Curis Inc Q4 FY2023 Earnings Call

Good morning, and welcome to Curis' Fourth Quarter 2023 Business Update Call. All participants will be in a listen-only mode. After the company's prepared remarks, all participants will have an opportunity to ask questions. Please note that 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 Curis' fourth quarter 2023 business update call. Before we begin, I would like to encourage everyone to go to our Investors section of our website at www.curis.com to find our fourth quarter 2023 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 Jonathan Zung, Chief Development Officer. We will also be available for a question-and-answer period at the end of our call. I'd now like to turn the call over to Jim. Jim?

Thank you, Diantha. Good morning, everyone, and welcome to Curis' fourth quarter business update call. I'd like to start today's call with a look back over the past 12 months. Entering 2023, the whole biotech industry was struggling in the headwinds of a challenging financial market. Curis faced all of that and the daunting challenge of seeing our leukemia study stalled on partial clinical hold with the FDA. In the face of that adversity, the Curis team rose to the challenge. We worked tirelessly in answering questions posed by the FDA. This included enrolling additional patients at 200 milligrams BID and performing additional analyses. As a result, we were able to confirm the safety profile of emavusertib, gain alignment on the optimal dosing regimen for monotherapy and secure the removal of the partial clinical hold, a full quarter earlier than expected. We then redirected our energy to reopening clinical sites and enrolling new patients. In our monotherapy study, we are targeting a genetically-defined population of relapsed/refractory AML patients with a FLT3 or spliceosome mutation. Enrollment is going quite well, and we expect to have a data update by midyear. While that study advances, we have initiated a frontline study of emavusertib in combination with azacitidine and venetoclax for all AML patients regardless of their mutation status. This study is being conducted at sites in Spain, Germany, and Italy, and we expect preliminary data from this study in the second half of this year. All in all, a terrific year of progress in leukemia. Now let's turn to our lymphoma program, which is generating an equally high level of interest. After reviewing initial data collected across multiple NHL subtypes, we focused our efforts on the ultra-orphan indication of primary CNS lymphoma, or PCNSL, where we are evaluating emavusertib in combination with ibrutinib. We identified key sites, initiated enrollment. And in December, we released new clinical data in relapsed refractory PCNSL at the ASH conference in San Diego. The meetings we had with physicians at ASH were terrific, and we were especially pleased to have Dr. Greg Nowakowski and Dr. Han Tun from the Mayo Clinic present the data. As a reminder, frontline treatment in PCNSL is high-dose methotrexate and chemotherapy. When that no longer works, there is no approved second-line treatment. In our study, three of five patients were able to achieve complete remission of their disease. It is admittedly a small number of patients. However, the response and interest from the clinical community was very encouraging. In the eight weeks since ASH, our team has been fielding calls from clinical sites across the US and Europe wanting to participate in our trials. In fact, by the end of Q1, we expect to have doubled the number of clinical sites compared to where we were a year ago. Obviously, this is a reflection of the excitement about emavusertib, but it is also a reflection of the indefatigable efforts of the Curis team. I couldn't be more proud of them. Finally, in December, we announced that we entered into an agreement for an investigator-initiated trial to study the combination of emavusertib and pembrolizumab in patients with metastatic melanoma. We're excited that this study presents an opportunity to expand upon the research done at academic centers and the NCI to explore the potential of emavusertib in solid tumors. In short, we had an incredibly productive 2023, and we look forward to continuing that momentum in 2024. 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 2023, Curis reported a net loss of $11.7 million or $2.03 per share as compared to a net loss of $11.3 million or $2.35 per share for the same period in 2022. Curis reported a net loss of $47.4 million or $8.96 per share for the 12 months ended December 31, 2023 as compared to a net loss of $56.7 million or $12.14 per share for the same period in 2022. Revenues net for the fourth quarter of 2023 were $2.7 million compared to $2.9 million for the same period in 2022. Revenues net for the 12 months ended December 31, 2023, were $10 million compared to $10.2 million in 2022. Research and development expenses were $10 million for the fourth quarter of 2023 compared to $8.7 million in 2022. The increase in R&D was driven by higher clinical development costs. R&D was $39.5 million for the 12 months ended December 31, 2023, compared to $43 million in 2022. General and administrative expenses were $4.9 million for the fourth quarter of 2023 compared to $4.3 million in 2022. The increase in G&A was driven primarily by higher professional, legal, and consulting services. G&A was $18.6 million for the 12 months ended December 31, 2023 compared to $19.6 million in 2022. Other income net was $0.5 million for the fourth quarter of 2023 compared to other expense net of $1.1 million in 2022. Other income net was $0.9 million for the 12 months ended December 31, 2023 compared to other expense net of $3.7 million in 2022. Other income expense net consists of interest income and non-cash expense related to the sale of future royalties. As of December 31, 2023, Curis' cash, cash equivalents, and investments totaled $56.3 million, and there were approximately 5.9 million shares of common stock outstanding. We continue to be in a solid cash position and expect that our existing cash, cash equivalents, and investments will enable our planned operations into 2025. With that, I'd like to open the call for questions. Operator?

