Good morning, ladies and gentlemen, and welcome to the First Quarter 2012 Curis Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the call over to Mr. Mike Gray, Curis' Chief Financial Officer. Please proceed.

All right, thanks, Howard. Good morning, and thanks, as always, for joining us. During today's call, we'll provide you with an update on corporate plans and developments and also discuss our Q2 2012 financial results. Before we begin, I'd like to advise you this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, statements relating to our collaborator Genentech, expectations concerning the commercialization of the market opportunity for Erivedge, the timing and outcome of ongoing regulatory reviews for Erivedge and the timing and potential outcome of ongoing clinical studies with Erivedge. Our plans and expectations for advancing CUDC-101 and CUDC-907 and the potential therapeutic benefits of these development candidates and our collaborator, Debiopharm's expectations regarding the advancement of Debio 0932 into the additional clinical trials in 2012. Actual results may differ materially from those indicated by the forward-looking statements in this conference call as a result of various important factors, including Genentech's net sales of Erivedge in the U.S. in advanced BCC, being inadequate to provide us with meaningful royalty revenues to help authorities and territories other than the U.S. not approving Erivedge in advanced BCC and the failure of Erivedge to generate promising data in ongoing and future clinical studies in diseases other than advanced BCC. In addition, Debiopharm could experience adverse results, delays and/or failures in our current development programs, and we may experience difficulties with maintaining necessary IT, intellectual property protection, maintaining key collaborations and obtaining the additional funding required to conduct their business. And finally, we may experience some decline in cash requirements and may not receive additional anticipated payments under our collaborations and in which would shorten our estimated period in which we expect to have cash to fund our operations. We also face other risk factors described in our quarterly report on Form 10-Q for the quarter ended March 31, 2012, and in other filings that we periodically make with the SEC. We caution you that we are making these forward-looking statements only as of today, and that we may not update any of these statements even if events or developments subsequent to the date of this call cause these estimates or expectations to change. With that, I'd like to introduce Dan Passeri, Curis' President and CEO, who will provide a corporate overview, as well as an update on our pipeline. Following Dan's remarks, I'll return to review our financial results for the second quarter of 2012 and then we'll open the call for questions. Dan?

Yes, thanks, Mike. Good morning, everyone, and thanks for joining us today. We've seen continued progress during the second quarter with each of our 4 development programs. During this period, Genentech continued to advance its U.S. commercial launch of Erivedge in advanced basal cell carcinoma, and Roche has made progress with its efforts provide Erivedge to advanced BCC patients outside of the U.S. with recent submissions for regulatory approval in Australia, Canada, Israel, Mexico and Switzerland. Importantly, we received the $4 million milestone payment upon Roche's submission to Australian authorities. In addition, Roche filed for commercial approval of Erivedge in advanced BCC in Europe in December of last year. Including the most recent filing in Australia, Roche has now submitted regulatory applications in a significant number of territories and this clearly highlights its global strength and commitment to the development and commercialization of Erivedge. Internally, Curis is focused on the ongoing Phase I clinical study in locally advanced head and neck cancer patients with our IV formulation of CUDC-101, as well as preparing IND filings for the second half of 2012 to begin Phase I testing of the oral formulation of CUDC-101, as well as our oral PI3 kinase/HDAC inhibitor designated CUDC-907. Lastly, our partner, Debiopharm, has advanced our Hsp90 inhibitor, which is currently designated Debio 0932, into Phase Ib testing and also plans to initiate a Phase I/II clinical trial in non-small cell lung cancer patients in the near future. So I'm going to begin with the launch of Erivedge, which, this is to remind everyone, a first-in-class Hedgehog pathway inhibitor, which recently received FDA approval during the first quarter of this year for the treatment of adults with a type of basal cell carcinoma, or BCC, that has spread to other parts of the body that is metastatic…

