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

Thanks for joining us, and welcome to Curis' call covering the fourth quarter and year-end results. Before we get started, I'd ask that you visit the Investors Section on our site, www.curis.com, where you'll find our earnings release for the fourth quarter and full year 2021, along with the associated financial tables. I also want to remind you that forward-looking statements will be made on this call, and those are based on what we currently expect and believe. Such statements carry certain risks and uncertainties, and actual results could differ materially; please refer to our SEC filings for more detail. 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 held once the call concludes. At this point, I'll hand things over to Jim. Jim?

Thank you, Bill. Hello everybody, and good afternoon. I'm delighted to have you join us for the Curis call covering the fourth quarter along with our year-end results. Here at Curis, our driving force is the mission of creating the next generation of transformative cancer therapies that deliver meaningful improvements and extensions to patients' lives. During the fourth quarter of 2021, we achieved substantial progress toward that objective. First off, we're happy to share that our novel IRAK4 inhibitor CA-4948 is getting a new generic name, emavusertib, and we're also bringing in "take aim" as our brand name for clinical trials going forward with emavusertib. The "taking them" branding was chosen so as to emphasize the targeted design of emavusertib, the first-in-class IRAK4 inhibitor in oncology. As a reminder, emavusertib is right now under evaluation in nine distinct patient populations spanning three clinical studies in AML, MDS, and B cell cancers. The initial study, "taking leukemia," is a Phase 1/2 trial featuring both monotherapy and combination arms for patients who have relapsed or refractory acute myeloid leukemia, or AML, along with high-risk myelodysplastic syndromes, or MDS. The second study, "taking lymphoma," is a Phase 1/2 combination trial with ibrutinib for patients who have relapsed or refractory NHL or other hematologic malignancies. The third study is the Phase 2 Lucas study, assessing emavusertib in patients who have lower risk MDS, and it is being led by Dr. Uwe Platzbecker from the University of Leipzig. In early January, we reported positive updated data from the "game leukemia" study in targeted patients who have relapsed refractory AML or MDS, where the disease is characterized by a spliceosome or FLT-3 mutation. That updated dataset backed up the findings we presented at EHA last year, showing further encouraging anticancer activity relative to standard of care therapies across a broader set of patient data. As of December, we had enrolled 49 patients on monotherapy, 13 of whom had genetically defined diseases — either spliceosome mutation or FLT-3 mutation — and were evaluable for efficacy. We intend to talk over data from this ongoing study with the FDA during the first half of this year, aiming to clarify the regulatory path for delivering this novel therapy to patients in critical need; we'll give an update on that discussion later in the year. In addition, enrollment is going well for the combination arm investigating emavusertib plus azacitidine for patients naive to HMA and MCF2 Surtab plus venetoclax for patients naive to venetoclax; we anticipate having initial data from these combinations during the second half of this year. I want to briefly mention the ongoing Phase 2 LUCAS IST for patients who have lower risk MDS, which is being led by Dr. Uwe Platzbecker, the Co-Chairman of the EHA Scientific Working Group on MDS. Showing safety and efficacy in low risk MDS might bring about a potential breakthrough in the MDS field. Although the current standard of care using EPO stimulating agents can work for patients with lower risk MDS who have low serum EPO, that effect is frequently transient. It isn't disease modifying, and it doesn't stop MDS from progressing to AML. We think emavusertib, which hits IRAK4 head-on, might offer a transformative, disease-modifying option, opening the door to treating these individuals at a far earlier point in their illness. Doctors are able to provide transfusions to leukemia sufferers, and they have medicines capable of spurring blood cell production. Here at Curis, what we're working on are drugs that might halt the cancer itself. During this initial period of clinical testing, the results we've generated have shown the capability to accomplish precisely that, even among individuals carrying a spliceosome mutation, for whom currently available treatments prove ineffective. Let's now turn to our program in B-cell cancer and the taking lymphoma trial. We kicked off the combo trial, assessing emavusertib alongside ibrutinib, during the prior year. This followed our observation of unambiguous efficacy from this novel single-agent therapy, along with evidence that such efficacy persisted across such a lengthy stretch of time for these profoundly ill individuals. The dose escalation segment of this trial should enroll roughly 18 subjects following a three plus three design, with emavusertib doses beginning at 200 and climbing to 300 milligrams BID. Whatever ibrutinib dosing suits the patient's particular NHL subtype will be used. We anticipate sharing initial findings from this trial during the opening half of this year. Shifting to our second clinical asset, our first-in-class monoclonal anti-VISTA antibody, CI-8993, a novel immune checkpoint inhibitor we're creating alongside ImmuNext to treat individuals with relapsed or refractory solid tumors; we were thrilled to share clinical results from our Phase 1 dose escalation trial of CI-8993 back in January, showing a promising safety profile and underlining CI-8993's potential to trigger several anticancer mechanisms. CI-8993 is a monoclonal antibody engineered to counteract VISTA-mediated immune suppression via myeloid and T-cell pathways. In our view, CI-8993 stands as the most advanced anti-VISTA antibody presently undergoing clinical development. And it could become a game-changing cancer therapy. VISTA's function might extend past that of other checkpoint inhibitors, since we think VISTA inhibition could see broad use across numerous tumor types, whether alone or paired with existing checkpoint inhibitors. Given where VISTA sits on a range of immune cells, going after it influences many cancer immune mechanisms, a number of which remain untouched by going after PD1, CTLA4, or other checkpoints. Our Phase 1 dose escalation trial has revealed thus far that CI-8993 possesses a safe and well-tolerated safety profile. At first, dosing began at 0.15 milligrams per kilogram, the top dose cleared in the Janssen study; we subsequently raised dosing to 0.3 milligrams per kilogram and, most recently, to 0.6 milligrams per kilogram. Our early safety data leave us encouraged, since they seem to show how effective the procedures we put in place to handle anticipated CRS effects have been. CI-8993's pharmacokinetic profile shows it can get past a PK sink effect and reach meaningful drug exposure. One instance of this is what we've seen with CI-8993, where there are obvious pharmacodynamic effects and early signals that the drug is turning on several anticancer mechanisms in the patients dosed so far; because of that, our view is that going after VISTA therapeutically with CI-8993 could become an important piece of the immuno-oncology toolkit. We're eager to provide additional data on this during the back half of 2022. To wrap up, 2021 has brought progress we're happy with, and we're looking ahead to even more in 2022. I'll now hand things over to Bill, who will walk through the financial results for the quarter. Bill.

