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

Thanks, Gary. I'd like to welcome all of you to the Curis earnings call for the third quarter of 2021. First off, I'd ask that each of you visit the Investors area on our site, www.curis.com, where you can access our earnings release for Q3 2021 along with the accompanying financial tables. Also, a reminder that management will be sharing forward-looking statements on this call, and those reflect what we currently expect and believe. Such statements carry specific risks and uncertainties, and what actually happens could be materially different; for more information, please refer to the filings we make with the SEC. With me on the call today are Jim Dentzer, our President and Chief Executive Officer; Bill Steinkrauss, our Chief Financial Officer; and Bob Martell, who leads Research and Development. There will also be a question-and-answer session once the call concludes. At this point, I'll hand things over to Jim. Jim?

Thanks, Elif. Hello, everyone, and welcome — I'm glad to have you join us for Curis' Q3 earnings call. Looking back over this year, the company has come a long way, and we've achieved meaningful momentum across both of our main clinical candidates, CA-4948 and CI-899$3 million. At Curis, our mission every single day is to create the next wave of cancer treatments that are truly transformative and that can substantially enhance both how long and how well patients live. During the third quarter, we moved notably closer to that objective. First, I'd like to walk you through our primary asset: CA-4948, our innovative small molecule designed to inhibit IRAK4. When it comes to cancer, CA-4948 leads the field among IRAK4 inhibitors in clinical development, and right now it's being tested in 9 separate patient groups spanning AML, MDS, and B cell cancers. For AML patients — the number one cause of leukemia deaths across the United States — there's a serious unmet need for treatments that are both safe and fast-acting. In MDS, that need could be even more urgent, since a great many patients are left with supportive care alone as their best available option. We're thrilled that the initial scientific rationale behind CA-4948 and IRAK4 inhibition has been met with results in the lab that are consistent and encouraging, and, up to this point, results in the clinic that are consistent and encouraging as well. Across our studies in B cell cancer, AML, and MDS, CA-4948 has consistently shown that it's well tolerated and can deliver better efficacy as treatment continues over multiple cycles. We shared these findings most recently in June at the EHA meeting, presenting data from the monotherapy arm of our Phase 1/2 AML/MDS trial. That data showed clear efficacy without dose-limiting myelosuppression—a factor that could really set it apart, since it may mean we can treat even very ill patients who have very little tolerance for drugs. Our second lead program involves CI-8993, a first-in-class monoclonal anti-VISTA antibody and a novel immune checkpoint inhibitor we're developing together with ImmuNext. CI-8993 is a human IgG1 kappa monoclonal antibody that's in the clinic. It was created to block the VISTA signaling pathway, which boosts immunity driven by T cells while lowering the activity of myeloid-derived suppressor cells, or MDSCs. T cells stay quiet partly because of VISTA, which is an important checkpoint, and it stops them from becoming effector cells—something CTLA-4 and PD-1 treatments help bring about. VISTA also plays a major part in driving MDSCs. Existing therapies that mediate immunity don't address these two basic and distinctive functions of VISTA. That expression is likewise thought to be a significant way that resistance to PD-1 and CTLA-4 therapies develops, since it rises sharply once patients stop responding to those treatments. Lastly, VISTA shows up in high amounts right on the surface of particular tumor cells, not just on the immune cells around them — that includes mesothelioma, plus some breast, lung, and gynecologic cancer subtypes. In preclinical models, giving anti-VISTA antibodies has been demonstrated to hold back the growth of melanoma, whether transplanted or inducible. Right now, CI-8993 is under assessment in a Phase 1 study that escalates doses, aimed at treating solid tumors that have come back or stopped responding. With that said, let's take a closer look at the programs we have going at the moment, starting with the IRAK4 work in leukemia. As I said earlier, we were happy to share at EHA this past summer our encouraging updated results from the monotherapy portion of our AML/MDS trial, which built on the single-agent activity we had already seen across the full range of late-line AML and MDS patients. And that's even though these individuals had already gone through multiple prior therapies that did not work. We further showed that you could get near-complete IRAK4 inhibition at each dose tested in the study. From that data, it became clear that 300 milligrams BID delivered the best combination of lasting anticancer effect and manageable tolerability over time. So we chose that dose as the recommended Phase 2 dose moving ahead. This lined up with the results from our earlier CA-4948 monotherapy study in NHL, in which 300 milligrams BID was also chosen as the main dose for further investigation; enrollment is still progressing at a rate we find satisfactory in our CA-4948 monotherapy trial involving patients who have a U2AF1 or SF3B1 spliceosome mutation. As we have previously stated, our goal is to enroll 10 to 20 patients with a spliceosome mutation by the end of this year. We think results from this group could open the door to talks with the FDA about the registrational path ahead during the first half of 2022; we expect to reach that goal of 10 to 20 patients and intend to give a high-level safety and efficacy update on a subset of them in January. Obviously we don't yet have data on all 10 to 20 patients, but in January we do anticipate having initial efficacy findings for 8 to 10 spliceosome patients plus 3 FLT3 patients — close to 3x the data we showed at EHA only 5 months ago. That update will cover every patient enrolled through mid-September, giving room for at least two disease assessments to establish maral response. Not every patient responds that fast, yet we think looking at two assessments will give a useful interim picture of the obvious headway we're making in this trial; for these patients, we're hoping to see results that line up with what we presented at EHA. In other words, we hope to observe obvious anticancer activity and a lessening of tumor burden throughout the group, such that most patients see their blast counts fall all the way into the normal range, reaching an objective response and underscoring CA-4948's strong capacity to battle cancer on its own. Beyond that, we would like to see further signs of hematologic improvement — maybe even a second patient achieving complete response — to figure out whether certain patients might still reach a CR even with the harm to their marrow caused both by their disease burden and by the treatments they received previously. Beyond that, we're looking to confirm that rhabdomyolysis, which had shown up before at greater doses, won't prove to be a barrier to treatment at the 300-milligram BID dose recommended for Phase 2. So this is going to be an initial glimpse at the data. We expect to provide a wider update at a medical conference next year that will cover all 10 to 20 patients. After our promising monotherapy data, it was genuinely exciting to announce the recently started Phase 1/2 study of CA-4948 used in combination therapy for AML and MDS. Because of the positive preclinical combination results we presented at EHA, which underscored CA-4948's synergistic anti-tumor activity together with azacitidine and venetoclax, we hope this combination research will enable us to advance CA-4948 as a novel option for AML and MDS patients across the broader AML and MDS population, where a significant unmet need remains, since many patients cannot undergo intensive chemotherapy. This trial's combination phase consists of two arms. CA-4948 combined with azacitidine for those who haven't had HMA, and CA-4948 combined with venetoclax for those who haven't had venetoclax.

