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

Thanks for joining, and welcome to the business update call for Curis' third quarter of 2022. To start, I'd ask that all of you visit the investor section on our site, www.curis.com, where the earnings release for the third quarter of 2022, along with the related financial tables, can be found. I also want to remind those listening that forward-looking statements will be made during this call, and those are grounded in what we currently expect and believe; such statements carry certain risks and uncertainties, and actual results could differ materially; for more information, please refer to our SEC filings. On the line with me today are Jim Dentzer, our President and Chief Executive Officer, Diantha Duvall, our Chief Financial 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.

Craig, thank you. Hello, everyone, and good afternoon — we appreciate you joining Curis' call covering our third quarter business update. Our mission each day is creating the following generation of first-in-class cancer therapies, which deliver meaningful improvement and extension of patients' lives. Today, before this call, we shared that, drawing on fresh data from our Take Aim Leukemia study, the choice has been made to direct the company's resources toward speeding up the path that brings emavusertib to patients. Prioritizing emavusertib and, correspondingly, deprioritizing the rest of our programs will allow us to cut the company's workforce by roughly 30%, and that is expected to push the company's cash runway into 2025. Right now, I want to recognize that although we feel enthusiasm regarding the sharper focus on emavusertib, we realize what deprioritizing the other programs means for our treasured colleagues and friends who did that work; we are thankful for everything they contributed, and we send them good wishes as they seek new opportunities. Now let me talk about emavusertib and the development work underway to move this important asset forward, beginning with what we have recently accomplished. During the quarter, we were pleased to share that the FDA cleared us to resume enrollment in our Take Aim trials for leukemia and lymphoma. Additionally, in that same period, we hosted the inaugural annual symposium focused on IRAK4. That gathering brought together specialists from academia and industry to discuss the most recent pioneering work involving IRAK4. Turnout was impressive, the sessions were insightful, and frankly, it was genuinely enjoyable to learn about all the outstanding efforts taking place in this vital field of cancer biology. Being able to organize the event and welcome so many of the talented innovators driving IRAK4 science forward was truly an honor. Next quarter, at the 64th annual meeting of the American Society of Hematology in New Orleans, we'll be sharing fresh results from our Take Aim Leukemia trial of emavusertib. Those results involve 11 more patients who received monotherapy within our targeted populations — individuals whose disease carries FLT3 or spliceosome mutations. Adding these 11, we now have 24 patients in total who have targeted mutations. Many of you are aware that for relapsed refractory AML or MDS patients after HMA treatment, there are presently no approved drugs. When it comes to the post-HMA setting, the sole published figures we have concern MDS patients who received chemotherapy, and in that group an 8% ORR was seen. We're thrilled to be working on what we believe could be a transformative treatment for people dealing with an unmet need this serious. Let me remind everyone that emavusertib right now sits in three distinct clinical trials. The first is Take Aim Leukemia, a phase 1/2 trial that includes monotherapy as well as combination cohorts, enrolling relapsed or refractory acute myeloid leukemia, or AML, patients along with those who have high-risk myelodysplastic syndromes, or MDS. Then there's Take Aim Lymphoma, a phase 1/2 combination trial pairing the drug with ibrutinib in relapsed or refractory NHL and other hematologic malignancies. Third, there's the phase 2 LUCAS trial, which is assessing emavusertib in lower risk MDS patients. Enrollment is currently open in the Take Aim Leukemia study for monotherapy at the 200 mg dose level. Our goal is to add at least 9 more patients at that dose, then talk over the data from those patients with the FDA. If we get the agency's agreement through those discussions, our plan is to reopen enrollment both in the study's expansion arm and in a combination arm looking at emavusertib together with azacitidine or venetoclax. Remaining on leukemia and MDS for a moment, we think the LUCAS study in lower risk MDS might produce a data readout during the first half of 2023. Just remember, LUCAS is a study sponsored by investigators. Dr. Uwe Platzbecker leads it, and he's the chairman of EHA's Scientific Working Group on MDS. Seeing what emavusertib will demonstrate in this trial is thrilling, because among the mutations most commonly observed in lower risk MDS are spliceosome mutations. There's also an exciting, more recent piece of news: Curis will present at SITC, taking place in Boston later this week, and that presentation will focus on research into immune modulation tied to IRAK4 inhibition in melanoma brain metastases. That's one more illustration of the dynamic science going on around IRAK4, and it demonstrates that emavusertib's potential may well extend to solid tumors, not just leukemia and lymphoma. In closing, the standout achievements for this quarter include securing FDA clearance to resume patient enrollment across both Take Aim trials, hosting our inaugural IRAK4 symposium, sharing news about upcoming clinical data presentations at ASH, and revealing that the company's financial runway now stretches an extra year, reaching into 2025. It's certainly been a busy quarter, and we're eager to share key emavusertib updates at SITC, ASH, and other upcoming events in the coming weeks and months. Now, I'll turn things over to Diantha for a look at our quarterly financials. Diantha?

