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

Thanks for joining, and welcome to Curis's Q4 2023 business update call. Before we get started, I'd like to ask all of you to visit the investor section on our website, www.curis.com, where you can locate our Q4 2023 business update release along with the related financial tables. I also want to remind you that on this call, we'll be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and actual results may differ materially. For additional details, please see our SEC filings. On today's call with me are Jim Dentzer, President and Chief Executive Officer, and Jonathan Zung, Chief Development Officer. We will also be available for a question and answer period at the end of our call. I'd now like to turn the call over to Jim. Jim?

Thank you. Diantha, thanks as well. Good morning to all of you, and I'm glad to have you join Curis's Q4 business update call. Today, I want to open by reviewing what has happened across the last 12 months. As 2023 began, the entire biotech sector was laboring against the headwinds of a bleak financial market. Curis confronted every bit of that, plus the formidable obstacle of our leukemia study being halted under a partial clinical hold from the FDA. Despite such adversity, the Curis team met the moment. We labored without pause to respond to the questions the FDA raised. That effort involved bringing in more patients dosed at 200 milligrams BID and running further analyses. Because of this, we managed to verify emavusertib's safety profile, reach agreement on the best dosing regimen for monotherapy, and obtain the lifting of the partial clinical hold an entire quarter ahead of schedule; we then shifted our focus toward reactivating clinical sites and bringing new patients into the study; in our monotherapy trial, we are aiming at a genetically defined group of relapsed refractory AML patients who carry a FLT3 or spliceosome mutation. Accrual is proceeding nicely, and we anticipate a data update around midyear. As that trial moves forward, we have launched a frontline study testing emavusertib together with azacitidine and venetoclax for all AML patients, irrespective of mutation status. Sites in Spain, Germany, and Italy are running this study, and we look for preliminary data from it during the second half of this year. Taken together, it was a superb year of leukemia progress. Let's now shift to our lymphoma program, which is drawing an equally strong level of interest. Once we examined initial data gathered across multiple NHL subtypes, we concentrated our work on the ultra-orphan indication of primary CNS lymphoma, or PCNSL, where we are assessing emavusertib in combination with ibrutinib. We pinpointed key sites, began enrollment, and in December, we shared new clinical data in relapsed refractory PCNSL at the ASH conference in San Diego. Our physician meetings at ASH went extremely well, and we took particular pleasure in having Dr. Grzegorz Nowakowski and Dr. Han Tun from the Mayo Clinic present the data. As a reminder, high-dose methotrexate and chemo constitute frontline treatment in PCNSL. Once that stops working, no approved second-line treatment exists. In our study, three of five patients achieved complete remission of their disease. This is admittedly a small patient count; even so, the response and the enthusiasm from the clinical community proved very encouraging; in the 8 weeks since ASH, our team has been answering calls from clinical sites throughout the U.S; and Europe that want to take part in our trials. Indeed, by the end of Q1, we anticipate having twice as many clinical sites as we did a year ago. Clearly, this mirrors the excitement surrounding emavusertib, yet it also mirrors the tireless efforts of the Curis team. I could not be prouder of them. And lastly, during December, we shared news that a deal had been signed for a trial initiated by investigators, which will examine emavusertib together with pembrolizumab in metastatic melanoma patients; this gives us a chance, which we find thrilling, to build on work carried out at academic centers and the NCI, probing what emavusertib might do in solid tumors. To put it briefly, 2023 was a remarkably productive year for us, and we're eager to keep up that momentum as we move into 2024. With that said, I'll hand the call back to Diantha so she can walk us through the financial results for the quarter. Diantha?

