Curis, Inc. (CRIS) Q2 2018 Earnings Report, Transcript and Summary

Good morning, and welcome to the Curis Second Quarter 2018 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to the Chief Operating and Chief Financial Officer of the company, Mr. James Dentzer. Please go ahead, sir.

Thank you, operator, and welcome to Curis’s second quarter 2018 earnings call. Before we begin, I would like to encourage everyone to go to the Investor section of www.curis.com to find our second quarter of 2018 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. With that, I'll turn the call over to our President and CEO, Ali Fattaey.

Thank you, Jim. Good morning, everyone, and thank you for joining us today for our second quarter of 2018 business update. On today's call we will review the company's recent corporate and clinical development achievements as well as key milestones anticipated for the second half of the year. This past quarter, Curis has made steady progress advancing our three oncology drug candidates in the clinic. I would like to start with an update on our lead clinical candidate fimepinostat, which has demonstrated significant clinical benefit in patients with relapsed refractory DLBCL, and in particular those with MYC alterations. As a reminder, fimepinostat has been evaluated in a total of 105 patients with relapsed refractory DLBCL in a Phase 1 and in a Phase 2 clinical trial where treatment resulted in 19 objective responses, 9 of which were complete responses. Now 14 of these responses including 8 of the complete responses were in the 60 patients whose tumors were identified to have MYC alterations with a median duration of response of 13.6 months. Based on these results, we conclude that fimepinostat is able to provide durable benefit in patients with MYC altered DLBCL. Numerous publications have observed that patients with MYC altered disease have a poorer prognosis after front-line therapy, after stem cell transplant and in the relapsed refractory setting. And that these patients experience limited durable benefit with available therapies as compared to their non-MYC altered counterparts. Based on these encouraging results and the fimepinostat activity, fimepinostat development was awarded Fast Track designation by the FDA in May this year for treatment of patients with relapsed refractory DLBCL. It is noted that relapsed refractory DLBCL continues to be an unmet clinical need. We are continuing to design, evaluate and discuss with the FDA of pivotal clinical trial opportunities to further develop fimepinostat with the intent to -- for its registration in this patient population. These have included single-agent, single-arm studies and randomized control combination trials. We have concluded that a randomized controlled trial is preferable to formally demonstrate and secure registration of fimepinostat in this patient population. Therefore consistent with our very recent productive discussions with the FDA, we are highly motivated to test fimepinostat in combination with rituximab-based treatment regimens as a registration opportunity for fimepinostat. We are pleased with the FDA's encouragement with this approach. A combination therapy path will also provide for enrollment of patients in earlier lines of treatment as early as second line, which may further expand the use of fimepinostat for patients with DLBCL. Our primary focus in such a trial will continue to be a patient -- on patients with MYC altered disease, a population whose needs we believe remain poorly met without fimepinostat. In addition to commonly used rituximab-based regimens, we also expect to explore combinations of fimepinostat with novel anti-lymphoma agents such as BTK or BCL2 inhibitors. These agents have combined well with fimepinostat in nonclinical in vivo study using MYC altered DLBCL models and have resulted in strong additive or synergistic antitumor activity. In the coming months, we plan to initiate the necessary dose finding and safety clinical work to examine fimepinostat in combination with these treatment regimens. We will provide further updates on the status of fimepinostat developments with the start of patient dosing using these combination regimens in the second half of this year. We expect that one of these fimepinostat combination regimens will then be selected to initiate a randomized controlled trial in 2019. I would now like to turn to our second clinical candidate CA-170, the first and only orally administered small molecule checkpoint antagonist to enter the clinic, which we are developing in collaboration with our partner, Aurigene. CA-170 is a dual inhibitor targeting the PDL1 as well as VISTA inhibitory immune checkpoint