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

Thanks for joining us for Curis' First Quarter 2021 Earnings Call. I'd ask everyone, before we get started, to visit the Investors portion of our site, www.curis.com, where our earnings release for the first quarter of 2021 and the associated financial tables can be found. Also, a reminder that forward-looking statements will be made by management on this call, and those are based on what we currently expect and believe. Certain risks and uncertainties apply to these statements, and actual results could differ materially. Please see our SEC filings for additional details. On today's call with me are Jim Dentzer, President and Chief Executive Officer, and Bob Martell, Head of R&D. At the end of the call, we will also be available for a question-and-answer period. I'd now like to turn the call over to Jim. Jim?

Thank you, Bill. Hello, everyone, and thanks for being with us this afternoon. At Curis, our daily mission is to create the next wave of game-changing targeted cancer treatments designed to significantly better and lengthen the lives of patients; during 2021's first quarter, we moved meaningfully closer to that aim, extending the thrilling momentum achieved in the prior year and reaching into further spaces where we think our work can have an impact. Right now, 3 clinical trials are assessing our innovative small molecule IRAK4 inhibitor, CA-4948. To start, the Phase I/II monotherapy trial in AML MDS that I referenced a moment ago. Next, the Phase I/II trial pairing the drug with ibrutinib for individuals suffering from relapsed or refractory NHL or other blood-related cancers. And finally, the Phase II LUCAS trial, which examines CA-4948 in lower risk MDS patients and is being overseen by Dr. Uwe Platzbecker from the University of Leipzig. We feel particularly encouraged by how CA-4948 is progressing and by the thrilling data update that appeared this morning in the European Hematology Association abstracts, drawn from our Phase I/II monotherapy trial involving relapsed or refractory acute myeloid leukemia, or AML, along with high-risk myelodysplastic syndromes, or MDS. As lots of you have been tracking, the long isoform of IRAK4, or IRAK4-L, was recently pinpointed as the primary disease driver for most AML and MDS patients. Here at Curis, we hold the first and only medication that goes straight after IRAK4 to reach clinical testing for such patients. I'm also happy to share today that we've revised our AML and MDS trial to introduce a combination dose escalation alongside a monotherapy dose expansion. Preclinical findings backing the combination trial were released by EHA earlier today and are set for a poster presentation at next month's EHA conference; enrollment in this segment of the trial should kick off in Q3. Although our IRAK4 study has definitely drawn considerable focus. It's worth pointing out that patient enrollment has also pleased us in the Phase I dose-escalation trial of CI-8993, our first-in-class monoclonal anti-VISTA antibody. We anticipate sharing initial clinical results from that trial sometime later this year. In sum, we began 2021 with considerable momentum, on the heels of our December updates at ASH and the fruitful completion of key strategic financings and alliances with top-tier organizations such as the NCI and the European MDS consortium, which will underpin the ongoing growth and broadening of our clinical programs; so with that, let's explore some specifics of our active clinical programs, beginning with the IRAK4 study in leukemia. During April, we were glad to announce that CA-4948 had earned orphan drug designation from the FDA for treating AML and MDS; for Curis, this unique status marks a major milestone as we strive to move CA-4948 forward through clinical testing and eventually try to bring it to the patients who need it most. In the EHA abstract that came out this morning, we were happy to share that findings from our AML and MBS trial keep surpassing what we initially anticipated, demonstrating steady single-agent activity throughout the range of late-line AML and MDS patients. This is true even though these individuals had already gone through multiple prior therapies that did not work. For some background, alongside ASH last year, we presented initial results from 6 patients using a November cutoff, which showed decreases in marrow blasts among all 6 patients, and 2 of them had marrow complete responses. Also, no patient had a dose-limiting toxicity at the 200 or 300-milligram BID levels. The results released today, based on 15 patients and the February 8 cutoff, demonstrated bone marrow blast reductions at every dose tested—200, 300, and 400 milligram BID—and in 8 of 9 evaluable patients who had elevated blast counts when they started. Among them, 1 patient had a full hematologic recovery CRm, 1 patient had a CRI with negative minimal residual disease, and 2 patients had bone marrow CRs. 3 of these patients came in with the U2AF1 or SF3B1 spliceosome mutation, and all 3 of them reached a marrow CR or better, which confirms what we believe: that these spliceosome mutations are specific oncogenic drivers of the long isoform of IRAK4, and CA-4948 is designed precisely to target that. We were also glad to observe that every patient with an objective response displayed indications of hematologic recovery. Let me go a little further into this. The blast reduction figures in the abstract this morning offer more proof that CA-4948 works well at lowering a patient's cancer burden. For this late-line group, having a drug that can safely and effectively clear the cancer is the immediate aim; in first-line patients—those whose bone marrow hasn't been irreversibly harmed by cancer or by earlier cytotoxic treatment—it has been demonstrated that when they receive a drug that brings down the level of leukemic blasts, they can attain clear and substantial hematologic recovery within a few months. For the very ill late-line population, like the patients in our trial, it's crucial to keep in mind that their cancer has advanced in spite of many previous lines of therapy. Because of that, these patients frequently have deeply scarred, dysfunctional marrow, which can delay or even block successful hematologic recovery. So it is particularly encouraging that we have managed to observe signs of hematologic recovery even among these late-line patients after just a few months of treatment. This reinforces our optimism that CA-4948 could have a regulatory path both in combo therapy and as a monotherapy. All in all, we are extremely pleased with how CA-4948 is progressing, and we look forward to the EHA conference, where we will share an updated and expanded data set with a later cutoff date that includes more patients, among them those in our 500 milligram BID cohort. Additionally, we're going to give you an update on safety and pharmacodynamic findings, which will include IRAK4-L expression levels along with additional genomics information. What we've discovered is that the 500 milligram BID dosing schedule went beyond the maximum tolerated dose as defined by the protocol guidelines. We saw 2 patients who had dose-limiting toxicities — one of them experienced grade 3 CPK elevation, or rhabdomyolysis, which is comparable to what we observed in the NHL study, while the other had grade 3 syncope. In both patients, the AEs were reversible and cleared up rapidly once dosing was stopped. Since we've now determined the maximum tolerated dose, we're going to investigate the lower dose levels so we can identify the appropriate recommended Phase II dose. I want to spend a moment on the preclinical data from our other EHA abstract that was published earlier today. Those data brought attention to CA-4948's synergistic antitumor activity when combined with azacitidine and venetoclax in leukemia cells, and they'll be shared during a poster session at EHA next month. What these data show is that CA-4948 potentiates antitumor activity in certain cell lines that are resistant to clinically relevant concentrations of azacitidine and venetoclax. Moreover, CA-4948 showed synergistic antileukemic activity in combination with venetoclax and azacitidine in AML cell lines. Even prior to seeing these data, we already understood that CA-4948 was unique. It's oral; it's disease-modifying. It directly targets the key driver of disease, IRAK4-L, which is a novel mechanism of action.

