Curis, Inc. (CRIS) Q2 2021 Earnings Report, Transcript and Summary

Good afternoon and welcome to the Curis Second Quarter 2021 Earnings Call. All participants will be in a listen-only mode. [Operator instructions] After the company's prepared remarks, call participants will have an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time I'd like to turn the conference call over to the company's Chief Financial Officer, Bill Steinkrauss. Please go ahead.

Thank you and welcome to Curis' second quarter 2021 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 second quarter 2021 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 be available for a question-and-answer period at the end of the call. I'd now like to turn the call over to Jim. Jim?

Thank you, Bill. Good afternoon everyone and thank you for joining us today. At Curis, we're focused on developing the next generation of targeted cancer therapies that will meaningfully improve and extend patients' lives. In the second quarter of 2021, we made concrete progress towards that goal and laid the foundational groundwork to expand into additional areas where we believe we can make a difference. As a reminder, our lead asset, a novel small molecule IRAK4 inhibitor called CA-4948 is currently being evaluated in nine distinct patient populations, two AML and MDS populations in monotherapy for patients with spliceosome or FLT-3 mutations, two AML and MDS populations in combination therapy of CA-4948 with azacitidine and venetoclax, and four B-cell cancer populations in combination therapy of CA-4948 with ibrutinib. In addition, we are working with Dr. Uwe Platzbecker of the University of Leipzig on the LUCAS IST to study CA-4948 in monotherapy in patients with lower risk MDS. As many of you have been following, the long isoform of IRAK4 or IRAK4-L has been identified as the key driver of disease in the majority of patients with AML and MDS. Curis has the most advanced drug that directly targets IRAK4 in clinical testing for these patients. With each new batch of beta, our excitement for CA-4948 grows even further with its manageable and predictable safety profile and demonstrated ability to show deepening efficacy, the longer patients remain on treatment. At the EHA meeting in June, we were especially pleased to share updated data from the monotherapy arm of the Phase 1/2 AML and MDS study, highlighting efficacy at multiple study doses, a potentially differentiating factor that may enable us to help even the most extremely sick patients in this historically underserved population. Our second program, our first-in-class monoclonal anti-VISTA antibody, CI-8993, has also been making good progress. We've been pleased with patient enrollment in the Phase 1 dose escalation study in relapsed or refractory solid tumors and are on track to provide a substantive initial report on safety by year-end, including what we hope to be signs of early success in managing the CRs side effects known to be associated with anti-VISTA therapy. All told we continue to progress through 2021 as a year of execution for Curis. With that, let's dig into some detail on our ongoing programs, starting with the IRAK4 program in leukemia. At EHA earlier this summer, we were pleased to present updated data from the monotherapy arm of our AML and MDS study, which reinforced previously observed findings of single agent efficacy across the spectrum of late-line AML and MDS patients despite these patients having already experienced several unsuccessful prior lines of therapy. As a reminder, the data in our EHA presentation identified a subset of patients with specific genetic mutations that make their disease highly amenable to treatment with CA-4948 based on the drug's mechanism of action. Of the four evaluable patients with a spliceosome or FLT-3 mutation, all four achieved an objective response. This early success provides a key validation of the scientific thesis that U2AF1 and SF3B1 spliceosome mutations are specific drivers of the oncogenic long isoform of IRAK4, which CA-4948 is explicitly designed to target. In the broader patient population, in those patients without a spliceosome or FLT-3 mutation, we also saw encouraging signs of efficacy. Nine of 11 evaluable patients in this group achieved tumor reduction or were able to maintain a blast count in the normal range. The next step in our clinical plan is to address this population in combination therapy of CA-4948 with azacitidine or venetoclax. We hope that CA-4948 with its unique mechanism of action and demonstrated disease modifying capability will prove an important addition to the combination therapy toolset in the battle against AML and MDS. The data presented at EHA also highlighted the strong safety profile of CA-4948 with no dose limiting toxicities related to myelosuppression and no overlap in dose limiting toxicities with azacitidine or venetoclax, which are planned were combination studies with CA-4948. The dose limiting side effect at higher doses consisted of uncomplicated rhabdomyolysis, or elevated CPK and muscle soreness, which was manageable, quickly and easily detected, readily reversible and did not limit further treatment at a reduced dose level. Of note, those patients who did experience rhabdomyolysis at higher doses generally had predisposing factors such as taking statins or strenuous exercise. And lastly, we were also pleased to report at EHA an update of the pharmacokinetic analysis for CA-4948. At the 300 milligram b.i.d. dose, we are achieving pharmacokinetic exposure in patients that correlates to 98% target inhibition in preclinical models. These impressive data further our confidence in CA-4948 as a novel and robust IRAK4 inhibitor that has the potential to significantly advance therapeutic options for patients with AML and MDS. In first-line patients whose bone marrow has not been irrevocably