pathways. CA-170 is the only VISTA inhibitor in clinical development. To date CA-170 administered orally in an ongoing Phase 1 dose escalation trial in patients with solid tumors or lymphomas have demonstrated favorable safety and evidence of immune modulation as well as tumor shrinkage in multiple patients. These clinical observations were previously presented and included doses of up to 800 milligrams administered orally once-daily. In an effort to examine increasing doses of CA-170 and to obtain a uniformly high steady-state plasma exposure level during the 24-hour period, we have now completed enrollment of patients at three increasing dose cohorts using twice-daily oral administrations. Including 600, 900 and 1,200 milligram BID. Using these doses, CA-170 continues to demonstrate acceptable safety profile and achieve the desired PK and exposure profile. We expect to present an update on the clinical profile of CA-170 from this Phase 1 trial including the BID dosing cohorts at a scientific conference in the second-half of the year. VISTA is an independent immune checkpoint pathway and CA-170 is a potent antagonist of VISTA. In nonclinical studies, CA-170 have significant in vivo antitumor activity in mouse models that do not benefit from anti-PD1 antibody treatment. We ascribed this antitumor activity of CA-170 to its ability to address VISTA in these models. Up regulation of this expression in patient tumor samples has been identified as a potential resistance mechanism to treatment with anti-PD1 antibodies in melanoma or with anti-CLA4 antibody treatment in prostate cancer. Through analysis of a large array of human tumor tissues from different cancer types, our scientists have now noted high VISTA expression in the tumor microenvironment or on the tumor cells in a proportion of these samples. We expect to present these results at a scientific conference in the second half of this year. In addition, in recent literature and scientific conferences, investigators have noted a proportion of biopsies assessed from non-small cell lung cancer, gastric cancer, triple negative breast cancer and most recently mesothelioma express high levels of VISTA on the tumor cells. CA-170 is the only VISTA inhibitor in clinical development. Based on these lines of evidence and to exploit our leading position in addressing VISTA, we plan to rapidly advance one aspect of CA-170 development in exploring its clinical activity in cohorts of patients that express high levels of VISTA including patients with mesothelioma. We expect to provide further updates on CA-170 development in these populations of patients in the second half of the year with the commencement of patient enrollment. In addition, our partner Aurigene continues to rapidly enroll patients in a Phase 2 trial evaluating CA-170 in select populations of cancer patients in India. This Phase 2 study is a significant advantage in development of CA-170 and is providing access to a large number of patients who are immunotherapy treatment naïve and who have not been subject to expensive prior lines of anticancer treatment, for whom CA-170 could provide a more pronounced benefit. Aurigene and Curis expect to provide an update from this ongoing CA-170 study at a medical conference later in 2018. This year we also initiated a Phase 1 dose escalation clinical trial of CA-4948 for the treatment of patients with non-Hodgkin's lymphoma, with an expansion stage that will focus on patients with specific alterations in the mid-88 or Toll-like receptor signaling pathways. CA-4948 is currently the only IRAK4 kinase inhibitor in clinical development for the treatment of patients with cancer. Enrollment of patients with lymphoma in this study continues to progress. We’ve recently assembled the necessary nonclinical data and rationale that demonstrate CA-170 -- I apologize, CA-4948 is active in animal models of human AML, and therefore expect to extend the current Phase 1 clinical study to enroll patients with AML in the second half of this year. We expect to provide an update on this drug candidate in the second half of 2018 at a medical conference. Finally, I would like to formally recognize Dr. Robert Martell, who is in the room with us, who recently accepted a position as Head of Research and Developments with Curis. Dr. Martel has been a practicing physician for over 20 years with a focus in oncology with extensive experience in drug development within the pharma and biotech industry. We believe Dr. Martel will be a great resource in ensuring that Curis continues to generate promising clinical oncology candidates for patients in need. With that, I will now turn the call over to Jim for a discussion of our financial results.

