Curis, Inc. (CRIS) Q2 2022 Earnings Report, Transcript and Summary

Good afternoon, everyone, and welcome to Curis' second quarter 2022 earnings conference call. [Operator instructions] At this time, I'd like to turn the conference over to Curis' vice president of investor relations and corporate communications, Craig West. Sir, please go ahead.

Thank you, Jamie, and welcome to Curis' second quarter 2022 earnings call. Before we begin, I would like to encourage everyone to go to the Curis investors section of our website at www.curis.com to find our second quarter 2022 earnings release and related financial tables. I would also like to remind everyone during -- that during the call, we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and 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; Bill Steinkrauss, chief financial officer and chief administrative 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 Jim. Jim?

Thank you, Craig. Good afternoon, everyone, and welcome to Curis' second quarter earnings call. Every day at Curis, we strive to develop the next generation of first-in-class cancer therapies that meaningfully improve and extend patients' lives. We have several updates for you this quarter. First, as we've noted previously, the path of drug development is seldom a straight line, and the second quarter began with FDA placing a partial clinical hold on our TakeAim studies in leukemia and lymphoma in April. We're having productive discussions with the agency to bring these discussions to a resolution as quickly as possible. Second, we are delighted to announce that we have appointed a new CFO, which I'll talk about more in a minute. Third, the second quarter also saw several positive presentations on emavusertib at ASCO and EHA, both by our internal team at Curis and by several of our partners in academia with whom we are expanding the frontiers of IRAK4 research. These presentations included the first data from the combination arm of the TakeAim lymphoma study, as well as additional data in solid tumors and novel discoveries that are deepening our understanding of IRAK4 biology. In short, we are encouraged that in emavusertib, we have a drug that works as a single agent in exactly the places our research predicted. To start our update tonight, I'd like to welcome Diantha Duvall, who is joining the Curis team as our new CFO. Diantha began her career with PricewaterhouseCoopers and, over the last 20 years, has built an impressive track record of financial leadership at Merck, Biogen, Bioverativ and Genocea. We're delighted to have such a well-respected industry veteran join the team. I'd also like to take this opportunity to thank Bill Steinkrauss. He has been a key leader on the executive team at Curis, and we wish him all the best in his future endeavors. Turning now to our pipeline and our lead asset, emavusertib, our first-in-class program specifically designed to target IRAK4 and FLT3. Emavusertib is currently being evaluated in three clinical studies. First, the TakeAim leukemia study, a Phase 1/2 study with both monotherapy and combination arms for patients with relapsed or refractory acute myeloid leukemia, or AML, and high-risk myelodysplastic syndromes or MDS. Second, the TakeAim lymphoma study, a Phase 1/2 combination study with ibrutinib for patients with relapsed or refractory NHL or other hematologic malignancies. And third, the Phase 2 LUCAS study, evaluating emavusertib in patients with lower-risk MDS. Starting with the TakeAim leukemia study. We continue to work with FDA on resolving the partial clinical hold. We've had productive interactions with the agency and hope to provide an update soon. At ASCO and EHA, we presented positive clinical data, showing early and compelling response rates in AML or MDS patients with spliceosome or FLT3 mutations. These results demonstrate both a well-tolerated regimen and improved anticancer activity compared with the current standard of care. As the leader in IRAK4, we are pleased to be hosting an IRAK4 symposium on October 7th. In this symposium, we'll be bringing together experts from academia, clinicians and other corporates in panel discussions. To be clear, this will not be a forum for a Curis data update. The aim of the symposium is to address and advance topics of key interest to everyone in the IRAK4 community. We'll be releasing more details on this event soon. Now let's turn to our study of emavusertib in B-cell cancers and the TakeAim lymphoma study of patients with NHL and CLL. Our first look at initial data presented at ASCO and EHA showed the results from nine evaluable patients, eight of the nine patients experienced tumor burden reduction, including two CRs and two PRs. We share the excitement of our investigators that one of the observed CRs was in a patient who had received prior treatment with ibrutinib, suggesting that the combination may be able to overcome resistance to ibrutinib. Also at ASCO and EHA this year, we presented work by Curis scientists, describing the novel observation that IRAK4 localizes to the nucleus in cancer cells. When nuclear IRAK4 is found with two NF-kappaB proteins, P50 and 65, this triple presence in the nucleus is associated with better patient responses to emavusertib. This new finding deepens our understanding of IRAK4 biology and its role in cancer and marks an important next step in the development of biomarkers for identifying patients who could benefit from treatment with emavusertib. The ASCO and EHA conferences also saw presentations by our partners in academia, showing emavusertib's potential in several other tumor types, including solid tumors such as gastric cancer, melanoma brain metastases and primary CNS lymphoma. In short, the second quarter was an exciting time for IRAK4 research and expanding the potential of emavusertib. Now let's move to our second asset, CI-8993. The first-in-class monoclonal anti-vista antibody we're developing in collaboration with ImmuNext for the treatment of patients with relapsed or refractory solid tumors. CI-8993 is designed to antagonize the vista-signaling pathway. By blocking vista, a checkpoint associated with T-cell suppression, we hope to increase T-cell-mediated immune function. In preclinical models, addressing vista demonstrates exciting anti-cancer potential, both in monotherapy and in combination with CTLA4 and PD1. We believe CI-8993 is the most advanced anti-vista antibody currently in clinical development, and we are pleased to announce that we have cleared the 0.6 milligram per kilogram dose level in our dose escalation study and are currently enrolling at the dose level of 1 mg per kg. We are hosting the second annual vista symposium this year on September 23rd. As with the IRAK4 symposium, this will not be a forum for a Curis data update. The aim of the symposium is to address and advance topics of key interest to everyone in the vista community. We look forward to providing a Curis data update later this year. In summary, we're pleased with the progress we've made this quarter. We're excited to have Diantha onboard, and we look forward to providing important updates on both emavusertib and CI-8993 in the weeks and months ahead. With that, I'll turn the call over to Bill to review our financial results for the quarter. Bill?