damaged by cancer or by prior cytotoxic treatment, it has been shown that clear and substantial hematologic recovery is achievable within a few months if leukemic blast levels are effectively reduced. In contrast for the late line patients in our study, it is important to remember that they already have deeply scarred dysfunctional marrow, which may delay or even prevent successful hematologic recovery. CA-4948 like other cancer therapies addresses the underlying cancer, but it is not by itself a marrow stimulating agent. We are therefore very pleased to see signs of hematologic recovery in these extremely sick patients after only a few months of treatment. From a regulatory perspective, our goal is to have 10 to 20 patients with spliceosome mutations on drug by year end. Assuming the data remained consistent we hope to be in a position to reach out to the FDA in the first half of next year to discuss the potential for our rapid approval path. Given the compelling data observed to date, and the impressive pace of enrollment we are optimistic that we can meet this goal. The spliceosome population is only one of the nine population groups we are studying with CA-4948, but we believe these may be the data which mature the quickest, enabling the earliest discussions with FDA. While the monotherapy studies push ahead the incremental positive safety findings showing no overlapping dose limiting toxicity with azacitidine or venetoclax were an important next step in the development of CA-4948 in combination therapy for the broader population of AML and MDS patients. These findings underscore the relevance and importance of the updated preclinical data also presented at EHA, which highlighted CA-4948 synergistic antitumor activity when used in combination with azacitidine and venetoclax in leukemia cell lines. Before moving on from leukemia, I would like to briefly touch on the ongoing Phase 2 LUCAS IST for patients with lower risk MDS, being led by the Co-Chairman of EHA's Scientific Working Group on MDS, Dr. Uwe Platzbecker. As a reminder of the study's rationale, if successful, it could lead to a potential breakthrough in the MDS field. Current standard of care with EPO stimulating agents can be effective for patients with lower-risk MDS. However, this effect is often transient, it is not disease modifying and it does not affect further disease complication and progression to AML. With its direct targeting of IRAK4 and strong safety profile, we believe CA-4948 could potentially offer a safe and disease modifying alternative for patients at earlier stages of disease. With that let's move on to lymphoma. We reported updated clinical data from our Phase 1 dose escalation study of CA-4948 for the treatment of patients with relapsed or refractory NHL or other hematologic malignancies at ASH last December. These data highlighted durable reductions in tumor burden in six of seven evaluable patients treated with 300 milligrams of CA-4948, twice daily, following a median of four prior lines of therapy. It is important to reiterate it seemed clear efficacy with a novel monotherapy agent and seeing that this efficacy is durable over such an extended period of time for these extremely sick patients is enormously encouraging and provided powerful affirmation of our intention to launch the current combination study evaluating CA-4948 with ibrutinib. As a reminder, enrollment in the combination study began in Q1 of this year with CA-4948 doses starting at 200 milligrams and escalating to 300 milligrams BID. We expect to report initial data from this study at a medical meeting in the first half of 2022. Lastly, I'd like to turn toward VISTA program with CI-8993, our first-in-class monoclonal antibody for the treatment of patients with relapsed or refractory solid tumors. We believe CI-8993 is the most advanced anti-VISTA antibody currently in clinical development and has the potential to be a game changing cancer therapy. In June, we hosted a virtual symposium gathering industry taught leaders and respected academics to discuss the emerging understanding and opportunities surrounding this immune checkpoint. The excitement and interest in our program in both the clinical and academic communities is very high, and we look forward to reporting an initial update by year end. Briefly, I'd like to give you a sense of why we're so excited about this program. Existing major checkpoint inhibitors function to enhance T-cell priming such as anti-CTLA4 antibodies or relieve T-cell exhaustion, such as anti-PD-1 or PD-L1 antibodies. All of these have two key limitations. First CTLA4 and PD-1 checkpoints cannot act on T-cells that are stuck in a quiescent state. Second, it is known that CTLA4 and PD-1 effectiveness is actively impaired by myeloid-derived suppressor cells or MDSCs which promote T-cell exhaustion and suppress pro-inflammatory macrophages. In VISTA, we find the checkpoint whose primary role is enforcing T-cell quiescence. In addition, VISTA is a known driver of MDSCs with this dual pronged effect VISTA can sequester a large proportion of T-cells in a quiescent state and prevent them from being acted upon by anti-CTLA4 or anti-PD-1 antibodies. Finally, we know that the expression of VISTA can increase dramatically as a compensatory mechanism during treatment with anti-CTLA4 or anti-PD-1 or PD-L1 therapy. For these reasons, we believe that therapeutic targeting of VISTA will be a crucial addition to the immune oncology arsenal. To wrap-up, I'd like to extend my utmost appreciation to the entire Curis team who continue to work tirelessly in pursuit of these paradigm altering breakthroughs. We're eager to build upon our efforts in the quarters to come and advanced our next generation targeted cancer programs to help patients in need. With that, I'll turn the call over to Bill to review our financial results for the quarter. Bill?

