Curis, Inc. (CRIS) Q3 2022 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Curis' Third Quarter 2022 Business Update Call. All participants will be in listen-only mode. [Operator Instructions] After the company’s prepared remarks, call participants will have an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Curis' Vice President of Investor Relations and Corporate Communications, Craig West. Please go ahead.

Thank you, and welcome to Curis' third quarter 2022 business update call. Before we begin, I would like to encourage everyone to go to the Investors section of our website at www.curis.com to find our third quarter 2022 earnings release and related financial tables. I would also like to remind everyone 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; Diantha Duvall, Chief Financial 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.

Thanks, Craig. Good afternoon, everyone, and welcome to Curis' third quarter business update call. Every day, we strive to develop the next-generation of first-in-class cancer therapies that meaningfully improve and extend patients' lives. Earlier today, we announced that based on new data we have received in our TakeAim Leukemia study, we've made the decision to focus the company's resources on accelerating the path of bringing emavusertib to patients. This focus on emavusertib and the corresponding deprioritization of our other programs will enable a reduction of approximately 30% of the company's workforce and is expected to extend the company's cash runway into 2025. At this time, I'd like to acknowledge that while we are excited about the heightened focus of emavusertib, we understand the impact of deprioritizing our other programs has on our valued colleagues and friends who worked on them. We're grateful for all of their hard work and we wish them well as they pursue new opportunities. Let me turn now to discuss emavusertib and the development activities going on to drive this important asset forward, starting with our recent accomplishments. During the quarter, we were pleased to announce that the FDA has approved the reopening of enrollment in our TakeAim studies in Leukemia and Lymphoma. Also in the quarter, we sponsored the first annual symposium on IRAK4. This event brought together academic and industry experts to discuss the latest groundbreaking research in IRAK4. The event was well attended, informative and frankly, it was a lot of fun to hear about all the great work going on in this important answer – area of cancer biology. We were honored to make the event possible and to host so many of the brilliant pioneers advancing the science of IRAK4. This coming quarter, we'll be releasing new data in our TakeAim Leukemia study of emavusertib at the 64th Annual Meeting of the American Society of Hematology in New Orleans. These data will include 11 additional patients treated with monotherapy in our targeted populations, those patients whose disease harbors FLT3 or spliceosome mutations. These 11 new patients bring the total number of patients with targeted mutations to 24. As many of you know, there are currently no drugs approved for relapsed/refractory AML or MDS patients post treatment with HMA. The only published data available for the post HMA setting are for MDS patients treated with chemotherapy, where in 8% ORR was observed. We are very excited to be developing what we hope will be a game-changing therapy for patients who face such a significant unmet need. As a reminder, emavusertib is currently being evaluated in three separate 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. The TakeAim Lymphoma study, a Phase 1/2 combination study with ibrutinib for patients with relapsed or refractory NHL and other hematologic malignancies; and third, the Phase 2 LUCAS study evaluating emavusertib in patients with lower risk MDS. The TakeAim Leukemia study is open for enrollment in monotherapy at the 200-milligram dose level. We plan to enroll at least nine more patients at this dose and discuss data from those patients with FDA. Provided we received the agency's agreement in those discussions. We plan to reopen enrollment in the study's expansion arm as well as in a combination arm, investigating emavusertib with azacitidine or venetoclax. Staying with leukemia and MDS for a moment. We believe that the LUCAS study in lower-risk MDS could have a data readout in the first half of 2023. Recall that the LUCAS study is an investigator-sponsored study led by Dr. Uwe Platzbecker, Chairman of EHA’s Scientific Working Group on MDS. We’re excited to see what emavusertib shows in this study as splices on mutations are among the most prominent mutations in lower-risk MDS. In an exciting new and more recent development, we note that Curis will be presenting at SITC right here in Boston later this week. This presentation will highlight an investigation of the immune modulation that occurs with IRAK4 inhibition in myeloma brain metastases. This is yet another example of the vibrant level of scientific research going on around IRAK4 and demonstrates that emavusertib’s potential quite possibly extends to solid tumors as well as leukemia and lymphoma. In summary, progress this quarter is highlighted by receiving FDA approval to reopen enrollment in both of the TakeAim studies, convening the first IRAK4 symposium, announcing the release of new clinical data at ASH, and announcing the extension of the company’s cash runway an additional year into 2025. It has been an eventful quarter, and we look forward to providing important updates on emavusertib at SITC, ASH and at other events in the weeks and months ahead. With that, I’ll turn the call over to Diantha to review our financial results for the quarter. Diantha?