All right. Thanks, Dan. I'll try to be brief in just covering the Q2 financials and the chance to get to Q&A. So for the second quarter of 2012, we reported a net loss of $2.9 million or $0.04 per share on both the basic and fully diluted basis, as compared to a net loss of $4.9 million or $0.06 per share in both the basic and for diluted basis for the same period in 2011. We recorded revenues for the second quarter of 2012 of $4.4 million as compared to $400,000 in the same period in 2011, the increase from the primary year period primarily resulted from $4 million in license fee revenues that we received from Genentech upon Roche's filing of Erivedge for marketing registration in Australia. We also recorded $250,000 in royalty revenues from Genentech's U.S. net sales of Erivedge during the second quarter of 2012. Operating expenses for the second quarter of 2012 was $6.8 million as compared to $5 million for the same period in 2011. R&D spending was $4.5 million in Q2 2012 versus $3.1 million in Q2 2011, an increase of $1.4 million. Spending on our internal programs increased by approximately $700,000, including an increase of $600,000 in spending on 907, HDAC, PI3K inhibitor primarily due to an increase in preclinical development costs in preparation for an expected IND filing in the second half of this year. Our spending on 101 also increased about $100,000, primarily due to cost with the ongoing development of an oral formulation during the second quarter. In addition to increases in spending in our internal research programs, we incurred $650,000 in R&D expense during the second quarter of 2012 related to sublicense fees paid to university licensors in connection with Roche's filing in Australia. And lastly, stock-based compensation…

[Operator Instructions] Our first question or comment comes from the line of Simos Simeonidis from Cowen and Company.

Just in an effort to reconcile the sales numbers for the first 2 quarters and what we've seen as pretty a significant increase in prescriptions. First of all, did Roche give you an idea of the number of patients that were treated this quarter? I know in the first few weeks that Erivedge was in sale in the first quarter it was 175. Do we know what number of patients for the second quarter?

We don't know specifically. We do know that it's more than 2x and -- but that's about the guidance that we have.

More than 2x of Q1?

Yes.

Okay. And then, I know, Dan, you don't like to speculate but -- I mean, there seems to be an inventory buildup, unless you believe there was a decrease in demand, which doesn't really jive with the prescription numbers. But do you think there was inventory buildup this quarter? Or in the first quarter, how many weeks worth of buildup do you think is in these numbers of $5.4 million?

Yes, good question. And that's really going to be the estimate in extrapolation based on metrics that we have access to. But we think there's been a significant increase in prescriptions Q2 over Q1 and that's what we're focusing on. We're really confident with that. Mike, anything you want to add?

Yes, let me just add something, Dan. So it's hard to know exactly because you don't know the individual value of a prescription. It could be for a month. It could be for a few months. And so it's tough to know. What we do know is, based on the data that we have, which is still a reputable subscription, reputable database, it's not perfect. Our understanding is that because the drug is distributed through specialty pharmacies, it's a little bit less transparent than other distribution methodologies. But just from a relative sense, you see basically a 4:1 or 5:1 increase in prescriptions quarter-to-quarter. So in my mind, which -- it could be more or less. But just as an approximation, I'm thinking that no more than $2 million in actual net sales -- in booked net sales that Roche recorded in Q1 were to fill demand and it was probably actually a little bit less. And then between the USD 10.5 million between Q1 and Q2, you have somewhere in 7 -- say, $1.5 to $2 million in Q1, $7 to $7.5 with some inventory left at the end of Q2. But what you'd hope to see is if the inventory sort of evens itself out, now we'll start getting into a period where the quarterly net sales numbers actually are more closely aligned with what you see from the prescription data.

Okay. And then, if we can -- I don't know if you can do this, but maybe you could give us some insights to the sales and marketing efforts from Roche. Is there any adjustments that they've communicated to you to their sales and marketing approach? What is the size of the sales force they're using? And how are they, in terms of the physicians they're targeting, if you know what the percentage is for medical oncologists versus, let's say, Mohs surgeons and then thirdly, general dermatologists?

That's a really important question, and I think just to provide some context, first off, we've been really impressed by the professionalism and commitment of Genentech and Roche to this drug. And I'll remind everyone, this is a newly approved drug. It's a novel mechanism in a disease that has previously had no therapeutic alternative. Patients are benefiting quite dramatically from this drug. So just from that standpoint, major accomplishment in terms of the impact on patients' lives. So Genentech and Roche are firmly committed at this point to the drug's continued development commercialization. The feedback we get from them is they're actually very pleased with the process and the uptake, and I think it's really just indicative of the fact that it's not like other indications where you may have patients with a life expectancy of several months and you had this sort of rapid buildup. This is a drug that is going to take some education and it's going to take a bit more of a process. But they have communicated to us. They have been very pleased with the response so far, both in terms of the commercial uptake, but more importantly the feedback they're getting on patient responses. They've been very committed to a sales and marketing effort globally. We have seen marketing materials and education materials that they've put together. And again, I think the key here is they are not just targeting oncologists but also Mohs surgeons and dermatologists per se. And the more this process continues, the more the data is compiled. And the more data is published, I think the growth trajectory will continue on this drug, which is going to take some time to build up and to achieve its full potential. But we're very impressed with their overall performance and commitment to this drug.

