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,…

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…

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.