019. Costs of royalty revenues came to $0.1 million in both the second quarter 2020 and 2019. Research and development expenses reached $5.3 million in the second quarter of 2020, versus $5.6 million for the same period in 2019. That decline was mainly due to reduced clinical trial costs tied to CA-170 and fimepinostat. General and administrative expenses were $2.4 million in the second quarter of 2020, compared with $2.5 million for the same period in 2019. That decrease was driven primarily by lower stock-based compensation and legal and professional services fees, partially offset by higher occupancy costs. Other expense net was $1.3 million for the second quarter of 2020, compared with $1.1 million for the same period in 2019. Other expense net primarily consisted of imputed interest expense related to future royalty payments. As of June 30, 2020, our cash, cash equivalents and investments totaled $23.6 million, which includes net proceeds from our $17.5 million registered direct offering that closed in June. As of June 30, 2020, roughly 50.6 million shares of common stock were outstanding; we expect that our existing cash, cash equivalents and investments should allow us to maintain our planned operations beyond our end-of-the-year data catalysts and into the first half of 2021. Note that our forecast does not include any potential proceeds from our stock purchase agreement of up to $30 million with Aspire Capital. With that, I'd like to open the call for questions. Operator?

Hi there. I appreciate you answering my question. I have a few things to ask. First, regarding 4948 and the data expected at year-end — can you give us a sense of how many patients that might involve? Also, what role has COVID played here, or is it simply that additional data is needed before the dose can be fully understood? My second question concerns the ibrutinib combination and how you plan to determine the appropriate dose level for it. Then my third question: what are the rate-limiting steps for launching the anti-VISTA program in the second half of the year? Are there any, or do you believe you're nearing the final stage for that? Thank you.

Of course. Hello, Alethia, thanks for joining. So I believe that's three questions — your update on the combo being pushed back because of COVID, and then the anti-VISTA rate-limiting factors. Regarding enrollment in the lymphoma study, you're absolutely correct. COVID-19 did affect us. Certain sites closed completely. Fortunately, they've reopened and resumed enrolling. So although we're seeking just a small number of additional patients, we've brought some new ones on. And honestly, all we need is for those patients to remain on drug sufficiently long for the data to be read out — essentially, to let the data mature. Based on the patients we've managed to enroll since reopening, we're confident we'll be able to lock in that Phase 2 dose by year-end. But regrettably, yes, the COVID interruption set us back, much as it did many others across the industry. On the combo study, could you remind me what your second question was?

What I was trying to get at is how you arrived at the correct dose in that situation. My understanding was that some of the 4948 work done at the other sites was being used to guide your dosing decision?

Had we already established the Phase 2 dose in lymphoma, the choice would have been obvious — we'd simply begin there. What made the combo study tricky, I think, is that at this point our knowledge is solid enough that we're confident about moving into Phase II; the data is convincing to us. The real open question was: which dose is the correct one? That left us with 2 options. Option one: hold off until the Phase II dose was locked in and all the data had matured. Option two: given that we're ready to proceed and we already know 200 works, launch the study right away and put patients on the therapeutic dose, which is 200. Then, should they clear that dose, we simply escalate the dosing exactly the way we've been doing on the monotherapy arm. So yeah, that's essentially the whole story for the combo side. With VISTA, nothing is really holding us back. Honestly, our interactions with the FDA turned out to be more fruitful, more efficient, and quicker than we'd expected. As a result, we're operating at breakneck speed to open our sites as quickly as we can. At this point it's really just the blocking and tackling involved in working with the sites — which are also back up now that COVID has passed — to get them through all their processes and begin enrolling patients into that study.

Okay. Great. Thank you.

Sure.

Hi, everybody. I appreciate you answering my question, and congratulations on getting the ibrutinib combo across the finish line in NHL — you're really making that asset work hard. I'd like to hear your thoughts on running this monotherapy trial alongside 4948. Are you noticing, or are the physicians who enroll patients, leaning toward more of the non-GCB type, or is that something you'd rather emphasize in the ibrutinib combo study? And could you share a bit of detail about which line of patients you're seeing. Are they — what share are transplant relapse versus naive? Just some flavor regarding the patients in NHL.