We will now begin the question-and-answer session. And our first question will come from Ed White of H.C. Wainwright. Please go ahead.

Good morning. Thanks for taking my questions. Jim, you mentioned that in the primary CNS lymphoma trial, you have doubled the clinical sites open versus this time last year. I'm just wondering if you can let us know how many sites that is and how many sites you plan to open.

We try to avoid getting into the details of the number of sites that we have at any given time because, of course, we're always increasing them. But I think the reason why we mentioned that in this call is because it's a reflection of the kind of conference we had. Obviously, we were very encouraged by the data ourselves. And if you were at ASH, you saw that our booth was incredibly busy. But that's been followed up by being able to get these new sites up and running and online. And we've got, as I said, not the expectation to double by the end of Q1, but enthusiasm more broadly across the world, not just in the U.S. So it's really exciting from our perspective, and I'm hopeful that we can keep that momentum going forward.

Thanks. Can you give us your thoughts on the size of that primary CNS lymphoma market?

Sure. It's an ultra-orphan market. It's one of the reasons why we selected it. If you think across the landscape of non-Hodgkin's lymphoma, everywhere where BTK gets used, we have been targeting broadly. Anytime you use BTK, you're down regulating in a kappa-B pathway. There are a lot of BTK inhibitors targeting that path. We're the only one that targets the other pathway. When we look across the landscape of non-Hodgkin's lymphoma, we focused on primary CNS first because it's so small, with an incidence of 5 per million. That yields a lot of very attractive benefits from a development perspective, especially in conversations with regulatory authorities. But also within primary CNS lymphoma, it's a fairly aggressive lymphoma where we believe we can address the disease quickly. As you saw in the data, the three of five complete responses, we achieved that within the first three months of treatment, so it's very helpful. And of course, there are no effective treatments. There are no approved drugs for relapsed/refractory PCNSL. So if we can go after a disease that is ultra-orphan, where there are no approved treatments, and we can see this kind of response from the drug, it's really encouraging.

Okay, thanks, Jim. And now perhaps if I could just ask a big-picture question. I wanted to get your thoughts on the potential in solid tumors. You had mentioned the IST beginning in combination with KEYTRUDA and metastatic melanoma. I just wanted to get your thoughts on that market in solid tumors overall.

Yes. Solid tumors are really exciting. We have been, of course, from the very beginning in identifying this target. One of the things that was so exciting was that the role of IRAK4 in oncology, more broadly, was something that Curis had discovered and no one else knew about. So when we were designing the molecule originally, we had the Pharmacyclics template in mind of how to go after a blockbuster indication or an indication with multibillion-dollar revenue potential that no one else knows about yet. We designed that molecule, so it would be effective in lymphoma, but also confers some competitive advantage in leukemia and in solid tumors. As you know, our first studies started in lymphoma, and that's, of course, where our most recent data are as well, and that's really compelling. The data in lymphoma in the targeted population that we expect to hit in the IRAK4 or spliceosome population and the FLT3 population looks very compelling. We've just started the frontline study. To your point in melanoma, this is the first time we've gone into solid tumors. Now, there's been a lot of work done by the NCI and by academic centers in studying emavusertib in various types of solid tumors. So we know there's a lot of interesting work going on for example in bladder cancer, gastroesophageal cancer, ovarian, lung, and pancreatic cancers. There are a number of different solid tumors, where it looks like IRAK4 plays a significant role and where our drug might be able to confer benefits. This is the first time we're going into that. I think it's a little premature to talk about how large all of those markets are. But the idea that we have a drug that looks as though it could provide incremental benefit that no other drug does in these very targeted markets individually and, of course, at the high level across the world of human solid tumors is really quite exciting.

