Curis, Inc. (CRIS) Q2 2019 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Curis Second Quarter 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 Company’s Vice President of Finance, Bill Steinkrauss. Please go ahead.

Thank you, and welcome to Curis’ second quarter 2019 earnings call. Before we begin, I would encourage everyone to go to the Investors section of the company’s website at www.curis.com to find our second quarter 2019 earnings release and related financial tables. I would also like to remind everyone that during the call, management 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 actual results may differ materially. For additional details, please see our SEC filings. Joining me on today’s call with prepared remarks are Jim Dentzer, President and Chief Executive Officer; and Bob Martell, Head of R&D. We will also be available for Q&A at the end of the call. I’d now like to turn the call over to Curis’ CEO, Jim Dentzer.

Thank you, Bill. Good afternoon, everyone, and thank you for joining us today for our second quarter 2019 earnings call and business update. At the end of last year, we announced our goal of achieving key clinical milestones for each of our three clinical programs in 2019: our first look at efficacy data for CA-4948 in NHL, efficacy data in mesothelioma for CA-170 and confirmation in the clinic that patients can safely tolerate a combination regimen of fimepinostat and venetoclax. Both the fimepinostat and CA-170 studies are on track. The big news today is our first look at efficacy for CA-4948 in NHL. As a reminder, CA-4948 is a first-in-class, orally available small molecule inhibitor of IRAK4, which, in preclinical studies, reduced tumor burden by inhibiting myddosome activity, which, in turn, inhibits signaling in the cancer-causing TLR pathway. In our ongoing Phase 1 dose escalation study, we began dosing patients in the first cohort at 50 milligrams once daily or QD and in following cohorts at 50 milligrams twice daily or BID, 100 milligrams QD and BID and 200 milligrams BID. We are currently enrolling patients in the 400-milligram BID cohort. To date, CA-4948 has demonstrated good safety, dose-proportional pharmacokinetics and clear signs of pharmacodynamic inhibition of the target. What’s really exciting is that since our last update at the beginning of this year, our study has now advanced to dose cohorts with drug exposure levels in patients where efficacy was observed in preclinical models. So we can now expand our focus from safety, PK and PD and begin to look at efficacy data as well. To that point, we are excited to announce today that we are now seeing the anticancer activity we hoped for with tumor burden reduction in multiple patients across multiple dose levels. With the caveats of small cohorts and low dosage in the initial cohorts and, of course, that we’re still in the middle of dose escalation, it’s very exciting to see clinical results in patients develop as we hoped they would. As we have not yet determined the maximum tolerated dose, or MTD, we are continuing dose escalation in this study until we identify a Phase 2 dose or we hit MTD. In the meantime, we are working with our lead investigators to present data from this study at an upcoming medical conference. With the positive efficacy news from our NHL study, we also announced today our decision to advance CA-4948 into the clinic in the study for acute myeloid leukemia, or AML, and myelodysplastic syndrome, or MDS. Dr. Martell will dive into the science behind this later, but we think this is another population that might benefit from CA-4948. In summary, we are excited to have hit the first of our three big clinical milestones this year with initial efficacy in CA-4948, and we are on track for the other two milestones: confirmation in the clinic that patients can safely tolerate a combination regimen of fimepinostat and venetoclax and efficacy data for treating mesothelioma patients with CA-170. With that, I’ll turn the call over to Bob Martell to review our three clinical programs in greater detail. Bob?