Thank you, Jim. Curis today has a strong foundation, both operationally and financially to allow us to concentrate on emavusertib development. For the third quarter of 2022, Curis reported a net loss of $13.3 million or $0.14 per share as compared to a net loss of $11.1 million or $0.12 per share for the same period in 2021. Curis reported a net loss of $45.3 million or $0.49 per share for the nine months ended September 30, 2022, as compared to a net loss of $31.8 million or $0.35 per share for the same period in 2021. Revenues for the third quarter of 2022 and 2021 were $2.8 million and $3 million, respectively. Revenues for the nine months ended September 30, 2022 and September 30, 2021, were $7.3 million and $7.5 million, respectively. Operating expenses for the third quarter of 2022 were $15.4 million as compared to $13.1 million for the same period in 2021. Operating expenses for the nine months ended September 30, 2022, were $50.1 million as compared to $37 million for the same period in 2021 and consists of the following: Cost of royalty revenues, which is comprised of amounts due to third-party university patent licensors in connection with Genentech and Roche’s Erivedge net sales were $0.1 million for the third quarter of 2022 as compared to $0.2 million for the same period in 2021. Cost of royalty revenues for the nine months ended September 30, 2022, were $0.2 million as compared to $0.4 million for the same period in 2021. Research and development expenses were $10.8 million for the third quarter of 2022 as compared to $8.6 million for the same period in 2021. The increase in research and development expenses for the quarter is primarily attributable to increased personnel and consulting costs, partially offset by decreased manufacturing and clinical development costs. Research and development expenses were $34.6 million for the nine months ended September 30, 2022, as compared to $24.1 million for the same period in 2021. General and administrative expenses were $4.6 million for the third quarter ended September 30, 2022, as compared to $4.3 million for the same period in 2021. The increase in general and administrative expenses was partially – was driven primarily by the timing of costs. General and administrative expenses were $15.3 million for the nine months ended September 30, 2022, as compared to $12.5 million for the same period in 2021. For the third quarter of 2022 and 2021, total other expense was $0.7 million and $1 million, respectively. Other expense primarily consisted of imputed interest related to the future royalty payments partially offset by interest income. Other expense was $2.5 million for the nine months ended September 30, 2022, as compared to $2.3 million for the same period in 2021. As of September 30, 2022, Curis’ cash, cash equivalents and investments totaled $98.7 million, and there were approximately 96.4 million shares of common stock outstanding. We are in a strong cash position and expect that our existing cash, cash equivalents and investments should enable us to maintain our planned operations into 2025. With that, I’d like to open the call for questions. Operator?

[Operator Instructions] Our first question is from Ed White with H.C. Wainwright. Please go ahead.

Good afternoon. Thanks for taking my questions. A couple of questions on the headcount reduction. So is the impact going to be felt more in the G&A or the R&D expense line? And should we be seeing the impact starting in the fourth quarter? Or is this going to be really a 2023 event for the impact on expenses?

Yes. Thanks, Ed. First, thanks for taking the question. So the impact is really – it’s across the company. And it is both G&A and R&D. Obviously, it starts with everything that’s not directly related to emavusertib. So we are absolutely concentrating all of our resources towards emavusertib and therefore, anything that wasn’t directly related was something that we could live without. And if we could live without it and that extended our cash runway without having to do anything else, I mean this is the luxury of starting with such a strong balance sheet that we have this flexibility. But with these data in it becomes increasingly clear that this is a drop and this needs to get to NDA submission with haste. So we’re going to dedicate and redouble all of our efforts to make that happen and insulate ourselves from the need to raise money in the meantime. So yes, broad-based across G&A and R&D, there will be some impact in Q4. But it’s really as you look out over the full two-year period that follows that you’ll see that cash runway impact.

