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

Thanks for joining us, and welcome to the Curis call covering the fourth quarter and the close of 2020. To get started, I'd ask that you visit the Investors area of our site, www.curis.com, where the earnings release for quarter 2020 and the accompanying financial tables can be found. I also want to note that throughout this call, management will share forward-looking statements, and those rest on what we currently expect and believe. Such statements carry certain risks and uncertainties, and what actually happens could differ materially. For more on that, please look at our SEC filings. With me today are Jim Dentzer, our President and Chief Executive Officer, and Bob Martell, who leads R&D; a question-and-answer period will also be offered at the end of the call. At this point I'll hand things over to Jim. Jim?

Thanks, Bill. Hello, everyone, and good afternoon. We appreciate you being with us today. As always, Curis exists to create the next generation of targeted cancer therapies, with the goal of meaningfully improving and extending the lives of patients. In that sense, despite the challenges posed by the ongoing COVID-19 pandemic, 2020 proved to be a particularly productive year for Curis. We were lucky enough to keep delivering our novel therapeutics to patients who are enrolled in our clinical studies, and we sustained a consistent rate of advancement across the clinical process, which led to several exciting updates regarding our lead assets, including CA-4948, our first-in-class IRAK4 kinase inhibitor, that were shared at the Ash annual meeting in December. Right now, our IRAK4 platform is anchored by two active clinical studies: one combining our drug with the BTK inhibitor ibrutinib in patients who have relapsed or refractory non-Hodgkin's lymphoma, and the other a 4948 monotherapy study in patients with relapsed or refractory Acute Myeloid Leukemia, or AML, and high-risk Myelodysplastic Syndromes, or MDS. We remain on schedule to offer a follow-up update from this AML MDS study by mid-year, and to report initial data from the CA-4948 ibrutinib combination study by year end. We are also still enthusiastic about the possible opportunities that may arise from the Cooperative Research and Development Agreement, or CRADA, with the National Cancer Institute, which we announced in November, concerning the development of CA-4948. And from the IFT being conducted by Dr. Platzbecker, which is studying CA-4948 as a treatment for anemia in patients with lower risk MDS. We will go into more detail on these later in this call. However, both partnerships provide a uniquely intriguing expansion potential, while also substantially increasing the number of patients we can reach in a population with dire medical need, and offering a derisked opportunity to further develop CA-4948 in novel indications. Turning away from IRAK4 for a moment: also in 2020, we acquired rights, received IND clearance, and initiated patient dosing in a Phase 1a/1b trial of CI-8993, our first-in-class, monoclonal anti VISTA antibody for treating patients with relapsed or refractory solid tumors. We have kept enrolling patients and bringing additional trial sites online for the study, and we look forward to reporting initial safety and efficacy data in the second half of this year. All in all, 2020, and the fourth quarter especially, was a period of meaningful progress for the company, including the successful execution of key strategic financings that have given us a robust foundation to support the continued advancement and expansion of our clinical programs in 2021 and the years to come. We look forward to building on this progress, as 2021 shapes up to be another important year for Curis. With that, let's dig into some detail on our ongoing clinical programs, starting with leukemia. We're evaluating CA-4948 in patients with relapsed or refractory AML or MDS, including those with spliceosome mutations that drive the expression of the oncogenic long isoform of IRAK4. During the Ash conference, we shared very promising Phase 1 results from the monotherapy trial we're still running, showing decreases in marrow blasts that could be seen across every patient who could be evaluated, and among those six valuable individuals, two achieved a marrow complete response. We've kept collecting information since that prior update. Also, dosing has started for patients at 500 milligrams BID. Early signals at earlier dose levels matched what we'd already disclosed; we're eager to share refreshed findings from this trial around the middle of the year. Beyond that study, we're particularly glad to be working alongside a well-known AML MDS physician, Dr. Uwe Platzbecker, to launch the Phase 2 LUCAS Investigator Sponsored Trial focused on treating anemia among individuals who have lower risk MDS. Given the encouraging initial results we showed in December for relapsed refractory AML and high risk MDS patients, we felt motivated to investigate whether CA-4948 might additionally help those with earlier stage MDS who remain further from advancing to AML. Should that idea be confirmed, it might represent a significant advance in the AML and MDS area, because today's erythropoiesis stimulating agents, or ESA, aimed at anemia in genetically defined lower risk MDS can work, yet that benefit frequently fades, eventually leading to AML progression and added disease complications. Because it directly and without myelosuppression targets IRAK4, and given the strong durability it has already shown, we think CA-4948 might deliver a safe and transformative disease modifying option for early stage or low risk MDS patients. Enrollment for this trial should start during the second quarter of 2021, with as many as 84 patients anticipated across two cohorts. Cohort A consists of those refractory or intolerant to ESA. Cohort B covers ESA naive individuals. Everyone in both groups will get 300 milligrams of CA-4948 twice daily BID across 21 days, within no fewer than four repeating cycles, each lasting 28 days. Evaluating the share of patients achieving an erythroid response per IWG 2018 criteria serves as the study's primary endpoint. Now turning to lymphoma. As a reminder, our Phase 1 dose escalation trial of CA-4948 treating relapsed or refractory non Hodgkin's lymphoma patients enrolls those with diffuse large B cell lymphoma Waldenstroms and oncogenic mutations. We've now entered the expansion phase, assessing individuals receiving 300 milligrams of CA-4948 twice daily, after clear dose response and tumor shrinkage appeared at that level during dose escalation. In an oral presentation at Ash last December, we shared broader clinical findings from this trial, emphasizing sustained tumor burden decreases seen among six of seven evaluable patients given 300 milligrams twice daily, single agent CA-4948, after a median of four earlier lines of therapy. Looking at that information, 300 milligrams BID was chosen as the best dose to move forward with, since it seems to offer the most favorable mix of lasting anti-cancer effects and tolerability for extended therapy, and that matters greatly for these very ill individuals who have already gone through multiple unsuccessful treatment lines. For a bit more background, this information reinforced a pattern first highlighted at Ash 2019, when we shared a modest yet compelling set of results indicating CA-4948 might position IRAK4 inhibition as a fresh mechanism of action, a new approach to treating NHL patients given its strong safety and efficacy profile, especially at higher doses when used as a monotherapy. During 2020, this study had two main objectives. The first was proving the concept as a monotherapy, confirming IRAK4 inhibition as a fresh mechanism of action, a new approach to treating NHL patients by providing a strong safety and efficacy profile, especially at higher doses. That would give us a key read through for the combination study we planned. The second was determining which effective dose levels provided the optimal safety-efficacy balance. Based on the results we shared and our choice of 300 milligrams BID of CA-4948 as the recommended Phase 2 dose, we feel we achieved both objectives.

