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

Thanks for joining us for Curis' Q2 2021 earnings call. To start, I'd suggest that all of you visit the Investors area of our site, www.curis.com, where you can access our Q2 2021 earnings release along with the associated financial tables. Also, a reminder that management will present forward-looking statements today, which reflect our present expectations and beliefs. Such statements carry certain risks and uncertainties, and actual outcomes could differ materially. For more information, please refer to our SEC filings. With me on this call are Jim Dentzer, our President and Chief Executive Officer, and Bob Martell, who leads R&D. We'll take questions during a Q&A session at the conclusion of the call. At this point, I'll hand things over to Jim. Jim?

I appreciate that, Bill. Good afternoon, everyone, and thanks for being with us today. Here at Curis, our mission is to create the next wave of precision cancer medicines that can truly enhance and prolong the lives of patients. During the second quarter of 2021, we achieved tangible strides toward that objective and established the essential base to grow into further areas where we think we can have an impact. Just to recap, our foremost candidate — a novel small molecule IRAK4 inhibitor known as CA-4948 — is right now under investigation across nine separate patient groups: two AML and MDS groups receiving it as a single agent for those carrying spliceosome or FLT-3 mutations, two AML and MDS groups getting CA-4948 together with azacitidine and venetoclax, and four B-cell cancer groups receiving CA-4948 in combination with ibrutinib; beyond that, we are collaborating with Dr. Uwe Platzbecker at the University of Leipzig on the LUCAS IST, which examines CA-4948 as monotherapy in lower risk MDS patients. A lot of you have been following this closely: for the majority of AML and MDS patients, the long isoform of IRAK4 — IRAK4-L — has been identified as the main thing driving the disease. When it comes to the companies running clinical trials in these patients, Curis has the medicine that hits IRAK4 most directly and has advanced the farthest. With each new set of beta data that comes in, our excitement about CA-4948 grows even more, because its safety profile is manageable and predictable, and it has shown it can deliver deeper efficacy the longer someone continues treatment. During June's EHA meeting, we were especially pleased to share updated findings from the monotherapy arm of our Phase 1/2 trial in AML and MDS. We highlighted how the drug performed across multiple doses tested in the study — something that may set it apart and could allow us to treat even the most critically ill individuals within this long-overlooked population. Our other program, CI-8993 — a first-in-class monoclonal antibody targeting anti-VISTA — is also moving forward nicely. Enrollment of patients into the Phase 1 dose escalation study for relapsed or refractory solid tumors has encouraged us, and we're still on track to provide a meaningful initial safety readout before the year ends, which we hope will include signs of early benefit in managing the CRs-related side effects that are known to occur with anti-VISTA treatment. Broadly speaking, we continue to advance through 2021, a year in which Curis is focused on execution. With that in mind, let's look at a few details of the programs currently underway, starting with the IRAK4 effort in leukemia. During EHA earlier this summer, we were pleased to present updated findings from the monotherapy arm of our AML and MDS study. Those results reinforced what we had seen previously regarding single-agent activity across the range of late-line AML and MDS patients, despite the fact that these people had already received several earlier treatments that did not work. As a reminder, the data in our EHA presentation identified a group of patients whose specific genetic mutations make their disease highly responsive to CA-4948, because of how the drug works. All four patients we could evaluate who had either a spliceosome mutation or an FLT-3 mutation achieved an objective response. This finding, though early, strongly supports our scientific theory: that mutations in U2AF1 and SF3B1, both part of the spliceosome, specifically drive production of the oncogenic long isoform of IRAK4 — precisely the target CA-4948 was designed to attack. In the broader population — patients without a spliceosome mutation or an FLT-3 mutation — we also saw encouraging efficacy signals. In that group, 9 of 11 evaluable patients experienced tumor shrinkage or maintained blast counts in the normal range. The upcoming phase of our clinical strategy involves targeting this patient group by using combination treatments that link CA-4948 together with either azacitidine or venetoclax. We are hopeful that because of its unique way of working and its proven ability to alter the course of the disease, CA-4948 will become a useful component in the toolkit of combination therapies for combating AML and MDS. Findings presented at EHA also highlighted CA-4948's favorable safety record: there were no dose limiting toxicities associated with myelosuppression, and no dose limiting toxicities overlapped with those of azacitidine or venetoclax, which are the drugs we intend to study in combination with CA-4948. When we escalated the dose, the side effect that capped further increases was uncomplicated rhabdomyolysis — meaning CPK went up along with muscle aches. That turned out to be something we could handle: it was spotted fast and without difficulty, it reversed readily, and it didn't stop us from continuing treatment once we stepped the dose back down. Of note, those patients who developed rhabdomyolysis on the higher doses typically had contributing predisposing factors, such as taking a statin or doing intense exercise. Last, we were glad to present at EHA a pharmacokinetic analysis update for CA-4948. With the 300 milligram b.i.d. dose, the pharmacokinetic exposure achieved in patients matches 98% target inhibition in preclinical models. The strength of this data gives us greater conviction that CA-4948 is a novel IRAK4 inhibitor with robust activity, one that could meaningfully expand treatment choices for AML and MDS patients. Among first-line patients, whose bone marrow hasn't yet been permanently harmed either by the cancer itself or by earlier cytotoxic therapy, we've seen that notable and meaningful hematologic recovery can occur over the course of a few months, provided leukemic blasts are brought down effectively. On the other hand, when it comes to the late-line patients enrolled in our trial, we should keep in mind that their marrow is already deeply scarred and dysfunctional, and that fact can slow down, or in some cases block, a successful hematologic recovery. CA-4948 targets the cancer underneath, as other cancer therapies do, but on its own it does not stimulate the marrow. So it's encouraging for us to observe evidence that these very ill individuals are experiencing blood count improvement following just several months on therapy. On the regulatory side, we aim to have between ten and twenty patients who carry spliceosome mutations receiving the drug by the time the year closes. If results continue to hold steady, we anticipate being able to approach the FDA during the first six months of next year to talk about the possibility of an accelerated approval pathway. Because the findings so far are so compelling, and because enrollment has moved along so quickly, we feel confident about hitting that target. Among the nine population groups we're examining with CA-4948, the spliceosome population is just one — yet our belief is that this could be the dataset that reaches maturity fastest, allowing us to begin conversations with FDA sooner than otherwise possible. As the monotherapy trials continue forward, the step-by-step favorable safety results, which demonstrate no dose limiting toxicity overlap with either azacitidine or venetoclax, represented a key subsequent milestone in developing CA-4948 as a combination therapy for the wider AML and MDS patient population. Such results emphasize how pertinent and significant the revised preclinical data shared at EHA also are, since that data brought to light CA-4948's synergistic antitumor activity in leukemia cell lines when combined with azacitidine and venetoclax. Prior to leaving the leukemia topic, I want to briefly mention the ongoing Phase 2 LUCAS IST in patients who have lower risk MDS, which is being led by Dr. Uwe Platzbecker, Co-Chairman of EHA's Scientific Working Group on MDS. To remind everyone of why this study makes sense, should it succeed, it might deliver a potential breakthrough for the MDS field. Today's standard of care using EPO stimulating agents is able to work well for patients with lower-risk MDS.