It has also shown that it can deliver pronounced single-agent activity on its own, with no meaningful myelosuppression, even clearing detectable cancer entirely. Given that the newest preclinical findings point to a potential synergistic benefit too, both we and the clinical investigators working with us are eager to study how CA-4948 combines with azacitidine and venetoclax in patients. As noted before, during this quarter we changed the protocol for the study already underway so that it now contains expansion cohorts covering both monotherapy and combination treatment. Once the recommended Phase II dose has been established, the monotherapy expansion will get underway, comprising 4 cohorts: individuals whose MDS carries a spliceosome mutation and whose disease has relapsed or is refractory to HMA; individuals whose MDS lacks a spliceosome mutation and whose disease has relapsed or is refractory to HMA; individuals with relapsed or refractory AML harboring FLT3 mutations; and individuals with relapsed or refractory AML having wild-type FLT3. For the combination study, dose escalation will open at 200 milligrams BID and will involve 2 cohorts — CA-4948 plus azacitidine in AML and MDS patients who have not previously received HMA, and a second cohort pairing CA-4948 with venetoclax in AML or MDS patients who are core naive to venetoclax. Our hope is that the way these cohorts are designed will assist in pinpointing the most suitable regulatory path, or paths, for CA-4948. Enrollment into these combination cohorts should get started in Q3; we might additionally investigate a triple regimen using all 3 drugs — CA-4948 plus azacitidine plus venetoclax — though naturally that would hinge on the initial safety and efficacy findings from the 2-agent combination cohorts. Before leaving leukemia behind, let me briefly mention the ongoing IST in lower-risk MDS patients that we disclosed in February. The Phase II LUCAS study is under the leadership of the co-chairman of EHA's scientific working group on MDS, Dr. Uwe Platzbecker, and he will oversee this trial at 17 sites throughout Europe, assessing CA-4948 as a treatment for anemia among lower-risk MDS patients. Should this trial succeed, it might represent a potential breakthrough for the MDS field. Although today's EPO-stimulating agents can work for lower-risk MDS patients whose serum EPO is low, that benefit tends to be short-lived and does not modify the disease, nor does it influence progression to AML and additional disease complications; because CA-4948 directly targets IRAK4 without causing myelosuppression and has a strong safety profile, we think it may provide a safe and potentially transformative disease-modifying option for patients whose disease is at an earlier stage. Turning now to lymphoma: in an oral presentation at ASH last December, we shared expanded clinical data from our Phase I dose-escalation study of CA-4948 in patients with relapsed or refractory NHL or other hematologic malignancies. Those data showed lasting decreases in tumor burden among 6 of 7 evaluable patients who received 300 milligrams of CA-4948 twice daily, after a median of 4 prior lines of therapy. I want to stress once more how significant it is that we observed obvious activity from a single new agent, and that this activity held up across such a long stretch of time in these very ill individuals. That gave us tremendous encouragement and strongly validated our plan to move ahead with the ongoing trial of CA-4948 combined with ibrutinib. That combination trial, which started screening participants during the first quarter, should bring in roughly 18 subjects under a 3-plus-3 scheme, with CA-4948 given at a starting dose of 200 milligrams BID and then increased to 300 milligrams BID. The ibrutinib dose will be whatever fits the specific NHL subtype each patient has. We anticipate sharing a recruitment update for this trial, along with the first safety and efficacy findings, during the fourth quarter. Let me now shift to CI-8993, our first-in-class monoclonal antibody aimed at treating individuals whose solid tumors have returned or stopped responding. Checkpoint inhibitors that work by boosting T cell priming, like anti-CTLA-4 antibodies, and checkpoint inhibitors that ease T cell exhaustion, like anti-PD-1 antibodies, both carry 2 major drawbacks. To begin with, T cells locked in a dormant condition cannot be reached by such checkpoint inhibitors. In addition, myeloid-derived suppressor cells, or MDSCs, actively undermine how well these checkpoint inhibitors perform. VISTA serves as a leading enforcer of T cell dormancy and is able to hold a substantial share of T cells in that dormant condition, keeping them beyond the reach of anti-CTLA-4 or anti-PD-1 antibodies. VISTA also acts as a main force behind MDSCs; such cells work to drive T cell exhaustion and to shut down pro-inflammatory tumor-associated macrophages. Lastly, it is established that VISTA expression may rise sharply as a compensatory response while patients receive anti-CTLA-4 or anti-PD-1 treatment. Given all this, we think that aiming therapeutics at VISTA will prove an essential piece of the immune-oncology toolkit. In our view, CI-8993 is the furthest-along anti-VISTA antibody now undergoing clinical testing and could become a therapy that transforms cancer care. The clinical community has already demonstrated profound enthusiasm and curiosity about this program, and we anticipate sharing the first clinical results before this year ends. In closing, I want to express my deepest gratitude to everyone at Curis, whose work has enabled all of this progress. We are keen to keep building on what we have done in the upcoming quarters and to push forward our next-generation targeted cancer programs for the benefit of patients who need them. With that, I will hand the call to Bill so he can go over our financial results for the quarter. Bill?