The main objective of this combination trial is to establish the recommended Phase 2 dose for CA-4948 when given together with azacitidine and when given together with venetoclax, using safety, tolerability, and biologic activity — including pharmacokinetic and pharmacodynamic results from the study population — as the basis; initial data from this combination study are anticipated in 2022. I'd like to spend a moment discussing the ongoing Phase 2 LUCAS IST in patients who have lower-risk MDS, which is being run by Dr. Uwe Platzbecker, the Co-Chairman of EHA's Scientific Working Group on MDS. We understand there is considerable enthusiasm for this trial, since a positive outcome could represent a potential breakthrough in the MDS field; therefore, although this study has a longer time horizon and is not controlled by the company, we hope to give an update on how the LUCAS IST is progressing in 2022. Today's standard of care for low-risk MDS consists of supportive measures like EPO stimulating agents, which may work well for patients whose serum EPO is low, or luspatercept, which boosts red blood cell production. Sadly, neither of these approaches changes the disease underneath. The benefit they provide tends to be short-lived, and they fail to stop progression to AML or other disease complications. By contrast, CA-4948 modifies the disease itself, hitting a key driver of the underlying condition. Because it directly targets IRAK4 without causing myelosuppression and has a demonstrated safety profile, we think CA-4948 may be able to provide a safe and transformative disease-modifying option for patients at this earlier stage of disease. To wrap up on AML and MDS, the success we achieved earlier this year prompted us to broaden our clinical investment to cover both monotherapy and combination therapy, and to cover patients throughout the disease spectrum, from low-risk MDS to high-risk MDS to AML. We look forward to sharing data updates across all of these studies in 2022. Turning to our B cell cancer program; we have continued to make steady progress with CA-4948 clinical development in B cell cancers. Results from our monotherapy Phase 1/2 study showed a clear decrease in tumor burden and a strong durability profile, which stands out particularly for a novel monotherapy agent in patients who are so extremely sick. Building on those results, along with our preclinical work, we believe CA-4948 is the ideal candidate for combining with BTK inhibitors to maximize downregulation of NF-kappa B. Earlier this year, we launched the combination study testing CA-4948 with ibrutinib, which should enroll roughly 18 patients in a 3+3 design, with CA-4948 beginning at 200 and escalating to 300 milligrams BID. Ibrutinib dosing will be set according to the appropriate dose for the patient's type of cancer; we are happy to report today that CA-4948 given at the 200-milligram twice-daily dose has been well tolerated when combined with ibrutinib, with no DLTs observed. We are now evaluating the 300-milligram twice daily dose of CA-4948 together with ibrutinib. Things are moving along nicely with the trial, and we anticipate sharing the first set of results from that study at a medical conference during 2022. We're clearly enthusiastic about the AML, MDS, and B cell cancer trials currently underway, and we feel just as strongly about how broadly this could potentially be used in additional cancers. To that end, we're collaborating with our partners at NCI and across the wider KOL community to look into further possibilities for CA-4948. Back in October, at the Triple Meeting Conference on Molecular Targets and Cancer Therapeutics, we presented new preclinical findings that point to possible advantages for CA-4948 across several new uses. Those findings showed that CA-4948 is able to get past the blood-brain barrier and improve survival among patients who have primary central nervous system lymphoma — an extremely aggressive and uncommon lymphoma type where malignant cells develop in the lymph tissue of the brain and spinal cord. Other results shared at that meeting positioned CA-4948 as working synergistically alongside small molecules aimed at BCR signaling, among them idelalisib as well as ibrutinib. Such results hint that it might assist in surmounting secondary resistance to those treatments in marginal zone lymphoma. Finally, shifting to CI-8993, our first-in-class monoclonal antibody that targets VISTA in patients whose solid tumors are relapsed or refractory. Accrual continues as planned in this Phase 1 trial, and we anticipate presenting preliminary safety findings in our January 2022 update. VISTA stands apart considerably from other currently available checkpoint inhibitors, owing to the leading part it plays in maintaining T cell quiescence. Once unblocked, VISTA can trap a substantial share of T cells in a quiescent state, stopping them from being affected by anti-CTLA-4 or anti-PD-1 antibodies. VISTA additionally serves as a key driver of MDSCs, which on their own encourage T cell exhaustion and restrain pro-inflammatory tumor-associated macrophages. Our main goal for this year is assessing safety and tolerability and verifying that, under our amended protocol, the on-target adverse effects of CI-8993 are manageable in a safe way — allowing dose escalation up to and past every dose examined with this anti-VISTA therapy in earlier clinical trials. Hitting that important milestone, which we're hoping to report on in January, will let us start looking into efficacy at higher dose levels during 2022. I'd add that earlier today we reported that a preclinical data submission for CI-8993 was granted acceptance for a poster presentation at the Annual Meeting of the Society for Immunotherapy of Cancer, or SITC, taking place between November 12 and the 14. We're eager to share further data from this program then. All in all, it's been a remarkably exciting year for Curis, and there's still more ahead. To be specific, in January we anticipate reporting both preliminary safety data from our anti-VISTA program — the Phase 1 monotherapy trial of CI-8993 — and a safety and efficacy data update from our Phase 1/2 monotherapy trial of CA-4948 in AML/MDS patients carrying particular spliceosome or FLT3 mutations. A more thorough update later in 2022 will come after that. Additionally, during 2022, we intend to present preliminary findings from the continuing Phase 1/2 trial combining CA-4948 with ibrutinib in individuals who have B cell malignancies at a scientific conference. Prior to handing things over to Bill for a review of our financials, I want to express, as I always do, my thanks and recognition to everyone at Curis for their commitment and effort; we're excited to keep building on what we've done and to push forward our next-generation targeted cancer programs for patients who need them. So now, I'll pass the call to Bill so he can go over our financial results for the quarter. Bill?