Thank you, Jim. For the second quarter 2021, we reported a net loss of $10.8 million or $0.12 per share on both a basic and diluted basis as compared to a net loss of $6.7 million or $0.17 per share on both the basic and diluted basis for the same period in 2020. Revenues for the second quarter of 2021 and 2020 were $2.3 million and $2.4 million respectively. Revenues for both periods comprised primarily of royalty revenues recorded on Genentech and Roche's net sales of Erivedge. Operating expenses for the second quarter of 2021 were $12.9 million as compared to $7.8 for the same period in 2020. Cost of royalty revenues, $0.1 million for both the second quarter of 2021 and 2020. Research and development expenses were $8.8 million for the second quarter of 2021 as compared to $5.3 million for the same period in 2020. The increase in research and development expenses for the quarter is primarily attributable to increased clinical and manufacturing costs for our programs, as well as increased employee related costs as a result of additional head count. General and administrative expenses were $4.1 million in the second quarter 2021 as compared to $2.4 million, the same period in 2020. The increase in general and administrative expense was driven primarily by higher costs for stock-based compensation, personnel, professional consulting services and legal services. In the second quarter of 2021 and 2020 total other expense was $0.2 million and $1.3 million respectively. Total other expense, primarily consisted of imputed interest expense related to future royalty payments, partially offset in the second quarter of 2021 by a gain related to the extinguishment of debt. As of June 30, 2021, there were approximately 91.6 million shares of common stock outstanding. As of June 30, 2021, Curis' cash, cash equivalents and investments totaled $160.7 million. We expect that our existing cash, cash equivalents and investments should enable us to maintain our planned operations into 2024. With that, I'd like to open the call for questions. Operator?

Ladies and gentlemen, at this time we'll begin the question-and-answer session. [Operator Instructions] Our first question today comes from Justin Walsh from B. Riley Securities. Please go ahead with your question.