Thank you, Ali. For the second quarter of 2018, we reported a net loss of $8.7 million or $0.26 per basic and diluted share as compared to a net loss of $14.1 million or $0.49 per basic and diluted share for the same prior year period. Revenues for the quarter ended June 30, 2018 were $2.4 million as compared to $2.1 million for the same period in 2017. Revenues for both periods comprised primarily royalty revenues recorded on Genentech and Roche's net sales of Erivedge. Operating expenses were $10.2 million for the second quarter of 2018 as compared to $15.2 million for the same period in 2017. Research and development expenses were $6.5 million for the second quarter of 2018 as compared to $11.3 million for the same period in 2017. The decrease in research and development expense was primarily due to decreased costs related to clinical activities for fimepinostat and CA-170, partially offset by increased costs related to CA-4948. General and administrative expenses were $3.6 million for the second quarter of 2018 as compared to $3.8 million for the same period in 2017. The decrease in general and administrative expenses was driven primarily by lower personnel and stock-based compensation expense for the period. Other expense was $0.8 million for the second quarter of 2018 as compared to $1 million for the same period in 2017. Other expense primarily consisted of interest expense related to the debt obligations of Curis Royalty, a wholly owned subsidiary of Curis. As of June 30, 2018, our cash, cash equivalents, marketable securities and investments totaled $40.4 million and there were approximately 33.2 million shares of common stock outstanding. With that, we will open the call for questions. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Adnan Butt from Guggenheim. Please go ahead.

Hey. Thanks for the question. Ali, first on fimepinostat. Where exactly are you in your discussions? Are they final now in terms of trial design, the numbers of patients you would need to enroll and so on and how to detect MYC driven disease or are they still being shaped?

Good morning, Adnan, and thank you for your question and joining the call. We have a continuing discussion with the FDA. And obviously we discussed with them our plans and our designs and continue to work through that. We’ve had a recent discussion with them regarding our preferred method of or approach to developing fimepinostat. We are expecting to run a randomized controlled trial for fimepinostat. This is partly because of the scarcity of available control data in this patient population that really makes us want to do a randomized trial to formally demonstrate the activity of fimepinostat in this population of patients. And the FDA has been very encouraging with the approach that we put forward to them. In terms of the nature of the study designs and the trials, we continue to work through those and we will have further discussions with the FDA as well.

Ali, do you expect to finalize those discussions? And essentially when can you update us on the number of patients, the types of patients you will enroll, and then for us to estimate timelines for that study?

Yes, I appreciate that. Thank you, Adnan. I will say that we do have some preliminary work to do, especially combining fimepinostat's with different regimens to get a much better assessment of those numbers. We're very confident with the level of activity that fimepinostat provides, especially in the MYC altered DLBCL population. Some of that exact sizing of the trial will be determined after those initial exploratory work that we do have to do in establishing some of the combination safety study. So that will be perhaps later on this year or early in 2019.

Okay. And if I can ask a couple on 170 before I get back in line. On 170, you mentioned an update at a medical meeting. So those data have been submitted or accepted at any meeting at this time?

I think one of the meeting that is quite appropriate for a discussion of immunotherapy agents of course is the SITC Conference. And we do look forward to being able to present our data at the SITC Conference as well. That is one of the options that we have.

Ali, do you expect both the Phase 1 and Phase 2 data at the same conference or it will be different presentations?

I think what we would like to do and I think this is a possibility, we would like to present the full clinical profile of CA-170 both in the Phase 1 and in the Phase 2 trial. Of course, our colleagues and partner Aurigene are conducting the Phase 2 trial in India and they’re quite excited about describing their experience with CA-170 in those patients as well. As I’ve described, we also would like to present some of the work that the team here has been doing in terms of characterizing VISTA and its over-expression in many different cancer types. And we do expect to be able to present some of that work as well.

Just with the clarity I was looking for, Ali, is that for both the Phase 1, Phase 2 update should we expect them at medical meetings or should we expect them via company updates?

I think preference and I think the expectation is that we will present them at a scientific conference later this year for both on the Phase 1 and the Phase 2.

Okay. And then last question, sorry, it's on -- it's the interesting update on mesothelioma. So those patients are they being dosed with the CA-170 or is there an anti-VISTA only that you’re using? And is that going to be part of the update this year?

