Curis, Inc. (CRIS) Q4 2022 Earnings Report, Transcript and Summary

Good morning, and welcome to the Curis Fourth Quarter 2022 Business Update Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Diantha Duvall, Curis' Chief Financial Officer. Diantha, please go ahead.

Thank you, and welcome to the Curis Fourth 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 fourth quarter 2022 business update 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; 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 like now to turn the call over to Jim.

Thank you, Diantha. Good morning, everyone, and welcome to Curis' Fourth Quarter Business Update Call. This past quarter, we made important progress with our lead clinical candidate, emavusertib, which is currently being evaluated in two clinical studies: 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; and the TakeAim Lymphoma study, a Phase 1/2 combination study with ibrutinib for patients with relapsed or refractory NHL and other hematologic malignancies. We were especially pleased to present an update of clinical data from the TakeAim Leukemia study, in which AML patients with a FLT3 mutation had a CR rate of 29%. AML patients with a spliceosome mutation had a CR/CRh rate of 22% and MDS patients with a spliceosome mutation had an overall response rate of 45%, with all five responses achieving a marrow Complete Remission. This update doubled the size of our earlier data set and reaffirmed emavusertib's potential to be an important therapeutic alternative for patients with AML or MDS. We've also made important progress in our work to resolve the partial clinical hold on our leukemia study. In last quarter's call, we announced that the FDA had approved the reopening of our clinical sites so that we could enroll nine additional patients at the 200-milligram dose level to facilitate discussions with FDA on the Recommended Phase 2 Dose or RP2D and the resolution of the partial clinical hold. We're pleased to announce today that we have completed the reopening of our sites, and have also completed the enrollment of the nine additional patients requested by FDA. This is ahead of schedule, and we believe reflects the excitement surrounding this novel therapeutic and the critical unmet need in this sorely underserved patient population. We expect to collect data for these patients in Q2 and meet with FDA in Q3 to review those data. We also continue to enroll in our TakeAim Lymphoma study in which we are focusing on primary CNS lymphoma and treating patients with the combination of emavusertib and ibrutinib. In short, we had a very productive end of 2022 and that momentum is carried forward into 2023. We look forward to working with the FDA in the months ahead to gain alignment on RP2D in our TakeAim Leukemia study and resolution of the partial clinical hold. With that, I'll turn the call back over to Diantha to review our financial results for the quarter. Diantha?

Thank you, Jim. For the fourth quarter of 2022, Curis reported a net loss of $11.3 million or $0.12 per share as compared to a net loss of $13.6 million or $0.15 per share for the same period in 2021. Curis reported a net loss of $56.7 million or $0.61 per share for the 12 months ended December 31, 2022, as compared to a net loss of $45.4 million or $0.50 per share for the same period in 2021. Revenues for the fourth quarters of 2022 and 2021 were $2.9 million and $3.1 million, respectively. Revenues for the 12 months ended December 31, 2022, and December 31, 2021, were $10.2 million and $10.6 million, respectively. Operating expenses for the fourth quarter of 2022 were $13.1 million as compared to $15.7 million for the same period in 2021. Operating expenses for the 12 months ended December 31, 2022, were $63.2 million as compared to $52.7 million for the same period in 2021. And consisted of the following: royalty revenues, which comprised amounts due to third-party university patent licensors in connection with the Genentech and Roche Erivedge net sales were $0.1 million for the fourth quarter of 2022 as compared to $0.2 million for the same period in 2021; cost of royalty revenues for the 12 months ended December 31, 2022, were $0.3 million as compared to $0.5 million for the same period in 2021; research and development expenses were $8.7 million for the fourth quarter of 2022 as compared to $10.8 million for the same period in 2021. The decrease in research and development expense for the quarter is primarily attributable to decreased personnel, manufacturing and clinical development costs. Research and development expenses were $43.3 million for the 12 months ended December 31, 2022, as compared to $34.9 million for the same period in '21. General and administrative expenses were $4.3 million for the fourth quarter ended December 31, 2022, as compared to $4.8 million for the same period in 2021. The decrease in general and administrative expenses was driven primarily by a decrease in personnel costs. General and administrative expenses were $19.6 million for the 12 months ended December 31, 2022 as compared to $17.3 million for the same period in '21. For the fourth quarters of '22 and '21, total other expense was $1.1 million, respectively. Other expense was $3.7 million for the 12 months ended December 31, 2022, as compared to $3.4 million for the same period in 2021. Other expense net for the year ended December 31, 2022, primarily consisted of expense related to future royalty payments, partially offset by interest income. Other expense net for the year ended December 31, 2021, primarily consisted of imputed interest expense related to future royalty payments, partially offset by a gain recognized upon the forgiveness of a PPP loan. As of December 31, 2022, Curis' cash, cash equivalents and investments totaled $85.6 million, and there were approximately 96.6 million shares of common stock outstanding. We continue to have a strong cash position and expect our existing cash, cash equivalents and investments should enable us to maintain our planned operations into 2025. With that, I'd like to open up the call for questions. Operator?

