Earnings Call Transcript - CRIS Q1 2022

Operator, Operator

Good afternoon everyone and welcome to Curis' First Quarter 2022 Earnings Conference Call. Please also note, today’s event is being recorded. At this time, I’d now like to turn the conference call over to Curis’ Vice President of Investor Relations and Corporate Communications, Craig West. Sir, please go ahead.

Craig West, Vice President of Investor Relations and Corporate Communications

Thank you and welcome to Curis' first quarter 2022 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 first 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; 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. And I'd now like to turn the call over to Jim.

Jim Dentzer, President and CEO

Thanks, Craig. Good afternoon everyone and welcome to Curis' first quarter 2022 earnings call. For those of you who haven't yet had the pleasure of meeting Craig, he recently joined the company as our Vice President of Investor Relations and Corporate Communications and we're delighted to have him on the team. Every day at Curis, we strive to develop the next generation of first-in-class cancer therapies that meaningfully improve and extend patients' lives. The first quarter of 2022 has been a reminder that the path of clinical development is not always a straight line and that we need to collaborate with many different stakeholders along the way. We are encouraged by the knowledge that we have a drug that works as a single agent in exactly the places we expect it to. Further, the company is well positioned to manage through the dynamics of drug development, and we remain confident in our pipeline, our strategy, and our team. Let's start our update tonight with our lead asset, emavusertib, formerly known as CA-4948. 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 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 and other hematologic malignancies. And third, the Phase 2 Lucas study, evaluating emavusertib in patients with lower risk MDS. In January, we announced the positive updated clinical data from the TakeAim Leukemia study, showing early, but compelling response rates in patients with spliceosome or FLT3 mutation. These results demonstrated both a manageable safety profile and improved anti-cancer activity compared with the current standard of care. Patients enrolling in this study are often in poor condition. They tend to be heavily pre-treated and have an expected median survival of less than six months. Given that baseline, we've been very encouraged by the study results to date. We'll be presenting the data highlighted in January at the ASCO and EHA Medical Conferences in June. Beyond that, we expect to report updated data from the monotherapy and combination portions of the study later this year. In April, the FDA asked us to pause the enrollment of new patients, placing partial clinical holds on both the TakeAim Leukemia and TakeAim Lymphoma trials following Curis’ report to the FDA of the death of a relapsed refractory AML patient who after being on study drug for nine cycles experienced among several other conditions rhabdomyolysis. Patient safety is always our top priority. We're working with the FDA to provide additional data related to rhabdomyolysis and also our recommendation of 300 milligrams BID as the recommended Phase 2 dose. We hope to resolve the partial hold as quickly as possible. We expect to provide updated guidance on the timing for discussions with the FDA on a potential rapid registrational path for emavusertib after the partial clinical hold has been resolved and any potential impact on the study can be determined. Now, let's turn to our study of emavusertib in B-cell cancers, the TakeAim Lymphoma study. We expect to report initial data from this study at both ASCO and EHA in June, the same data at both meetings to address both the American and European audiences. This update will include new data on approximately a dozen patients who have received emavusertib in combination with ibrutinib in several types of NHL. As a reminder, Part A1 of the study, which is completed, examined dose escalation in monotherapy. Part A2, in process now, is exploring the combination of emavusertib and ibrutinib. This combination study is expected to enroll approximately 18 patients in a three plus three design with emavusertib doses starting at 200 and escalating to 300 milligrams BID and ibrutinib dosing will be determined based on the patient's respective NHL subtype. In this initial dataset, we'll be looking to confirm that the combination of emavusertib and ibrutinib can be dosed safely without overlapping toxicities. And of course, we also hope to see signs of anti-cancer activity. Especially for patients who are relapsed or refractory to BTK inhibitors, signs of anti-cancer activity would be an early and encouraging proof of concept for the scientific literature, which suggests targeting both the BCR and TLR pathways may prove more effective than targeting either pathway alone. I'd also like to comment briefly on our collaboration studying emavusertib in patients with low-risk MDS. This study is being led by Dr. Uwe Platzbecker, the Co-Chairman of the European Hematology Association’s scientific working group on MDS. We hope to report data on this study later in 2022. Being able to demonstrate safety and efficacy in these patients could represent a potential breakthrough in the MDS field. In March, a new potential opportunity for IRAK4 inhibition was identified with the publication of preclinical data in the peer-reviewed journal gastroenterology, authored by our collaborators at the Washington University School of Medicine in St. Louis. This manuscript examines the role of IRAK4 and the preclinical efficacy of emavusertib in combination with checkpoint immunotherapy in pancreatic ductal adenocarcinoma, a disease type with a very poor prognosis and in need of new therapeutic options. As we look ahead, we hope to build upon these results working with the NCI and our other collaborators to identify additional new cancer targets where emavusertib could address areas of high unmet need. Moving to our second asset, CI-8993. This is the first-in-class monoclonal anti-VISTA antibody, which we are 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, thereby increasing T-cell mediated immune function. We believe CI-8993 is the most advanced anti-VISTA antibody currently in clinical development and has the potential to be a game-changing cancer therapy, affecting numerous cancer-related immune mechanisms, many of which are not addressed by targeting PD1, CTLA4, or other immune checkpoints. In January, we presented updated clinical data, highlighting an encouraging safety profile and early signs of CI-8993’s potential to activate multiple anti-cancer immune mechanisms. We were additionally pleased with the PK profile, which exhibits saturation kinetics, suggesting the potential to overcome the anticipated sink effect. Dose escalation has proceeded to the 0.6 milligrams per kilogram dose level and will continue until the recommended Phase 2 dose has been determined. We look forward to reporting expanded safety and tolerability data along with initial PK, PD, and anti-cancer data from the trial in the second half of 2022. In summary, we're pleased with the clinical results observed to date, and we expect to provide several updates later this year, including new clinical data in both IRAK4 and VISTA programs. In the meantime, we'll work with the FDA to resolve partial clinical holds as quickly as possible. As we have said to many of you in calls over the last few weeks, clinical development is never a straight road. We're fortunate to be working with a molecule with the unique and compelling profile of emavusertib. With that, I'll turn the call over to Bill to review our financial results for the quarter.