Thank you, Jim. Hello, everyone. Thanks for joining us this afternoon. Let me start with CA-4948. Jim provided a nice high-level overview of the data that we announced today, but I’d like to provide a little bit more background on the program overall. CA-4948 is an inhibitor of IRAK4, a critical component of the myddosome in the Toll-like receptor, or TLR pathway, which leads downstream to B-cell proliferation. This pathway, which depends on the myddosome for signaling, is known to be oncogenic and tumor-promoting. Unfortunately, there are currently no approved therapies targeting this pathway. So with CA-4948, we have a potential therapeutic that we have shown to block this pathway. In preclinical models, CA-4948 represses TLR signaling and cytokine production in vitro, and it exhibits anti-tumor activity in diffuse large B-cell lymphoma tumor xenograft models as well as in patient-derived xenografts. As Jim described, we’re running a Phase 1 dose escalation study of CA-4948 in patients with relapsed/refractory lymphoma, including patients with diffuse large B-cell lymphoma, DLBCL as I’ll refer to going forward, and in Waldenstrom’s Macroglobulinemia. Nine study sites in the U.S. are currently participating in the study with at least three patients enrolled per dosing cohorts. As a reminder, we’ve dosed patients in continuous 21-day cycles. Initially, as Jim mentioned, we started at 50 milligrams once daily and have escalated all the way up to our current dose of 400 milligrams twice daily. The study’s evaluating the safety and tolerability of CA-4948 in addition to pharmacokinetics, pharmacodynamics and also, importantly, anti-cancer activity with the goal of reaching the recommended Phase 2 dose. Through the 200-milligram twice-daily dose, CA-4948 has shown clear and clean safety profile. It’s also shown dose-proportional pharmacokinetics and strong evidence of pharmacodynamic inhibition of signaling in this oncogenic pathway. In addition, we’ve seen evidence of anti-tumor activity in several patients across dose levels with greater activity observed as we have moved up in the dose. This initial clinical data is very promising, and we continue our dose escalation until we define our maximum tolerated dose and ultimately our recommended dose for Phase 2 studies. We plan to present new data on CA-4948 at an upcoming medical conference. This quarter, we also highlighted the recent publication in Nature Cell Biology describing a cancer-causing splicing variance of IRAK4 called IRAK4-L. This form of IRAK4 is dominant in the majority of the cases of AML, or acute myelogenous leukemia, and also in myelodysplastic syndrome, or MDS. The paper also noted that specific mutations of the U2AF1 splicing factor induced IRAK4-L. This represents a potential strategy for patient enrichment. These findings present the inhibition of IRAK4 with CA-4948 as a potential treatment option for patients with myeloid malignancies expressing IRAK4-L and also with U2AF1 mutations. Given the potential of CA-4948 in this population, we’ve decided to bring this molecule into the clinic for AML and MDS, then we look forward to providing further updates on this program as we finalize the study protocol and initiate our first trial in these indications. Next, I’d like to move on to fimepinostat. This is our anti-MYC program, which targets both the genetic transcription and the protein degradation of MYC. Fimepinostat uniquely targets MYC through simultaneous inhibition of both PI3-kinase and histone deacetylase, or HDAC. These two enzymes are essential to manifest MYC derangements in cancer. MYC levels are enhanced in many malignancies due to several mechanisms. For example, the overactivity of PI3-kinase often seen in lymphomas results in repression of GSK-3 and, consequently, reduced MYC protein degradation. This ultimately causes a buildup of excess amounts of MYC in lymphoma. On the other hand, HDAC is important for transcription of any new MYC in cancer cells. For example, when translocation of the MYC gene drives excess synthesis of MYC, that process depends on HDAC. Inhibiting HDAC reduces MYC transcription, and inhibiting PI3-kinase increases MYC protein degradation. We and others have shown synergy in targeting both HDAC and PI3-kinase simultaneously. We have the additional advantage in fimepinostat of being able to target both of these in the same molecule and have shown that both enzymes are, in fact, inhibited, both in preclinical models and in the clinic. In clinical studies to date, fimepinostat has shown a 23% overall response rate in MYC-altered lymphoma, in particular diffuse large B-cell lymphoma, with a median duration of response of over a year, actually 13.6 months. This is a patient group with the most challenging prognosis. Based on our discussions with the FDA, we believe that combining fimepinostat with an anti-lymphoma agent will be the most expeditious path to the initial approval of this drug. Since the strong benefit of fimepinostat is somewhat delayed due to its mechanism of action, adding an anti-lymphoma agent will also allow us to create a bridge for patients with rapidly growing lymphomas, slowing this growth long enough to allow fimepinostat’s benefit to take hold. Because one of the most deadly types of lymphoma is this double-hit lymphoma, and this is defined by an alteration specifically in MYC as well as Bcl-2. Because of this, we’re combining fimepinostat with venetoclax. Venetoclax is a drug that is rapidly acting and binds and inhibits Bcl-2. By itself, venetoclax has only modest activity in diffuse large B-cell lymphoma. However, when combined with our MYC suppressor fimepinostat, we found dramatic synergy in preclinical models of double-hit lymphoma. The current trial is designed to evaluate the safety and tolerability, the pharmacokinetics, the pharmacodynamics and the anti-cancer activity of the combination in patients with relapsed/refractory DLBCL, including those with double-hit lymphoma. We are planning to enroll patients in two cohorts in the study. In the first cohort, patients received 30 milligrams of fimepinostat and 400 milligrams of venetoclax daily. These are doses that have demonstrated clinical activity as a single agent for both molecules. In the second cohort, patients received full doses of each agent, which is 60 milligrams of fimepinostat and 400 milligrams of venetoclax daily. We plan to continue dose finding on the study until the recommended Phase 2 dose has been identified, and we expect to report initial data from the study this year. Our third program is CA-170, the first oral molecule targeting VISTA and PDL1. We are currently evaluating this molecule in patients with mesothelioma because of this extremely high levels of VISTA expressed in this disease. CA-170 is the only anti-VISTA candidate in human clinical trials currently, and it is the first oral molecule targeting PDL1 currently in the clinic. We are developing this candidate with our partner, Aurigene. VISTA is an incredibly important target in oncology and is highly expressed on tumor cells and infiltrating immune cells. Our Phase I study is evaluating the anticancer efficacy of CA-170 in these patients with high VISTA-expressing mesothelioma. These patients have previously been treated and are not curable. We’ve enrolled 12 patients across six study sites within the U.S. and the UK randomizing patients into two cohorts. The first cohort receives 1,200 milligrams twice daily of CA-170, and the second cohort receives 200 milligrams twice daily. Patients who do not respond or experience disease progression at the lower dose are then crossed over to the high dose cohort. We are pleased to have completed enrollment of these 12 patients and look forward to reporting initial clinical data before year-end. That sums up our ongoing clinical programs. We are excited by our initial data on CA-4948 and look forward to presenting detailed data at an upcoming medical meeting. We also continue to make great progress on our fimepinostat and CA-170 programs, and we’ll also report initial data in both of these programs before the end of this year. With that, I’ll now turn over the call to Bill to discuss this quarter’s financial results. Bill?

