Curis, Inc. (NASDAQ:CRIS) Q4 2023 Earnings Call Transcript

Curis, Inc. (NASDAQ:CRIS) Q4 2023 Earnings Call Transcript February 8, 2024

Curis, Inc. misses on earnings expectations. Reported EPS is $-2.03 EPS, expectations were $-1.91. Curis, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, and welcome to Curis’ Fourth Quarter 2023 Business Update Call. All participants will be in a listen-only mode. [Operator Instructions] After the company’s prepared remarks, all participants will have an opportunity to ask questions. [Operator Instructions] 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.

Diantha Duvall: 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 like to — I’d now like to turn the call over to Jim. Jim?

Jim Dentzer: Thank you. 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 green 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 into 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 chemo. 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 versus 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?

Diantha Duvall: 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?

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Q&A Session

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

Ed White: 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.

Jim Dentzer: We try to get out of the details of the number of sites that we have in any given time because, of course, we’re always increasing them. But I think the reason why we mentioned that 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.

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

Jim Dentzer: Sure. It’s an ultra-orphan market. It’s one of the reasons why we selected it. So if you think across the landscape of non-Hodgkin’s lymphoma, and everywhere where BTK gets used, of course, we have been targeting broadly. Anytime you use BTK, you’re down regulating in a kappa-B from one pathway. There are a lot of BTK inhibitors targeting that path. We’re the only one that targets the other path. When we look across the landscape of non-Hodgkin’s lymphoma, we focused in on primary CNS first because it’s so small, 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 can — we believe we can address the disease quickly.

As you saw in the data, the three or five complete responses, we got a few of that in the first three months on treatment. So that’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 ultra-orphan, where there are no approved treatments, and we can see this kind of response from the drug, it’s really encouraging.

Ed White: 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.

Jim Dentzer: Yes. So solid tumors is 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 do you go after a blockbuster indication or an indication with multibillion dollar revenue potential, what no one else knows about yet. And we designed that molecule, so that it would be effective in lymphoma, but also would confer some competitive advantage in leukemia and in solid tumors. As you know we — 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 would expect to hit in the IRAK4 or spliceosome population and the FLT3 population those data look really compelling. We’ve just started the frontline study. And then 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, in gastroesophageal cancer, in ovarian, in lung, in pancreatic. 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 benefit. 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.

Ed White: 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?

Jim Dentzer: Sure. So, I mean, take the melanoma study as the case in point. Obviously, that’s a study we would rather not pay for. There are a lot of trials maybe 1,000. There are a lot of clinical trials going on right now of a company’s drug in combination with pembro, Merck’s PD-1, which is most people consider it deleting PD-1. But the way most of those work is, they beg Merck to give them 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. So, obviously, 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 that we’re going to be able to find all of our future studies are 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 get data across lymphoma, leukemia and now solid tumors and we can afford to do it. So as long as we can afford to keep our rights and generate the data that show that this drug has such significant potential, I think that’s our plan.

Ed White: Okay. Great. Thanks for taking my questions.

Jim Dentzer: You bet.

Operator: The next question comes from Soumit Roy of JonesTrading. Please go ahead.

Soumit Roy: Good morning, everyone, and congratulations on all the progress on multiple fronts. One question on the frontline, the triple combo with emavusertib, azacitidine [ph] and venetoclax. You’re starting — you mentioned three different countries including Europe. Are you planning on initiating some US trial sites also? The second was …

Jim Dentzer: Go ahead.

Soumit Roy: Keeping this trials, is that in combination of ibrutinib, or still you are planning to do monotherapy emavusertib patients?

Jim Dentzer: Okay. So the first one first. So the initial study for the triplet, we’re really targeting some sites where we think we can get data relatively quickly. Because we want to — in these early stages the most important thing is to generate the data as quickly as we can and prove that the triplet works. We’ve got a lot of preclinical data that suggests that IRAK4 is the primary driver of disease in half of all AML patients. There’s a published article as you know the Smith Choudhary article that was published in Nature in 2019 pointed that out. Half of all patients this is the number one driver of disease. In the other half of patients, it’s not the number one driver of disease, but it’s a secondary or tertiary driver.

So really this should provide incremental benefit from a new mechanism that no other drug does. So the long-term to capture as many patients as we can is to, of course, go frontline in combination with standard of care. That’s azacitidine and venetoclax. So our hope would be that we can recapitulate in humans what we found in the lab and that is whether you add emavusertib to aza or to ven or the aza-ven combo. This significantly increases the efficacy of that standard of care treatment. So that’s what we found in the lab. And again that’s what we want to try and identify very quickly, if possible in the clinic. And of course, we always want to check for safety. Aza and ven, as you know, are a pretty tough regimen to tolerate. They’re effective but they’re pretty tough to tolerate.

Anecdotally half of all patients that go on that aza-ven doublet, have to discontinue treatment. So what we’re going to be doing in the early days is putting patients on and confirming that there is no safety overlap as we expect. And then second, of course, we’re going to be looking for that efficacy signal. And if you want to do that kind of exploration quickly, it really helps to identify the sites that you can focus on in a very concentrated way and those are the sites we’ve chosen to initiate that study. Your second question could you remind me?

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

James Dentzer: No, thank you 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, and again the rationale for first the combination of ema and ibrutinib that one’s clear. In the case of lymphoma, the problem driving disease for patients with NHL is NF-kappaB overactivity. So when NF-kappaB is overactive what happens is it disrupts, the apoptotic process of the malignant cells. So 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 you get a pretty high response rate on BTK inhibitors.