I want to stress once more that the people enrolled are very ill—they had already gone through a median of 4 earlier treatment regimens prior to joining the trial—and even so, we managed to see a meaningful therapeutic response using a single agent. The fact that those responses hold up across such a long stretch of time is hugely encouraging and strongly validated our strategy of starting a combination trial with a synergistic agent such as the BTK inhibitor ibrutinib. We began that combination trial earlier in the current quarter. During the Ash presentation, we also shared preliminary findings on 2 possible biomarkers that could aid our efforts toward selecting and enriching patients; we expect to give updated results on both biomarkers at AACR next month. Let's now spend a little time on why we, along with key stakeholders in the NHL clinical community, consider the idea of pairing an IRAK4 inhibitor with a BTK inhibitor so compelling. Approved, effective oral BTK inhibitors such as ibrutinib are used in patients with a range of lymphatic cancers, and they act by hitting one of the key activators of NF-kappaB, the BCR pathway. The key point, though, is that full NF-kappaB regulation also demands shutting down medicinal signaling through the TLR pathway, which IRAK4—the target of CA-4948—primarily controls. Put simply, the BCR pathway and the TLR pathway represent two principal, independent oncogenic drivers of NF-kappaB. Regulation of either one of these pathways pushes excessive B cell proliferation. Blocking BTK shuts down one; blocking IRAK4 shuts down the other. Our view is that hitting both pathways effectively could yield substantially better results than hitting just one; and although multiple companies have approved BTK inhibitors, just a single company is working on a BTK IRAK4 combination. Curis is that company. Right now we are enrolling patients into part one, the dose escalation portion, of the trial, which is expected to enroll roughly 18 patients following a three plus three design, with CA-4948 doses beginning at 200 milligrams BID and rising to 300 milligrams BID. Ibrutinib doses will be suited to each patient's respective NHL subtype. The primary endpoints for the study's first part are our maximum tolerated dose and determination of the recommended Phase 2 dose. Secondary endpoints are PK and preliminary efficacy. We will share updates as appropriate while enrollment advances, and ultimately proceed to part two of the study. Even so, from scientific hypothesis through preclinical data and on to clinical data, every stage of this journey has been a steady step forward in the long-term vision for Ca-4948 in NHL—namely, that IRAK4 governs a critical pathway running in parallel and complementary to the BCR pathway. And that blocking IRAK4 could deliver added benefit to the vast population of patients treated with a BTK inhibitor and help mitigate resistance to BTK therapy. That is our vision for NHL. We're eager for the chance to bring you up to speed on this program again during Q4 of the current year. At this point, let's shift focus to CI-8993, which is our first-in-class monoclonal antibody aimed at treating individuals who have relapsed or refractory solid tumors. For some context, we picked up the rights to CI-8993 during Q1. The FDA granted us IND clearance in Q2, and by Q3 we had launched our initial clinical locations and given the first dose to our first patient. The pace of all this has been remarkable. From that point on, we've kept adding more clinical sites and bringing in additional patients. This target has generated long-standing enthusiasm among us and the clinical community due to the essential function it serves in curbing T-cell activity once it becomes activated. On the flip side, when it gets blocked or inactivated, preclinical research has demonstrated that it stops T-cell suppression, which in turn reawakens anti-tumor immune responses. We likewise recognize considerable promise in combinations, and down the road we might investigate going after VISTA alongside particular synergistic treatments, for example PD1, PDL-1, or perhaps even CTLA-4 inhibitors. This is because preclinical findings indicate that inhibiting VISTA markedly boosts how well those checkpoint regulators work. Additionally, over the past 10 years, advances in CAR-T therapy development within the wider immunotherapy field have tackled the on-target side effects that used to be limiting with this kind of pathway blockade—specifically, immune-mediated toxicity and cytokine release syndrome. In our view, CI-8993 stands as the furthest-along anti-VISTA antibody now undergoing clinical development. The clinical community has already displayed profound enthusiasm and keen interest in this initiative. And we think CI-8993 could potentially transform cancer treatment. We're eager to share preliminary safety and efficacy findings for this promising program during the latter half of 2021. In closing, I'd like to stress how deeply proud I am of everyone at Curis, who, even as a global pandemic continues, have labored relentlessly to make sure we achieved each bold objective we established for this year. Their dedication is evident in the fact that we're now in a dramatically different position compared to 12 months back, and ever nearer to delivering our promising therapies to the patients who need them most. It's a privilege to collaborate with them daily. Having said that, I'll hand things over to Bill so he can go through our financial results for the quarter. Bill?