And the last question and I will jump back in queue, is this the sales force that's detailing Zelboraf, for example?

I think so, yes.

Our next question or comment comes from the line of Adnan Butt from RBC Capital Markets.

Follow-up on Erivedge. So first, I thought that royalties were a bit lower in the second quarter than the first quarter. Is that the reflection of the sales trend? Secondly, prescription data looks very promising. Do you think it's an accurate reflection of demand? Do you have access to patient numbers aside from the prescription numbers that we've seen? And last question, on Erivedge, what is compliance like? What is -- are you able to track that -- would you be able to track that? And what you expect it to be in the real world versus the repeat clinical trials?

All right. From the -- so the first question, I think, Adnan, was net sales and our royalty, modest decrease Q1 to Q2. I think we kind of touched on this in the call. And actually Simos, his question before just sort of asked about the effect. I think it's really an inventory effect. And you see -- as you mentioned in your question is, well, the prescription data is much stronger in Q2 versus Q1. So clearly, a lot of net sales, which again Roche books when the product is shipped to the specialty pharmacies who distribute the drug had basically a launch buildup of inventory and that was reflected in the Q1 numbers. So we're encouraged that you see 4 to 5x Q1 scripts in Q2. And we're hopeful that the net sales number will get closer to reflecting sort of the prescription trends that we see. As far as prescription data, we don't have clear vision through to actual patient numbers from Genentech at this point. We do know that the numbers are -- that the relative direction is accurate and -- but in terms of reconciling total patients versus prescriptions, we don't have that clarity.

And then the final question about compliance. What do you expect treatment duration to be in the real world versus it was in studies?

No, it's so early. The study, if you recall, was just updated at ASCO in June. The mean duration in the pivotal study was 13 months. And we're only in now the 6-month closed launch. So I think we'll have to wait and see. Right now, it's kind of the best information that we have available.

Our next question or comment comes from the line of Joe Pantginis from Roth Capital Partners.

Dan, also, thanks for your details on the commercial efforts that Roche is undergoing right now. I was wondering if you could drill down on the little bit of that. You guys have consistently said, and Roche has as well, that it's about 1.5% of the market for the advanced BCC. Can you drill down a little bit with regard to the efforts that Roche is undertaking with regard to how they're identifying patients? Obviously, there should be a pool or good access to patients based on the clinical centers that have been used. Just wanted to see if you could drill down about any additional efforts in looking to identify patients to who would be Erivedge candidates.

Yes, important question. I think that's part of this, as I stated earlier, part of this education process in their sales and marketing effort. If you look at current sales and the increase in patient numbers, I think it's rational to estimate that a good portion of those are patients that have been on study, patients that have a clear, pent-up and immediate demand, and that would be metastatic patients and very severe advanced BCC patients. So these will be physicians that were already in the queue, probably already either part of a trial or in discussions with Genentech. And then the continued effort with oncologists, which would see the metastatic and very severe cases of advanced BCC. Mohs surgeons, so the leading Mohs surgeons that are seeing the more complex cases of advanced BCC. And then more broadly, educating dermatologists for broader acceptance and application. And then when you look at the language of the label, we're very pleased with the scope of that label where there are 3 categories and it appears to give physicians discretion. And I think ultimately, their methodical, systematic approach to doing this sort of systematically and deliberately of educating the market will pay dividends in the long run by getting access to a broader number of those patients. We believe, for instance, the Gorlin syndrome category could currently fall under the existing label where these tumors recur. So the 1.5% that Roche stated potentially represents a 30,000 patient population. So even if it's a small subset of that, this is a significant revenue potential and a very important drug for this indication and this is just going to take some time to see those numbers start to materialize.

