Good day ladies and gentlemen, and welcome to the Q2 2016 Curis, Inc. Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would to introduce your host for today's conference, Mr. James Dentzer, Chief Financial and Chief Administrative Office. Sir, you may begin.

Thank you, operator and welcome to Curis' second quarter 2016 earnings call. Before we begin, I would like to encourage everyone to go to the Investors Section of curis.com to find our earnings press release and related financial tables. I would also like to remind everyone that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. I encourage you to consult our SEC filings for additional detail. Now I will turn the call over to our President and CEO, Dr. Ali Fattaey.

Thank you, Jim and good morning everyone, and thank you for joining us today. It is a pleasure to provide an update on Curis and our progress in developing multiple innovative drug candidates for patients with cancer, including our two clinical programs; CA170 and CUDC-907. First I would like to update you on CA170. CA170 is the first orally administered small molecule immune checkpoint antagonist to enter the clinic. Recall that CA170 was discovered in our collaboration with Aurigene it targets PD ligands and VISTA immune checkpoint. The PD ligands such as PDL-1 and PDL-2 and VISTA are members of the same family, the B7 immunoglobulin super-family of immune-regulators that share structural similarity in their extra-cellular domain. And this extra-cellular domain of these proteins is where CA170 is designed to bind. We have shown that CA170 selectively rescues T-cell proliferation and function that are specifically inhibited by the PD ligands or VISTA. Our goal is to develop CA170 as a cancer immunotherapy and in this regard developed as the first orally early administered anti-checkpoint therapy for cancer patients. As now multiple anti-checkpoint immunotherapies are either approved for in development, but so far all of these are antibodies that need to be administered intravenously in an infusion clinic setting. We believe CA170 can establish a new class of immunooncology anti-immune checkpoint therapy that is administered as an oral pill. As a small molecule rather than an antibody we expect that the pharmacokinetic properties of CA170 will likely provide an advantage in the dosing flexibility as a monotherapy. And perhaps even more importantly, when used in combination with other anti-cancer treatment regimens. We believe that a successful CA170 can provide a compelling treatment alternative for patients and physicians. We are pleased to note that in June the FDA accepted our IND application…

[Operator Instructions] And our first question comes from Peter Lawson from SunTrust Robinson Humphrey. Your line is now open.

Thanks for taking my question. These response rates you're seeing. Are those still ongoing since, I guess, what, [indiscernible] 2015?

Hi Peter. And yes, thank you for your question. Multiple of our responders including complete responders are still ongoing.

And these three new valuable patients. They don't seem to be MYC positive. Is that right?

Actually, whether I think they're MYC positive or not, the only way we determine whether they're positive or negative if they're positive by any of the three criteria that we use, which includes either translocation, gene copy number change or even if the chemistry is staining, But if they're not positive, then we don't know all three status we cannot determine whether they are negative at this point.

Right. Got you. And then, just R&D expense, a minor point to this one, the $3 million payment went in that. That seems low R&D expense for the quarter. Is that kind of the new base or do you think that you'll be going back to the normal run rate it's been?

You know, that $3 million payment was the payment or Aurigene that was a milestone payment in the agreement based on the FDA acceptance of our I N D. That was not the R&D expense for the quarter.

Got you. And what should we think about the R&D expense for, say, 3Q and 4Q?

So we haven't given specific guidance on R&D expense on a quarter by quarter basis. I think it's fair to say that as we progress through the trials and get more patients in both -907 and -170 that you should expect that there's a clinical trial expense increase.

But your -- that 8.8 for R&D, that included the $3 million milestone. That's baked in.

Correct.

Okay, great. Thanks so much.

Thank you. And our next question comes from Chris Chibutony [ph] from Cowen. Your line is now open.

Thank you. Good morning. And we appreciate the update. A couple of questions. First on CUDC-907. Can you give us a sense for as you approach the interim look I believe in 2017, what kind of response rate threshold should we be thinking about from that monotherapy arm as far as your being able to think about advancing that into expansion into an accelerated approval type trial.

