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

Thanks, Jamie, and I'd like to welcome all of you to the earnings call for Curis covering the second quarter of 2022. Prior to getting started, I'd ask that each of you visit the Investors portion of the Curis website, www.curis.com, where you can locate our earnings release for the second quarter of 2022 along with the accompanying financial tables. I also want to note that throughout this call, forward-looking statements are going to be made, and those rest on what we currently expect and believe. Such statements carry certain risks and uncertainties, and actual results could end up differing materially; for more information, please refer to our SEC filings. With me on today's call are Jim Dentzer, our President and Chief Executive Officer; Bill Steinkrauss, our Chief Financial Officer and Chief Administrative Officer; and Bob Martell, who leads R&D; a question-and-answer session will also be held once the call concludes. At this point, I'd like to hand things over to Jim. Jim?

Thanks, Craig. Good afternoon, everyone, and welcome to Curis' call covering our second quarter results. At Curis, our daily mission is to create the next wave of first-in-class cancer treatments that deliver meaningful improvements and extend how long patients live. We've got a number of updates to share this quarter. To begin with, as we've mentioned before, progress in drug development rarely follows a straight path, and April brought news that FDA had placed a partial clinical hold on our TakeAim studies in Leukemia and Lymphoma to start the second quarter. Talks with the agency are underway and productive, and we aim to resolve these matters as fast as we can. Next, we're very pleased to share that a new CFO has been appointed, and I'll say more about that shortly. Also, during the second quarter there were multiple favorable emavusertib presentations at ASCO and EHA, delivered both by our own Curis team and by a number of academic partners alongside whom we are pushing forward the boundaries of IRAK4 research. Among these presentations were the initial data from the combination arm of TakeAim Lymphoma, plus further data in solid tumors and new findings that are expanding our knowledge of IRAK4 biology. Put simply, we take encouragement from the fact that with emavusertib, we have a drug that functions as a single agent precisely where our research anticipated it would. To kick off tonight's update, I want to welcome Diantha Duvall, who is coming aboard the Curis team as our new CFO. Diantha launched her career at PricewaterhouseCoopers, and across the past 20 years, she has assembled an impressive record of financial leadership at Merck, Biogen, Bioverativ and Genocea. We're thrilled to add an industry veteran who commands such respect. I'd also like to use this moment to express thanks to Bill Steinkrauss. He has served as a key leader on Curis' executive team, and we wish him the very best going forward. Now turning to our pipeline and our lead asset, emavusertib, our first-in-class program built specifically to target IRAK4 and FLT3. Right now, emavusertib is under evaluation in 3 clinical studies. The first is the TakeAim Leukemia study, a Phase I/II trial featuring both monotherapy and combination arms for patients with relapsed or refractory acute myeloid leukemia, or AML, and high-risk myelodysplastic syndromes or MDS. The second is the TakeAim Lymphoma study, a Phase I/II combination trial with ibrutinib for patients who have relapsed or refractory NHL or other hematologic malignancies. And the third is the Phase II LUCAS study, which evaluates emavusertib in patients with lower-risk MDS. Beginning with TakeAim Leukemia. Our work with FDA on lifting the partial clinical hold continues. Interactions with the agency have been productive, and we hope to share an update before long. At ASCO and EHA, we shared positive clinical data revealing early and compelling response rates among AML or MDS patients carrying spliceosome or FLT3 mutations. These findings show a regimen that is well tolerated along with better anti-cancer activity than today's standard of care. Since we lead in the IRAK4 space, it's a pleasure to announce that on October 7 we will hold an IRAK4 symposium, where panel discussions will unite specialists from academia, clinical practice, and other companies. Let me be clear: no Curis data update will be shared at this forum. What the symposium is meant to do is tackle and push forward the subjects that matter most to the entire IRAK4 community. Additional information about this event will be shared shortly. Let's now discuss our research on emavusertib in B-cell malignancies, along with the TakeAim Lymphoma trial involving NHL and CLL patients. The first glimpse of initial data we presented at ASCO and EHA covered findings from 9 evaluable patients. Tumor burden decreased in 8 of those 9 individuals, with 2 CRs and 2 PRs among them; like our investigators, we're thrilled that a single one of those CRs occurred in someone previously treated with ibrutinib, which hints the combination might be capable of overcoming ibrutinib resistance. Additionally, at this year's ASCO and EHA, we shared research from Curis scientists that describes a novel observation: IRAK4 localizes to the nucleus within cancer cells. Whenever nuclear IRAK4 appears alongside 2 NF-kappaB proteins, P50 and P65, this triple presence inside the nucleus correlates with improved patient responses to emavusertib. This fresh discovery expands our knowledge of IRAK4 biology and the part it plays in cancer, and it represents a significant next step toward developing biomarkers that can identify patients likely to benefit from emavusertib treatment. Presentations at ASCO and EHA also came from our academic partners, demonstrating emavusertib's potential across several additional tumor types, among them solid tumors such as gastric cancer, melanoma brain metastases and primary CNS lymphoma. In summary, the second quarter proved an exciting period for IRAK4 research and for broadening what emavusertib may be capable of. Let's now shift to our second asset, CI-8993, the first-in-class monoclonal anti-VISTA antibody being developed alongside ImmuNext to treat patients who have relapsed or refractory solid tumors. CI-8993 is engineered to antagonize the VISTA signaling pathway. Through blocking VISTA, a checkpoint tied to T-cell suppression, our goal is to boost T cell-mediated immune function. In preclinical models, targeting VISTA reveals promising anti-cancer potential, whether used as monotherapy or combined with CTLA-4 and PD-1. We consider CI-8993 the furthest advanced anti-VISTA antibody presently undergoing clinical development, and we're happy to report that the 0.6 milligram per kilogram dose level has been cleared in our dose escalation study, with enrollment now underway at the 1 mg/kg dose level; on September 23 of this year, we're hosting the second annual VISTA symposium. Just like the IRAK4 symposium, no Curis data update will be provided at this forum. What the symposium aims to do is tackle and push forward the subjects that matter most to the entire VISTA community. Later this year, we anticipate sharing a Curis data update; to sum up, this quarter's advancements have left us encouraged. Having Diantha join the team is something we're thrilled about, and we anticipate delivering key updates regarding both emavusertib and CI-8993 over the coming weeks and months. Having said that, I'll now hand things over to Bill so he can walk us through the quarter's financial results. Bill?