Okay. Thanks, Jim. And then on – I’m just curious with the VISTA program, will we be seeing more data from 8993? What’s going to happen to patients that are currently enrolled, if there are any? And is – are you looking at this as just halting the program for now? Or is this something that you might want to partner or out-license for someone else to bring forward?

Yes. I think this is as more of a pause of suspension of activity. We’re not enrolling new patients in that study. As you know, we love the VISTA target. I think it’s fantastic. But in a world where you’ve got two programs in the clinic, and one of them has really not just proven data that it shows it works consistently from theory to lab to clinic, but you now have a new batch of clinical data that shows you’ve got an eye to NDA. And then the other program is still in dose escalation. If you can’t afford to do both, boy, the decision is clear, you go with the one that’s got the proven data. So I love VISTA as a target, but we need to take the effort and the money and the people that are dedicated to that program right now and be laser-focused on emavusertib.

Okay. That makes sense. Thanks for taking my questions.

Sure. Thank you.

The next question is from Soumit Roy with Jones Research. Please go ahead.

Hi, everyone. Congrats on all the progress. A quick one on the expected ASH data from the monotherapy and the combo arm. Could you give us any color on what kind of duration of drug these patients will be just 28 days or a little longer than that since you just started enrolling?

Yes. So it’s a little longer than that. And it includes data for some patients. As you may remember, we were put on clinical hold last spring. So we had some patients that had just started the study before the FDA halted enrollment of new patients. So we’ve got the data is related to those patients incrementally. I do think, obviously, it’s a significant add to the data set. It’s almost doubling the number of patients we’ve got with the targeted mutation. So I think it’s a very meaningful update and really looking forward to talking about the results of how those patients are doing when we get to ASH.

The venetoclax combo that started recently, right, there?

Well, that started again before the FDA hold. So any patients that were started – if you dose drug for sake of argument, 24 hours before the hold came in, you stayed on drug. The FDA didn’t ask us to take people off drug. They just said, don’t put more on. So we had already started putting patients on combination therapy. As you can imagine, investigators are really excited about combo therapy and monotherapy with this program. And so anybody that was – that started the study shortly before the FDA told us to stop adding new ones, was able to stay on study, and we’ve got five of those patients that we’re going to talk about at ASH.

Okay. That’s really helpful. And one last question. If you can provide any color, like what are you seeing these new patients are being more spliceosome mutant patient? Or are you seeing more FLT3 mutant patient getting enrolled?

Yes. So I want to be a little cautious about saying too much about the data before we get to ASH. I’d just say that, look, we are really excited about this program. This is the first new target identified in AML and MDS in years. And not only is it the newest target, but coincidentally, it’s the largest target. It looks like every patient or virtually every patient across the spectrum of AML and MDS over expresses that long-life form of IRAK4 and at least half the population has a very heavy over expression of that kinase. So we expect that the excitement is going to continue. As long as the data stay consistent, theory to lab to clinic that if you have lots of IRAK4 long, monotherapy should be sufficient to knock it down and knock it down hard. And if you have a little bit of IRAK4 out, it’s still a driver of disease. It’s simply not the only driver of disease. Those will be the patients that benefit from combo therapy. So we’re going to see that as we move from theory to the lab, the data were really consistent and attractive, now that we’ve doubled the data set in our targeted population, have we been able to maintain that level of consistency in the data and should the excitement be building, not just at the company and among investors, but frankly, among physicians and patients. That's what we're eager to talk about when we get to ASH.

Okay, thank you for taking the questions.

[Operator Instructions] The next question is from Li Watsek with Cantor Fitzgerald. Please go ahead.

Hi, thank you for taking my questions. So a quick one on ASH, for the 11 additional enrolled patients. By the time of the presentation, could you give us a sense of how many you'd be able to get a potential efficacy read on? I know it's a little early.

Yes, we're going to – thank you, Li, first for the question. We're going to be talking about efficacy for all 11 patients. So we're going to be looking at an efficacy pool of 24 patients with a targeted mutation. So obviously, we consider this a significant and meaningful update. And as I said, we're really excited about doing it. Stay tuned.