Thank you Chris. For that. Let me refer maybe to some of the data that we've seen so far in the Phase I trial of CUDC-907 in the last refractory population of the DLBCL patients. As you'll note that with roughly nine responses from the 31 total patients if you will in the intent to treat if you will population we are closer to the one-third or 30% of patients responding. If we look at response evaluable patients, obviously that number higher, it's in the 40s, closer to the 50% response rate population. Our expectation is that in the Phase II trial, for us it would have to be from somewhere in that range of the -- what we've seen either for the intent to treat or the response evaluable. But that's the range that we would be looking for the response rate. And in the population that we're treating.

With CUDC-907 still, can you give us a sense for development in solid tumor trials? Can you help us with potential timelines and when we might see initial data in the MYC altered patients?

Yes -- that's obviously an independent Phase I trial that we actually started initially not focused on MYC altered patients and so multiple patients were treated for us to get a safety signal from CUDC-907 in a non-key malignancy study. It's really been more much more recently where we've been able to generate the criteria and begin to involve patients. With MYC amplifications predominantly, but MYC alterations in this study. So allow us to be able to get more data entered into that so realistically we're not looking at a significant number of patients in data until 2017 for the solid tumor study as well.

And lastly, if I could ask about CA170. Can you talk about how you plan on selecting the recommended Phase II dose and as you continue to develop CA170, do you have a sense for maybe how you can improve the efficiency of advancing development further as an optimized path that you can foresee?

Yes. Obviously this is just getting into the study with initial patients being treated and I'll give another [ph] there that this is obviously the first small molecule to go into the clinic. And it is going through what I would consider to be a true dose escalation. Meaning, it is with a small molecule with expected pharmacokinetic profile similar to what a small molecule would be. And as we would expect and have seen in preclinical setting, a continued exposure increase in animals as we increase the dose. So we're sort of expecting the same thing in the dose escalation. The question that you're asking in terms of what parameters would we use to determine the recommended dose or the dose for going forward: as you know traditionally with small molecule agents or maybe the anti-cancer agents we would have been continuing dose escalation until safety parameters allow -- determine that, meaning the maximum tolerated dose. That can certainly be one of the criteria that may get used here as well. We would intend to continue dose escalation as high as is practical or until maximum tolerated dose is reached. We are obviously looking at the exposure in patients as we would dose escalate as well. That's one of the drivers that we can use for assessment of how much exposure we are getting. There are various biomarkers that we also look at both in vivo and ex vivo from treated patients. We've developed some of those assays to monitor immune modulation and correlation of potential exposure with that immune modulation and correlate that with our preclinical studies. That's a separate assessment that we're doing. And of course any clinical markers that can show in the trial can also be used for assessment of recommended dose. So in summary,…

Thanks for the responses. Congrats on the continued progress.

Thank you very much.

Thank you. And our next question comes Adnan Butt with RBC Capital Markets. Your line is now open.

Good morning. This is Arshad [ph] for Adnan. To start, could you give us some color on the timing for how you're thinking about the timing for taking CUDC-907 data to the FDA to decide if it's favorable [ph]?

Thank you, Arshad please give our regards to Adnan as well. With regards to CUDC-907, the best estimates that we can give right now is that we would have data in 2017. Our expectation is to look at the end point that we've determined for the phase 2 trial including the response rates, as well as the durability of the clinical benefit and take that information potentially with an interim look at the study into a discussion with the FDA. Our expectation would be in 2017 our preference is obviously for that to be as early in 2017 as possible. But right now, our best estimate is in 2017.

Okay, thank you. And then for the CA170, is it possible for you to enroll in ARM with patients who are only PD-1 or PDL-1 failures?