Okay, that's helpful. And then when you look at the, obviously, the future potential expansion into other tumor types, you alluded to some of the IST data such as like pancreatic and you talked about different levels of expression that could be correlated with responses. Just curious about any future efforts on Roche's part on prospectively identifying any of those patients in future studies or any potential diagnostic?

Yes, complicated question. Joe, I think this clearly fits in the philosophy of Roche's oncology franchise, which is translational medicine of identifying patients that have molecular aberrations, either overexpression or mutation, that they have drugs in their portfolio that would match those patients, and Hedgehog is part of that approach. Regarding other indications, again, I'm just going to commend the logic and rational approach that Genentech and Roche is taking, which is very methodically serving multiple indications, watching the data emerge and they will follow data. And if a signal emerges in any of these tumor types with a molecular underpinning, having do with the Hedgehog pathway, I'm -- we're very confident they will then invest to exploit those observations. And I think, in this business, it's really the most prudent way to proceed.

Our next question or comment comes from the line of Mr. Ted Tenthoff from Piper Jaffray.

Thanks for the detail on everything going on with the Erivedge franchise. Switching gears a little bit to 907, can you give us a sense -- obviously, PI3K has been an area that's become increasingly excited from a biotech standpoint over the last few months with -- especially with some data coming out both at ASCO and over the summer. Can you give us an update on kind of what your longer-term plans are here? It says something that you would take forward yourselves for a while. Would you look at or have you been entertaining potential partnerships? Give us a little bit more of a kind of high strategic view on what you want to do with that asset?

Okay. Thanks, Ted, for the question. Let me just start off on a very high level, which is philosophically, what we're trying to do with the company. Erivedge and Genentech represent growing revenues. And as Mike stated, we're in a very good position right -- we're in a very good position right now financially. We just about how just about 2 years of cash with no additional infusion, and we expect additional infusions from milestones and as revenues increase. So that being said, that's really the sort of strategic objective of this model was to be using partnered assets to subsidize and create a more stable model where we're able to then hold on to assets longer through development. And that's our intent was 101 and 907. And as you alluded to, 907 is -- it's a PI3 kinase/HDAC inhibitor and the PI3 kinase space is starting to heat up a bit. Our objective is to file the IND, demonstrate that the drug is -- can be well tolerated at what we will determine to be efficacious doses hopefully. And the additional focus is going to be on hematological cancer and then we'll look beyond that based on the safety profile of the drug, the biological activity that we may observe.

Excellent, that's helpful. And what data should we be expecting -- or what would be the next release? I guess that would be the filing and then the Phase I data sometime next year, correct?

Yes. On 907 and 101, hopefully, oral is successful and we'll be filing that this, yes, this Q3 or Q4.

Our next question or comment comes from the line of Mr. Ed Arce from MLV & Co. Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division: Just one question actually on CUDC-101 and the leading trial now with head and neck cancer. So you mentioned that you've added to the patient population HPV positive with prior smoking history. And I was just wondering if you could elaborate or discuss how you came about that decision and how you believe that will help the ongoing trial results.

Yes. The objective there was to increase patient access. We wanted to increase the rate of enrollment, particularly in this Phase I dose escalation. So our CMO, Dr. Maurizio Voi, basically proposed this strategy and I think it's very rational, which was to look at the HPV positive but smoking history where these patients don't have the same response rate as the HPV-positive non-smokers in that it would give us an increased access to patients, particularly in the Phase I dose escalation so that we could complete it, hopefully, on time. So to look at, obviously, the safety and tolerability of the drug at various doses in combination with standard of care but hopefully, we can also get some representative signal in these patients that may give us some insight, the thought being that those patients also have typically an EGFR component driving the cancer where our drug may have an effect.

Our next question or comment comes from the line of Mr. Boris Peaker from Oppenheimer. Boris Peaker - Oppenheimer & Co. Inc., Research Division: I just wanted to probe a little in Erivedge, but not within the specific sales. Just to get an understanding of the difference in the community setting versus the academic setting, if you're getting any feedback on that from Roche and Genentech.

No, not specifically. We haven't had any feedback on that. But I would say the sort of academic setting is really important to expand out more broadly because that group will be the catalyst for disseminating information on patient responses and the therapeutic benefits of the drug and the report on the AEs through publications and conferences. So I think that's a really intelligent way of doing this is, first, emphasizing the sort of thought leaders in the academic group and then using that group to educate the broader group. Boris Peaker - Oppenheimer & Co. Inc., Research Division: Great. And -- but if we look at the real world dosing in terms of what Roche may be reporting to you on your discussions with them, are you seeing any people maybe taking the drug once every 2 days or once every 3 days to manage adverse events and to kind of optimize the dosing for themselves?