Thanks, Jim. Curis posted a Q4 2023 net loss of $11.7 million, equal to $2.03 per share, versus a net loss of $11.3 million, or $2.35 per share, during the comparable stretch of 2022. For the twelve months ended December 31, 2023, Curis recorded a net loss of $47.4 million, or $8.96 per share, against a net loss of $56.7 million, or $12.14 per share, in the same period of 2022. Net revenues during Q4 2023 came in at $2.7 million, versus $2.9 million a year earlier. For the twelve months concluded December 31, 2023, net revenues reached $10 million, against $10.2 million in 2022. Research and development expenses totaled $10 million in Q4 2023, versus $8.7 million in 2022. That rise in R&D stemmed from greater clinical development costs. Over the twelve months concluded December 31, 2023, R&D came to $39.5 million, versus $43 million in 2022. General and administrative expenses came to $4.9 million in Q4 2023, versus $4.3 million in 2022. The growth in G&A stemmed mainly from greater professional, legal, and consulting services. Over the twelve months concluded December 31, 2023, G&A came to $18.6 million, versus $19.6 million in 2022. Other income, net, was $0.5 million during Q4 2023, versus other expense, net, of $1.1 million in 2022. Over the twelve months concluded December 31, 2023, other income, net, was $0.9 million, versus other expense, net, of $3.7 million in 2022. Other income (expense), net, comprises interest income along with non-cash expense tied to the sale of future royalties. As of December 31, 2023, cash, cash equivalents, and investments at Curis came to $56.3 million, with roughly 5.9 million shares of common stock outstanding. Our cash position remains solid, and we anticipate that current cash, cash equivalents, and investments will fund planned operations into 2025. Having said that, I'd like to open the call for questions. Operator?

Morning, and thanks for fielding my questions. Jim, during the primary CNS lymphoma trial discussion, you noted that the number of clinical sites currently active is twice what it was at the same point 12 months ago. Could you share the actual site count and also how many more you intend to bring on board?

Sure — we generally steer clear of providing specifics on site counts at any particular moment, since that figure keeps climbing all the time. The main reason we brought it up on today's call, though, is that it mirrors the type of conference we just had. Naturally, the data left us quite encouraged. Anyone who attended ASH would have seen how packed our booth was. Since then, we've managed to bring these additional locations live and operational, and as I noted, while we don't expect the figure to double by the close of Q1, there's broader excitement worldwide, extending beyond the US. From where we sit, that's genuinely thrilling, and my hope is that we sustain this momentum moving ahead.

Hi, could you share your perspective regarding how large the primary CNS lymphoma market is?

Absolutely; this is an ultra-orphan indication; that's among the reasons we chose it. If you consider the whole non-Hodgkin's lymphoma space, and every setting in which BTK is utilized, naturally, our aim has been broad. Whenever BTK is employed, you are reducing NF-κB activity through a single pathway. Many BTK inhibitors go after that route; ours is the sole one going after the alternative route. Looking throughout the non-Hodgkin's lymphoma landscape, we initially zeroed in on primary CNS because of how tiny it is, with an incidence rate of 5 per million. That produces numerous highly appealing advantages from a developmental standpoint, particularly when speaking with regulatory agencies. Additionally, among primary CNS lymphoma cases, this is a rather aggressive form of lymphoma in which we think we are able to tackle the disease rapidly. As the data showed, with 3 of 5 complete responses, we observed that within the initial 3 months of treatment. So that is quite beneficial. And naturally, no effective therapies exist. No approved medications are available for relapsed refractory PCNSL. Thus, if we are able to pursue an illness that is ultra-orphan, in which no approved therapies exist and we can witness this type of response from the drug, that is truly encouraging.

Okay, thanks, Jim.

Sure.

At this point, could I ask something at a high level? I want to hear how you see what solid tumors could bring to the table. You mentioned the IST that's getting underway, combined with Keytruda, in metastatic melanoma. I'm just wondering what you think about that specific market, and about solid tumors more broadly.