Bill Steinkrauss, CFO and Chief Administrative Officer

Thank you, Jim. Curis continues to execute on its strategy from a position of financial strength. For the first quarter of 2022, Curis reported a net loss of $16 million or $0.18 per share on both a basic and diluted basis, as compared to a net loss of $9.9 million or $0.11 per share on both a basic and diluted basis for the same period in 2021. Revenues for the first quarters of 2022 and 2021 were $2.1 million and $2.2 million respectively. Revenues for both periods represent royalty revenues, recorded on Genentech and Roche's net sales of Erivedge. Operating expenses for the first quarter of 2022 were $17.2 million, as compared to $11 million for the same period in 2021. Operating expenses comprised the following: Cost of royalty revenues, which comprised amounts due to third-party university patent licensors in connection with royalties received on net sales of Erivedge, were $0.1 million for the first quarter of 2022 and 2021. Research and development expenses were $11.4 million for the first quarter of 2022 as compared to $6.8 million for the same period in 2021. The increase is primarily attributable to increased manufacturing costs for our programs and higher personnel-related costs as a result of additional headcount. General and administrative expenses were $5.7 million for the first quarter ended March 31, 2022, as compared to $4.1 million for the same period in 2021. The increase in general and administrative expense was driven primarily by higher costs for personnel, stock-based compensation, professional consulting services, and insurance costs as compared to the prior year. Net other expense for the first quarter of 2022 and 2021 was $1 million and $1.1 million, respectively. Net other expense primarily consisted of imputed interest expense related to royalty payments. As of March 31, 2022, Curis' cash, cash equivalents, and investments totaled $120.7 million, with approximately 91.6 million shares of common stock outstanding. First quarter cash burn was consistent with prior years of being higher than other quarters driven by the timing of working capital changes. We are in a strong cash position. We 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

Our first question today comes from an analyst from Cantor Fitzgerald. Please go ahead with your question.

Unidentified Analyst, Analyst

Hey, thanks for your updated remarks. Thanks for taking my questions. I guess, my first one, you mentioned that additional data was requested by the FDA. I just wonder if you can talk a little bit more if you need additional preclinical data or clinical data and do you need to gather more clinical data for lower doses to fully resolve this issue?

Bob Martell, Head of R&D

Yeah. Let me address this. This is Bob Martell. We are obviously working closely with the FDA to answer their questions. As you know, as Jim mentioned, they had requested a variety of components from us, one of which was a little bit more information to help us and them untangle the complex patient who unfortunately passed away during treatment after seven or eight months of being on this drug. Another is somewhat related to that and that is our work to identify the appropriate dose going forward. We've mentioned in the past based on our pharmacodynamic work, our pharmacokinetics, safety, and efficacy that we believe the 300 milligram twice daily dose is our recommended dose. We'll present those data to the FDA and have a discussion with them regarding that. Beyond that, the specifics of the data we'll discuss with the FDA and disclose more of that as we come to an agreement with them.

Unidentified Analyst, Analyst

Okay. Can I ask a follow-up question? On the determination of the Phase 2 dose, can you just talk about what additional data points the FDA might need to see to justify the dose selection? And what gives you confidence that you can resolve this hold quickly?