Hi, guys. Thanks for taking the questions. Congrats on the progress. I just start off as the VISTA safety data approaches, can you remind us what changes were made to this trial versus prior Janssen trials that increase your confidence of the asset will prove safe? And what would you view as a good outcome to the safety readout?

Thanks, Justin. Really appreciate the question. Bob, you're probably the best person to talk to that.

Yes, thanks Justin. So as you know, the Janssen trials run a number of years ago. Since that time there has been a lot of study of cytokine release syndrome, which was the dose limiting toxicity that they had experienced in one patient on that study with the CAR-T therapies coming out in the oncology field, cytokine release syndrome has been much more manageable and clinicians understand much better how to deal with this. In fact, a number of guidelines have been published since that time, including NCCN guidelines and others. So we've implemented a number of factors around those guidelines into our protocols. And I think also very importantly, we and ImmuNext have done quite a few preclinical experiments to better understand the cytokine release and how to potentially mitigate that. So to that end we've determined that performing a fairly quick desensitization for patients at least in preclinical models in those models we were able to reduce or even completely mitigate cytokine release findings. And so, we've implemented a brief sort of desensitization or dose escalation that takes about a week for patients on a couple of different infusions. And we do that prior to starting the dosing and believe that that will help mitigate this. The end result that we hope to see is that we're able to manage these patients who have a brief cytokine release syndrome at the beginning during and slightly after their infusion. Generally, this goes away fairly quickly. And what we've found and what Janssen actually found also is that the intensity and frequency of getting some cytokine release symptoms after dosing reduces on subsequent doses. So, initially, we'd like to see that we can get through that initial dosing and then continue on with treatment of these patients once they become desensitized to the cytokine release.

Yes. Got it. Yes, go ahead.

Yes. You mentioned what are the – what would be the success factor really for year end for this. There are really two big catalysts for VISTA. The first one is the one we're going to address this year that safety, of course, the longer-term one would be efficacy. The first one was obviously in Janssen's study, they ran into CRs early on and our thesis is CRs is manageable for all the reasons Bob said. So this year, by year-end, what we want to be able to do is fundamentally de-risk that program from a safety perspective effectively that with five more years under our belts both Curis start with and ImmuNext, but also the industry as a whole and our knowledge of CRs that we can manage CRs, and we can get this drug up into the therapeutic range. And then, of course, the next goal will be sometime next year. And that is now we begin the hunt for efficacy somewhere in between that 0.5 and 2.0 mg per kg, but first thing is first. This year is all about de-risking the program, hitting that first really important catalyst of value creation and that is proving that this drug can be dose escalated and that CRs can be managed.

Got it, thanks. And one last question for me. So we previously expected that the CA-4948 plus ibrutinib data by the end of this year, but it looks like we won't get it until the first half of next year now. Has enrollment been challenging? Or are we just seeing the timelines being honed as we move forward?

No, I think everything is moving really quite a pace. We're really pleased with that. I think it's a reflection of – we want to make sure to present these data at a medical conference and just the timing of the medical conferences means if you're going to get the data submitted and all of that, that's going to be a first half of 2022 conference. I think our focus for this year end continues to be on the spliceosome patients in the AML and MDS study, but all nine studies, I think, we're really pleased with the pace of moving on them all and specifically in the enrollment with the combo with ibrutinib.

Perfect. Thank you. That's all the questions for me.

Sure.

Our next question comes from Alethia Young from Cantor Fitzgerald. Please go ahead with your question.

Hi. Thanks for taking our questions and congrats on the progress. This is Nina on for Alethia. We were wondering for VISTA, can you just like characterize where you are in the dose escalation process? And then second – sorry, go ahead.

Go ahead. No, no, go ahead. Sorry.

And second, if you could just share more on why you picked these particular monotherapy populations for CA-4948 and the rationale behind that?