Thank you, Jim. And the last question if I could. Just wanted to get your thoughts on partnering the product in solid tumors, is that something that you'd be looking at, or is this something as you expand into solid tumors that you think you could fund on your own going down the road?

Sure. I mean, take the melanoma study as the case in point. Obviously, that's a study we would rather not pay for. There are many trials taking place right now of a company's drug in combination with PD-1, which most people consider it deleting PD-1. But the way most of those work is, they beg Merck to provide them with free drug, and then they run the study. We have the opposite. We're going to get data from this study, and we're the one providing free drug. Merck's the one picking up the tab for the study. What most companies would hope for is just getting free drug. Ideally, if we’re going to expand the number of clinical studies that we can run, whether it’s in lymphoma or in leukemia or now in solid tumors, at the minimum, we’d like to get a 50-50 study. I think it’s overly optimistic to believe that all of our future studies will be 100% funded by the partner without giving up any rights. But at this point in time, obviously, we're really excited that we're going to have the opportunity to gather data across lymphoma, leukemia, and now solid tumors, and we can afford to do it. As long as we can maintain our rights and generate the data that shows that this drug has significant potential, I think that's our plan.

Okay. Great. Thanks for taking my questions.

You bet.

Good morning, everyone, and congratulations on all the progress on multiple fronts. I have a question regarding the triple combo with emavusertib, azacitidine, and venetoclax. You mentioned you are starting in three different countries, including Europe. Are you also planning to initiate some trial sites in the US?

Go ahead.

Keeping this trial, is that in combination with ibrutinib, or still you are planning to do monotherapy emavusertib for patients?

The initial study for the triplet is targeting sites where we can obtain data quickly. In these early stages, generating data swiftly to prove that the triplet works is crucial. We have substantial preclinical evidence suggesting that IRAK4 is a primary driver of disease in half of all AML patients, according to a published article. In the other half, it may not be the primary driver but acts as a secondary or tertiary driver, which should provide additional benefits through a new mechanism that no other drug addresses. Our long-term goal is to include as many patients as possible by using this in combination with standard care, which consists of azacitidine and venetoclax. We hope to replicate our lab findings in humans and determine whether we can add emavusertib to azacitidine, venetoclax, or the combo of both. This could significantly enhance the efficacy of the standard treatment. That's what we found in the lab and aim to demonstrate quickly in the clinic, while also ensuring safety. Azacitidine and venetoclax can be tough to tolerate; they are effective but challenging. Anecdotal evidence suggests that about half of the patients on the aza-ven regimen have to stop treatment. Initially, we plan to put patients on and confirm there are no safety concerns, as expected, and then look for efficacy signals. Focusing on the right sites helps us conduct a quick exploration, which is why we chose these specific locations to initiate the study. Can you remind me of your second question?

Yes, I fully understand. So, on the PCNSL trial, are you expecting to get frontline patients? If you want to get to that you want to combine it with emavusertib or ibrutinib? What's the plan here?

No, thank you for that. So right now the combination is emavusertib and ibrutinib, and it's in relapsed refractory patients, and that's the initial starting point. The rationale for first the combination of ema and ibrutinib is clear. In the case of lymphoma, the problem driving disease for patients with NHL is NF-kappaB overactivity. When NF-kappaB is overactive, it disrupts the apoptotic process of malignant cells. If you're on a BTK inhibitor today, the reason you're on that BTK inhibitor is that it blocks the BCR pathway, which is one of two pathways driving NF-kappaB overactivity. We now know that that's effective and achieves a high response rate on BTK inhibitors. There are five big pharma companies chasing after BTK inhibitors of various flavors, all effectively working the same way, blocking the BCR pathway driving NF-kappaB. The second pathway, the toll-like receptor pathway, is currently unaddressed. Curis is the only company that has a drug that blocks that pathway, that's emavusertib. It binds to MYD88 Myddosome, and without that binding, the toll-like receptor pathway shuts down. It stands to reason when you step back, if you have lymphoma that's effectively treated by BTK, you'll want to block NF-kappaB as strongly as possible. So hit the BCR pathway with BTK, hit the toll-like receptor pathway with IRAK4. The combination, not monotherapy, should always be better than either one alone. That's what we've determined in the lab and so far in the clinic. The long-term goal is of course to go frontline in combination with BTK inhibitors. For now, we’ve chosen primary CNS lymphoma as our proof-of-concept indication to prove it out. We’ve been able to generate data pretty quickly. Longer-term, I think we will want to go frontline. For now, having an ultra-orphan indication where we can go into the relapsed/refractory setting offers a compelling regulatory opportunity, which is why we're pursuing this path.