Bob Martell, Head of R&D

Yeah. So, like I said, we've done a pretty thorough analysis, and in fact, as you know, we've evaluated a number of patients at 400 milligrams twice daily, 300 milligrams twice daily, as well as numerous other patients at lower dose levels. So, part of the approach to identifying a recommended dose is understanding the exposure of each individual patient. This is typical for any drug development and more of what they’re looking for these days is a good understanding of pharmacokinetic exposure bands. So, we'll present those data to the agency to discuss that and justify our choice of 300 twice daily. In addition, we've carefully monitored the safety across all of these doses. We believe that the safety of the 300 milligram twice daily is a safe dose, and we'll present our data regarding that. As I mentioned earlier, we'll provide data to better untangle the complicated issues with this one particular patient who unfortunately passed away on the study. Those are some of the main things that we'll be looking at and presenting to them in a full report.

Unidentified Analyst, Analyst

Okay. Thank you very much.

Operator, Operator

Our next question comes from Soumit Roy from Jones Research. Please go ahead with your question.

Soumit Roy, Analyst

Hi everyone. Thank you for taking the question. I wanted to just clarify one thing: have you already submitted all the necessary data set to the FDA regarding this partial hold or do we have a timeline on that?

Bob Martell, Head of R&D

So, again, we're working closely with the FDA. We haven't given specifics on the timing of that or whether or not we have done that yet, but as soon as we gain further information from our discussions with the agency, then we'll release that information.

Soumit Roy, Analyst

Okay. The June data on the AML front, that will be no new data, it will probably be some finer details you would provide, would you also include in mid-year at ASCO? Would you also include details on this patient who died during the ASCO presentation?

Jim Dentzer, President and CEO

Yes. Thanks, Soumit. So, I'll do the first one first. So, the June data update and there are going to be two updates right. There's going to be leukemia and lymphoma. The leukemia is not an update; that's the January 6 data, which was, as you may remember, put out in the press release. This is now going to be at a peer-reviewed form. So, it's our opportunity to get that in front of the global physician network at both ASCO and EHA American and European forums. Lymphoma, on the other hand, is new data. That's going to be roughly a dozen patients of emavusertib in combination with ibrutinib. And so I would point you to that. And then lastly, you asked if we’d take the opportunity at one of those two conferences to discuss more about the patient death? I'd say no; our focus right now is having that dialogue with the FDA, and as Bob mentioned, the patient was on for a long period of time. We do have a lot of data related to that patient, and I think the question is a fair one, but it's, of course, a complicated one as well. As we get resolution with the FDA on where they come out and where we can both get comfortable moving forward, we'll share all of the details, but because this is an ongoing and very complicated discussion, we want to wait until we've got that resolved with the FDA before we go public with the information.

Soumit Roy, Analyst

Got it. Totally understandable. And one last one. On the lymphoma front, the Part A2, would you present any data with 300 milligram BID or do you know – or can you disclose any patient being treated with 300 milligram BID or are they pretty much all at 200 milligram?

Jim Dentzer, President and CEO

Yeah. As I said, I think we're going to wait for the disclosure of those data at that conference, but it is going to be new data, and I would encourage you to keep an eye out for it. We look forward to talking about it.

Soumit Roy, Analyst

Thank you so much for taking the questions.

Jim Dentzer, President and CEO

Thank you.

Operator, Operator

Our next question comes from Yale Jen from Laidlaw and Company. Please go ahead with your question.

Yale Jen, Analyst

Good afternoon and thanks for taking the questions. I’ve got two here. The first one is that, with a partial clinical hold for the other study combined, how many patients are eligible at this point to undergo studies on both lymphoma and leukemia?

Bob Martell, Head of R&D

Well, I want to make sure I understand your question. So, the partial clinical hold had us pause enrollment of new patients. All the patients who were existing in the study, who we felt were benefiting from the study, are allowed to continue on. It did not prevent those patients who are ongoing from continuing. We haven't mentioned the specific number who are ongoing, but any patient who is continuing on would be able to remain on.

Jim Dentzer, President and CEO

Yeah, the hold is simply keeping us from adding new patients to the study. So, it really gets to the amount of patient data that we might have by year-end. But the existing patients on study that are benefiting from the drug, of course, can stay on, and we're still following them.

Yale Jen, Analyst

Okay, great. And maybe just two quick ones. For the pancreatic cancer study, is that allowed at this point or are you still under the partial clinical hold until that can start enrollment?