Sure. Well, first and foremost, thank you for joining the call. I appreciate it and for the questions, of course. So let me address the dose escalation question in VISTA simply by saying that we're really going to postpone any discussion of our progress in that to get to year-end. We've been pretty consistent over the course of this year that our goal is to have that update at year-end. And we frankly want to make sure that while we're very pleased with the progress to date, we want to make sure we've got enough experience under our belt by the time we get to year-end to be able to definitively say that we have de-risked the asset that it can be managed and safely dose escalated. And I frankly want to wait in giving any sort of progress update on that program until we get to that point. On the next question on CA-4948, there were a couple of things that are important about the different populations that we're testing in and why we're selecting the ones that we did. So I'll start with – the data on this program have been really exciting not just for us and of course for investors, but the investigators. I have been really excited about it. And it's why we've blown the doors out on investing in this program. That's why we've got nine separate populations ongoing. All of this work really being initiated leading up to ASH last year, but with a positive data at ASH and the money we were able to raise, we were able to put our foot on the accelerator and run all of these studies simultaneously. So that's the first really exciting thing. And the next thing is all of these studies really I think had the ability to generate an incredible amount of value and represent a significant value creation opportunity and therapeutic option for these patients. In AML and MDS, the focus for monotherapy is going to be for those patients, who are part of a population that's directly targeted by the drug. And you may remember the drug has a dual targeting mechanism for AML and MDs purposes, its IRAK4 and FLT-3. So, of course, the patient populations we've chosen there are the IRAK4 population or the spliceosome mutation patients and patients with a FLT-3 mutation. Everybody else is going to get this in combination therapy. In AML and MDS that's with azacitidine and venetoclax because those are the drugs that clinicians would look to today. We want to make sure that we can combine safely with them and then our unique mechanism of action would further their improvement in that broader population. As you go to ibrutinib in B-cell cancers, we look to use this drug wherever you find ibrutinib is being used, long-term, that's the commercial strategy that if you're on ibrutinib today, you're on it precisely because it down regulates NF-kappaB. Well there are two pathways that drive NF-kappaB; one is the BCR pathway that's addressed with ibrutinib. The second is the toll-like receptor pathway that's addressed by our drug by 4948. In our view, if you want to down-regulate NF-kappaB you want to stomp on it as hard as you can with both feet that's with a BTK and it's with 4948. So everybody longer-term in our view ought to be considering hitting NF-kappaB as hard as you can and going on combination therapy 4948 ibrutinib. For regulatory purposes, it gets a little more complicated because of what you want is to get the highest probability study going in as fast as you can, get an answer as fast as you can. So you want to try and identify comparatively aggressive indications, meaning indications, where you can see an effective, the drug more quickly. And also a subset of those indications where ibrutinib gets used, where frankly ibrutinib doesn't do as well. So think of those, those applications or those indications where the NF-kappaB activity is being driven on balance more from the toll like receptor side than the BCR side. So that's why we've chosen the three first indications of the four being assessed in combination with ibrutinib. So there's the BTKi-naïve bucket for marginal zone lymphoma, there's primary CNS lymphoma, and of course, ABC-DLBCL. These would be three comparative – comparatively aggressive indications where ibrutinib gets used. But they're also indications which have been associated with either a toll like receptor activity or mediate activity – activities, which should be amenable to therapy with an IRAK4 inhibitor. And then of course the last bucket is anybody who has responded to ibrutinib in the past, who has sensed become relapsed/refractory. Those patients of course, if you added, if you had gotten a response in the past on ibrutinib. You know that shutting down NF-kappaB was effective. And for whatever has stopped by effective, if you can add 4948 to that regimen, attacking kappaB from a different angle through the toll-like receptor path and bring that patient back under control, we think that's a really compelling case where you can say clearly the difference was adding 4948. So that's really the walkthrough. It the story is of course a complex one, as took look the breadth of AML and MDS, and B-Cell cancers. But in all cases it's taking advantage of 4948 properties as a novel targeting drug going after [indiscernible].