That said, this response tends to be short-lived, it doesn't alter the course of the disease, and it has no impact on subsequent complications or progression to AML. Because CA-4948 hits IRAK4 directly and has a solid safety profile, we think it may be able to provide patients at earlier disease stages with a safe, disease-modifying option; now let's turn to lymphoma. At ASH this past December, we presented updated clinical results from our Phase 1 dose escalation trial of CA-4948 in patients with relapsed or refractory NHL or other hematologic malignancies; those findings showed sustained decreases in tumor burden among six of seven evaluable patients who received 300 milligrams of CA-4948 twice a day after a median of four earlier lines of therapy; I want to stress again that this looked like clear efficacy from a novel single agent, and the fact that such responses held up over so long a stretch in these very ill patients is highly encouraging and gave strong support to our plan to start the ongoing combination trial of CA-4948 plus ibrutinib. As a reminder, the combination study started enrolling in Q1 of this year, with CA-4948 dosed from 200 milligrams up to 300 milligrams BID. We anticipate sharing initial results from this trial at a medical conference during the first half of 2022. Finally, I'd like to discuss the VISTA program with CI-8993, our first-in-class monoclonal antibody being developed for patients with relapsed or refractory solid tumors. We consider CI-8993 the furthest advanced anti-VISTA antibody in clinical development today, and it could become a game changing cancer therapy. In June, we held a virtual symposium that brought together industry thought leaders and respected academics to talk over the growing knowledge and possibilities tied to this immune checkpoint. Enthusiasm and interest in our program among both clinical and academic groups is extremely high, and we expect to provide an initial update by year end. Let me briefly explain why this program excites us so much. Today's major checkpoint inhibitors work either by boosting T-cell priming, like anti-CTLA4 antibodies, or by easing T-cell exhaustion, like anti-PD-1 or PD-L1 antibodies. Each of these faces two important constraints. First, the CTLA4 and PD-1 checkpoints are unable to act on T-cells trapped in a quiescent state. Second, CTLA4 and PD-1 effectiveness is known to be actively undermined by myeloid-derived suppressor cells, or MDSCs, which drive T-cell exhaustion and inhibit pro-inflammatory macrophages. With VISTA, we have found the checkpoint whose main job is to enforce T-cell quiescence; moreover, VISTA is a recognized driver of MDSCs, and through this dual pronged effect, VISTA can hold a large share of T-cells in a quiescent state and keep them from being acted upon by anti-CTLA4 or anti-PD-1 antibodies. Lastly, we know VISTA expression can rise dramatically as a compensatory mechanism while patients are being treated with anti-CTLA4 or anti-PD-1 or PD-L1 therapy. Given all of this, our view is that going after VISTA therapeutically is going to be an essential piece of the immuno-oncology toolkit. To close things out, I want to express my deepest gratitude to everyone across the Curis team, who keep putting in relentless effort as they chase these breakthroughs that could reshape how we treat disease. We're looking forward to carrying our momentum forward across the upcoming quarters and pushing ahead with our next generation of targeted cancer programs to serve patients who need them. So with that, I'll hand things over to Bill, who will walk us through the financial results for the quarter. Bill?

