Good day, ladies and gentlemen, and welcome to the Second Quarter 2017 Curis Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. James Dentzer, Chief Financial and Chief Administrative Officer. Sir, you may begin.

Thank you, and welcome to Curis' second quarter 2017 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'll 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. I would like to start by indicating that we continue with pressing forward with developing our pipeline of oncology drug candidates here at Curis. As you recall, our pipeline currently includes four drug candidates, two of which are in clinical development, including CUDC-907 and CA-170. And two of our drug candidates are in the pre-IND stage, which includes CA-4948 and CA-327. I will provide an update on these programs during this morning's call. And I would like to begin with CA-170, the first orally administered small molecule checkpoint antagonist that we are developing in collaboration with our partner, Aurigene, who are responsible for the discovery of the molecule. CA-170 targets the PD ligands and the VISTA inhibitory immune checkpoints. As a reminder, for our Phase 1 trial patient dosing of CA-170 began approximately a year ago. And we continue to enroll patients in the U.S., in South Korea, in Spain and other European countries also expected to join the trial shortly. And these are all as part of the dose escalation stage of the study, using a continuous once daily dosing schedule. As noted before and in general, we have focused on enrollment of patients that are immunotherapy treatment naïve and with cancers that either have or not yet received approval for treatments with anti-PD1 or anti-PDL1 checkpoint inhibitor antibody therapies in the U.S. Our expectation is to analyze the initial Phase 1 clinical profile of CA-170, based on data from approximately 30 to 40 such patients with respect to pharmacokinetics, pharmacodynamics, safety of the molecule and any clinical activity. In this regard, our submission for our presentation at the ESMO Conference this year, which will be in Spain during September, has been accepted for a…

Thank you, Ali. For the second quarter of 2017, we reported a net loss of $14.1 million or $0.10 per basic and diluted share, as compared to a net loss of $11.3 million or $0.09 per basic and diluted share for the same prior year period. Revenues were $2.1 million and $1.7 million for the second quarter of 2017 and 2016 respectively. Revenues for both periods comprise primarily royalty revenues recorded on Genentech and Roche's net sales of Erivedge. Operating expenses were $15.2 million for the second quarter of 2017, as compared to $12.4 million for the same period in 2016. Research and development expenses were $11.3 million for the second quarter of 2017, as compared to $8.8 million for the same period in 2016. The increase in research and development expense was primarily due to increased direct spending related to clinical activities of CUDC-907 and CA-170, and increased employee-related expenses primarily due to additional headcount to support the multiple programs. General and administrative expenses were $3.8 million for the second quarter of 2017, as compared to $3.4 million for the same period in 2016. The increase in general and administrative expenses was driven primarily by higher personnel costs and stock-based compensation expense due to increased headcount. Other expense was $1.0 million for the second quarter of 2017, as compared to $0.6 million for the same period in 2016. Other expense, primarily consisted of interest expense related to the loan obligations of Curis Royalty, a wholly owned subsidiary of Curis. As of June 30, 2017, Curis's cash, cash equivalents, marketable securities and investments totaled $51.0 million and there were approximately 143.9 million shares of common stock outstanding. With that, we'll open the call for questions.

Yeah, hi, this is Santhosh on for Chris. Thank you for taking my question. So I have a few if that's okay with you guys. So maybe start with CA-170, so Ali, you mentioned we might see 30 to 40 patient data in a poster session. If you could give us a little bit of breakdown of how many of these patients are I/O naïve versus experienced as well as approved versus non-approved indication for the checkpoint inhibitor?

Good morning, Santhosh. And, yes, as we had described in our previous earnings call, our expectation, we think about enrollment of patients as I indicated predominantly as being immunotherapy treatment naïve. In that category, we look at them in two populations if you will. One, that are from cancer types that have approval for anti-checkpoint antibody treatment. And these obviously include, for example, melanoma, lung cancer, renal, bladder, and head and neck, as well as Hodgkin's lymphoma. And a second population that are basically patients from any other cancer that have not yet received approval for treatment with anti-checkpoint antibody treatment. With respect to those categories, those two categories, we indicated that we would expect to have approximately 15 to 20 patients from each of those two categories. Separately a third category of patients that are prior immunotherapy treatment positive, meaning they had prior therapy and we expected to have a handful of those patients, small number of those patients treated as well. So the 30 to 40 would be predominantly immunotherapy treatment naïve, roughly half of them from cancer types that have approvals for anti-checkpoint inhibitor therapy and half of them, roughly half of them from cancer types that do not have that and then a small handful of patients with prior immunotherapy treatments.