Absolutely. Thanks, Soumit. Above all, I appreciate you joining the call. We're grateful for your interest; regarding the patients who are being enrolled, I'd say there's definitely a broad mixture of indications. The data isn't in our hands yet. We'll receive that data in due course, definitely before we report out on MYD88 mutations. That's something we're quite eager to learn as well. Still, it's been encouraging that there's been a wide range, a wide sampling of patients spanning multiple indications going into the study. These are relapsed/refractory patients; we're seeing that on average they've had roughly 3.5 lines of prior therapy before entering; so they're quite ill; yet naturally we're heartened that the level of interest in getting them enrolled is high, and that the dose response has been so clear. And we're quite eager to learn, once the final data comes back on MYD88 alterations, where the data tend to correlate, even though it's a small number of patients — I believe each little piece of information will prove very useful to us moving forward. Go ahead.

For the ibrutinib combination study, would your focus be on the non-GCB subtype, or would you keep it completely open to whatever the physician characterizes?

Right. So I'd say there are a couple of ways to think about it. First, the study's purpose, as I see it, is genuinely to extend the preclinical evidence we've generated; so — you might recall that the preclinical evidence we've generated, shown on a slide in our corporate presentation, demonstrates that IRAK4 and BTK inhibition each work quite strongly on their own. When you put them together, they seem highly synergistic and, naturally, more potent than either one alone. With that in mind, we're genuinely aiming at patients who would otherwise receive ibrutinib. So in any indication where ibrutinib is used, at full dose, we'd anticipate seeing synergy; that being said, although it's broadly open to those populations, anyone whose tumor type is at least partly driven by the toll-like receptor pathway ought to show greater sensitivity to treatment and ought to respond even more strongly. Yet we'd anticipate, based on our preclinical evidence, that wherever we can identify patients responding to BTK therapy, adding 4948 to it ought to turn it into a more effective therapy; and that's genuinely the population we're pursuing.

All right. Thanks. I have one thing to ask about on the AML side. Now that Takeda's pevo in the high-risk MDS population is, shall we say, once more quietly posting a pretty solid response rate — a CR rate of 52% — do you think the competitive picture is shifting? And do you think the route to registration won't be as straightforward as an accelerated approval, but instead require a full Phase III trial with a controlled arm? Are you seeing any shift in strategy?

Yeah. Actually, Bob, you might be a good person to jump in on this one.

Absolutely, and I appreciate that question. So we are kicking off a trial that covers both AML and myelodysplastic syndrome. When you look at these indications—leaving out high-risk MDS, lower-risk MDS, and AML—each one comes with its own distinct set of treatment algorithms, and we fully expect those to shift as time goes on. That said, as Jim pointed out, one thing that makes IRAK4 stand out is its role as a major driver of the disease—it was a < >—meaning the drug goes straight at that target. Because of that, we believe it will become an essential piece in how AML and MDS are treated. We also recognize that when you pair this drug with other agents used < > MDS, there's potential for synergy, so that plays into the picture as well. All that said, yes, we see this continuing to evolve, but at present, we believe there are multiple registrational pathways that look quite viable.

Yes. Soumit, allow me to make a couple of additional points. First off, I realize the connection on our end appears to be dropping out; scheduling our earnings call for the same day a hurricane struck the Northeast was not something we intended. Thank you for bearing with us while you attempt to follow every second or third word, since each of our phones keeps disconnecting. Now for the second point, yes, I'll expand on what Bob just shared. In my view, the oncology field overall, and definitely the direction we are moving in, never stays still, because novel treatments keep emerging. A benefit of 4948, being a small molecule, is its strong compatibility with a variety of other agents. Additionally, as Bob noted — and I want to stress this — specifically in AML and MDS, although some therapies will demonstrate effectiveness in this area, just one disease driver affects half the population, period. What's more, ours is the sole oncology drug presently in the clinic that hits that culprit directly, that disease driver. Naturally, that means IRAK4-L, with 4948 aimed at IRAK4-L. Therefore, although I anticipate other agents might also prove useful for this group, and I genuinely hope our industry produces many options that benefit these patients, my sense is that the principal drug most investigators are focused on is the one actually hitting the disease driver — ours.

Understood. Thanks a lot, and once more, congrats on advancing on all fronts.

Thanks.