Curis, Inc. (CRIS) Q3 2020 Earnings Report, Transcript and Summary

Good afternoon everyone and welcome to the Curis' Third Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After the company’s prepared remarks, all participants will have an opportunity to ask questions. [Operator Instructions] Please also note today’s event is being recorded. At this time, I would like to turn the conference call over to the company's Chief Financial Officer, Bill Steinkrauss. Sir, please go ahead.

Thank you and welcome to Curis' third quarter 2020 earnings call. Before we begin, I would encourage everyone to go to the Investors section of our website at www.curis.com to find our third quarter 2020 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 are Jim Dentzer, President and Chief Executive Officer; and Bob Martell, Head of R&D. We will also be available for a question-and-answer period at the end of the call. I'd now like to turn the call over to Curis' CEO, Jim Dentzer. Jim?

Thank you, Bill. Good afternoon everyone and thank you for joining us today. Our mission at Curis is to develop the next generation of targeted cancer therapies to meaningfully improve and extend patients' lives. In the third quarter, we made significant progress on that mission. Despite the difficulties of the COVID-19 pandemic, we remain on track to achieve all of our stated goals and milestones for 2020, as we prepare for the anticipated release of clinical results next month at ASH. With CA-4948, our first-in-class IRAK4 inhibitor, we have two ongoing clinical studies. One, in patients with relapsed or refractory non-Hodgkin's lymphoma and a second IRAK4 study in patients with relapsed or refractory acute myeloid leukemia and high-risk myelodysplastic syndromes. Updates from both studies will be presented in an oral presentation and in poster sessions next month at the annual meeting of the American Society of Hematology. In addition, earlier today, we were very pleased to announce that we have entered into a cooperative research and development agreement or CRADA with the National Cancer Institute, under which they will collaborate with us on the development of CA-4948. We are thrilled to announce this partnership as it substantially increases the number of reachable patients in a population of dire medical need without requiring an external diluted financing or sizeable financial commitment from Curis. We are eager to begin the collaborative process with our partners at the NCI, and we look forward to providing you with updates as we have them. With CA -- with CI-8993, our progress has also been very exciting. Earlier this year, we announced our partnership with ImmuNext and the submission of our IND for CI-8993, our first-in-class VISTA inhibitor. In Q2, we announced that we received FDA clearance of that IND. Today we are happy to report that in Q3 we were able to get our first clinical sites up and running and initiate dosing in our Phase 1a/1b study in patients with relapsed or refractory solid tumors. All told, it was a very active quarter for Curis. We look forward to building on this progress through our year-end data updates and carrying that momentum into 2021. Now let's dig into some detail on our ongoing clinical programs. As a refresher, our Phase 1 dose escalation study of CA-4948 for the treatment of patients with relapsed or refractory non-Hodgkin's lymphoma includes patients with diffuse large B-cell lymphoma, Waldenström's macroglobulinemia and oncogenic MYD88 mutations. We are currently evaluating patients treated with 300 milligrams of CA-4948, twice daily after observing clear dose response and tumor reductions at previous dose levels. Last week, on November 4th, we disclosed clinical data from this study in an abstract that was accepted for oral presentation at the ASH conference in December. As reported in the abstract CA-4948 has exhibited encouraging safety and pharmacokinetic properties. And at higher dose levels, clear single agent efficacy in a relapsed refractory NHL patient population that had already seen a median of four prior lines of therapy before joining our study. To provide some additional context, last year at ASH, we presented a small but intriguing data set that suggested CA-4948 could potentially establish IRAK4 inhibition as a new mechanism of action, a novel way to treat patients with NHL as it delivered a compelling safety and efficacy profile, particularly at higher dose levels in a monotherapy setting. This year's goal was to confirm that finding and also explore which of the efficacious dose levels of 200, 300 or 400 milligrams BID offered the best balance of safety and efficacy. Diving a bit deeper into the abstract data, which are from a July cutoff, we see that eight patients achieved a tumor burden decrease of 20% or greater from baseline, including four of the patients treated with 300 milligrams BID. It is very encouraging that efficacy improved as dose levels increased. This was shown in both the study group as a whole, and also in the case of a single patient, a Waldenström's patient who as of the July cutoffs had been on study for 18 months over multiple dose levels and achieved an objective response with a 66% tumor burden reduction. This patient started at an initial BID dosage of 50 milligrams and escalated through 100 milligrams, 200 milligrams and 300 milligrams, demonstrating dose dependent decreases in tumor burden at every level. It is important to highlight again that these are extremely sick patients who have received a median of four prior lines of therapy before entering the study, that we have been able to observe therapeutic effect in monotherapy, and the dose effects are durable over such an extended period of time is enormously encouraging. And we look forward to the ASH conference where we will provide an updated and expanded dataset with a later cutoff date for the data provided in the abstract. Given the clear single agent activity we have seen in the clinic and the clear preclinical synergy we have seen when CA-4948 is combined with a BTK inhibitor, such as ibrutinib. We and our clinical investigators are eager to explore the combination of CA-4948 and ibrutinib in the clinic. As we mentioned on our August call, we could already see where the data were headed and we made the decision to get the combination study up and running as quickly as possible. Today we are excited to announce that in working closely with our clinical sites, we have been able to amend the protocol of our existing study to include combination therapy rather than having to file a completely new protocol and initiate a completely new clinical study. This allows us to leverage the clinical sites and staff currently active in our monotherapy study and should save significant time and resources as we speed our path to the clinic. The combination study has two parts, and it will be designed -- and it will be outlined in a trial in progress poster to be presented at the ASH conference. Part