Got it. That's very helpful. And just couple of questions on CUDC-907. So you had mentioned that 36 evaluable patients with intent to treat for 44 patients. Those for eight patients are you just waiting for scans at this point and are there any - also any confirmed responses? The second question is on the durability. I understand that the median duration of response has not been reached at this point. But can you give any commentary on durability? And you had mentioned about alternative options in terms of study design going forward. If you could name few of those designs which you're considering at this point. Thank you.

Sure, that was a pretty healthy three- or four-part question. And I'll try and answer it for you. It is correct. We do have 36 patients that are evaluable. 44 of the patients are what we would refer to as the intent to treat population, in this study that are MYC positive based on our central criteria, so all 44 of those patients are MYC positive. Of those, there is a very small number of them that are yet too early to be scanned, others that will not be considered that as evaluable. And evaluable really refers to whether they managed to complete a cycle of treatment and be disease assessed from our definition perspective. So of the small number that are - the difference evaluable and ITT, there is only a very small number, a few, that are too early to be assessed. Others at this point will not be considered in the evaluable category. The median durability and median duration of treatment, we think that is tracking fairly well, with what we've seen in the Phase 1 trial. The range in terms of the follow-up, which is probably the best indicator of that is between one month and nine months for us. All of the patients that we have had so far have been confirmed responses. We're not awaiting at this point for confirmation of any additional responses with regards to that. In general, and again, just for your point, our CRs for treatment with CUDC-907, when we look at both the Phase 1 and the Phase 2, those have been fairly durable complete responses. I mean, - or several of those patients have continued with that complete response. In terms of alternative paths for this, clearly, the path that we took the drug on, which we think…

Okay. Thank you.

And our next question comes from Brian Skorney with Robert Baird. Your line is now open.

Hey, good morning, guys. Just starting off on CA-170, what does the enrollment like look like so far? And when we think about what we might see at ESMO, any feel for how many immunotherapy naïve patients we might have some follow-up on that are - that do have tumors that are validated by PD-1? And on CUDC-907 I'm just curious, it seems like there are a lot of patients in the study that have unknown MYC status. Just wondering why such a large number with unknown status.

Sure. Let me go to the - first, good morning, Brian, and thank you for your question. With respect to CA-170, I think the projections that we have been giving is really with respect to this number of patients, as Santhosh earlier asked, as well as in terms of the breakdown of the total number of roughly 30 to 40 patients that we would expect. Obviously, a significant number of those patients, especially the immunotherapy treatment naïve from cancer types that have approvals for anti-checkpoint inhibitor treatment in the U.S., those patients were enrolled predominantly this year and those were patients that we enrolled in Spain and in Korea, that was strategically the reason we open those ex-U.S. centers to get those patient population. Our expectation is that we would have an initial read-out from many of these patients for the ESMO presentation. With respect to CUDC-907, as we noted, that a significant number of the patients have MYC status just as a clarification, in terms of how the trial, just a little bit into the trial enrollment and conduct. We enroll patients with relapsed/refractory DLBCL in the study. They would have to have tissue available for us and/or slides available for us to assess their MYC status by central testing. Some patients that do come into the study with knowledge of their prior testing that we take into account, but all of these have to be confirmed by central testing for us to consider them as positive. The central testing that we do is two different categories. As a reminder, MYC can be altered either genetically by translocation or by gain of copy number. Those two tests are done by FISH analysis on the genetic basis. Separately MYC alteration can be detected by immunohistochemistry for a significant number of the calls as being positive under immunohistochemistry. That cut off as we've described before is at 40%. So for a patient to be considered a positive, one of those has to be a positive. For a patient to be a negative would have to be all three tests as being negative, meaning translocation, copy number and immunohistochemistry. And therefore, you can see that why some patients at least have not satisfied some of the - all three criteria, is they're not positive in this case. I hope that provides you with additional detail or more nuance of the analysis as well.

Thanks.

[Operator Instructions] And our next question comes from Peter Lawson with SunTrust. Your line is now open.

Hi, Ali. Just kind of, I guess, going through 907, is there a temptation to mosbo [ph] 907 and do you think it's a matter of finding the right patient title, the right drug combination, just your thoughts as you kind of think through that and I guess focus of the company in the next couple of years?

Good morning, Peter, and thank you for your question. I think, first and foremost, the level of response that we observe with CUDC-907 treatment. In particular, in MYC-altered DLBCL is in our opinion significant. The ability to generate complete responses in these patients, and the numbers that we've seen in total, we believe are a significant achievement by a single agent drug candidate. And as I mentioned, secondly, the fact that the correlation continues to demonstrate that it's the MYC-altered disease population that seems to be the most susceptible to CUDC-907 treatment in those cancers, give us significant encouragement to continue development of CUDC-907. Our belief is that the challenge really is to be able to design a study that extracts that benefit for these patients, and we continue to explore that right now.