Thanks, Jim. For the second quarter of 2021, we posted a net loss of $10.8 million, which works out to $0.12 per share, on both a basic and diluted basis. That compares with a net loss of $6.7 million, or $0.17 per share, again on both a basic and diluted basis, during the same period in 2020. When it came to revenues, the second quarter of 2021 brought in $2.3 million, versus $2.4 million for 2020. In both periods, revenues came mostly from royalties recorded on Genentech and Roche's net sales of Erivedge. Operating expenses reached $12.9 million in the second quarter of 2021, compared with $7.8 million during the same period in 2020. Cost of royalty revenues stood at $0.1 million for both the second quarter of 2021 and 2020. Research and development expenses came to $8.8 million in the second quarter of 2021, versus $5.3 million during the same period in 2020. The rise in research and development expenses this quarter stems mainly from higher clinical and manufacturing costs across our programs, along with greater employee related costs from added head count. General and administrative expenses were $4.1 million in the second quarter of 2021, compared with $2.4 million during the same period in 2020. The growth in general and administrative expense was primarily driven by higher costs for stock-based compensation, personnel, professional consulting services and legal services. During the second quarters of 2021 and 2020, total other expense came to $0.2 million and $1.3 million, respectively. Total other expense was made up mostly of imputed interest expense tied to future royalty payments, partly offset in the second quarter of 2021 by a gain related to the extinguishment of debt. As of June 30, 2021, roughly 91.6 million shares of common stock were outstanding. As of June 30, 2021, cash, cash equivalents and investments at Curis added up to $160.7 million; we believe our existing cash, cash equivalents and investments ought to let us keep our planned operations running into 2024. With that, I'd like to open up the call for questions. Operator?