Thanks, Jim. Operationally and financially, Curis has a solid base right now, which lets us focus our efforts on developing emavusertib. Curis posted a net loss of $13.3 million, or $0.14 per share, for the third quarter of 2022, versus a net loss of $11.1 million, or $0.12 per share, during the same quarter in 2021. For the nine months that ended September 30, 2022, the net loss came to $45.3 million, or $0.49 per share, compared with a net loss of $31.8 million, or $0.35 per share, over the same stretch in 2021. Revenue during the third quarters of 2022 and 2021 came in at $2.8 million and $3 million, respectively. Revenue for the nine months ended September 30, 2022 and September 30, 2021 was $7.3 million and $7.5 million, respectively. Operating expenses in the third quarter of 2022 reached $15.4 million, versus $13.1 million during the comparable period in 2021. Operating expenses for the nine months ended September 30, 2022 totaled $50.1 million, versus $37 million during the comparable period in 2021, and break down as follows. 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 to $0.1 million in the third quarter of 2022, versus $0.2 million during the comparable period in 2021. Cost of royalty revenues for the nine months ended September 30, 2022 was $0.2 million, versus $0.4 million during the comparable period in 2021. Research and development expenses reached $10.8 million in the third quarter of 2022, versus $8.6 million during the comparable period in 2021. Higher personnel and consulting costs largely explain the quarterly rise in research and development expenses, partly offset by lower manufacturing and clinical development costs. Research and development expenses totaled $34.6 million for the nine months ended September 30, 2022, versus $24.1 million during the comparable period in 2021. General and administrative expenses came to $4.6 million in the third quarter ended September thirtieth, 2022, versus $4.3 million during the comparable period in 2021. The timing of costs was the main driver behind the rise in general and administrative expenses. General and administrative expenses totaled $15.3 million for the nine months ended September thirtieth, 2022, versus $12.5 million during the comparable period in 2021. Total other expense for the third quarter of 2022 and 2021 was $0.7 million and $1 million, respectively. Imputed interest tied to future royalty payments accounted for most of that other expense, partly offset by interest income. Other expense came to $2.5 million for the nine months ended September thirtieth, 2022, versus $2.3 million during the comparable period in 2021. As of September 30, 2022, cash equivalents and investments at Curis totaled $98.7 million, with roughly 96.4 million shares of common stock outstanding. Our cash situation is solid, and we anticipate that the cash equivalents and investments we currently hold ought to let us keep funding our planned operations through 2025; so with that said, I want to turn things over for questions. Operator?

Good afternoon, and thank you for taking my questions. I have a few questions regarding the headcount reduction. Will the impact be felt more heavily on the G&A or the R&D expense line? Should we expect the impact to begin in the fourth quarter, or will this really be a 2023 event for the expense impact?

Yeah. Thanks, Ed. First, I appreciate you taking the question. The impact truly spans the entire company, affecting both G&A and R&D. Obviously, it begins with everything not directly tied to emavusertib. We are completely focusing all of our resources on emavusertib, so anything not directly connected was something we could do without. If we could do without it, and that prolonged our cash runway without requiring any other actions, I mean, this is the advantage of beginning with such a robust balance sheet that gives us this flexibility. With these data in hand, it becomes increasingly evident that this is a drug, and this must reach NDA submission quickly. We're going to commit and intensify all of our efforts to achieve that and shield ourselves from needing to raise money during this time. Yeah, broad-based across G&A and R&D. There will be some impact in Q4, but it's really when you look out over the entire two-year period that follows that you'll observe that cash runway impact.

All right. Thank you, Jim. I've got a question about the VISTA program. Should we expect additional data coming out of CI-8993? What's in store for those who are already participating in the trial, assuming there are any? Also, do you view this simply as putting the program on hold for the time being, or could this be a candidate for partnering or out-licensing to another party who would move it ahead?

Yes. My view is that this is closer to a pause or a suspension of the work. No new patients are being brought into that trial. As you're aware, the VISTA target is something we're very fond of. To me, it's terrific. When you're in a situation with two programs in the clinic, and one of them hasn't merely generated data demonstrating it performs reliably all the way from concept to bench to bedside, but you also now have a fresh set of clinical results indicating you're on a path toward an NDA, while the second program remains in dose escalation — if funding both isn't possible, well, the choice is obvious. You stick with the one backed by proven data. The VISTA target is one I really like, but the resources, the funding, and the personnel currently assigned to that program need to be redirected so we can be intensely focused on emavusertib.

Fine, that's clear. I appreciate your time for my questions.

James E. Dentzer, executive: Of course. Thanks to you.

Hello, everybody. Congratulations on everything that's been accomplished. I have a brief question regarding the anticipated ASH results from the monotherapy and the combo arm. Can you provide any insight into the sort of drug duration these patients will have? Is it only 28 days, or somewhat more than that, given that you've only recently begun enrolling?

Yes. It's somewhat more than that, and it covers data for certain patients. As you might recall, a clinical hold was placed on us last spring, meaning some patients had only just begun the study prior to the FDA stopping enrollment of new patients. The data we have pertains to those patients on an incremental basis. Obviously, I believe it's a substantial addition to the data set. It nearly doubles the count of patients we have with a target mutation, so I think it's a highly meaningful update. I'm really eager to discuss the results of how those patients are faring once we reach ASH.

Regarding the venetoclax combination group, enrollment for that began not long ago, correct?

Yes, it began prior to the FDA's clinical hold. If someone had received the drug, say, 24 hours before that hold took effect, they continued receiving it. The FDA never instructed us to remove anyone from the drug. Their directive was simply, "Do not enroll additional patients." We had already begun placing patients on the combination treatment. As you might expect, the investigators feel a great deal of enthusiasm for both combo therapy and monotherapy in this program. Anyone who entered the study just before the FDA told us to halt adding new participants could remain in the study, and there are five such patients we intend to discuss at ASH.

Thanks. That's very useful. Just one more thing. Could you give us any sense of whether the newly enrolled patients tend to have more spliceosome mutations, or are we seeing a higher number of FLT3-mutant cases coming in?