Sure. Solid tumors are genuinely an exciting space. Of course, from the very beginning, we've been focused on identifying this target. What made it so exciting was that IRAK4's role in oncology, more broadly, was something Curis discovered, and no one else knew about it. So, as we were first engineering the molecule, we had the Pharmacyclics template in mind—specifically, how do you go after a blockbuster indication, or one with multibillion-dollar revenue potential, when no one else has figured it out yet? So we designed that molecule to perform well in lymphoma, while also providing a competitive advantage in leukemia and solid tumors too. As you know, our first trials began in lymphoma, which is, of course, where our newest data also come from, and those results are really compelling. In lymphoma, among the targeted populations we'd expect to affect—the IRAK4 or spliceosome group and the FLT3 group—those findings look really compelling; we've only just started the frontline trial, and then, as you mentioned with melanoma, this is our first step into solid tumors. Well, a lot of work has been done by the NCI and academic centers looking at emavusertib across many solid tumor types; so we know there's a lot of interesting activity going on, for instance, in bladder cancer, gastroesophageal cancer, ovarian, lung, and pancreatic. There are various solid tumors where IRAK4 appears to play a meaningful role, and where our drug might potentially provide benefit. This is our first entry into that space. I think it's a bit early to talk about how large each of those markets is, but the idea that we have a drug that seems capable of offering incremental benefit unlike any other drug in these highly targeted markets, taken one by one, and certainly at a broad level across the whole field of human solid tumors, is, is really quite exciting. In fact, in the frontline setting we could be looking at something in the range of 10% to 12%.

Thanks, Jim. And a last question-

Sure.

If I could just ask, I wanted to hear what you think about bringing in a partner for the product in solid tumors. Would that be something you'd consider, or do you believe that as you move into solid tumors, you could finance that yourself somewhere down the line?

Sure. So, yeah, I mean, look at the melanoma study as an example. Clearly, that's a trial we'd prefer not to be paying for. There are many trials, gosh, perhaps 1,000? A great many clinical trials are underway at present involving a company's drug combined with Pembro, Merck's PD-1, which is regarded by most people as the top PD-1; but in most of those cases, they plead with Merck for free drug, and then they conduct the trial. With us it's the reverse. We're going to obtain data from this trial, and we're the party supplying free drug. Merck is the one covering the cost of the study. So, obviously, what you know, what the majority of companies would wish for is simply receiving free drug. Ideally, if we're going to grow the number of clinical studies we can conduct, whether that's in lymphoma or in leukemia or now in solid tumors, at the very least, we'd want a 50/50 study. I think it's too optimistic to expect that we'll be able to have every one of our future studies be 100% funded by the partner without surrendering any rights. But right now, obviously, we're really thrilled that we're going to have the chance to get data across lymphoma, leukemia, and now solid tumors, and we can afford to do it; so as long as we can afford to retain our rights and produce the data that demonstrate this drug has such significant potential, I think that's our plan.

Alright, that's great. I appreciate you taking my questions.

Sure thing.

Hello everybody, and well done on the advances across so many areas. I have one thing about the frontline, that triple combination of emavusertib, HMA, and venetoclax. You're beginning... You referred to three separate European nations. Do you also intend to open any trial locations in the U.S.?

The second is- Jim Dentzer (A): Please continue.

About the PCNSL trials — are those being run alongside ibrutinib, or do you still intend to test emavusertib as a single agent in those patients?

Let me take the first part first. For the triplet, the opening study is aimed at selected sites where we believe we can obtain data fairly fast. Since we're at these early stages, what matters most is producing the data as speedily as possible and demonstrating that the triplet is effective. We have substantial preclinical evidence indicating that IRAK4 serves as the main disease driver in 50% of AML patients. There's a published paper, as you're aware — the Smith-Choudhary paper that came out in Nature in 2019 — which made that point. In 50% of patients, this is the top driver of disease. For the remaining 50%, it isn't the top driver, though it does act as a secondary or tertiary driver. So this really ought to deliver incremental benefit through a novel mechanism that no other drug provides. Thus, over the long term, in order to reach as many patients as possible, we would of course move to front line alongside standard of care, which is azacitidine and venetoclax. Our hope is that we can reproduce in humans what the lab showed us — namely, that adding emavusertib to AZA, to VEN, or to the AZA/VEN combination markedly boosts the efficacy of that standard of care regimen. That's what the lab work demonstrated, and once again, that's what we hope to pin down very fast, if we can, in the clinic. And naturally, we always want to check safety. AZA and VEN, as you know, are a fairly hard regimen to tolerate. They work, but they are quite difficult to tolerate. Anecdotally, 50% of all patients who start that AZA/VEN doublet end up having to stop treatment. So in the early days, what we'll do is enroll patients and verify there is no safety overlap, as we anticipate. Then second, naturally, we'll be hunting for that efficacy signal. And if you want to carry out that sort of exploration rapidly, it genuinely helps to pinpoint the sites you can concentrate on very tightly, and those are the sites we've picked to launch that study. As for your second question, could you remind me?