Thanks, Jim. Curis is still in a solid financial position. For the year that closed on December 31, 2021, Curis posted a net loss of $45.4 million, which works out to $0.50 per share on both a basic and diluted basis. That compares with a net loss of $29.9 million, or $0.61 per share on both a basic and diluted basis, in 2020. In the fourth quarter of 2021, Curis recorded a net loss of $13.6 million, or $0.15 per share, on both a basic and diluted basis. That compares with a net loss of $7.5 million, or $0.11 per share, on both a basic and diluted basis, for the same period in 2020. Revenues for the year ended December 31, 2021, came in at $10.6 million, versus $10.8 million for the same period in 2020. In both periods, revenues consisted mainly of royalty revenues recorded on Genentech and Roche's net sales of Erivedge. Revenues for the fourth quarters of 2021 and 2020 were $3.1 million and $3 million, respectively. Operating expenses for the year ended December 31, 2021, were $52.7 million, compared with $35.7 million for the same period in 2020. Operating expenses for the fourth quarter of 2021 were $15.7 million, compared with $9.3 million for the same period in 2020, and consisted of the following: Cost of royalty revenues, primarily amounts owed to third party university patent license holders in connection with Genentech and Roche's Erivedge net sales, were $0.5 million for the years ended December 2021 and 2020. Cost of royalty revenues were $0.2 million in 2021 and 2020. Research and development expenses were $34.9 million for the year ended December 31, 2021, compared with $23.1 million for the same period in 2020. Settlement expenses were $10.8 million for the fourth quarter of 2021, compared with $5.6 million for the same period in 2020; this increase was primarily attributable to increased clinical manufacturing costs for our programs, and higher personnel spending as a result of additional headcount. General and administrative expenses were $17.3 million for the year ended December 31, 2021, compared with $12.1 million for the same period in 2020. General and administrative expenses were $4.8 million for the fourth quarter of 2021, compared with $3.5 million for the same period in 2020. The increase in general and administrative expense was driven primarily by higher costs for stock based compensation, professional consulting services, personnel, and insurance as compared to the prior year; net other expense was $3.4 million for the year ended December 31, 2021, compared with $5 million for the same period in 2020. For the fourth quarter of 2021 and 2020, net other expense was $1.1 million and $1.2 million respectively. Net other expense primarily consisted of imputed interest expense related to royalty payments. As of December 31, 2021, Curis' cash, cash equivalents, and investments totaled $139.8 million and there were approximately $91.6 million shares of common stock outstanding. Curis anticipates that the cash, cash equivalents, and investments it currently holds ought to let it keep funding its planned operations all the way into 2024. Having said that, I'd like to begin the Q&A portion of the call. Operator?