one of the study design will be dose escalation, a 3x3 design with CA-4948 doses starting at 200 milligrams BID and escalating to 300 milligrams BID and ibrutinib doses appropriate for the respective NHL subtype. Part two of this study will be an expansion basket of four cohorts. The first in Marginal Zone Lymphoma or MZL. The second in ABC DLBCL. The third in primary central nervous system lymphoma or PCNSL and the fourth in NHL with adaptive ibrutinib resistance. Primary endpoints in the study will include the established clinical end points such as objective response rate and duration of response. But we will also explore response correlation with biomarkers we have identified that may help us enrich the patient population and help us determine the optimal path for registration. So far from scientific hypothesis to preclinical data to clinical data, each step of the journey has been a consistent step forward in the long-term vision for CA-4948 in NHL. That IRAK4 controls a critical pathway that is parallel to and complimentary to the BTK pathway. And that inhibiting IRAK4 can provide incremental benefit to the vast population of patients treated with a BTK inhibitor and may help mitigate resistance to BTK therapy. That is our vision in NHL. Now let's move on to leukemia, and what many see as even more exciting than the NHL vision. Our second study of CA-4948 is in patients with relapsed or refractory AML and high-risk MDS, including those with spliceosome mutations that drive the expression of the oncogenic long isoform of IRAK4. In early July, we announced the dosing of the first patient in our open-label Phase 1 dose escalation study of CA-4948 monotherapy in these patient populations. Since then, enrollment has proceeded particularly well. You may recall that this study grew out with a groundbreaking work performed by Dr. Amit Verma and Dr. Daniel Starczynowski presented at last year's ASH conference in which they identified the specific spliceosome mutations that drive disease in AML and MDS patients by causing the expression of the long isoform of IRAK4. We now know based on their published work, that the long isoform of IRAK4 is oncogenic and further that IRAK4-L is overexpressed in over half the population of AML and MDS patients. Of particular excitement to the team here at Curis, doctors Verma and Starczynowski also demonstrated that inhibiting IRAK4-L with a treatment of CA-4948 substantially reduces leukemic blast formation in patient-derived xenografts. Today, we are pleased to announce that the first two cohorts in the Phase 1 dose escalation study have completely enrolled. The first cohort receives 200 milligrams twice daily, and the second cohort receives 300 milligrams twice daily. As we have previously discussed, we believe 200 milligrams is likely to be a therapeutic dose, and we will continue dose escalation until reaching the recommended Phase 2 dose and maximum tolerated dose. We will provide an additional overview of the study design and report initial interim data for these patients next month. We know that other drugs in single agent studies in this late line relapsed refractory population have struggled to show steep reductions in leukemic blasts cells. To be clear, the data we will be presenting next month will be early data. Nevertheless, we hope to see data consistent with our preclinical findings. We remain confident that the novel approach of targeting IRAK4 represents clear differentiation for CA-4948 in AML and MDS. Before moving on, I would like to add that this AML and MDS study and the data we are presenting next month are in addition to the NCI CRADA we announced earlier today. We are still in the early days of our partnership with NCI, and we look forward to providing you with updates on our partnership in the future. Now I'd like to turn to CI-8993. We believe that a therapeutic antibody, such as CI-8993, could provide potent VISTA blockade as a monotherapy in patients with certain solid tumors. This is a target we have long been excited about, because of the critical role it plays in suppressing T cell activity when at the VISTA checkpoint is activated. Conversely, blocking VISTA has been shown in preclinical studies to prevent T cell suppression and thereby reactivate antitumor immune function. We also see significant combination potential and in the future may explore targeting VISTA in combination with a PD-1, PD-L1 or even a CTLA4 inhibitor as preclinical study suggests that blocking VISTA significantly improves the efficacy of those checkpoint regulators. To date, there has been little meaningful progress targeting VISTA due to the various on target side effects associated with pathway blockade, most notably immune mediated toxicity and cytokine release syndrome. However, progress in the development of CAR-T therapies and the broader immunotherapy space over the last decade have made safe and effective VISTA regulation much more possible. To that end, we have initiated patient dosing in a Phase 1a/1b dose escalation study evaluating CI-8993 in patients with relapsed and refractory solid tumors and enrollment is currently ongoing. We believe that CI-8993 has the potential to succeed beyond our previous PD-L1 VISTA program, a small molecule that demonstrated activity, but did not provide the level of efficacy needed to compete with monoclonal antibodies in development at the time for the same target population. This is likely because large molecule monoclonal antibodies like CI-8993 provide complete coverage of a receptor across multiple binding regions. By comparison, a small molecule interrupts only one or two contact points on a target receptor. In addition, monoclonal antibodies tend to firmly wrap around a receptor almost like Velcro, as opposed to a small molecule, which continually bounces on and off its target. We believe CI-8993 is the most advanced anti-VISTA antibody currently in clinical development. We have received a lot of interest and excitement from the clinical community on this program, and we believe CI-8993 has the potential to be a game-changing cancer therapy. We look forward to providing an overview of the study in a trial and -- trial and progress poster at SITC this week and providing additional updates in 2021. To wrap up, I want to emphasize how proud I am of the entire team at Curis that in the midst of an ongoing global pandemic has worked tirelessly to ensure we hit every ambitious goal we set for ourselves this year. It is incredible to think that since we signed the deal to bring this new VISTA asset on board in January, we have written a protocol, engaged the FDA, secured IND clearance, opened clinical sites, trained investigators and their staff, and begun the dosing of patients, all in less than 9 months. It is a testament to the team's experience, their commitment and their passion. And it is an honor to work with them. With that, I'll turn the call over to Bill to review our financial results for the quarter. Bill?