Thanks, Jim. For Q1 2021, we posted a net loss of $9.9 million, which works out to $0.11 per share, on both a basic and diluted basis. That compares with a net loss of $9.7 million, or $0.28 per share, again on both a basic and diluted basis, during the same period in 2020. Revenue in the first quarter of 2021 came in at $2.2 million, versus $2.7 million in the first quarter of 2020. In each case, royalty revenue recorded on Genentech and Roche's net sales of Erivedge made up the bulk of revenues. Operating expenses during the first quarter of 2021 reached $11 million, compared with $11.2 million for the same period in 2020. Cost of royalty revenues came to $0.1 million in both the first quarter of 2021 and 2020. Research and development expenses totaled $6.8 million in the first quarter of 2021, versus $7.5 million for the same period in 2020. The decline for the quarter stems mainly from the upfront license fee expense tied to our option and license agreement with ImmuNext covering CI-8993, which was incurred in the first quarter of 2020. A $0.3 million rise in employee-related cost partly offset those costs. General and administrative expenses were $4.1 million in the first quarter of 2021, compared with $3.6 million for the same period 2020. The rise in general and administrative expense was driven mainly by greater cost for stock-based compensation and professional and consulting services, partly offset by reduced legal cost during the 3 months ended March 31, 2021. In the first quarter of 2021 and 2020, net other expense was $1.1 million and $1.2 million respectively. Imputed interest expense tied to future royalty payments made up the main component of net other expense. As of March 31, 2021, roughly 91.5 million shares of common stock were outstanding. As of March 31, 2021, Curis' cash, cash equivalents and investments came to $168.4 million. We expect our existing cash and investments should let us keep our planned operations going into 2024. With that, I'd like to open the call for questions. Operator?