Thanks, Jim. For Q3 2021, our net loss came to $11.1 million, which works out to $0.12 per share on both a basic and diluted basis, versus a net loss of $6 million, or $0.11 per share on both a basic and diluted basis, during the same quarter in 2020. Looking at the 9 months that ended September 30, 2021, the net loss was $31.8 million, or $0.35 per share, compared with a net loss of $22.4 million, or $0.52 per share, for the same period in 2020. Revenue for the third quarter of 2021 came in at $2.1 million, while the third quarter of 2020 brought in $2.7 million. For the 9 months ended September 30, 2021, revenue reached $7.5 million, versus $7.8 million during the same period in 2020. In both periods, revenue consisted mainly of royalties recorded on Genentech and Roche's net sales of Erivedge. Operating expenses for the third quarter of 2021 totaled $13.1 million, compared with $7.5 million for the same period in 2020. For the 9 months ended September 30, 2021, operating expenses were $37 million, versus $26.4 million for the same period in 2020, and they broke down as follows: cost of royalty revenues — mainly amounts owed to third-party university patent licensors tied to Genentech and Roche's Erivedge net sales — was $0.2 million in the third quarter of 2021, compared with $0.1 million for the same period in 2020. Cost of royalty revenues was $0.4 million for both the 9 months ended September 30, 2021, and in 2020. Research and development expenses were $8.6 million for the third quarter of 2021, compared with $4.7 million for the same period in 2020. The rise in direct research and development expenses for the quarter stems mainly from higher clinical and manufacturing costs across our clinical programs. On top of that, employee-related R&D costs grew by $2.3 million, driven largely by greater stock-based compensation and personnel costs from added headcount. Research and development expenses were $24.1 million for the 9 months ended September 30, 2021, compared with $17.5 million for the same period in 2020. General and administrative expenses were $4.3 million for the third quarter of 2021, compared with $2.6 million for the same period in 2020. The growth in general and administrative expense came primarily from higher costs for stock-based compensation, personnel, and professional and consulting services. General and administrative expenses were $12.5 million for the 9 months ended September 30, 2021, compared with $8.6 million for the same period in 2020. For the third quarter of 2021 and 2020, net other expense was $2.1 million and $1.3 million, respectively. Net other expense consisted primarily of imputed interest expense tied to future royalty payments. Net other expense was $2.3 million for the 9 months ended September 30, 2021, compared with $3.8 million for the same period in 2020. By the close of September 30, 2021, Curis held $149.8 million in cash, cash equivalents, and investments combined, with roughly 91.6 million common shares issued and outstanding. Our current cash, cash equivalents, and investments, we believe, ought to fund our planned operations into 2024. Having said that, I'd like to open the line for questions. Operator?