Thank you, Adnan. And just in case I was not clear, we -- other investigators, in particular, at the ASCO Conference presented some work where they had looked at different cancer types and mesothelioma was one of the cancers that highly over-expressed VISTA on the tumor tissue. That is a cancer type that we think may represent a population with CA-170 can target and we would like to enroll patients with mesothelioma in the second half of the year.

Okay. I will get back in line. Thank you.

Thank you.

[Operator Instructions] And our next question comes from Peter Lawson from SunTrust. Please go ahead.

Thanks for taking my questions. Ali, just on the oral IOs [ph] within a number of patents that have been filed, have you learned anything from those kind of new patent filings on oral IOs?

Good morning, Peter, and thank you for joining the call and the question. We do obviously have a great interest and do track both the patents as well as other conferences and literature in the context of all immune checkpoint inhibitors, and in particular of course small molecule strategies that are geared towards that. We do not believe that any of those at the moment provide an opportunity for clinical development. We do see CA-170 certainly having a significant lead advantage in the clinic, especially as both a PDL1 as well as a VISTA inhibitor. The -- our analysis of the compounds that have been part of different patents that have published, really not that informative and we think we learned quite a bit more from CA-170 and the work that we've done so far in terms of the approach of using small molecules to target these immune checkpoints. We are aware of all of the current patent and other literature.

Got you. Thank you. And do you think it validates your approach [indiscernible] space?

Yes, that’s a good question. Thank you, Peter. We certainly know a number of companies that would like to approach this because of the advantages that certainly we see an oral agent can provide for patients. And certainly, of course, we do believe that the dual targeting of these is a unique advantage that so far we've been able to generate. So certainly we are encouraged by the fact that there is a more activity in terms of generating small molecules. It is not an easy task certainly and our colleagues at Aurigene spent numerous years developing and refining the chemistry that went into their line of work, which has generated these compounds that we work on. But, yes, we’re encouraged that there are additional efforts being put into this and we do think it's advantageous strategy for targeting them.

And are you seeing kind of dual targets and approaches as well in IP landscape and from conferences etceteras, that mostly single targeting agents in the small molecule arena?

I mean, I think thus far we have seen a single agent targeting as the main approach that’s being used with the small molecule at this stage. And I think, obviously there is limited amount of information that’s available, but we will see the single agent targeting. We do see obviously CA-170 is having a significant advantage in terms of being duly targeted which really has provided us certainly with an opportunity to address the population such as the VISTA high population.

And then just finally, just on 170, the second half, I apologize if you mentioned this, but what kind of venue you’re targeting for that data? And from a number of patients with its Phase 1 or Phase 2, or whether it's U.S versus Indian versus rest of the world patients? Anything around that will be appreciated.

Sure. In the past we’ve presented CA-170 updates at the SITC Conference, that’s been a very appropriate conference and a welcoming one, and we continue to look forward to being able to present at the SITC Conference. Last year we presented approximately 40 patients worth of clinical profile data on CA-170. We've indicated that we look to roughly double that number of patients by this year and we're well on track between the Phase 1 and the Phase 2 studies to reach those levels.

Okay. Thank you so much.

[Operator Instructions] [Indiscernible] there are no further questions. This concludes our question-and-answer session. I’d now like to turn the conference back over to the Company's President and Chief Executive Officer, Dr. Ali Fattaey for closing remarks.

Thank you, everyone, and thank you, operator. I would like to end today's conference call by thanking the Curis team for their continuous hard work and our partner Aurigene for the productive relationships and shared vision in making a difference in patient care. I would also like to thank our partners Genentech and Roche for the commercialization work that they do with our approved drug Erivedge, as well as our investigators for their support and dedication to the development of novel drug candidate. Most importantly, I'd like to thank the patients and their families for participating in our trials and being an essential part of the process in discovering effective cancer treatment. Thank you everyone.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.