Got you. And then, the status of the combo treatments you had originally planned for 907. I guess, those are on hold or are you thinking about accelerating those? I know, they kind of drifted back a little bit in timelines?

I apologize, this was for CUDC-907 that you asked, is that correct?

Yes, yes, absolutely.

Okay. Yeah, so just as a reminder, in the Phase 1 trial, in the expansion cohorts, we enrolled patients with monotherapy treatment of DLBCL patients as well as a population of DLBCL patients in the Phase 1 that as a cohort that we treated in combination with rituximab. And that was 12 patients that were treated with the combination. We didn't really see any difference in the level of benefit that relapsed/refractory DLBCL patients achieved either as monotherapy versus in combination with CUDC-907, certainly not for the MYC-altered population of patients. That's really the only clinical experience that we've had with CUDC-907, obviously non-clinically, we presented data with respect to CUDC-907 potential combinations. We do think there are several opportunities that we can explore in the setting of DLBCL for combinations. Our first path was obviously a potential for monotherapy treatment in this population to seek accelerated approval. We don't believe the data is sufficient to do that. The next opportunity really is either continued monotherapy exploration, or as I indicated in answer to Santhosh's question, whether there is a possibility to include or follow a combination treatment path. That's really the stage that we're at and hope that provides you with the level of thinking and the thinking that's going on here at this time.

Yes, I know, that's definitely helpful. At what point, do you think we can get an update around 907 plans of - concrete plans about moving forward? And then, how long you had this data to kind of mull over?

So with respect to data presentation, we do obviously would like to be able to present the datasets, and we would explore presentation at the ASH Conference towards the end of the year. In terms of any additional trials that can potentially initiate being the time of the year that it is, we would imagine that any new trial for CUDC-907 would be 2018 timeframe for that. With respect to the data, frankly, these are data that are hot off the press. We triggered the interim analysis once the criteria had been met for the interim analysis. And this was the opportunity for us to be able to - the first opportunity really for us to be able to present that data. But these are very, very new data for us, in terms of the completion of the interim analysis and very rapidly their presentation in this conference.

Got you. And plans for those the next trials for 907, do you think that's - we won't hear about that until 2018 or is that something you an update between then and now?

I think there are opportunities for us to be able to describe the maturation of our thinking and the maturation of any plans for CUDC-907. As I indicated with potential presentation of the data, we would like to be able to present the data at the ASH Conference later on this year. And that also potentially provides us an opportunity to be able to provide more insights into the plans for CUDC-907 as well. My comment with respect to 2018 is really the fact that any potential for initiation of any new studies would be within the 2018 timeframe. We certainly have opportunities to provide additional insights into the planning for that, of course, for the remainder of the year.

Got you, and then just on 170. Are we going to see some form of efficacy data, whether it is patient vignettes or - and then the abstract itself, is that going to be data rich or more of a placeholder abstract?

So maybe to the first part of it, the way that we think about, and I think what we would think is the appropriate thing to do, is to provide the clinical profile of CA-170 for the roughly 30 to 40 patients that I described earlier. What we mean by clinical profile, there are four parameters as we've indicated before that we evaluate that internally. And I think that's the right thing to present as well. That includes the pharmacokinetic profile of the drug candidate, which really reflects whether we are able to expose patients to the drug. That we've already presented some of that information, that is one of the factors that we think about as a clinical profile. Secondly, safety, although we've indicated that there has not been a safety signal that precludes our ability to dose escalate we would expect to present more on the safety profile of CA-170, or is the pharmacokinetic - sorry, pharmacodynamic profile of the drug. We've presented some of the data and to the extent that we've had with respect to how patients respond from a pharmacodynamic perspective after treatment with CA-170 both in the peripheral setting in circulation as well as some in the tumor setting. We would expect to be able to present that as part of the clinical profile of CA-170, and then, of course, any parameters of clinical activity. In general, I think about clinical activity as really two parameters, any - first of all, how long can patients take the drug, did they benefit from taking the drug. And then secondly, are there signals of tumor shrinkage associated with it. I see those four parameters, pharmacokinetics, safety, pharmacodynamics and clinical activity, as what we would consider as the clinical profile of CA-170 and that's what we would like to be able to also present. And that's a possible for us or we would like to be able to present that at the ESMO Conference. As I indicated, this is a Phase 1 trial, and it's an ongoing trial at this point. There are other opportunities for us also as the year progresses as well. One that I note would be the SITC Conference as well, that's upcoming in November and there's certainly other opportunities for us to continue presenting the clinical profile of CA-170, as we continue to enroll and as the data matures in this regard. I think that was the - answered all the points of your question. Am I correct, Peter, or did I miss any part of it?