All right, yeah, that makes complete sense. Now, regarding the PCNSL trial, do you anticipate enrolling patients in the frontline setting?

Yes.

Or, to avoid reaching that point, do you intend to pair it with ibrutinib?

Yes.

What's the strategy here?

No, thank you — and thanks for asking. At this moment, what we're combining is emavusertib plus ibrutinib, and we're testing it in patients who have relapsed and are refractory. That's where we begin. And once more, the reasoning behind starting with pairing ema and ibrutinib — that part is obvious. When it comes to lymphoma, what pushes the disease forward in NHL patients is too much NF-κB activity. When NF-κB becomes overactive, the effect is that it interferes with how malignant cells go through apoptosis. So if a patient takes a BTK inhibitor these days, the reason for taking it is that it prevents the BCR pathway from working — and that pathway is among the two that cause NF-κB to be overactive. We understand now that this works. You see a fairly strong response rate with BTK inhibitors, and as you're aware, that's a $10-$15 billion market as of today. Of that, ibrutinib alone accounts for $10 billion — the AbbVie, J&J drug. Our aim in lymphoma is to strike NF-κB as forcefully as possible. Currently 5 large pharma companies are pursuing BTK inhibitors in different forms, whether covalent or non-covalent, and every one of them acts in essentially the same manner, each blocking the BCR pathway that activates NF-κB. The other pathway — the toll-like receptor pathway — nobody is targeting it right now. Curis is the sole company holding a drug that shuts that path down. That drug is emavusertib. It attaches to MYD88 myddosome, and absent that attachment, when IRAK4 isn't there, the myddosome along with the toll-like receptor path in general gets shut off; so logically, looking at the big picture, if a lymphoma responds well to BTK treatment, you'd always want to block NF-κB or bring NF-κB down as much as possible. That means targeting the BCR path through BTK, and targeting the toll-like receptor path through IRAK4. Using them together — not either by itself — the pairing ought to consistently outperform either agent on its own. That's what the lab showed us, and naturally, that's what we've been seeing in the clinic up to now. So that's the reasoning behind combining with emavusertib. As for moving into frontline, ultimately, sure, you know, the long-term prospect we'd like to raise and intend to investigate is whether this could become a companion frontline standard of care alongside BTK for non-Hodgkin's lymphoma. At this point it's somewhat early for that; we picked primary CNS lymphoma as our proof of concept — the indication to demonstrate it — and we've managed to show we can produce data fairly fast. But over the long run, I believe we'll certainly want to move to frontline in combination with BTK inhibitors. For the time being, having an ultra-orphan indication allowing us to enter the relapsed refractory setting, where no drugs have approval, ought to present a fairly compelling regulatory opening. That's the reason we're taking this route.

Excellent.

That response went on quite a while. Hopefully it proved useful.

No, you got it.

Okay.

When it comes to companion diagnostics, now that you're expanding into solid tumors, I'm wondering whether you plan to advance the companion diagnostic for the IRAK4 mutation assay, and whether that could help in segmenting the market, both within solid tumors and later on in leukemia.