Thank you, everyone. I appreciate you fielding my question, and congratulations on the headway you've achieved across the last 2 months. My first aim was to dig somewhat deeper and discuss your approach to designing these trials. Which elements truly matter, and which ones perhaps aren't workable? I realize you've already discussed this with the FDA, but how are you approaching the outlook — what shape are you giving it on that point? Then, regarding VISTA, do you believe you'll be able to possibly reach proof-of-concept by the point we arrive at the close of this year? Will you have moved beyond the safe and effective doses? Also, what's your thinking on keeping monotherapy going, or might there be a route to doing something — leaning more toward combining those?

Alethia, thank you, and thanks for being with us too. Bob, you're the first — the ideal individual to discuss the trial design for 4948, and we can tackle the VISTA item in a moment.

Okay, hi Alethia, I appreciate you asking that. Regarding the study's design, as we mentioned, we're separating it into two groups: high-risk MDS and AML. And as you're aware, at this point we feel the AML portion is pretty uncomplicated. Our goal is to pursue a very fast route to registration with the FDA, examining both at the same time. That might mean a single-arm trial evaluating surrogate markers such as CR and CRh. The FDA has validated those markers, and they're also used alongside how long the response lasts. A few medications have gained approval for this indication and AML, among them gets LiNiB and < >, each showing response rates within the low 20% range. So our view is that this represents a fairly workable strategy; plus, the population we're dealing with has traditionally been very hard to achieve these kinds of responses in. Even so, in the results we've shared up to now, we've shown truly quite durable CR and CRh, along with pretty strong impacts on blood counts for those patients in a highly difficult-to-treat group. And so I believe that's our primary emphasis for the AML clinical trial, and we'll be talking that over with the FDA shortly.

Yes, thank you, Bob. Regarding that initial question — first of all, Alethia, does that address what you asked about how the CA-4948 trial is designed?

All right, that's useful. But is there a difference when it comes to MDS — what you might do there — compared with AML? Clearly, in AML I can recognize the unmet need described in the protocol and how we've moved ahead there. With MDS, though, how do you sort of approach designing a later-stage trial? Please share your thoughts on that.

Yes, there certainly is —

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Go ahead, Bob.

Right, so that represents yet another distinct group, even if past experience suggests outcomes tend to be poor in that setting. As you observed earlier with this group, we've recorded really potent anticancer effects. Take, for instance, the fact that blast counts returned to normal in 4 of 6 patients whose levels had been elevated at baseline — that's remarkable anticancer activity. One of them actually proceeded to receive a stem cell transplant, a treatment that holds the potential for a cure. So in that case, we must talk with the FDA about which type < > would work best for this group. Obviously, anticancer activity ranks among the endpoints we'll bring up; we'll also make sure to consider our combination trial, and as those trials emerge, that brings additional chances for clinical studies and further development in that area.

Sure, if I were to sort of boil that down too and highlight a handful of those items, Alethia, what I'd say is that within AML, the endpoints the FDA will want to see are clear. As Bob mentioned, multiple drugs have examined CR to CRh rates as an endpoint. And in fact that wasn't only for accelerated approval — it was full approval based on those endpoints, so both emavusertib all achieved CR CRh rate. There appears to be wide consensus regarding which endpoints would be sensible; and wide consensus that our data look excellent on those endpoints relative to anything else employed in the relapsed refractory setting. In MDS, on those same two items, I'd say everyone appears quite at ease that our data look fantastic relative to whatever else is used. What isn't clear is what the endpoint will be. And that's the area where there's considerable debate. Of course, we receive many questions on that. Since the reality is that no drugs are approved in relapsed refractory MDS. Because nothing has worked, no drugs have been approved. It isn't clear how the FDA will land on that. So I believe the AML path is, naturally, far clearer. We simply have to go present that case to the FDA and make them comfortable that we're set to move to the pivotal design on this, but the endpoints are clear and our data look good on those endpoints; in MDS, our data look good certainly relative to chemo, which is used more than half the time in these patients. But the absence of clarity is purely due to the fact that no drugs are approved, so we will be breaking new ground with FDA regarding the primary endpoints in that study. Hopefully that's useful.

No, that is quite useful.

All right. Excellent. Perhaps I will address the question you raised about VISTA.

Yeah.

In 2021, the major box to tick involves saying we anticipated CRS adverse events — our trial was built around that expectation and around handling them well. We had to demonstrate, put simply, that we could accomplish what Janssen couldn't. Was clearing 0.15 mics per kg possible? Turns out it was — we did it — then 0.3 got cleared too, and at present we're giving 0.6 as a dose. On the safety front, that box has been ticked in a huge way during 2021. Come 2022, though, the aim shifts. Now the pursuit is efficacy. Which dose level produces the drug concentrations that cause tumors to shrink is something we can't yet pin down. Still, that's the target we're chasing. So our plan is, within monotherapy, to escalate doses and investigate, seeking the proper dose. We want to build on the promising pharmacodynamic results observed up to now, and ideally witness tumor shrinkage signs. Meanwhile, as you brought up, is combination therapy also on our minds? Yes, absolutely. We'll be advancing — stay tuned for more on that conversation — using a strategy in which, during 2022, both monotherapy and combination therapy get studied in the clinic.

