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

Thanks for joining us for the Curis Fourth Quarter 2022 Business Update Call. To start, I'd ask that all of you visit the Investors portion of our site, www.curis.com, where you can access our Q4 2022 business update release along with the related financial tables. I also want to note that forward-looking statements will be made on this call, and those are rooted 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, and Bob Martell, who leads R&D. There will also be a Q&A period once the call concludes. At this point, I'll hand things over to Jim.

Thanks, Diantha. Good morning, everybody, and welcome to the Curis Fourth Quarter Business Update Call. During the quarter just ended, we achieved significant momentum with our lead clinical candidate, emavusertib, which right now is under evaluation in 2 clinical studies. First, the TakeAim Leukemia study, a Phase I/II trial that includes 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; and second, the TakeAim Lymphoma study, a Phase I/II combination trial with ibrutinib, for patients with relapsed or refractory NHL and other hematologic malignancies. We were particularly happy to share an update of clinical data from the TakeAim Leukemia study, where AML patients carrying a FLT3 mutation showed a CR rate of 29%. For AML patients with a spliceosome mutation, the CR/CRh rate came in at 22%, and MDS patients with a spliceosome mutation had an overall response rate of 45%, with all 5 responses reaching a marrow complete remission; this update doubled the size of our earlier data set and reaffirmed emavusertib's potential to become an important therapeutic alternative for patients with AML or MDS. We've also achieved meaningful headway in our efforts to resolve the partial clinical hold on our leukemia study. On last quarter's call, we announced that the FDA had approved the reopening of our clinical sites so that we could enroll 9 additional patients at the 200-milligram dose level, in order to facilitate discussions with FDA regarding the recommended Phase II dose, or RP2D, and the resolution of the partial clinical hold. We're happy to report today that we have finished reopening our sites, and have also finished enrollment of the 9 additional patients requested by FDA; this happened ahead of schedule, and we believe it reflects the excitement surrounding this novel therapeutic and the critical unmet need in this sorely underserved patient population; we expect to gather data for these patients in Q2 and to meet with FDA in Q3 to review those data. We also continue to enroll in our TakeAim Lymphoma study, where we are focusing on primary CNS lymphoma and treating patients with the combination of emavusertib and ibrutinib; in short, we had a very productive end of 2022 and that momentum is carried forward into 2023. We look forward to working with the FDA in the months ahead to gain alignment on RP2D in our TakeAim Leukemia study and resolution of the partial clinical hold; with that, I'll turn the call back over to Diantha to review our financial results for the quarter. Diantha?

Thanks, Jim. Curis posted a fourth-quarter 2022 net loss of $11.3 million, or $0.12 per share, versus a net loss of $13.6 million, or $0.15 per share, in the same period of 2021. For the 12 months ended December 31, 2022, Curis recorded a net loss of $56.7 million, or $0.61 per share, compared with a net loss of $45.4 million, or $0.50 per share, during the same period in 2021. Fourth-quarter 2022 and 2021 revenues came in at $2.9 million and $3.1 million, respectively. Revenues for the 12 months ended December 31, 2022, and December 31, 2021, were $10.2 million and $10.6 million, respectively. Operating expenses totaled $13.1 million in the fourth quarter of 2022, compared with $15.7 million in the same period of 2021. For the 12 months ended December 31, 2022, operating expenses reached $63.2 million, compared with $52.7 million during the same period in 2021. And they were made up of the following: royalty revenues — which included amounts owed to third-party university patent licensors tied to Genentech and Roche's Erivedge net sales — came to $0.1 million in the fourth quarter of 2022, versus $0.2 million in the same period of 2021. Cost of royalty revenues for the 12 months ended December 31, 2022, was $0.3 million, versus $0.5 million during the same period in 2021. Research and development expenses were $8.7 million in the fourth quarter of 2022, versus $10.8 million in the same period of 2021. The quarterly drop in research and development expense stems mainly from lower personnel, manufacturing and clinical development costs. Research and development expenses were $43.3 million for the 12 months ended December 31, 2022, versus $34.9 million during the same period in '21. General and administrative expenses were $4.3 million for the fourth quarter ended December 31, 2022, versus $4.8 million in the same period of 2021. The decline in general and administrative expenses was mainly due to lower personnel costs. General and administrative expenses were $19.6 million for the 12 months ended December 31, 2022, versus $17.3 million during the same period in '21; for the fourth quarters of '22 and '21, total other expense was $1.1 million, respectively. Other expense was $3.7 million for the 12 months ended December 31, 2022, versus $3.4 million during the same period in 2021. Other expense net for the year ended December 31, 2022, was primarily made up of expense tied to future royalty payments, partly offset by interest income. Other expense net for the year ended December 31, 2021, was primarily made up of imputed interest expense tied to future royalty payments, partly offset by a gain recognized upon forgiveness of a PPP loan. As of December 31, 2022, Curis' cash, cash equivalents and investments totaled $85.6 million, and roughly 96.6 million shares of common stock were outstanding. Our cash situation remains solid, and we believe the cash, cash equivalents, and investments we already hold will let us keep carrying out our planned operations into 2025. With that said, I'd like to begin the question-and-answer portion of the call. Operator?