Nice results — that's really encouraging. To start off, Jim, one question. What should our expectations be regarding the route to approval for both monotherapy and combination therapy? Could you possibly walk through the likely time lines for approval in AML and MDS? Also, which approach — monotherapy or combo — could bring 4948 to market faster?

Sure. Thanks, Ed. I appreciate the thoughts and the question. Discussing timelines to approval feels a bit early for us. Still, I'd say our overall approach remains exactly what we laid out in December. Of course, we're simply more confident at this point because the data keeps reinforcing it. At first, our assumption was that this drug would only work in combination and be limited to a chosen subgroup making up half of patients. But the findings from December, and certainly the ASH abstract data we now have, seem to indicate it fits better across the entire patient pool. That, I'd say, is the main intended use. There's another possibility that December gave us a glimpse of, and which is now becoming clearer: a single-agent route may exist for a particular subset. At this point, I think we can state that the spliceosome mutation group appears to be a strong option for that approach. Every patient in this trial who has a spliceosome mutation—three people total as of now—has achieved a marrow CR or something even better. Given that genomic link, this clearly becomes a highly attractive opportunity for monotherapy, especially since no other drug has been approved in the post-HMA setting. That prospect appeals to us too. Which program will advance more quickly is honestly unclear to me. What I can say right now is that both look like very strong opportunities: one as a combination approach added on top of standard of care, and the other as monotherapy in a distinct population defined by that genomic signature.

Also, perhaps you could share your perspective regarding how large these trials of dose escalation are, along with the cohorts for both the combination and the monotherapy arms.

Sure. Bob, could you handle that question?

Correct — the first phase of this work will be trials that escalate the dose, following a 3-plus-3 design. Luckily, we can begin at 200 milligrams given twice a day, a dose already demonstrated to have therapeutic activity and one that is quite relevant. In addition, as Jim noted, we've begun establishing the upper limits too. For dosing, we would probably remain somewhere between 200 and 400. That means the full dose escalation across these studies probably won't require very much time.

Nice work on the advances. To start, would you two mind going into more detail about what it takes to set the recommended Phase II dose below 500 milligrams bid in AML MDS?

Of course. Once more, that one is likely best directed to Bob. Bob?