Hello, everyone. I appreciate your willingness to answer our questions. Congratulations on how far things have come. To begin, since the VISTA safety data is getting close, could you go over again which modifications were implemented in this study compared with earlier Janssen studies, and why those give you greater assurance that this asset will turn out to be safe? Also, what would you consider a favorable result from the safety readout?

Thank you, Justin. I truly value that question. Bob, you are likely the ideal individual to address it.

Right, thank you Justin. So, as everyone is aware, the Janssen trials took place several years back. In the time since then, there's been extensive research into cytokine release syndrome, which was the dose limiting toxicity seen in one patient during that study, and with CAR-T therapies emerging in oncology, cytokine release syndrome has become far more manageable, and physicians have a much clearer understanding of how to handle it. In fact, several guidelines have come out since then, among them NCCN guidelines and others. So we've built a number of elements tied to those guidelines into our protocols. And I believe it's also very important that we, together with ImmuNext, have run a good number of preclinical experiments aimed at better understanding cytokine release and how it might be potentially mitigated. With that in mind, we've established that doing a relatively rapid desensitization for patients — at least in preclinical models — in those models we could lower or even fully eliminate cytokine release findings. And so, we've put in place a short kind of desensitization or dose escalation lasting roughly a week for patients across a couple of different infusions, and we carry that out before we begin dosing, and we believe that will help mitigate this. What we hope to see in the end is that we can manage these patients who experience a brief cytokine release syndrome at the start, during and a little after their infusion. Typically, it resolves quite fast. And what we've observed — and what Janssen in fact observed as well — is that the severity and how often cytokine release symptoms occur following dosing goes down with later doses. So at first, we want to see that we can get through that initial dosing and then keep going with treating these patients once they've become desensitized to the cytokine release.

Yeah, understood. Yeah, please continue.

Right. You asked about — what actually would count as the measure of success by the time the year wraps up for this. For VISTA, there are genuinely two major catalysts. The initial one is the one we're tackling during this year, which is safety, and naturally the one further out would be efficacy. The first of those clearly showed up in Janssen's trial, where they hit CRs right away, and our position is that CRs are handleable for every reason Bob mentioned. So during this year, by the time the year ends, what we're aiming to accomplish is essentially taking the safety risk out of that program, in effect, given that we now have 5 additional years of experience at both Curis start and ImmuNext, plus across the industry generally, and our understanding of CRs, we can handle CRs, and we can push this drug into the therapeutic range. After that, naturally, the following objective comes at some point next year. At that stage we start searching for efficacy somewhere between 0.5 and 2.0 mg per kg, but we have to take things in order. This year is entirely focused on de-risking the program, reaching that first truly critical catalyst for value creation, which is demonstrating that this drug is capable of dose escalation and that CRs are manageable.

Understood, thank you. One final item from my side. Previously, our expectation was data for CA-4948 combined with ibrutinib before this year wrapped up, yet it now appears that won't arrive until the opening six months of next year. Was enrollment difficult? Or is it simply that timelines get refined as things progress?

No, I'd say all of it is advancing at a very strong clip. That pleases us greatly. I believe this mirrors — our aim is to ensure these findings get presented at a medical conference, and merely the scheduling of medical conferences dictates that submitting the data and so forth lands you at a conference in the first half of 2022. For the close of this year, our emphasis remains on the spliceosome patients within the AML and MDS trial, though across all nine studies, I'd say the speed at which they're progressing genuinely satisfies us, particularly regarding enrollment for the combination with ibrutinib.

That covers everything I wanted to ask. Thanks so much.

Of course.

Hello, and thank you for fielding our questions — congratulations on the advancements. This is Nina, filling in for Alethia. Regarding VISTA, we were curious whether you could describe the current stage you've reached in the dose escalation process. Then a second thing — apologies, please continue.