Thanks, Jim. Curis keeps carrying out its plan from a position of financial strength. In Q2 2022, Curis posted a net loss of $15.9 million, or $0.17 per share, on both a basic and diluted basis, versus a net loss of $10.8 million, or $0.12 per share, on both a basic and diluted basis during the same quarter in 2021. Across the 6 months that ended June 30, 2022, our net loss came to $32 million, or $0.35 per share, compared with a net loss of $20.8 million, or $0.23 per share, during the same stretch in 2021. Revenue in the second quarter of 2022 totaled $2.4 million, while the second quarter of 2021 brought in $2.3 million. Revenue across the 6 months that ended June 30, 2022 and June 30, 2021 came to $4.5 million. Operating expenses in Q2 2022 reached $17.5 million, versus $12.9 million during the equivalent period in 2021. Operating expenses across the 6 months that ended June 30, 2022 reached $34.6 million, versus $23.9 million during the equivalent period in 2021, and consisted of the following. Cost of royalty revenues, made up of amounts owed to third-party university patent licensors tied to Genentech and Roche's Erivedge net sales, came in under $0.1 million in Q2 2022, versus $0.1 million during the equivalent period in 2021. Cost of royalty revenues across the 6 months that ended June 30, 2022 came to $0.1 million, versus $0.2 million during the equivalent period in 2021. Research and development expenses reached $12.3 million in Q2 2022, versus $8.8 million during the equivalent period in 2021. That rise stemmed mainly from greater spending on consulting services along with higher personnel costs brought about by added headcount. Research and development expenses reached $23.8 million across the 6 months that ended June 30, 2022, versus $15.5 million during the equivalent period in 2021. General and administrative expenses reached $5.1 million in the second quarter that ended June 30, 2022, versus $4.1 million during the equivalent period in 2021. The rise in G&A expense came mainly from greater personnel, stock-based compensation, and insurance costs relative to the prior year. General and administrative expenses reached $10.8 million across the 6 months that ended June 30, 2022, versus $8.2 million during the equivalent period in 2021; in the second quarter of 2022 and 2021, total other expense reached $0.9 million and $0.2 million, respectively. Total other expense mainly consisted of imputed interest expense tied to royalty payments, partly offset in the second quarter of 2021 by a gain of $0.9 million tied to extinguishment of debt. Total other expense reached $1.9 million across the 6 months that ended June 30, 2022, versus $1.3 million during the equivalent period in 2021. By the end of June 30, 2022, Curis held $107.2 million in cash, cash equivalents, and investments, and roughly 91.8 million shares of common stock were outstanding; our cash position remains strong, and we still anticipate that the cash and investments we currently have will let us keep our planned operations going into 2024; with that said, I'd like to turn the call over to questions. Operator?

I'd really appreciate it if you could share anything you know about a recent FDA interaction. Originally, our thinking was that it takes roughly 3 months on average for the FDA to respond regarding the clinical hold. Is August still a sensible timeline? Or do you see any basis for believing it might slip even further?

Thanks, Soumit. I appreciate you dialing in and asking. So no, honestly, based on what we've seen here, looking at AML and the other companies that received holds, my sense is that over the past 18 months, 5 AML trials have been put on hold; typically, a quarter or 2 is needed for them to complete their process, requesting their collections and gathering the data. So as far as I'm aware, we remain on track for that; that said, I'd characterize the talks as progressing quite well. As you might recall, the FDA raised questions regarding the patient who passed away. They're seeking additional data on that, which is understandable. And naturally, they have certain questions regarding dose and Project Optimus. What we'd hope is that they become comfortable, just as we have, that this drug looks safe, that it provides a strong risk-benefit profile in an area of serious unmet need. As you know, most patients in the relapsed/refractory space have a median survival of 2.3 months; so my hope is that the FDA lands where we are, which is that this represents a highly compelling option for clinicians, and we'll move through that entire process, but their review has to be completed; so my hope is they'll do so in due time, and the discussions appear to be going well.

Thanks. For my follow-up, I'd like to ask about the low-risk MDS trial being run by the investigator. Could you share any update on where things stand with it? Is enrollment also paused on that one, or is it still open?

No — that study isn't ours, so the FDA hold wouldn't apply to it. It's an IST taking place in Germany, conducted across the 17 sites under Dr. Platzbecker. That said, since it's an IST, we have neither control over it nor insight into it. As you're aware, the population it targets receives mainly best supportive care, which by definition does not modify disease. So it's my hope that a readout will come from it; we keep hoping there will be 1 before this year ends. Naturally, though, we have no say over that — neither where enrollment stands nor what the data look like right now. The outcome has us quite excited; we believe it could bring an oral disease-modifying drug into a space of clear unmet need. Still, as I mentioned, you'll learn of it at the same moment we do, once we hear from Dr. Platzbecker that his team is prepared to share an update on the results they have so far.