Just a few things. First, I'd like to begin with — I'm not sure whether you can provide this level of detail yet, but is it reasonable to assume that the FDA discussion would likely take place following the second, more substantial update? So possibly a bit later during the first half of 2022. My — this sort of ties into my next question, which is, with 10 to 20 people, do you believe that will be adequate? I realize you have safety and other information from additional trials. But do you feel that's — how confident are you that that level of enrollment is enough to prompt a discussion that could shape a possible pivotal approach, even though I understand the population is considerably smaller. And my third question was, you brought up — I think you brought up the complete response that already occurred, but then you brought up the possibility of a further complete response. So I just wanted to verify that this one hasn't been observed yet, and it's simply what you're hoping to see.

Yes. Thank you, Alethia. This is Jim. Let me address that final item first, since I realize it's of great interest; it's what we hope to observe. This clearly isn't a call where we're going over data we've already seen. We have a couple of months for the data to mature. But when we consider what we hope to observe with this drug, it has demonstrated a truly unique capacity as a monotherapy to lower cancer burden throughout the spectrum, with most of these patients having their blast counts return entirely to the normal range. That's what we're looking for. One CR has already been observed, and we'd be thrilled to see another. We want to provide that update in January; not all of those data are available to us yet. But naturally, if you're asking what we were hoping for, that was essentially our guidance; regarding the FDA meeting, we have always intended, and we've made this very clear throughout the year. We have always been planning to concentrate and focus on spliceosome patients and FLT3 patients. When we observed that the data we had at EHA were so compelling, we significantly increased our efforts to get patients on drug. Our regulatory consultants have advised us that to meet with the FDA, we probably need 10 to 20 patients, and our aim is to get 20 patients — 10 to 20 patients on drug by December 31, regardless of whether the FDA concurs with those consultants and accepts our meeting and has this discussion we hoped for. Naturally, we have no control over that. Yet the overall feeling appears to be that a successful conversation with the FDA would be within reach, provided we could enroll 10 to 20 patients and see consistent results. As for why we're providing a fresh update in January, it's naturally because we're quite happy with our current position. Not all of the data is in our hands yet, but what we do have strikes us as compelling and in line with where things have stood. We also believe that reaching the cutoff of 8 to 10 patients by year-end who carry spliceosome mutations, plus another 3 with FLT3, would go a considerable way toward giving everyone — our investigators, the KOL community, and investors — a solid picture of how the data are trending. Only three patients have been observed thus far, and knowing how the data are trending would give us a solid picture of how that FDA discussion could unfold. That is what the update is meant to accomplish. So our current position makes us quite happy. Naturally, though, we hold additional data internally and want to release it; therefore, the January plan is to make all of it public.