Jim Dentzer, President and CEO

Yes. So it’s the investigational study. That's not part of these clinical studies, but our approach, you may remember when the leukemia study was originally put on hold since it's the same molecule, we were advising our partners across the studies using the drug. The spirit of the FDA clinical hold was to not enroll new patients. So, of course, we would give the same advice. We would say, look, let's wait until we get resolution with the FDA before we start enrolling new patients, whether in one of our existing clinical studies or whether it's in an IST. That's the same guidance we would give to anyone using emavusertib.

Yale Jen, Analyst

Okay. My last request, given that you might slow down the clinical development activity for sure, should we anticipate the R&D expenses at least over the next one or two quarters to trend slightly lower before taking up?

Bob Martell, Head of R&D

Yes. Let me start that and then I'll hand over to Bill on that Yale. So, first, I’d say, obviously, the irony here is that we're all here on a partial clinical hold; you’re spending less than you otherwise would. It really gets to the long-term impact of how long we are going to be on clinical hold. And that's an unknown question to be fair. I mean, we can look to the prior studies; as you know, in AML, there have been five other studies—five other companies—that have had their AML programs put on hold in the last three years. Four of those five were in the last year. All of those came off in roughly a one or two-quarter timeframe. We don't know; every drug is different, and every FDA conversation is different. We don't know that definitely means that we're in that timeframe, but if you use that as a proxy, you might say it's a bump in the road between now and NDA and it's not something that I would consider a material question from a cash burn perspective; it’s more about executing against the goals, especially when we consider how much patient data we're going to be able to accumulate this calendar year.

Bill Steinkrauss, CFO and Chief Administrative Officer

Yeah. I wouldn't want to necessarily give guidance, but I think in terms of our approach, we certainly want to spend money wisely, and while we are on hold, we'll be considerate of that, but there's still a lot of work that, as you know, takes a long lead time so that if this is just a quarter or two delay, we'll want to make sure that continues on. I'd expect us to be spending money wisely over these next few quarters, and while there may be some savings, I don't think there will be a big impact on the trend unless the hold is to go longer than we expect.

Yale Jen, Analyst

Okay, great. Thanks for the details, and best of luck to you guys.

Jim Dentzer, President and CEO

Yeah, thank you Yale.

Operator, Operator

Ladies and gentlemen, our next question comes from Dane Leone from Raymond James. Please go ahead with your question.

Unidentified Analyst, Analyst

Hi guys. This is Sean on for Dane. Thanks for taking the questions. Just one from us, trying to get an idea of what the scale and scope of the second half readouts for emavusertib could be? Obviously, you haven't said how many patients you've enrolled in the studies, particularly in the combination studies. But just trying to get an idea of, maybe broadly, how many are you confident in the number of patients that are currently on study such that you could have a significant readout later in the year, irrespective of how long the clinical hold lasts? Additionally, do you expect to read out any more data, say on hem recoveries or efficacy in patients who are not FLT3 mutated?

Jim Dentzer, President and CEO

Yes, there were a lot of questions. I’m going to try and hit them all, and if I miss one, Sean, please let me know and I'm happy to go back to it. So, the scale and scope of what we're expecting for the year is obviously very dependent on where we end up with the FDA in this discussion, but I would say, in general, our milestones are very much the same as they were with the exception of the timing of meeting with the FDA to talk about the pivotal study. And that one's just unclear. So, let's go through those milestones again. First half of 2022, we will report initial data for emavusertib in combination with ibrutinib in NHL. That was already, of course, we started enrolling that a while back, so we’ve already had those patients; we'll have about a dozen patients of data to report out. That will be at ASCO and EHA as we announced today. Second, we will have updated data for emavusertib in AML and MDS monotherapy later this year. Again, the number of patients is going to vary depending upon when we can restart the clinical trial and how much time the patients have in the study and whether those data are mature enough for disclosure later this year. In the back half of the year, we've got two separate updates: initial efficacy data for CI-8993, the VISTA program, and also combination data of emavusertib with other agents in AML and MDS. You may remember we started dosing patients in the back end of Q4 this past year. So, we do have a handful of patients who are on drug before the clinical hold was put in place. Hopefully, if we can lift the clinical hold and start enrolling more patients in that study in that regimen, we would love to give an update on those data. So, a lot of data coming over the next six to nine months across both emavusertib and CI-8993.

Unidentified Analyst, Analyst

Okay. Thank you.

Jim Dentzer, President and CEO

Thank you.

Operator, Operator

And ladies and gentlemen I’m showing no additional questions. I'd like to turn the floor back over to the management team for any closing remarks.

Jim Dentzer, President and CEO

Thank you, Jamie, and thank you everyone 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.

Operator, Operator

Ladies and gentlemen, the conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.