Earnings Call Transcript - CRIS Q4 2022

Operator, Operator

Good morning, and welcome to the Curis Fourth Quarter 2022 Business Update Call. 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.

Diantha Duvall, CFO

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.

James Dentzer, CEO

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 the 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 the 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 the 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 Duvall, CFO

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

And our first question will come from Ed White of H.C. Wainwright.

Ed White, Analyst

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 this year?

James Dentzer, CEO

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.

Ed White, Analyst

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

James Dentzer, CEO

I think it's too early for us to consider restarting the program at this point. The reason we paused it had nothing to do with our enthusiasm for it. It's a great target and a fantastic program. We were making significant progress, in my view. The decision was more about the financial climate; we needed to reduce our cash burn to ensure we have enough funds for 2025. Until we are confident that the market conditions have improved or that we can access funds without adversely affecting IRAK4, we must focus entirely on IRAK4. I'm really excited about our current position and believe we can add substantial value to the IRAK4 program this year. We will also monitor the broader financial markets as we move through 2023.

Ed White, Analyst

Since you mentioned financials, I would like to ask Diantha about your perspective on R&D expenses throughout the year as the development of emavusertib gets back on track. How should we consider the potential increase or stability of R&D expenses?

Diantha Duvall, CFO

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 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 of a full quarter post reprioritization.

Operator, Operator

The next question comes from Soumit Roy of JonesTrading.

Soumit Roy, Analyst

The nine patients, you mentioned, the additional new patients got enrolled. Are these all AML patients or are they 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?

Robert Martell, Head of R&D

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 many of the patients that we've enrolled in 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, we always seek patients who are perhaps a little bit earlier in their lines of therapy. But for these nine patients, we haven't made specific guidelines.

Soumit Roy, Analyst

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

Robert Martell, Head of R&D

Yes. We haven't provided any updates since the ASH presentation. We're not ready to offer more details during this call, but the data we observed was quite impressive, showing deep responses in patients with AML and MDS. Out of the four patients who had responses or assessments available, three had significant reductions in their blast counts. As you mentioned, two of them managed to return their blast counts to normal. To discuss the mechanism briefly, venetoclax targets BCL2, while the other major anti-apoptotic factor preventing apoptosis in these patients is MCL1. In fact, targeting IRAK4 reduces MCL1. We believe this combination has strong potential from a mechanistic perspective, and we are excited to gather more data on that combination.

Operator, Operator

The next question comes from Yale Jen of Laidlaw.

Yale Jen, Analyst

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

Robert Martell, Head of R&D

Yes. Hey, Yale Jen. I would say they're 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 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 is another selective patient population that we'll be investigating in the future as soon as we get our recommended dose.

Yale Jen, Analyst

Okay, great. To elaborate further on the previous question, should we anticipate any insights from the ASH meetings based on the data that was recently presented? Thank you.

Robert Martell, Head of R&D

I believe the most significant takeaway for me was that, as you may recall, in 2022, we had notable data early in the year and leading up to the ASH conference last year. One of the highlights of ASH this year was that we effectively doubled the patient population and continued to witness very impressive activity, including several new responses. Typically, initial signals can be misleading, but in this instance, we are seeing sustained evidence as we broaden our database. Additionally, we're pleased to note that these patients are experiencing durable responses, particularly when those responses last over six months. Almost all of these patients had previous treatment with HMA, which is known to be a challenging group to treat. The median survival for these patients in AML is approximately 2.5 months. Therefore, we are genuinely excited about the data we've received so far, and the key takeaway is that our observations continue to improve as we nearly double the patient population.

Operator, Operator

And our next question will come from Li Watsek of Cantor Fitzgerald.

Unidentified Analyst, Analyst

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 after the Q3 meeting?

Robert Martell, Head of R&D

Let me begin with the data, and then Jim can address the communication aspect. The FDA has recently initiated Project Optimus, which aims to enhance their involvement in determining the recommended Phase 2 dose for oncology drugs in Phase 1. They have established guidelines that include exploring multiple doses that show efficacy and safety. For emavusertib, we identified three doses that met our safety criteria, indicating low dose-limiting toxicities, and all three doses demonstrated some efficacy. We had examined the 300 mg and 400 mg doses taken twice daily and found that the 300 mg dose had comparable efficacy to the 400 mg dose based on our evaluation. Initially, we had only assessed three patients at the 200 mg dose. The FDA requested us to conduct further exploration at this dose, aiming to increase the total patient count from nine to twelve since we observed some efficacy at this level. This request reflects their broader objectives for all companies in early Phase 1 development, not just Curis or emavusertib.

James Dentzer, CEO

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 the 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.

Robert Martell, Head of R&D

And Li, to provide more detail on the specific data, one thing the FDA emphasizes is what they refer to as an exposure response analysis. They closely examine the actual exposure of emavusertib in each patient. We're conducting detailed pharmacokinetic analyses on all these patients. The FDA will compare that data to safety and efficacy, which will help both them and us gain a very detailed understanding of the optimal dose. This is the fundamental aspect of what we will be looking for.

Unidentified Analyst, Analyst

Got it. And sorry, maybe just one quick follow-up. If you potentially have your hold lifted in Q3 or Q4, how quickly do you think you could restart?

Robert Martell, Head of R&D

Well, 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.

James Dentzer, CEO

Yes, Rosemarie, let me add to that. When we went on hold, we had to effectively shut our 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 waiting for the data, giving it to the FDA and seeing which dose they prefer. Do they prefer 200 or 300? Either way, our sites are open and we're off to the races.

Robert Martell, Head of R&D

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

James Dentzer, CEO

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.

Operator, Operator

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.

James Dentzer, CEO

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, Operator

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