Jim, thank you. Curis wrapped up 2020 on December 31 with a net loss of $29.9 million — that's $0.61 per share, basic and diluted. In 2019, the comparable figure was a net loss of $32.1 million, or $0.97 per share, also basic and diluted. Now looking at Q4 2020: our net loss was $7.5 million, or $0.11 per share, basic and diluted. For the same quarter in 2019, we posted a net loss of $8.6 million, or $0.26 per share, basic and diluted. Full-year revenue came in at $10.8 million, compared with $10 million for 2019. During each of those two years, the bulk of our revenue came from royalties we booked on Genentech and Roche's net sales of Erivedge. For the fourth quarter, revenue was $3.0 million in 2020 and $3.3 million in 2019. For the fourth quarter, revenue was $3.0 million in 2020 and $3.3 million in 2019. For the full year that closed on December 31, 2020, operating expenses totaled $35.7 million, versus $34.4 million during the equivalent period in 2019. Operating expenses in the fourth quarter of 2020 reached $9.3 million, while the same quarter in 2019 saw $10.6 million. Costs of Royalty Revenues came to $0.5 million for the years ended December 31, 2020 and 2019. In the fourth quarter of both 2020 and 2019, that figure stood at $0.2 million. On the R&D side, expenses came to $23.1 million for the year, versus $22.3 million in 2019. For the fourth quarter of 2020, R&D expenses totaled $5.6 million, compared with $7.5 million during the same period in 2019. This decline largely reflected lower clinical and manufacturing costs tied to CA-170 and fimepinostat. G&A expenses reached $12.1 million for the year ended December 31, 2020, up from $11.6 million during the same period in 2019. In the fourth quarter of 2020, general and administrative expenses were $3.5 million, compared with $3 million during the same period in 2019. The rise was mainly driven by higher personnel related costs. For the full year that closed on December 31, 2020, net other expense came to $5.0 million, versus $7.8 million during the equivalent stretch of 2019. Looking at the fourth quarter alone, net other expense stood at $1.2 million in 2020 and $1.3 million in 2019. The bulk of that net other expense figure was imputed interest expense tied to future royalty payments. Curis' cash, cash equivalents and investments added up to $183.1 million as of December 31, 2020, and that amount factors in $159.1 million in net proceeds from the follow-on public offering we completed in December 2020. Roughly 91.5 million shares of common stock were outstanding as of December 31, 2020. Based on our current cash, cash equivalents and investments, we believe we can keep our planned operations running into 2024. Having said that, I'd now like to turn things over for Q&A. Operator?