[Operator Instructions] And our first question will come from Ed White of H.C. Wainwright.

Jim, previously, you had said that TakeAim Lymphoma, you had expected data in 2023. Now that we're in 2023, can you give us a little bit of guidance as to when we should expect to see that data in this year?

Thanks, Ed. Thanks for calling in. Yes, I think our expectation remains the same, that we're hoping to provide an update by year-end. If things change between now and then, of course, we'll let you know. But we're very pleased with where we stand on both studies.

Great. And you didn't mention the VISTA program at all. I know it's been halted. I just wanted to get your thoughts on -- is anything changing there? Is there any thoughts being given to restarting this program in 2023? Or is that perhaps more out there further?

Well, yes, I think it's premature for us to think about restarting it just yet. Remember, the reason we paused it had nothing to do with our excitement about the program. It's a terrific target. It's a terrific program. We were making really nice progress I thought. I think it was more about -- given the financial climate, we needed to cut back our cash burn in order to ensure that cash went to 2025. And until we get to a point where we're confident that the market is different or that we've got the ability to access cash that doesn't put any compromising impact on to IRAK4, we need to go all in on IRAK4. So as I said, we're really excited for where we are right now. I think we're in a great position to add value to the IRAK4 program this year. And we'll be keeping our eye on the financial markets more broadly as we go through the course of 2023.

Okay. Since you brought up financials, maybe a question for Diantha, just regarding the -- your thoughts on R&D expense throughout the year as the development of emavusertib gets back on track, how should we be thinking about the ramp or perhaps just not a ramp or flattening of the R&D expense?

So Ed, if you recall, we announced our reprioritization in November. And I think Q4, as we said, the costs are coming down. So I think sort of where we sit in Q4 will likely sort of be the sort of ongoing run rate, although I will say it could come down a little bit further just by virtue of the fact we did not avail ourselves with a full quarter post reprioritization.

The next question comes from Soumit Roy of JonesTrading.

The nine patients, you mentioned, the additional new patients got enrolled. Are these all AML patients or they are AML and MDS, if you can give us some idea? And also, do you think if you can provide any color on if they are very late line patients as you have seen prior to the whole enrollment hold today, you are getting more late-line patients?

Hey, Soumit. This is Bob Martell. Yes, we're currently really trying to address the FDA's question around the dosing in particular, at the lower dose of 200 milligrams. And so we've enrolled these nine patients as part of the regular Phase 1 protocol, which is open to both AML and MDS. We noticed that patients -- many of the patients that we've enrolled on the study have had lots of prior lines of therapy. And that's obviously a challenging population to treat. So while we're not restricting per se, we always seek patients who’re perhaps a little bit earlier in their lines of therapy. But for these nine patients, we haven't made specific guidelines.

Totally understandable. That's really helpful. And one last question is, you previously had four patients on emavusertib and venetoclax combination with 50% response rate. Can you confirm if these patients are still being treated?

Yes. We haven't really given any updates on -- since the ASH presentation, we're not prepared on this call to provide any further detail other than the fact that the data that we saw was quite impressive where we had deep responses in the patient's AML, MDS, Three out of the four patients who had responses -- or assessments available had pretty dramatic reductions in their blast counts. And as you mentioned, two of them with getting their blast count back to normal. So as you know, just to talk a little bit to the mechanism, venetoclax hits BCL2. Well, the other major anti-apoptotic factor in these patients, that's the cancer from undergoing apoptosis is MCL1. And in fact, hitting IRAK4 reduces MCL1. So we think this is a great potential combination from a mechanistic standpoint, and we're really excited, ultimately to get more data on that combination.

The next question comes from Yale Jen of Laidlaw.

Just for the nine patients you recently completed, are -- they have any sort of difference compared to the prior patients? Or they are very much similar to the ones you have enrolled before?

Yes. Hey, Yale Jen. I would say there's basically similar for all intents and purposes to the prior patients under Phase 1. In general, we're enrolling patients, essentially last line patients who've had all available therapies. And so again, these patients are in a very difficult situation. And like we've said before, the fact that we've been seeing efficacy -- such striking efficacy in the earlier patients is pretty amazing, honestly. So we're just continuing to enroll that same population. Eventually, once we identify a recommended Phase 2 dose, we'll be, as we've mentioned, selecting targeted patients who are much more likely to respond. So patients with the two splicing factor mutations, SF3B1 and U2AF1, we’ll be selecting only those patients going forward once we get to our recommended dose. Similarly, the FLT3 mutation as well, that's another selective patient population that we'll be investigating in the future as soon as we get our recommended dose.

Okay. Great. And maybe just to elaborate a little bit more in terms of the previous question, which is that what you -- what should we see any read-through from the ASH meetings, just the data as presented not too long ago? And thanks.