I want to slip in one more quick item regarding low risk MDS. Where do things stand on that? I realize it was an investigated trial, but could you tell us what's happening? That trial seemed quite interesting.

Absolutely. That is a genuinely interesting trial. Like I said during my remarks, since it's an IST, our visibility into it is fairly limited. What I expect is — Dr. Platzbecker, the European lead and MDS, serves as head of the EHA Working Group on MDS. That study involves 17 sites of his. So what I hope, and I'll call it a hope, obviously I can't make any promise, given that we aren't running it; still, my hope is that at some point this year we'll have data data from that study. But having a small molecule with our safety profile, that's disease modifying to use in that setting, is something that, obviously, not just we're excited about, but obviously Dr. Platzbecker and his team are very excited about as well; so we look forward to hopefully seeing results from that study later this year.

That's really useful, at minimum. I appreciate it a lot.

Thanks. Alethia.

Good afternoon, and thank you for taking my questions. To dig a bit deeper into AML — as you mentioned, there is clarity around the endpoints. How should we think about the size of the study that will be required? And once you speak with the FDA, when could a rolling start begin — might that happen by the close of this year, or is it more likely a next-year event? Also, given what you now know about the pandemic, which we have been living with for two years, I would like to hear your perspective on what the involvement trans could look like and how quickly the trial could be enrolled. Thank you.

All right. Perhaps I will have Bob address the size of the study. Bob first.

Yes, absolutely. Once more, looking at what's happened historically — the research Jim and I brought up, where single-arm trials led to approval — gives us a benchmark. Every one of those studies had somewhere from 100 to 200 patients taking part. Because outcomes for this group are so poor, we might have gotten away with testing even fewer people, though for a study capable of securing approval, that range is likely where you'd land. What we want to accomplish — and this is something we'll bring up with the FDA too, regarding how many patients we enroll — is to consider possibly broadening the trials we're running right now. For those already in the trial, we'll gather whatever data matters in that context, and from there, potentially keep adding more participants, rather than launching a fresh study; so those represent a few paths we'd talk over with the FDA.

Absolutely. I'd agree with Bob's point, and particularly when you consider the additional trials conducted over the years, keep in mind that after HMA in this context, survival is between two and six months. Specifically, following HMA, the median survival is 2.3 months. It was insane. Given the effectiveness we've observed thus far, even though it's a limited sample size, making it difficult to discuss statistical power for a trial, it appears sensible to suggest we'd fall within the range of similar trials that have pursued a pivotal design in AML. Whether we can launch in 2022 or 2023 will somewhat hinge on the design that the FDA<>. Naturally, our preference would be a single-arm trial. If that's the case, we're prepared to begin immediately. We've already been treating patients in single-arm fashion; obviously, we'd utilize that information and simply continue advancing with the current locations, enrolling from them, and incorporating additional ones. If, conversely, the FDA responds requesting a controlled trial, then you must develop that protocol. At that point, you're looking at more of a 2023 commencement. However, we're optimistic they'll adhere to precedent and opt for the single-arm approach; and then, regarding your final inquiry about how quickly it could accrue participants. We've been quite satisfied with the pace of accrual. I believe it stems from the regrettable reality that survival is bleak for these individuals. And the cause survival is so bleak is that no treatment is effective. The leading genetic driver of illness in AML and MDS. It's not similar to long expression. And I suspect part of why survival remains so bleak is that none of the available therapies target that driver for nine for eight. Well, emavusertib does; so we're hopeful that the enthusiasm we've witnessed among the researchers thus far will persist as we bring more locations into the pivotal trial. Does that answer your question, Ed?

Yes — thank you, Chairman. One final item, and it concerns those talks with the FDA: at this point, do you possess everything you need in order to have that conversation with the agency, or is something holding things up while you wait on additional data? Thanks.

Nothing is holding things up. The study remains underway. Consequently, each passing day and week will bring additional data into our hands. As I see it, our schedule has not shifted. We anticipate holding a discussion with FDA during Q2. That is definitely what we intend to request. Whenever they choose to put it on the calendar is beyond our control, yet we are confident that by then we will have enough data available for that meeting, and we expect it to go well. Regarding how much data exists at any particular moment, though, the trial keeps running. So enrollment continues throughout this process, and should it be a single-arm study, since patients have been enrolling from the start, our hope is simply to keep putting those patients into the pivotal groups, which would let us reach the NDA timeline considerably sooner. Naturally, that is what we would hope for.

Excellent, I appreciate you answering my questions.

Of course, Ed, thank you.