Thank you, Bob. Now for an update on our financial results. For the second quarter of 2019, we reported a net loss of $7.2 million or $0.22 per basic and diluted share as compared to a net loss of $8.7 million or $0.26 per basic and diluted share for the same prior year period. Revenues were $2.1 million and $2.4 million in the second quarter of 2019 and 2018, respectively. Revenues for both periods comprised primarily of royalty revenues recorded on Genentech and Roche’s net sales of Erivedge. Operating expenses were $8.2 million for the second quarter of 2019 as compared to $10.2 million for the same period in 2018. Research and development expenses were $5.6 million for the second quarter of 2019 as compared to $6.5 million in the same period in 2018. The decrease in research and development expense was primarily due to decreased employee-related expenses. General and administrative expenses were $2.5 million in the second quarter of 2019 as compared to $3.6 million for the same period in 2018. The decrease in general and administrative expenses was driven primarily by lower personnel, legal and stock-based compensation for this period. Other expense was $1.1 million for the second quarter of 2019 as compared to $0.8 million for the same period in 2018. For the second quarter of 2019, other expense, primarily consisted of the non-cash, imputed interest expense related to the sale of future royalties that we completed with Oberland Capital in the first quarter of 2019. As of June 30, 2019, our cash, cash equivalents and investments totaled $35.3 million, and there are approximately 33.2 million shares of common stock outstanding. We anticipate that our existing cash, cash equivalents and investments should enable us to maintain our planned operations beyond our upcoming data catalyst for each of our three programs and into the second half of 2020. With that, we’ll open the call for questions. Operator?

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Chris Raymond with Piper Jaffray. Please go ahead.

Yes. Hey, thanks for taking the question. Guys, Bob or Jim, I wonder if you could elaborate a little bit more on your 4948 data. It sounds like you’re seeing some tumor reduction at the higher dose levels. Can you provide a little bit – first of all, maybe can you describe, are you using the Cheson criteria, I think, to measure responses, first of all, and maybe talk a little bit about the – sort of the trajectory of these responses? I guess what I’m asking is, are we thinking we should be or could be able to see a formal response in some of these cohorts?