Great. Thank you. And just one follow-up. When do you think you'd potentially be able to go back to the FDA with these new patient data and then discuss the next steps for AML?

Yes. It's a great question. So let's step back in time, just as a reminder, when the FDA put us on hold in the spring, they had three fundamental questions. The first one was there was a patient who died and they wanted to make sure that, that wasn't an issue with the drug or the study in any way. And then second, they knew that we had an early signal, it was rare, but a signal in CPK elevation in rhabdo. They wanted to make sure that wasn't a problem in the index patient, in the patient death or in any other patients, make sure that they didn't need to change our protocol in any way. Are we identifying and managing CPK elevation in rhabdo appropriately. And then third, they asked us about dose, Project Optimus, which dose is the right dose taking the recommended Phase 2? So we were able, over the course of the summer. We said this in the beginning, and I'm glad, of course, to be able to say now that it worked out that way. The FDA was going to get comfortable as we were as they learned more about the patient death that this is a patient with relapsed/refractory AML who had a life expectation of 2.3 months in the literature. That patient died in month nine. Our view would be that patient – the question shouldn't be, why did the patient die? The question should be, how did that patient get to month nine? And the answer is, of course, the drug. The patient eventually did progress and the FDA, of course, got comfortable with that as they reviewed more data. The second question was on CPK elevation in rhabdo. We do know it is rare to see it in our study, but we do see it. We do know that our drug can exacerbate a CPK elevation in some patients. We do know that there are confounding factors and we were able to identify them in the data with FDA. If you're on a statin, if you're on a fibrate, if you're a heavy exerciser, you will see CPK elevation, but when you know exactly what to look for, the protocol has really good language for identifying it, training the patients doing blood draws to see if there is a CPK elevation and the procedures are in the protocol for managing effectively, and we didn't have any patients have renal complication, which was obviously terrific. The FDA reviewed all of our procedures and all of our data and of course, got comfortable with that as well. It was the last question on dose and this is really getting to answer your question directly, that the FDA was able to focus on the most and would involve most of the discussion. In the context of Project Optimus, where the FDA wants to know and be involved in which dose moves forward in drug studies. Emavusertib represents an ideal drug for that purpose. We studied and cleared for safety purposes, 200 milligrams, 300 milligrams and 400 milligrams and all three dose levels got responses. That's the perfect place for FDA to want to sink their teeth in. Now we came back, suggesting that between 300 and 400, there was no efficacy increase but there was a risk that there might be some off-target effect. We were saturating the target of 300, so it didn't make sense to go to 400, 300 was better between those two. Between 200 and 300, we feel as though when we run our exposure analysis, there is a higher probability of getting a response of 300 milligrams and therefore, 300 is better than 200. And the FDA said, okay, we appreciate that logic. That makes sense. We'd just like to see a few more patients at that lowest dose level to make sure we agree. And so the negotiation with FDA was all about how many more patients do you need to be able to see to help us decide is 200 or 300 the appropriate recommended Phase 2 dose, and we agreed on the number nine. So we're going to spend the next – this quarter, of course, now that we're open for enrollment where the blocking and tackling is in process of getting all of our sites open. And then, of course, we're going to quickly move into enrolling those nine additional patients. And my hope would be that sometime early to mid next year, we've got those patients on study. We can run the analysis on them, build the briefing book and have that discussion with FDA and one of two outcomes is going to happen. Either the data is going to come back exactly the way we thought and the way the early data suggested and 300s or dose and FDA will agree or frankly, we are wrong. And when we put nine more patients on it 200 milligrams, we get a bunch of CRs at 200 milligrams. In which case, you know what the FDA turned out to be right or at least the question turned out to be valid. And we will then move forward with 200 milligrams as our dose. But we should know that sometime by mid next year would be my guess. That’s a really long answer, but I wanted to make sure to address it thoroughly. Did that help?

Thank you. Yes, appreciate that very much. Thank you.

Okay, thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to the company's President and Chief Executive Officer, James Dentzer, for any closing remarks.

Excellent. Thank you, operator, and thank you, everyone, today for joining 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. Thanks, Gary.

Thank you. The conference has now concluded. Thank you again for your participation. You may now disconnect.