Thank you, Jim. Curis continues to execute on its strategy from a place of financial strength. For the second quarter of 2022, Curis reported a net loss of $15.9 million or $0.17 per share on both a basic and diluted basis, as compared to a net loss of $10.8 million or $0.12 per share on both a basic and diluted basis for the same period in 2021. For the six months ended June 30, 2022, we reported a net loss of $32 million or $0.35 per share, as compared to a net loss of $20.8 million or $0.23 per share for the same period in 2021. Revenues for the second quarter of 2022 and 2021 were $2.4 million and $2.3 million, respectively. Revenues for the six months ended June 30, 2022 and June 30, 2021 were $4.5 million. Operating expenses for the second quarter of 2022 were $17.5 million, as compared to $12.9 million for the same period 2021. Operating expenses for the six months ended June 30, 2022 were $34.6 million, as compared to $23.9 million for the same period 2021 and comprised the following: cost of royalty revenues, which comprised amounts due to third-party university patent licensors in connection with Genentech and Roche's Erivedge net sales were less than $0.1 million for the second quarter of 2022, as compared to $0.1 million for the same period in 2021. Positive royalty revenues for the six months ended June 30, 2022 were $0.1 million, as compared to $0.2 million for the same period 2021. Research and development expenses were $12.3 million for the second quarter of 2022, as compared to $8.8 million for the same period in 2021. The increase was primarily attributable to increased consulting services and higher personnel costs as a result of additional headcount. Research and development expenses were $23.8 million for the six months ended June 30, 2022, as compared to $15.5 million for the same period 2021. General and administrative expenses were $5.1 million for the second quarter ended June 30, 2022, as compared to $4.1 million for the same period in 2021. The increase in G&A expense was driven primarily by higher costs for personnel, stock-based compensation and insurance as compared to the prior year. General and administrative expenses were $10.8 million for the six months ended June 30, 2022, as compared to $8.2 million for the same period in 2021. For the second quarter of 2022 and 2021, total other expense was $0.9 million and $0.2 million, respectively. Total other expense primarily consisted of imputed interest expense related to royalty payments, partially offset in the second quarter of 2021 by a gain of $0.9 million related to extinguishment of debt. Total other expense was $1.9 million for the six months ended June 30, 2022, as compared to $1.3 million for the same period in 2021. As of June 30, 2022, Curis' cash, cash equivalents and investments totaled $107.2 million, and there are approximately 91.8 million shares of common stock outstanding. We are in a strong cash position and continue to expect that our existing cash and investments should enable us to maintain our planned operations into 2024. With that, I'd like to open the call for questions. Operator?