Well, I think the biggest read-through from my perspective was the fact that, as you remember, back in 2022, we had, had pretty striking data early in the year and towards the ASH of the year prior. One of the exciting things about ASH this last year was that we essentially doubled the patient population and continued to see -- continue to see very dramatic activity, including multiple new responses. Oftentimes, you can get a signal in the first couple of patients and then it never pans out in the end. Well, in this case, it's continuing as we expand our database. And also the fact that these patients are having really durable responses when they get a response over six months. And almost all of the patients had, had prior HMA, which is, as you know, a very difficult patient population to treat. The median survival, as we've said before, in AML for these patients is about 2.5 months. So we've been really excited to see the data that we've gotten so far. And that was really the big read-through is that we continue to get it as we're, like essentially doubling the patient population.

[Operator Instructions] And our next question will come from Li Watsek of Cantor Fitzgerald.

This is Rosemarie on for Li. So regarding the nine patients and your discussion with the FDA, would you be able to tell us potentially what types of data you would be collecting and talking about with them. And when do you anticipate you might communicate the feedback with The Street after the 3Q meeting?

Well, let me start with the data and then maybe Jim can talk about the communication. So the FDA is -- so you may be familiar with Project Optimus. So let me start from there. This is an effort that the FDA has undertaken in the last year or so to try to participate much more in the determination of the recommended Phase 2 dose for essentially oncology drugs that are going through Phase 1. And so they've kind of set some guidelines around this, and one of which is exploring multiple doses where there is some efficacy and safety. So in the example of emavusertib, we've had actually three doses that met our safety criteria, meaning that we felt that they were safe. They didn't have a high rate of dose-limiting toxicities but all three doses also had some efficacy. We had explored the 300 and the 400 dose twice daily and felt that the 300 offered a comparable efficacy to the 400 when we evaluated that. Well, we had originally only evaluated three patients at the 200. So the FDA just wanted us to explore that a little bit more, and that's the goal for the nine patients is to get that total up to 12 patients. So that since we did have some efficacy at that dose level, they wanted to better understand that as well. And ultimately, that's the driving force around why they've asked us for this. And we don't think this is unique to Curis or emavusertib, I think that they're really doing this for all companies who are in their early Phase 1 development.

Yes. Let me add to that, Li. So first, when we talk about the different dose levels, as Bob said, we know Project Optimus is about trying to find the lowest dose that can lead to that optimal efficacy level. I think one of the things that gets us so excited is that all of the doses at 200, 300 and 400 that we tested have efficacy. That's the good news. It's also the good news if you're interested in Project Optimus because, of course, it means you want to make sure you fully explore those. The question about data that we would have by the end of the year, we're still anticipating that we're going to have data in both leukemia and lymphoma by the end of the year. My hope is that we're going to have some output from FDA as well to talk about. Whether or not we end up at 200 or 300 remains to be seen, of course. Right now, we're just doing everything that the FDA has asked, and we are thrilled that we were able to get the sites open and patients enrolled ahead of schedule. And I think, as I said in my comments, it reflects both the dire situation that these patients are in, the critical unmet need and the excitement among our investigators to get this new therapy in and treating patients.

And Li, and just to give a little bit more detail on the specific data, one thing that the FDA really likes is what they call an efficacy response analysis -- I'm sorry, exposure response analysis. So what they look at closely is the actual exposure of emavusertib in each patient. So as you know, we're doing detailed pharmacokinetic analyses on all of these patients. So they'll look at that. They'll compare that to safety. They'll compare it to efficacy and that will help give them and us a very granular understanding of the optimal dose. And so that's really the fundamental aspect of what we're going to be looking for.

Got it. And sorry, maybe just one quick follow-up. If you potentially have your hold lifted in 3Q or 4Q, how quickly do you think you could restart?

Well, we're already -- the studies are actually already open and going. So it would essentially once we have that agreement, the studies are already open, and we continue with that dose level. So I don't anticipate any significant delay once that happens.

Yes, Rosemarie, let me add to that. So that was when I said it kind of quickly in the comments. But of course, when we went on hold, you have to effectively shut your sites down. The big change that we had at the end of last year was they allowed us to resume enrollment. So we went through the process already in Q4 of getting all our sites open and then recruiting new patients. So to Bob's point, as far as the FDA is concerned, we are open. We needed to recruit those nine patients, but that's not done. And we're now in the process of wait for the data, give it to the FDA and see which dose they prefer. Do they prefer 200 or 300? Either way, our sites are open and we're off to the races.

As soon as you get the dose, you can go?

We can continue enrollment at that dose, which ultimately, we feel like we can accumulate data there. We're interested in let's step back and think about our overall potential registrational plan. So we've mentioned that there's a couple of opportunities for very rapid registration and that would be single-arm studies in FLT3 mutated patients, with FLT3 mutated AML; and secondly, in patients with splicing factor mutated AML. And so those are single-arm studies. As soon as we have our dose, we can start expanding that. And really at that point, having much greater clarity on what our registrational plan will be. End of Q&A:

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.

Thank you, operator, and thank you, everyone, for joining today's call. And as always, thank you to the patients and the 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. Thank you again for your participation. And you may now disconnect.