Yes. The brief response is affirmative. The fuller response is that it's somewhat more complex. To put it briefly, are we working toward identifying and securing the regulatory pathway for a companion diagnostic tied to IRAK4 expression? The response is definitely yes. The more complex part is that we don't want that effort to hold back our development timeline in getting this drug to patients. The way we're guaranteeing the quickest route is through monotherapy, on the leukemia side, where we intend to enroll patients who either carry a FLT3 mutation or show IRAK4 overexpression. We'll narrow the IRAK4 group by using spliceosome mutations; these spliceosome mutations represent a subgroup of patients who overexpress IRAK4. The rationale for targeting spliceosome mutations is that those mutations are already detectable in gene panels that exist today. That makes a companion diagnostic considerably simpler. There's no need for a brand-new assay to detect IRAK4. We can simply rely on the panels already available, the Illumina panel, the FoundationOne panel, and institutions like MD Anderson that have their own proprietary gene panel. Those panels are already being run on their current patients, and we can leverage that and say, "If you carry one of these particular mutations, then by definition you have IRAK4 expression," and employ that as our approach, though over the longer term, naturally, we'll want a diagnostic. On a separate note-

Thanks once more.

That's the rationale behind moving to frontline in combination. Our approach will be to treat all patients, so a companion diagnostic won't be required.

Thanks once more for fielding every question, and congratulations-

Of course. Of course. I appreciate it.

Hello, and good morning. We're grateful that you've made time to field our questions. Jim, about the leukemia results you're scheduled to share around the midpoint of this year — could you perhaps help us understand what's coming, meaning which data set will be presented, and how the bar is defined both for FLT3 and for spliceosome mutations? And for the combination data arriving in this year's back half, maybe you could lay out that bar as well, given that AZA-VEN, as we all know, establishes a fairly demanding standard and works quite well. In addition, as you brought up earlier, when it comes to toxicities — would you expect any overlap in tox from this regimen?

Yes. Thanks, Lee. Good to have you on the call. On those questions — starting with patient counts, we've stated all along that our goal is a data set spanning 10 to 20 patients, while at present ours consists of 3 patients in spliceosome, 3 patients in FLT3 at our target dose, and, of course, 5 patients in primary CNS. Our aim is to expand that data set to an n equals 20 to 50, somewhere inside that range. My hope is we'll get to a point where we've got data gathered. Of course, you enroll the patients, treat them, follow them over a period of time, and then evaluate the responses. I'm hopeful that we'll get to a point of having that level of n, that level of data, in leukemia, spliceosome, and FLT3 by midyear, and in lymphoma, by year-end. As for the benchmark, what we think must be achieved to be effective on the monotherapy side is a target of a CR/CRh of 20%, with a lower bound in the low teens, a 12, 13% kind of lower bound. Yet a 20% CR/CRh rate in salvage line therapy for either FLT3 or spliceosome in leukemia, we consider very compelling. Of course, our first 3 patients look better than that, but let's not get ahead of ourselves. It's only 3 patients. As we get to 10 to 20 patients, what we'd really hope is that we can clear that CR/CRh rate of 20% and be compelling. On the lymphoma side, since no existing treatments are out there, that bar is probably lower. What we do know is that the largest data set available for BTK as a monotherapy in primary CNS lymphoma was a study of 52 patients. The CR rate was 19. So you'd expect 1 out of 5 patients or again, roughly a 20% CR rate in that population, and that's in BTK-naive patients. Once they've failed BTK, you'd expect that rechallenging them with BTK yet again probably wouldn't work at all. You might expect 0 out of 5; that we're getting 3 out of 5 so far is obviously highly encouraging. Holding to that precise cadence likely isn't required, though if we're able to keep a CR rate at 20% or higher in lymphoma for individuals previously treated with BTK therapy, then I think we'd possess a pretty compelling data set for a discussion with FDA. The CR rate was 19%. So 10 to 15, pardon me, 10 to 20 patients across every indication is what we're hoping for; we anticipate being situated with data within that range for leukemia by the middle of the year and for lymphoma by the end of the year. Does that address what you asked?

Is there any concern about toxicities stacking when you combine AZA-ven with your drug?