[Operator Instructions]. Our first question today comes from Soumit Roy from Jones Research. Please go ahead with your question.

Would love to get some, if you have any, color on any recent FDA interaction where we were originally thinking with an average of three months turnaround time from the FDA to hear on the clinical hold, if August is still a reasonable time line. Or you think there is any reason to think it could be further delayed?

Thank you, Soumit. Thanks for calling in and for your question. So no, actually, I think our experience in this as we look at AML and the prior companies they put on hold, I think they've put five trials in AML on hold in the last 18 months. It generally takes a quarter or two for them to finish their process, asking their questions and collecting the data. So I think we're on track for that as far as I know. But I'd say, the discussions are going very well. As you may remember, the FDA had questions about the patient who died. They want more data on that, which makes sense. And of course, they've got some questions about dose and Project Optimus. Our hope would be that they get comfortable as we do, that this drug appears to be safe, that it offers a compelling risk-benefit profile in an area of severe unmet need. Most patients in the relapsed/refractory space, as you know, have a median survival of 2.3 months. So I think the FDA, I hope, is going to come out where we are, which is this is a very compelling alternative for clinicians and will release that whole process, but they need to finish their review. So my hope is that they will in due time, and discussions seem to be going well.

Great. My second question is on the low-risk MDS, the investigator on trial. If you can provide us any status on that. Is that trial also on enrollment hold? Or that's still enrolling?

No. So that's not our study, so that one wouldn't be affected by the FDA hold. That's an IST in Germany, run by the 17 sites with Dr. Platzbecker. But we don't have control or visibility into that study as an IST. As you know, that's going into a population which is primarily treated with best supportive care, which is, of course, by definition, not disease modifying. So my hope is that we're going to have a readout from that, and we continue to hope that there would be one by the end of this year. But of course, we have no control over that of where he is in enrollment or what those data look like at this point in time. We're very excited about the outcome. We think it's the potential to put an oral disease-modifying drug into a clearly unmet need space. But as I say, you will know when we know when we hear from Dr. Platzbecker that the team is ready to give an update on their results so far.

Great. Thank you so much for taking my questions.

Of course. Thank you.

[Operator instructions]. Our next question comes from Li Watsek from Cantor Fitzgerald. Please go ahead with your question.

I guess, I just want to follow up on the clinical hold. I just wonder if you can share some color on, I guess, where you are in terms of the alignment with the FDA on some of the key issues like dose selection and perhaps what additional information may be needed. And also curious if you had any discussion around the potential for accelerated approval pathway.