And after that, perhaps just one more thing regarding safety. When it comes to the combination with ibrutinib that you brought up, nothing connected to Raptor or anything like that has come up for you. My understanding is that you stated there were zero DLTs. So I simply wanted to verify that.

Right. In fact, Bob, could you please address that?

Absolutely. So in the monotherapy trial, we have of course kept administering our 300 dose level to patients, and that is progressing nicely. As Jim mentioned, we will provide an update on the safety data for that. At that time, we likely will not offer any update regarding the combination study; however, at that starting dose level, there were no dose-limiting issues. It was tolerated quite well, which is genuinely exciting, since as you're aware, we can now escalate the dose all the way up to the full dose for both drugs.

And nice work on the advancement. Given that you'll be holding an update call in January, and since this won't represent the complete data set you're aiming for in spliceosome and FLT3, could you help clarify what we should expect? The concern, I suppose, is that if this update comes in January, people will try to read it as the kind of data set you'd actually take to the FDA, perhaps similar to the monoinhibitor class, yet based on what you've said, it sounds like you're aiming for something more anecdotal. So could you offer some caveats about what this data analysis will really look like, and the context you're hoping to draw from publicly updating people without perhaps the complete data set for the spliceosome group?

Sure. Let me start with a comment, and I'll also ask Bob to add his thoughts. The thinking is, naturally, we provided a great update on three patients, but at EHA it was just three patients with the spliceosome mutation; and actually, one FLT3 patient. That FLT3 patient did precisely what we'd hoped, precisely what the literature would indicate for patients who hadn't responded to other FLT3 inhibitors joining our study and within two cycles, not merely achieving a response, but seeing full eradication of the mutation. I mean both data sets, those first three and that one, appear terrific. We then moved quickly and aggressively to hold the discussion with the FDA. And what we're simply trying to address, I think, is that there's a long gap between EHA and that discussion with the FDA; we have a lot of confidence, and we're witnessing terrific progress in that study, and we wanted to let everyone else see what we're seeing. So it isn't the full update we'll have 6 months from now. But we believe the data we have now and the data we'll have by year-end makes for a good update, and it gives us a significant upgrade. Just 5 months after EHA, we're going to triple the data set; we think that will be, I think, a very robust discussion; it isn't anecdotal. And it isn't the complete total of all patients who will ever be on the drug, but it's a significant increase in the data size and really should let everyone share our enthusiasm for the progress in the study. Bob, would you like to add to that?

I believe you captured that nicely, Jim. Essentially, as we've mentioned, this drug's disease-modifying potential has us very enthusiastic, particularly in this patient group, where it appears to exert quite a strong impact on curbing blast proliferation and lowering blast counts. We believe the FDA will take considerable interest in this therapy for a population that currently has no approved alternatives. Consequently, drawing on our EHA findings, we aimed to construct our argument around that point and direct our attention toward the FDA, with the objective of providing public updates to the community as relevant data becomes available. That, then, is what we're aiming for in January. It won't be the identical dataset we ultimately submit to the FDA, but as Jim noted, it will represent a threefold increase in the patients we've shared publicly to date. We therefore expect it should offer the community considerably greater reassurance regarding this drug and its anticancer activity as we head into that possible conversation with the FDA.

Okay, thanks. I just want to clear up one point. Regarding the group with spliceosome mutations, when would you approach the FDA for follow-up? Do you plan to wait until that group is completely enrolled and every one of those patients has been tracked clinically long enough to assess efficacy properly before starting that conversation with the FDA? Or would you do that prior to having a more developed data set for that group?

So, clearly, whenever we do go, patients will have spent varying amounts of time in the study; we would certainly want a minimum duration for every patient whose data we show them. This is a continuous process; and even what we share with them will be interim data to some degree. But we believe by the first half — so we've committed to looking at that as a possibility during the first half of 2022. And we think that at that time we'll have data that's sufficiently mature to talk with them, or at least we'll ask to talk with them.

All right, just so I understand — when you provide that January update, there won't be any actual feedback from the FDA yet, is that accurate?