Okay. That makes sense. And thank you for the detail.

Sure.

[Operator Instructions] Our next question comes from Yale Jen from Laidlaw & Co. Please go ahead with your question.

Good afternoon, and thanks for taking the questions as well as congrats on the progress. I'm just going to fall off the previous question regarding 4948 in lymphoma, you patents are also you have ibrutinib resistant patients. What's your sort of expectation and hope the kind of improvement you would like to see considered as a very positive outcome even at this pretty stage of the trial?

Yes. At first, thank you, Yale for the question, I appreciate that. Actually, Bob, if you wouldn't mind, he might be a good person to talk to that.

Yes. Thanks. So if we think about the different populations that Jim mentioned, let me start with the last population you mentioned the adaptive resistance. In this case the patient's disease has been altered ultimately such that the BTK inhibitor is much less or not effective yet, as Jim mentioned, we know that that disease is driven by NF-kappaB. We also know from a variety of preclinical studies done by both us and outside academic investigators that have shown really strong synergy in multiple different systems by targeting IRAK4 or the Myddosome pathway in combination with targeting the BTK pathway. And so in that situation, if a patient has developed resistance on ibrutinib, for example, and then we continue with the ibrutinib and add-on 4948. What we would expect to see would be actual responses by adding on this additional hit on NF-kappaB and knowing that helps synergy we'll hope to start to see objective responses on that study. And that's in a population that's resistant or refractory to ibrutinib or other BTK inhibitor. In the other settings, for example, ABC-DLBCL or primary CNS lymphoma, these are populations where the Myddosome pathway is favored. So for example, in primary CNS lymphoma, we know that the majority of patients have a mid-88 mutation in ABC-DLBCL; probably 40% of those patients have a mid-88 mutation. And in these populations ibrutinib and other BTK inhibitors are somewhat in fact effective, but tends not to get very deep or durable responses. And so here we would expect to see a significant number of durable and deep responses. We ultimately will once we get those data discuss them with the FDA in terms of ultimately what type of benefit the patients are seeing. So we haven't made a statement of what specific response rate we want to see at this point, but those are the types of data points we're be looking for.

Okay. That's very, very helpful. And maybe it's one more question here. In terms of 4948 in all this leukemia study, which anticipated to start in the second half of this year. Are you guys having any sort of a timeline or fine tune the timeline in terms of when some of these studies might started, and thanks?

Yes. Thank you, Yale. So as you can imagine we are moving as aggressively as we can across the Board. So as you know, we've got these nine studies moving in the leukemia side, I think we're especially interested in getting the data on the targeted monotherapy crowds, the splices of mutation and FLT-3 mutation populations. So those are moving of course, the fastest. I think we're also very excited about the studies that you mentioned that are starting in this second half, the combination with azacitidine and venetoclax. The data that we've been able to present at EHA that are in our corporate, our current corporate deck. You can see the combination data pre-clinically is really compelling. We think we've got a very strong case for rapid approval, a rapid approval path with monotherapy with FLT-3; we should have data in splicing zone patients as they say by year end. And then the combination therapy that will take a little longer, but of course, that gets to every other population, the broader commercial story, where every patient that's within on MDS ought to be looking for an IRAK4 inhibitor, and we of course have the lead. So our view would be let's get all of these studies going simultaneously. The one that goes to the fastest is probably the spliceosome crowd, but they're all really important. And we want to make sure that as we're sprinting down the fastest regulatory path, we are following it up very quickly with data that will support the broad application across the spectrum.

Okay, great. That's a very helpful, and again, congrats on the rapid progress.

Thank you so much. I really appreciate your support.

And ladies and gentlemen, with that we'll conclude today's question-and-answer session. I'd now like to turn the floor back over to the company's President and Chief Executive Officer, James Dentzer for closing remarks.

Thank you, operator, 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, ImmuNext and the NCI for their ongoing help and support. We look forward to updating you again, soon. Operator?

Ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.