Absolutely, that's something we can do. Up to this point, the data we've observed in a limited group of patients has been quite compelling. As a result, one focus of our work going forward will involve examining many different factors, which of course takes in pharmacodynamics. For instance, we're aware that between the 200, 300, and 400-milligram dose levels, the pharmacokinetics behave quite predictably; beyond that, we'd like to broaden things a bit and gain a deeper picture of efficacy, maybe by exploring something like a break in the dosing interval. So over the next several months, all of this is going to happen, and with luck, we'll manage to establish a recommended Phase II dose before long.

Yeah. I suppose, Justin, if there's anything I'd tack onto that, it's this: on the timing front, the encouraging part is that reaching MTD was what we anticipated — we simply had no idea when it would happen. The sole clue we had coming out of the NHL studies was that it would probably show up as CPK elevation of rhabdo. And we certainly did observe that at 500 in the leukemia study. So now that MTD is in hand, we're facing this high-class headache where 200, 300 and 400 all appear therapeutic. I realize that sounds a bit odd to describe it that way — that's your headache. But honestly, it is. So at this point we need to do a bit of dose exploration to try to determine which one of these is truly the best candidate to move into Phase II.

Understood. One additional item from my side. The abstract indicated a majority of subjects were dependent on transfusions, which is not particularly surprising given high-risk MDS. What I want to know is whether you are monitoring this. Also, have any gains in transfusion dependence been observed among the MDS patients?

Correct. I will save that for a fuller conversation at EHA, though certainly, within MDS, dependence on transfusions matters a great deal. Indeed, a reduction in transfusion dependence could serve as a clinical endpoint for a trial. Therefore, we keep watching that. This will matter, not only for the studies we run, but naturally as well for the low-risk MDS trial, the Lucus IST being conducted in Europe. So keep that in mind.

Congrats once more on such strong data. I have just 2 questions — of course. And I'm not certain how much detail you're able to give us. Regarding these responders, is there any information on mutational status — should we assume they're largely spliceosome mutants, or does it appear to be both, possibly both split 3 white ticon mutant, and the breakdown between AML and MDS — how many come from the AML cohort among the responders, and how many from the MDS?

Right; so for some of the genomics discussion, we'd prefer to wait until the actual EHA presentation. We won't go past what was stated in the abstract. With that said, naturally, this is something of huge interest to us. So expect a much more detailed conversation on that topic once we reach it.

Of course, that makes sense. Only one more item from my side. As you designed the 4948 with aza portion in the HMA-naive population, ought we consider frontline subjects to be anyone unsuitable for 7-plus-3? And in what way will doctors decide between placing an older individual on 4948 plus aza rather than venetoclax with aza?

Sure. Let's have Bob, who is our oncologist, go through this. Bob?

Definitely. So azacitidine could indeed serve as a viable option for treating patients in the first-line setting. Thus, using this combination as initial therapy is definitely something worth considering. One benefit this drug offers compared with venetoclax, for instance, is that it doesn't cause notable myelosuppression; therefore, particularly when dealing with a frail elderly patient, this could be a key reason a clinician would pick this combination rather than venetoclax. As was noted earlier, we were additionally investigating a combination that includes venetoclax itself, and at some future point we might even look into a triplet combination too.

Well done once more.

Nice work on the abstract progress. That's a big assist for me. Yep. Great; so I'll go person by person since each one matters just as much; so regarding the 6 patients you presented at ASH, when we look back now at how the CRs got deeper, were those the ones with marrow CR who then deepened? Or what's the right way to think about which of them had hematologic recovery — that's my first question.

Yeah. We haven't drilled down to each individual patient. My suggestion is, save that deeper data discussion for EHA. What I'd say is the top-line takeaway is truly the key thing, which is we were quite happy to be seeing blast count reductions. Keep in mind this agent is — it's a cancer-fighting drug; it isn't something that stimulates the marrow. So heme recovery wasn't something we truly anticipated in this heavily pretreated group. That we began to observe it was wonderful; if you're able to clear the tumor burden, then heme recovery becomes possible, depending on how healthy the marrow is, and that's the kind of thing you'd figure might emerge gradually. The reality that we've seen it already is, naturally, wonderful. So those patients will be tracked. And naturally the extra ones we've added, onto the trial in upcoming months. But what we're observing thus far has us quite encouraged.