Thank you again, for taking all the questions and congrats on the progress.

Sure. Thank you.

Hey. Good morning. Thanks for taking my questions. Jim, I guess for the data that you're going to present from the Leukemia study around midyear, maybe just set the expectations for us a little bit with the data set that we are going to see, what the bar is for the three as well as for spliceosome mutations? And then for the combo data that's going to come in the second half of this year, maybe tell us a little bit about the bar here. Because as we know, the bar is fairly high, pretty effective. Also, do you expect any overlapping toxicities with this regimen?

Yeah. Thank you, Li. I appreciate you dialing in. So on those questions, first, in terms of the number of patients, we've consistently said what we’d like to achieve is a data set of 10 to 20 patients. We now have a data set of three patients with spliceosome mutations, three patients with FLT3 at our target dose, and five patients in primary CNS. We'd like to increase that data set to 20 to 50, somewhere in that range. My hope is that we'll be positioned to collect that level of data in Leukemia, Spliceosome, and FLT3 by midyear and in Lymphoma by year-end. In terms of the benchmark, we think we need to achieve a complete response/completed response with partial response rate of 20%, with a lower bound in the low-teens, around 12%-13%. So a 20% CR/CRh rate in salvage-line therapy, for either FLT3 or spliceosome in leukemia, we believe is compelling. Our first three patients look better than that, but let’s not get ahead of ourselves. It's only three patients. As we aim for 10 to 20 patients, we hope we can achieve a CR/CRh rate above 20%. On the Lymphoma side, given there's no existing treatments, that benchmark is probably lower. The largest data set for BTK as a monotherapy in primary CNS lymphoma showed a CR rate of 19%. Hence, for 20 patients you'd expect roughly four of those to respond, or a 20% CR rate. This is in BTK inhibitor-naïve patients—re-challenging them with BTK may yield no responses at all. If we can maintain a 20% or higher CR rate in lymphoma, I believe we will have a very compelling data set for discussion with the FDA. Our odds are favorable.

And overlapping toxicities with the regimen?

Yes. So that’s the number one thing to look for in the triplet. It makes sense that if you look at our preclinical data, it's evident from an efficacy perspective. In the lab, we observed an increment in efficacy when combining Aza with Aza-Ven. If the consistency we saw from mechanism to lab to clinic holds true for the leukemia triplet, we expect to see that. The primary consideration is ensuring that we do not exacerbate the high toxicity of Aza-Ven. We have no reason to believe that adding emavusertib would make it less tolerable, but as we noted, half of all patients on Aza-Ven struggle with tolerability. Thus, our first priority as we add our drugs to Aza-Ven will be to verify that we’re not worsening those toxicities. We're also looking for efficacy, but first and foremost, we want to confirm that the treatment is tolerable.

What are your thoughts on the maintenance setting in AML? Are you collecting any data points that could support off-label use?

Well, obviously, off-label use happens, but companies don’t typically target that. Instead, we focus on ensuring a drug is safe first. Second, it needs to have a compelling and unique efficacy profile, so that we provide a measure of efficacy that other drugs can’t offer. Finally, it’s crucial that we have a drug that can be taken long-term for maintenance. Some indications like AML are aggressive, but others like Waldenstrom’s are more indolent. Hence, we have a patient who’s been on the drug for four years now. While these are still early days for emavusertib, we've managed to check those three boxes. This drug, tested on almost 200 patients, demonstrates a solid safety profile. It appears to reflect similar clinical efficacy as observed in lab trials, and it shows potential for prolonged use in a maintenance context. That’s the trifecta you aspire for as a drug developer.

Thank you.

Yes.