This is Bob Martell. As Jim said, we're in discussions with the agency about this. And so let me sort of step back and give sort of a high-level overview of the situation, maybe a little bit more detail than what Jim provided so far. Obviously, we take safety extremely seriously and are always saddened when a patient passes. And that's the reason why we have looked very closely at this particular case where this patient on the study eventually did pass. Let me give you a little bit of background on this. So this patient came on to study with this therapy, a patient with AML, was managed quite successfully on the study for over eight months. And in the ninth month of treatment, unfortunately, this patient declined fairly rapidly, was admitted to the emergency department and unfortunately died rather quickly. We know that the patient, again, was managed successfully up to the last point. Unfortunately, when patients pass away as such, many things are going on. They're at high risk for sepsis and other complications. And so part of what we wanted to do and what the FDA requested us to provide information on is all the details around that. And so we are in those discussions and providing that level of detail to the agency. And I think, it's also important to put this into context. This is a patient with AML who had previously been treated with a hypomethylating agent. And we know from the literature that the median survival of that patient population is only about two and a half months. It's extremely short. So unfortunately, the natural history for these patients allows them just a couple of months of survival. We note that this particular patient was in the ninth month of treatment. And so we're treating a very serious population. And so we think that it's important to put that context over this. The other main issue that Jim mentioned was the dose selection. So the FDA has become very concerned about -- across the oncology indications and all studies, in fact, and we've seen this many times with other companies in recent times, wanting to participate in the dose selection for the ultimate recommended dose going forward before pivotal trials. And I'll get to your question about our path forward for registration in a minute. But this is part of what they requested, was a little bit further explanation about dose choice and the appropriate dose to take patients forward. Now we know that on this study, we actually have three doses where patients have had efficacy and that have cleared the safety hurdle on the study, meaning that they're below the maximum tolerated dose, so 200 milligrams, 300 milligrams and 400 milligrams. We've provided them with a significant amount of data to sort through those different doses and the exposures. And so that will be part of our discussion as well to understand where we would move forward in pursuing a registrational trial. And then just to get briefly to your last question on what is our regulatory path. Again, in this situation, there is not a lot -- actually, nothing formally available for patients. Once patients have progressed following hypomethylating agents, really, clinicians are left with only trying to give chemotherapy off the shelf, which is not necessarily approved in this indication. And the outcomes from this tend to be extremely poor, nothing approved for these particular indications. So we think that this could be an opportunity for rapid development, perhaps accelerated approval. So we've discussed previously the possibility of a single-arm study with response rate. We note that our reported response rate for AML post-HMA has been quite solid so far in the patients that we've treated. And even in MDS, we've seen a very consistent reduction in blast counts and the majority of patients achieving a MarrOCr. So we feel very encouraged. The FDA is also recently desiring more comparative trials. And so, ultimately, we hope to discuss, at some point in the near future, our plan with the agency. We haven't specified our time line yet for doing that, but we will discuss both of those options as potential paths forward. Did that answer your questions, Li?

Yeah, great. Thanks for the color. I guess, another question, I guess, is on the dose for the combination with ibrutinib. I guess, do you think you can move forward with 200 mg? Or do you think you need to explore perhaps a lower dose? And can you just share more details around the safety data at 200 mg?

Sure. So this is Jim again. Hi, Li. Yeah, as Bob said, we are very fortunate we're in this position where we've got multiple doses of emavusertib that appear to be both safe and effective. And our hope would be, as the FDA reviews the data, whether it's -- whether we're looking at monotherapy or combo therapy, we're getting really strong responses in every single place we're testing. Monotherapy and combination therapy, AML with spliceosome, MDS with spliceosome, AML with FLT3 and lymphoma in NHL and CLL. So the performance of the drug is clear. I hope that the FDA is going to agree with us that the risk-benefit profile looks really quite attractive and that emavusertib offers a novel way with a novel mechanism to give clinicians and their patients an extra tool that could be very valuable in addressing cancer. Of course, it is an expectation with Project Optimus, as Bob said. The FDA is very interested in learning more about doses. Our hope would be that, as I said, they're going to complete their review, and they'll come to where we are, which is the drug looks to be a really compelling novel alternative. And that what really should happen is that we should be dosing more patients and learning more about those doses and proceeding with the next step in clinical development. But I don't want to get too far ahead of ourselves. As I said, we're having discussions with FDA now, and I hope that they'll come out in that sort of positive place.

Thanks and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference call over to the company's president and chief executive officer, James Dentzer, for any closing remarks.

Thanks, Jamie, and thank you, everyone, for joining today's call. And as always, thank you to our 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?

The conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.