So for the -- both for the dose escalation, as well as for the expansion. Well, certainly for those dose escalation right now which is enrolling patients; we do expect to enroll patients that are naïve to checkpoint immunotherapy but we are also open for enrollment and in fact do look for patients that have been prior treated with checkpoint immunotherapy. And this is really to take advantage and address the possibility of CA170 ability to inhibit the VISTA checkpoint to see whether it has a activity in that population. That's really the goal and we are open to both of those populations in the dose escalation. In the expansion cohort, also at the moment we envision enrolling patients that have been prior treated with PD pathway checkpoint immunotherapy.

Okay, thank you very much. That's it for me.

Thank you, Arshad.

Thank you. [Operator Instructions] And our next question comes from Brian Skorney with Robert Baird. Your line is now open.

Good morning guys, thanks for taking my question. I guess my question -- I'm kind of interested in the state of preclinical development for the PD-L-1, 10, 3 molecule. Are you through lead selection at this point and into IND-enabling studies and when can we anticipate that moving into the clinic? And also just in terms of the landscape for 10 [ph]. With several that are in clinical development, what should we be looking for -- what are you guys looking for in terms of proof-of-concept for this as a target? And maybe just how do you think about the various antibodies that are in development from whether it would be Ticaro, Novartis or somewhere -- who do you think is in the lead there?

Okay, maybe I'll address your first part of the question in terms of the status of the program. And as you know last October we brought that program into the collaboration as a program of interest. This is obviously their collaboration Aurigene and their scientists are working really heavily on generation of compounds and assessing those. The next step that we would be taking is to actually license the program into -- as part of the collaboration, so we would exercise our option where we expect to exercise our option to license that. That's done for us at a time when we know we have a development candidate that we want to begin enabling studies with; which would include obviously the formulation work, manufacturing work, safety studies and the completion of the pre-clinical pharmacology studies that go on as part of the IND enabling study. So next step for us is Brian to exercise the license and then begin the -- what we would consider to be the IND enabling stages on the development candidate itself or for that. Our expectation, I think the guidance we've given is that this would be in the second half of this year, our expectation is to do that. Some of the data around those compounds were presented at the ACR Conference, we have multiple compounds and we do have multiple compounds that have had very nice activity and selectivity for PD-L and TIM3. Those compounds were shown to be active in invivo tumor models and multiple different invivo tumor models. Those are the types of things that we are looking at in terms of both, the potency selectivity, pharmacokinetic properties, as well as invivo activity of these compounds to select the one that we would be using as the development candidate. That has…

Great, thanks.

Thank you. And we have a follow-up question from Peter Lawson with SunTrust Robinson Humphrey. Your line is now open.

Just a quick clarification. Just around cash, you didn't -- I don't think I've heard any cash guidance. I think previously you said it kind of last into 2017, is that still the same kind of outlook you have around cash?

That's right. We haven't specifically given guidance on that. I think obviously with over $60 million in the bank, it's going to last a good way through 2017 but we haven't given specific guidance yet as you can imagine a lot of that will depend on the costs coming over the next couple of quarters.

Perfect. Okay, thank you so much.

And I'm showing no further questions at this time. I'd like to turn the call back over to Ali Fattaey for closing remarks.

Thank you everyone for joining the call. First, I would like to thank all of Curis's employees for their hard work in both bringing our drug candidates to a stage of less testing and into clinic, and also the fantastic job that they do in conducting the clinical studies that we discussed today. Second, I'd like to thank our partners, and particular Aurigene and their scientists and their leadership for all of the work that's going on in collaboration in a short period of time to get the first small molecule immuno-oncology checkpoint inhibitor into the clinic and the various other programs that very fruitfully have been advanced in their collaboration. As well as thanking our partners Genentech and Roche for the continued commercialization and development of Erivedge. And lastly, and most importantly, I'd like to thank all of the patients and their families for participating in the studies and enabling us to test these potential drug candidates for the treatment of cancer patients. With that I thank everyone for joining this call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone have a good day.