No reports on that at all, Boris. But I think just to make sure everyone is aware, the drug has a T1/2 of about 7 days. So I think the key is to hit the halfway hard for a period of time. One of the approaches they're taking, I think, that's the objective of the operable modular study where the third cohort has a 4-week drug holiday is to give the drug for 8 weeks where you should have clearly have enough exposure for a therapeutic benefit. That's also where you're going to start seeing the AEs manifest more substantively, giving a drug holiday to ameliorate the AEs and then putting the patients back on drug. So this as part of the education process. They're learning about the drug's activity. I think they've done a really elegant job at elucidating the molecular mechanism, how the drug works and now it's kind of maximized the utility of that knowledge by looking at the various dosing schedules and combinations, et cetera, for other cancers. But with BCC, it's trying to determine if you can put a patient on drug holiday, ameliorate the AEs and then keep the AEs to a minimum while still retaining the therapeutic benefit. Boris Peaker - Oppenheimer & Co. Inc., Research Division: Okay, that's helpful. And my last question is on Gorlin. I think you mentioned before that it is -- it does take the conform of the current label because these patients are surgically refractory and other surgery is not to going to cure them at any one point in time. But I'm just wondering, how many patients -- do you have any feedback, not patients, but from physicians how many of them actually see that since the word Gorlin is not actually mentioned in the label? How many of them do you think realized that the current label kind of includes these patients as well?

Again, that's going to be part of the ongoing sales and marketing effort of Genentech and then globally, Roche through their materials, reaching out to the various groups that are involved in treating these patients. So I would imagine thought leaders like Web Scene out of Stanford, for instance, you'd start off with someone like that who publishes and is recognized as a thought leader. And then through conferences and publications, word-of-mouth professional contacts, this will just become more and more widespread and accepted. So we're confident we're going to end up seeing a consistent and steady increase in market penetration and use of the drug.

Our next question or comment comes from the line of Mani Mohindru from ThinkEquity.

And I apologize, I was late on the call so if this question has been answered, I'd like to apologize in advance. But just wanted to get some additional details on your pipeline, more specifically the 907 program, the PI3/HDAC inhibitor. The field's getting crowded using a bunch of PI3 kinases, both on the solid tumor size oncology and even inflammation. How do you see your compound and even beyond PI3 kinase as the other sort of inhibitors that are targeting similar indications like NHL, CLL? I just wanted to get a sense from how do you see your compound fitting into that kind of setting and what potential indications would you like to pursue initially going into the clinic.

Okay. Thanks, Mani. An important question because the field is quite crowded, quite competitive and that is where we think we have a real competitive advantage in that our drug is not yet another PI3 kinase inhibitor. It has PI3 activity, which is quite potent. But also importantly, it has an HDAC pharmacophore built into the drug's scaffold. Recently, at a presentation at Columbia University, there was a researcher out of University of California at Irvine, who presented data from his lab showing synergy between PI3 kinase inhibition and HDAC inhibition. And we think that's the real benefit of this drug and that it provides an added benefit and hopefully, synergistic benefit of not just suppressing PI3 kinase signaling, which is the exchange of phosphate. So disrupting signal transduction but also creating a further barrier to the tumor's ability to adapt to that blockade. So we think that's the real advantage of this approach. The initial indications we're going to be going after, Mani, in the Phase I we will be focusing on B-cell lymphoma and multiple myeloma and that's really predicated on preclinical data that we've generated. We would obviously also look at the prospective application to solid tumor treatment. And then tangentially, it hasn't alluded us because we're seeing lymphopenia as part of the activity of this drug, hence focusing on B-cell lymphoma. But if the drug has an attractive safety profile, we may also start surveying the prospective application of the drug for autoimmune disease where we'll be treating flareups.

I'm showing no additional audio questions in the queue at this time. I'll turn the conference over back -- back over to you.

Okay, thank you. I want to thank everyone for your time, attention and interest. And we look forward to giving you further updates as they become available. Thank you again. Have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.