Jim, you mentioned before that for TakeAim Lymphoma, data was anticipated during 2023. Since we're now in 2023, could you offer some sense of when in this year that data should arrive?

Thanks, Ed. Yes, I'd say our expectation hasn't shifted; we aim to give an update by the time the year ends. Should anything shift between now and that point, naturally, we'll inform you; however, we're quite happy with our position on both studies.

Great. Also, you never brought up the VISTA program. I'm aware that it has been stopped. I simply wanted to hear what you think — is there anything shifting on that front? Has any consideration been given to getting this program going again during 2023? Or is that maybe something much further off?

Well, yes, I believe it's too early for us to consider restarting it right now. Keep in mind, the reason it got paused had nothing to do with how enthusiastic we are about the program; it's a fantastic target. It's a fantastic program. I thought we were making truly good progress. I think it was more about, because of the financial climate, we had to reduce our cash burn so that cash would last to 2025. And until we reach a point where we feel confident that the market has changed or that we have the capacity to obtain cash that doesn't place any compromising impact onto IRAK4. We have to go all in on IRAK4; so as I said, we're truly excited about where we stand at this moment. I think we're in a strong position to add value to the IRAK4 program this year. And we'll be watching the financial markets more broadly as we move through the course of 2023.

All right. Given that you've raised the topic of financials, perhaps this one is for Diantha, concerning your perspective on R&D expense over the course of the year now that development of < > is back on track. What's the right way for us to think about the ramp — or maybe there isn't a ramp, maybe it just flattens out — for that R&D expense.

Ed, as you may remember, back in November we announced the reprioritization; and in Q4, like we told you, those costs are declining; so my sense is that where we land in Q4 is probably going to represent the ongoing run rate, though I'd add that it might drop somewhat more, simply because we didn't take advantage of the entire quarter following the reprioritization.

Congratulations on everything you've accomplished so far. Regarding those 9 patients you brought up — the extra ones newly added to the study — can you tell us whether every one of them has AML, or is it a mix of AML and MDS? Also, could you shed some light on whether these are heavily pretreated cases? Before the enrollment pause happened, it seemed like you were seeing more patients who had already been through many prior therapies.

Soumit, it's Bob Martell here. Right now, our main focus is responding to what the FDA has asked, specifically about dosing — the 200 milligram lower dose in particular. So those 9 patients were enrolled under the standard Phase I trial, which accepts both AML and MDS. What we've observed is that a lot of the people coming into this study had already gone through numerous earlier treatments, and that's clearly a tough group to manage. So even though we don't formally limit who can join, we're always looking for individuals who might be somewhat earlier in their treatment journey. That said, for this group of 9 patients, no specific criteria were applied.

That makes complete sense, and I appreciate the clarity. So for my final question: you had mentioned before that 4 patients were on the combination of emavusertib and venetoclax, and the response rate was 50%. Could you verify whether those patients are still receiving treatment?

Yes. Since the ASH presentation, we really haven't provided any updates. On this call, we aren't ready to give any additional specifics, beyond saying that what we observed was pretty impressive — we saw deep responses in the patient's AML, MDS, and 3 of the 4 patients who had responses, with assessments available, experienced quite dramatic reductions in their blast counts. And as you pointed out, 2 of them had their blast count return to normal. So, as you're aware, just to speak briefly about the mechanism: venetoclax targets BCL2, which is well known, while the other key anti-apoptotic factor in these patients that stops the cancer from undergoing apoptosis is MCL1; and in fact, inhibiting IRAK4 lowers MCL1. So from a mechanistic perspective, we believe this is a great potential combination, and we're genuinely excited, ultimately, to obtain more data on that combination.

Regarding those 9 patients you finished treating not long ago, do they show any kind of variation from the ones treated earlier? Or do they look pretty much the same as those you'd signed up previously?