Hi everyone, I appreciate you fielding my questions. Honestly, congratulations on such a transformative past 3 or 4 months — it has been really exciting to watch. So, I have a few. First, regarding this mid-year update, could you help us frame how many participants you may have enrolled, or where things stand relative to that schedule? Also, please give us some context on enrollment. It sounds like things are going quite well, perhaps exceeding what I had anticipated. My second one concerns VISTA, the VISTA program. Do you believe that by the time the year ends, you will have reached a point where you might be able to evaluate efficacy? Or will it primarily hinge on whether this is listing things such as cytokine release syndrome, which I still consider a significant milestone? But I simply wanted to understand your thinking on both of those matters and the potential for some monotherapy. Then my third one: could you revisit and tell us a bit about, with regard to low risk MDS, some of the IRAK4 science? You have given some context already, but please elaborate a little more on why there is believed to be a link, and the degree of confidence in the ISP for the things you are running.

Certainly. Hello, Alethia. Thank you for joining; so out of the 3 questions, I will handle the first 2, and I will invite Bob to weigh in on the third. So the first one, the mid-year update. In my view, our enrollment expectations have been truly excellent; we managed to enroll 6 patients during the 6 months before Ash. Thus, for a mid-year update it stands to reason we would likely add another 6 patients on top of that; exactly how many patients and how that enrollment progresses toward getting the data back, and cleaned and valuable patients identified before that update, remains to be seen, but somewhere within that range probably makes sense. On VISTA, it is somewhat early for us to determine whether or not we will be able to identify it or assess efficacy by year end. And just to provide context, again, when we originally went into this study, we believed the efficacious window would probably fall somewhere between 0.5 and 2.0 mg per kg; and we need to escalate through the sub therapeutic doses until we can reach that window, and where inside that window we will see efficacy is not really clear. Naturally, the sooner we see it at lower doses, the faster we will obtain efficacy information, but it could very well be at the back end of that window. We do not really know at this point. Honestly, it mostly comes down to getting patients signed up through those doses that fall below the therapeutic level. With luck, by the time this year closes we'll be able to discuss efficacy. Yet being honest, at this moment it's somewhat premature for us to make any claim — that hinges on how recruitment proceeds across the coming 3 quarters. Bob, perhaps you could say a few words regarding the low risk MDS and the science behind that strategy.

Absolutely, that's right. Alethia, thanks for asking — it's a strong question. We view low risk MDS as an ideal setting in which to investigate this drug, in part since that's the context where many of these spliceosome mutations initially appear. The appearance of spliceosome mutations during the early phases of MDS, including low risk MDS, indicates that this result — the production of the long IRAK4 isoform — sits at the core of the disease process and represents an initial step as MDS evolves toward AML. So for that reason, and given how frequently spliceosome mutations occur in this disease, we believe this will matter a great deal; beyond the spliceosome mutations recognized for producing IRAK4 long, other factors probably also drive excess IRAK4 long, so we recognize that even in early stage MDS there are elevated levels, and our estimate is that roughly 50% of patients with lower risk MDS have excess IRAK4 long, including certain patients lacking particular spliceosome mutations. Thus a great deal of biology backs pursuing this early stage of disease.

Could I also ask a single follow-up regarding that midyear catalyst — should we be thinking of it as ASCO, or might you be in a spot where you'd simply jump on it? I'm just curious.