Yeah, that was great. Thank you so much. I'll jump back into the queue.

[Operator Instructions] And Peter Lawson, your line is now open.

Okay. Just a follow-up, on cash burn, has that changed in any way with 907 and has there been any - or will there be any shift in internal resources from - sorry with 907, has the cash burn changed with the results we've seen so far? And then has there been any internal shifts or will there be any internal shift in resources going from 907 over to 170?

Yes, so - thank you, Peter. This is Jim. So you definitely have seen an increase in cash expenditures over the course of the last few quarters, trailing closer to $10 million as we did this past quarter. And I think that's a reflection of the increased clinical expense for both CUDC-907 and as well as 170. So I think there are a couple of impacts, you might expect to see in the quarters to come. Certainly, the clinical expense for 907 should narrow a little bit as we refine the plans for the next regulatory step. But 170 of course is the opposite effect, as we increase enrollment on that. We are going to see increased expenses there. And as we've disclosed the IRAK4 program, IND should go into this quarter. So we will start to see expense for that, manufacturing first, and then clinical expense to follow, followed in Q1, of course, of 2018 with CA-327. So I think, you will - in general, you should expect to see a continuation of what we've seen in cash investment as we expand our clinical activity across the board in our pipeline. But, of course, as I've said in the past, it will be a little choppy from quarter-to-quarter, which is a function of when manufacturing runs hit as well as the expansion of patients in the various trials.

Great. Thank you. Just, Ali, just I guess a specific question then, the drop in the ORR that you saw for 907. What do you think really is going on there? Is it just a question of small numbers and that's kind of coming out or is it's just luck with initial patients that were responding? Just your thoughts around what drove that drop in the ORR?

I think there are - we obviously try to evaluate that as much as possible internally as well. I think the important part for us was to present the data when we had it, so you can at least see what the clinical effects or clinical benefits of CUDC-907 look like in this Phase 2 trial. Frankly, all our analysis in terms of the patient population itself has not been completed yet, so that's part of the exploration that we do at this point. I would say also in general, any time we move to a larger set of centers, any time we move into the global setting, there is opportunities for these types of trends to occur. It's clearly a global population that we've treated here versus the Phase 1 trial, which is in very small number, three to four centers in the U.S. that were enrolled in that. We've also noted as a possibility that the population that was enrolled in the - that we enrolled in these Phase 2 trial had a slightly poor prognosis in general than the patients that were in the Phase 1. We are exploring that. However, I don't think any of these things are singly changing this - changing the outcome of the study. So that's a lot of the exploration that we are conducting now at this point to evaluate that both on the patient population perspective, but also frankly are there - is there other factors that contribute to this. Again, I want to also emphasize that for any single agent drug in general, and this is not necessarily for CUDC-907 only. But for any single agent to have very significant activity, especially in late-stage patients, is a fairly tall order. So we are quite encouraged by what we see. I know you're pointing to the potential differences between the Phase 1 and the Phase 2. We're evaluating those. But I still see that CUDC-907 is providing fairly good benefit for at least the population of these patients.

The kind of the global setting is that one of the parameters you think that could be driving the difference in ORRs to the CRs with the U.S. versus ex-U.S. or any color like that would be helpful.

I think I already pointed to that. I would say, not necessarily only specifically for a CUDC-907, anytime there is a significant expansion and not only in the number of centers but the number of countries that in general we would enroll. As much as we control and try to have fairly tight criteria for enrollment of the patients, there are opportunities for expansion of the differences between this as well. I don't think there is a change. I don't want to give the impression that there is a change because we enrolled outside of the U.S. It's just the nature of expanding to significantly larger number of centers as well as countries. I think that provides at least some influence in this. But it's not the only thing obviously so.

Great. Thanks so much.

[Operator Instructions] And at this time, I'm showing no further questions. I would like to turn the call back over to Mr. Ali Fattaey, the CEO for closing remarks.

Thank you, everyone, for joining us for this call and updates. I would also like to thank first, all the team members here at Curis for the work that goes into developing our drugs and our ability to be able to present the data from these - our studies as they continue. I would like to thank our partners, first and foremost Aurigene, for the collaboration and the partnership that we have with them, and also our partner Genentech for Erivedge. I would like to thank our investigators that enroll patients in our trials. Without them, we would not be able to test our drug candidates. And most importantly and last, we would like to thank the patients and their families who are participating in our trials and allowing us to test our drug to see whether they have benefits for these patients. With that, we conclude the call. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.