Yes, thanks. This is Bob Martell. So as we mentioned, we are currently dosing at levels where we’re potentially expecting to see efficacy based on our preclinical data. And so the efficacy information that we’re presenting today is sort of looking at tumor burden measurements. And we look at a variety of different factors in measuring tumor burden, one of which is tumor size. So simply measuring a tumor, looking for a tumor decrease. And oftentimes we have, for example, diffuse large B-cell lymphoma. We have measurable tumor lesions, and those – it can be monitored over the course of therapy and either reduce or increase. And so in that case, tumor size reduction is an important factor. Some of the patients that we are studying includes Waldenstrom’s Macroglobulinemia or other diseases that have M-spike. And so that’s another way of measuring tumor burden. So looking at those variables, we’ve seen tumor reduction across multiple dose levels. For example, at the 200-milligram dose level, where we have three patients with efficacy data, two of the three are showing tumor burden decrease. We plan to present more detailed description of the efficacy data as well as the safety data at an upcoming meeting. But in general, for each of these malignancies, we are using the standard reporting criteria for the formal responses. But again, that will be presented in an upcoming meeting.

Thanks for the question.

Should we assume that’s ASH?

Yes. So this is Jim. Thanks for the question. Yes, we’re generally targeting year-end, but, of course, ASH is in December. So it’d be great if we could do that as well. The question’s really going to come down to, where does the investigator want to present, that we get – that we have all of the data updated and ready to go? So ASH makes the most sense from my perspective, but, of course, that’s going to be under the guidance of the investigator. So at that point, of course, that’s a much more full data of everything that we’ve seen so far, where the data we have today is halfway through the 200-milligram cohort. There’ll be presumably the full data at that, plus the 400 that we’re already testing and we don’t have data in yet. But yes, I think for today, the answer is it’s exactly what we were hoping to see for where we are. We announced earlier this year the first two patients we have PK/PD. And, of course, what we really wanted to see that we’re hoping for was, did we get more of that? Did we get safety PK/PD? And, of course, are we starting to see tumor strength? And the answer to that is yes. Now we don’t want to make too much of this. It’s small cohorts. You’re talking about three people per cohort. So am I going to say if we get two out of three people with we’re seeing tumor reduction, and that’s a 66% ORR, I’d say the answer’s no. Hold that thought for future release, future conferences and especially expansion. But for where we are today, are we seeing exactly what we hoped? The answer’s yes.

That’s great. One more question, if you don’t mind. So I think I heard Bob mention Waldenstrom’s patients. Did you confirm that you had Waldenstrom’s patients to this study or was it just DLBCL patients?

Well, so I did mention Waldenstrom’s. And I think it’s really important to emphasize that, too, because with regards to 4948, the unique thing about Waldenstrom’s is that a very significant majority of those patients actually have this MYD88 mutation, which strongly activates the myddosome that’s oncogenic. And yes, we are enrolling Waldenstrom’s patients from the study. Investigators are going to discuss in detail, obviously, at the upcoming meeting, but certainly, we’re very interested in that patient population because it really doesn’t require patient selection in order to have patients on the study who we know have this pathway activated.

Yes. It’s going to be very interesting to see. I mean, ideally, we’ll have a broad spectrum of patients. But to Bob’s point, the Toll-like receptor pathway is oncogenic precisely because when MYD88 is altered, it leads to overactivity of the myddosome, right, which then leads to overactivity of the pathway. Since we’re targeting the myddosome directly, we’d love to see some patients with, some patients without Waldenstrom’s comes right to the front. There are some patients – I think it’s 95% of Waldenstrom’s patients are MYD88-altered, so it’d be great if actually we could find some of both, the majority, and then maybe even somebody within the minority as well to do a compare and contrast. But to this point, we’re just happy we’re getting the broad swath of patients that we hoped for. And as I said, the data is really lining up exactly the way we hoped.

Awesome. Thanks, guys.

Thank you.

Showing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to James Dentzer for any closing remarks.

Thank you, operator. In Q4 of last year, we set an ambitious goal. We cut our staffing expenses by almost a third, and yet we promised to increase our productivity and achieve more results than we had in our 20-year history. We promised that we would see clinical execution across the board, achieve key clinical milestones in three separate clinical studies. And frankly, it sounded a bit too ambitious, and yet here we sit 2.5 quarters later and we’re hitting or beating every expectation. We knew 2019 would be an exciting and transformational year for Curis, and it’s turned out to be exactly that, and a lot of fun, too. I’m very proud of our team here at Curis and our partners at Aurigene for their continuous overachievement, and I’m thrilled for the patients and families who are benefiting from participation in our clinical trials. Thank you for joining us on our call today, and we look forward to updating you everyone again soon.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.