Good morning and thanks for taking the question. Jim, you have talked about an interest in moving to high-risk MDS in the second line, but you’re waiting for the VERONA study readout. Just to your best knowledge, when do you think that might happen? And if that takes place sometime in the future, what’s your plan at this point?

Yes. Thank you, Yale. Appreciate the question. The opportunity in MDS looks terrific. The clinical data we've released so far indicates that emavusertib appears to be active as a single agent in MDS, just as it does in AML and lymphoma. We would really like to go frontline in MDS in combination with standard care and assess whether we can provide improved benefits. In AML, the standard of care is Aza-Ven, but MDS has progressed more slowly. Many anticipated the study might readout at ASH, but now it seems everyone is looking to ASCO for results. We’re eager for this as well. The standard of care in MDS will be either Aza or the Aza-Ven doublet. The VERONA study's results will influence our decision on which of those we will proceed with for a combo study.

Okay, that's very helpful. My second question is whether we are expecting a meeting with the FDA to discuss the next stage of development after the AML data. Do you anticipate this meeting could happen later this year, or might it be an event for 2025?

I can’t speak for the FDA or how quickly this meeting will occur. We are, of course, very interested in having it as soon as possible. We've got a drug that the FDA should be interested in, as indicated by our investigators. We have favorable safety profiles, and our efficacy appears robust. The FDA ought to be receptive to that. As soon as we have sufficient patient data, probably in the 10 to 20 range, if our results remain consistent with past data, we will seek to meet with the FDA promptly. The scheduling ultimately depends on the FDA's availability.

Great. Maybe one last housekeeping question. I know you guys do not typically give guidance on operating expenses, but could you provide some directional guidance on operating expenses for 2024 compared to 2023?

Thanks, Jim. We believe our operating expenses will remain relatively consistent. As previously guided, the $56 million in cash should take us into 2025. It gives us an estimated burn rate of about 10% to 12%, potentially peaking at 13%, depending on the timing of certain manufacturing and other expenditures. Overall, you can expect consistency year-over-year.

Great. Thanks a lot. Congrats on all the developments, and I look forward to the data readout.

Thank you.

The next question comes from Bill Jahangiri of Truist Securities. Please go ahead.

Congratulations. Thanks for taking the questions. We were wondering if you could share any strategic or partnership interest at JPM from your end. Also, could you remind us what the benchmarks are for the triplet study in AML?

Sure. Thanks, Bill. As you can imagine, interest in partnerships mirrors the enthusiasm we've seen from investigators participating in our trials. We're always having conversations with potential partners, and many envision that if we can broaden out the drug’s use, this could work across various indications—lymphoma, leukemia, AML, MDS, and solid tumors like we just initiated in melanoma. Curis is too small to run studies in all those areas. At some point, partnering will make sense to accelerate clinical efforts and relief for our limited resources. I won't provide guidance on timing, but stay tuned as Curis is not the only company recognizing our drug's potential. As for the triplet, can you please remind me of the specifics regarding patients and eligibility?

Yes, I’m wondering about what the success metrics would be for triplet study in AML.

Right. The bar is safety initially. We understand that Aza/Ven has a challenging safety profile. Our first priority is to ensure our combination does not worsen that tolerability. We have no reason to expect our drug would contribute to that, but it needs to be tested in patients to verify. Beyond safety, we are looking for signs of efficacy, aiming to confirm that adding emavusertib yields increased treatment effectiveness beyond standard care. If we can achieve that, it represents a significant success.

So you're likely already meeting the duration bar in CNS lymphoma, right? We just need that data set to grow?

That's correct. The data set we have is impressive—much higher than necessary. However, it's crucial to note we're still at the beginning stage. Currently, we have data from five patients. If we treat a total of 20 patients with primary CNS lymphoma who have failed high-dose methotrexate and chemotherapy, they would generally progress to BTK treatment. Based on existing studies, you’d expect around four patients to respond according to earlier studies showing a CR rate of 19%. As we aim for 20 patients, achieving just one more CR would complete our benchmark discussion. I believe our chances are favorable.

Thank you.

You bet.

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, Jim Dentzer for any closing remarks.

Thank you, Andrea. And thank you, everyone, for joining today's call. 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 and the NCI for their ongoing help and support. We look forward to updating you again soon.

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.