Well, I believe it will hinge, naturally — this is Jim once more, Alethia — I believe it will hinge, naturally, on the conference to which we're able to submit the abstracts and, naturally, on which one agrees to take the abstract for discussion. Right now, we're sort of keeping it open. With luck, though, we'll be able to make that clear as that date draws nearer.

Evening, everyone, and thanks for letting me ask a few things. Maybe I'll start with a pair of questions about timing. Regarding the Phase 2 LUCAS study, as far as I understand, patient enrollment won't start until Q2 of this year. I'm just curious how you're viewing the path to data?

Absolutely. Hi, Ed, doing well? Right, so this trial is an IST. That means the company won't have the same tight level of control that you'd get with a more conventional study. The upside for us, naturally, comes in two parts. To start, being an IST, it costs us significantly less. More crucially, though, the person leading this IST is the clinician who serves as Chairman of the European MDS society. He has every one of his 17 sites committed to enrolling into this study. So although we typically can't control it — and we won't get to look at data continuously the way we would — in a standard trial. My take is that we're quite optimistic. We felt great when Dr. Platzbecker got in touch and asked about running this trial; in our view it's an ideal expansion of the drug, given what we showed at Ash. As you're aware, our plan has always included the combination study, and any situation where we can achieve blast count reductions. That looks genuinely thrilling, yet because we can achieve blast count reductions broadly, plus marrow responses. As we talked about before, I believe we were truly enthusiastic about the chance to pursue a monotherapy and move into earlier stage disease too. So when Dr. Platzbecker brought his team in and told us he wanted to take this on, we were delighted. So my hope is that it moves fast. Still, we'll need to wait and see, and we'll share updates whenever we're able.

Great, thanks Jim. One more thing, kind of about timing — how are we supposed to think about the route toward registration? In NHL, we understand the priority will be combining it with ibrutinib, but you also had outstanding results as a monotherapy following four prior lines of treatment. So I'm just wondering, what would be the fastest route to get approved? Could you possibly take us through your approach there, whether it's combo or mono?

Absolutely, thanks. That's a good question. Regarding how we get to approval, naturally there are quite a few distinct forks in the road. To begin with, we should consider AML and MDS in a different way than we do NHL. As you're aware, when it comes to AML and MDS, there could be a combination approach, a single-agent approach, and perhaps some work at earlier stages. But to address what you asked about NHL specifically, our view is that monotherapy remains a possibility, and that study is still running. Beyond that, we're quite enthusiastic, since these individuals had already gone through numerous prior lines of treatment, yet we kept seeing unmistakable signs of tumors shrinking — which is tremendously encouraging. So naturally, we intend to move forward on that front too. When we go out and talk with investor communities, this comes up often, and I'd say our view on the commercial side differs sharply from how we approach regulatory matters. On the commercial side, things look extremely straightforward to me. NF Kappa b gets driven by two routes: the BCR route and the TLR route. Every BTK inhibitor out there, ibrutinib included, shut down the BCR route; we're alone in being able to shut down the TLR route. So if you have one of these cancers, the real question isn't whether to pick one pathway over the other, or whether you'd rather have a BTK inhibitor or an IRAK4 inhibitor. What we believe people are really asking, when it comes to a commercial situation, is whether they can have both options at once. That's the main reason we decided to move forward with this study: to test it in the clinic and determine whether we can reproduce what the lab work showed, namely that this was plainly the superior treatment choice. After we've confirmed that, our next step is to examine a regulatory possibility — this is what we've called the expansion phase of the combination therapy, in which we'll assess the four subtypes, or four niche groups, within NHL that we believe could provide the quickest route with the greatest likelihood of success toward securing regulatory approval and obtaining that initial label. Our eventual goal is a label broad enough that doctors could use this in any situation where they'd reach for a BTK inhibitor, in any situation where they'd reach for ibrutinib. That said, in the early phase, as part of this trial that's currently running, our plan is to look at expansion into four separate cohorts. We'll be looking for patients who are BTK inhibitor-naive and who have marginal zone lymphoma — sorry, primary marginal zone lymphoma, primary CNS lymphoma, ABC DLBCL — or patients who received ibrutinib and later developed adaptive resistance. Those four patient groups, in our view, offer the fastest path to registration. Which of those routes is optimal, or if multiple appear similarly promising, won't be clear until the data arrives. Still, we intend to pursue each of them, along with the monotherapy, at the same time. That response ran somewhat long, yet the question mattered greatly. I trust that clarified things.