Thank you, Jim. For the third quarter of 2020, Curis reported a net loss of $6 million or $0.11 per share on both a basic and diluted basis as compared to a net loss $6.4 million or $0.19 per share on both a basic and diluted basis for the same period in 2019. Revenues for the third quarter of 2020 were $2.7 million as compared to $2.9 million in the same period in 2019. Revenues for both periods comprised primarily of royalty revenues recorded on Genentech and Roche's net sales of Erivedge. Operating expenses from the third quarter of 2020 were $7.5 million as compared to $8.2 million for the same period in 2019. Cost of royalty revenues were $0.1 million for both the third quarter of 2020 and 2019. Research and development expenses were $4.7 million in the third quarter of 2020, as compared to $5.1 million for the same period 2019. The decrease was primarily due to reduced clinical trial costs related to CA-170 and fimepinostat. General and administrative expenses were $2.6 million for the third quarter of 2020, as compared to -- excuse me, to $2.9 million for the same period of 2019. The decrease was driven primarily by lower personnel and stock-based compensation costs, partially offset by higher legal, professional and consulting services cost. Net other expense was $1.3 million for the third quarter of 2020, as compared to $1.1 million for the same period 2019. Net other expense for the third quarter of 2020, primarily consisted of imputed interest expense related to future royalty payments. As of September 30, 2020, Curis's cash, cash equivalents totaled $23.6 million and there were approximately 56.7 million shares of common stock outstanding. Since June 30, 2020, we have extended our cash runway through our at-the-market sales agreement with JonesTrading and stock purchase agreement with Aspire Capital. The aggregate proceeds of which have totaled approximately $10 million to date. As a result of these proceeds, we expect that our existing cash and cash equivalents should enable us to maintain our planned operations beyond our end of year data catalyst and through the second quarter of 2021. This forecast does not include any additional potential proceeds from our stock purchase agreement with Aspire Capital or at-the-market sales agreement with JonesTrading. With that, I'd like to open the call for questions. Operator?

[Operator Instructions] And our first question today comes from Alethia Young from Cantor. Please go ahead with your question.

Hi guys. This is Lee on for Alethia. Thanks for taking our questions. Just on your upcoming ASH presentation, how many patients should we expect at the meeting and how should we think about expectations around response rate and safety, and is it too early to assess duration of response? And then for the VISTA program, can you just provide some perspective on your trial design and how should we think about CRS management? Thank you.

Sure. Bob, would you like to talk about the ASH conference?

Yes. So the ASH conference, we have a number of presentations coming up, two trial and progress presentations and an oral presentation. We expect on the oral presentation for the non-Hodgkin lymphoma trial to present an update on our data. As you know in the past, we've had a significant tumor reduction. And as Jim mentioned, as we've escalated to higher dose levels and are honing in on our recommended dose, we continue to see activity in this way. And so we'll be providing an update of that trial at ASH as part of the oral presentation that Dr. Noah Kowalski [ph] will present. The two trial and progress presentation, one would include the combination in non-Hodgkin lymphoma with the BTK inhibitor ibrutinib. There we will describe the trial design in a bit more detail than what Jim has described today. And additionally, we'll talk about in the second trial and progress [technical difficulty]. As Jim mentioned, we have already enrolled the first two cohorts on that AML/MDS study. This trial was initially submitted to ASH prior to enrolling any patients and therefore it was submitted as a trial in progress. We will try to update the community of the -- of some efficacy data in some manner going forward in the same timeframe. The -- does that answer your question on the 4948 upcoming ASH data?

Yes, that's very helpful. And on the VISTA program, can you just remind us of your trial design and CRS management?

Yes. So this is designed as a Phase 1 dose escalation trial. It will be -- we have the benefit of the prior study that had been run by Janssen and we understand some of the early dose levels and potential side effects based on that study. We've [technical difficulty] study where we believe we can mitigate and hopefully having side effects. In particular, Jim mentioned cytokine release syndrome as being one potential toxicity that's on target toward hitting VISTA. We do know that in recent years, this has become much more manageable with better understanding of how this develops and how ultimately to manage it as well as new drugs that are available to help with that. In addition, we've done with our partners at any next extensive research in evaluating clinical measures that we believe will additionally reduce the chance of the side effects causing a problem for patients. Our top priority is to do this dose escalation in a way that's safe for patients and also will achieve meaningfully high dose levels that we believe will be clinically relevant. We do know that the dose escalation, dose levels that we're starting at are not too far from where we expect we would see meaningful clinical activity.

Okay. Thank you.

Thank you very much.

Our next question comes from Yale Jen from Laidlaw & Company. Please go ahead with your question.

Great. And thanks for taking the questions and congrats on the progress. Just two questions here. The first one is could you give a little bit more detail in terms of CRADA in terms of regarding the potential agenda, at least the planted agenda and specifically on the clinical side? And I have another follow-up.

Okay. And the second question, Yale? And thank you for calling by the way.

Okay. No problem. The second question is that in terms of the combo study for the 4948 in HL [ph], what was the anticipate or [indiscernible] planted patient size, study size that might be?

Okay. Thank you very much. I appreciate that. So on the CRADA, I think we're going to hold off on updates until we know a little bit more, but we'd be happy to update you as we can. I think you've seen what we can disclose at this point in time in the press release on that. I think it just -- I just want to underscore, obviously we're very excited to have gotten that collaboration put in place, and we think it's going to be a very healthy add for us to expand our study of these patients with the help of the NCI and frankly in a very efficient manner. On the combo study with 4948 in NHL, what we've anticipated before is as we discussed last year at ASH, it was really a small dataset. It was about getting through those initial dose levels and proving the safety and tolerability PKPD until we could get up into that efficacious range, which we expected to be 200 and in fact, turned out to be, right, 200, 300 and 400, all look to be efficacious doses, which was terrific. And we had six patients on last year at December, and we were looking at that time at five out of six patients showing tumor shrinkage. So really what we want to do this year at ASH is we have publicly said, we were looking to add three to six patients that was our goal for the year. But we wanted to add more patients at those doses and follow them for longer periods of time, really for two goals. The first one is the obvious one. We want to make sure that we can confirm that finding that we've got a drug that 200, 300 and 400, these are all efficacious doses, but we know that the drug is hitting the target and the drug shrinks tumors, even in this incredibly difficult population to treat, for prior lines of therapy, relapse refractory setting, monotherapy, all of it. We wanted to be able to show that we could repeat that finding that the drug is efficacious post-op. After that, of course, now we want to try and choose a recommended Phase 2 dose. So we want to try and expand on our learnings at 200, 300 and 400 and try to find out do we get better efficacy as we go to higher doses? Are there additional safety signals that we're seeing? We know this is a drug that is going to be used for long periods of time. We've got patients that have been on drugs for over a year in the study. Over 18 months in the case of the Waldenström's patient at the July cutoff. So we know that that we need a drug that is not just efficacious, but support long-term dosing. So of those doses, which is the best dose and what is the data that supports that conclusion? Those are the things that we're going to be talking about at ASH.

Okay. So that -- yes, that's very helpful. Maybe just squeezing one more question here, which is for the leukemia study, the dose finding at this point, all the patient has been genetically or gnomically screened for having the proper mutation before they been treated.

So, no, they haven't. This is in fact an all-comers study. So one of the terrific findings of Dr. Verma and Starczynowski's paper is that over half the population of AML and MDS patients overexpress IRAK4-L. And so we would expect that we've got over 50% shot of patients that enrolled in the study that have this overexpression. And in fact, the expression of IRAK4 is a spectrum. Not -- it's not binary. It's not you have it, or you don't. It's a ratio. Some patients express more, some patients express less. And what we want to be able to do is take all-comers into that space and frankly see how they do. With luck, it'll be a small dataset. We were thrilled. We've been enrolled more quickly than we were hoping. As I said, we've already got the first two cohorts filled, but we want to try and explore patients across that spectrum. And in fact, see how they do on the drug. And the ultimate goal obviously would be, these are all efficacious dose levels, at least we would expect them to be based on the preclinical study at 200 milligrams and 300 milligrams. Are we starting to see in any of these patients, the kinds of signs that we saw in the preclinical data that was so positive. That's what we're hoping for. So I expect to look to us to talk to that data set in just a few weeks at the ASH conference, or at least around that timeframe.

Okay, great. Thanks a lot. Again, congrats on the rapid progress.

Thank you very much.

And our next question comes from Soumit Roy from JonesTrading. Please go ahead with your question.

Hi, there. Congratulations on the nice execution.

Thank you, Soumit.

Absolutely. It looks like from the -- looking at the ASH abstract, it looks like the 300 milligram BID kind of hitting the nice point where you have manageable safety and probably the max efficacy. Given then these patients are such late line, what kind of translational data should we expect at ASH presentation, or what do you look at? Are we going to see biochemical readout or biomarker that gives us confidence that, yes, this is a active drug and it is hitting the right signaling pathway to the most it can. And the second question is, have you seen or have you shown efficacy in BTK mutant cell types with in vitro or preclinical setting?

Actually, Bob, would you like to chime in on this one?

Sure. Yes, we'll be presenting data. We've been capturing pharmacodynamic data throughout the study, as well as pharmacokinetic data. And we'll be presenting an update on that. And we do believe that, as you mentioned, the 300 dose is honing in, we haven't officially declared the recommended Phase 2 dose at this point. But we've had very good results as you can see from our abstract and the discussion today at that dose level, but we've also seen clinical activity even at 200 milligrams. So we likely will declare a recommended Phase 2 dose at some point in the near future. And we will present pharmacodynamic data that supports that. With regards to the BTK mutants, we haven't evaluated that specific question in our patient population. We would expect that this targeting in a independent pathway that is parallel to BTK, but independent of the BTK pathway that we would have activity regardless of that situation. This independently inhibits activity at the NF-kB location.

Okay. On the VISTA front, could you give us any color on what kind of chemo types you are looking at? Are you looking at strictly IO refractory or you are looking at more higher relapse kind of cancer types or more immune permissive cancer like RCC and head and neck, or would you be going more towards ovarian or TMBC type colder tumor type? What's the initial preferred indication set?

Yes, again, this is probably a better question for Bob.

Yes, so the -- the actual design of the study, so this is obviously early dose finding study, and we've opened this study to not limit the specific type of solid tumor. So it's open to solid tumor patients. So we'll be taking a variety of patients on this study. That being said, we think that the greatest opportunity for single agent activity, maybe in malignancy is that high mutational burden and that are tend to be sensitive to other checkpoint inhibitors. We do know that this expression is increased following treatments with other checkpoint inhibitors. And so when we think about our long-term development strategy, at least as a single agent, we'll be thinking about those potential indications. As we start to think about combining this drug with other checkpoint inhibitors, again, we've demonstrated very strong synergy and the ability of a combination between CI-8993 and a PD-1 antibody or others. We've demonstrated that this has the ability to overcome resistance to those other checkpoint inhibitors. So we think that there's a strong pathway for combination expanding beyond the current very sensitive indications. Although these are efforts that would be later in development. Right now, early in development, we have a pretty broad swath that we're looking at.

Thank you so much. And congratulations again on all the progress.

Thank you, Soumit. Really appreciate it.

And ladies and gentlemen, with that we'll conclude today's question-and-answer session. I would like to turn the conference call back over to the company's President and Chief Executive Officer, Jim Dentzer, for any closing remarks.

Thank you, Jamie, and thank you everyone for participating in today's call. And as always thank you to the patients and families participating in our clinical trials, to our team at Curis for their hard work and commitment and to our partners at Aurigene and ImmuNext for their ongoing help and support. We look forward to updating you again soon. Operator?

And ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.