Curis, Inc.
Q1 2015 Earnings Call Transcript

Published: 8 May 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Curis Incorporated Q1 2015 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your -- the first speaker for today, Mani Mohindru, Senior Vice President of Corporate Strategy and Investor Relations. You have the floor.

[Mani Mohindru:]

Thank you, operator. Good morning, everyone, and thank you for joining us. During today's call, we'll provide you with an update on corporate developments and plans and also discuss our first quarter 2015 financial results. Before we begin, I'd like to advise you that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements relating to our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management; the potential therapeutic benefits and our plans to develop our proprietary drug candidates, including CUDC-907, CUDC-427 and CUDC-305; progress and programs under collaboration with Aurigene, as well as our expectation of our partners Genentech and Roche's continued development in commercialization of Erivedge in various territories. Actual results may differ materially from those indicated by forward-looking statements in this conference call as a result of various important factors, including those risk factors described in our annual report on Form 10-K for the year ended December 31, 2014, and in other filings that we periodically make with the SEC, and we encourage you to review these risk factors carefully. We caution you that we're making these forward-looking statements only as of today, and that we may not update any of these statements even if events and developments subsequent to the date of this call cause these estimates and expectations to change. I'd now like to introduce Ali Fattaey, our President and CEO, who will provide an update on our company and our various programs, including CUDC-907, PDL-1 and IRAK4 Inhibitor programs under our collaboration with Aurigene as well as our partnered program, Erivedge. Following Ali's remarks, Mike Gray, our Chief Financial and Chief Business Officer, will review our financial results for the first quarter 2015, after which we will open the call for questions. [Operator Instructions] Ali?

[Ali Fattaey:]

Thank you, Mani, and thanks to the conference call and webcast participants for joining us this morning. This first quarter for Curis was a transformative period and reflects the strategy we've been building towards as an oncology therapeutics business focused on development and eventual commercialization of innovative and effective drugs for cancer patients. The past quarter was highlighted by our entry into broad and exclusive collaboration with Aurigene for the discovery, development and commercialization of small molecule drug candidates in the areas of immuno-oncology and precision oncology. The first 2 molecules within this collaboration that we expect to take into the clinic are an oral small molecule PD-L1 antagonist, designed to disrupt PD-1, PD-L1 immune checkpoint receptor ligand interaction and result in activation of T-cells for cancer immunotherapy, and the second molecule is an inhibitor of Interleukin-1 receptor associated kinase, or IRAK4, that is intended for treatment of certain hematologic malignancies. In addition to these, the Aurigene collaboration is expected to generate a pipeline of novel drug candidates in the coming years. Our partner, Aurigene, has made significant progress in advancing the lead immuno-oncology programs and is expanding efforts to address additional immune checkpoint targets with small molecule antagonist. Aurigene is also advancing compounds under the IRAK4 program, and we expect to exercise options to exclusively license these first 2 programs in the near future. We are also pleased to have recently received orphan drug designation for CUDC-907, which is our Dual HDAC PI3 Kinase Inhibitor for the treatment of diffuse Large B-cell lymphoma or DLBCL, which represents a disease of significant unmet need, especially in the relapse refractory setting. We continue to make progress in the clinical development of CUDC-907, both in expansion stage of the Phase I trial for hematologic malignancies, which is focused on patients with DLBCL, as well as the ongoing Phase I trial in patients with solid tumors. We look forward to presenting the Phase I dose escalation results of CUDC-907 as well as available data from the expansion stage in the hematologic malignancies at the ASCO Annual Meeting later this month. We're also planning a Phase II study in DLBCL for later this year that I'll elaborate on. Organizationally, we have also grown our capabilities and staff significantly in the areas of project leadership, clinical development and operations project management, regulatory data management and translational sciences. This is all -- this level of growth is all consistent with our expectations and commitment to advance development of our key drug candidates in the clinic. Lastly, during the first quarter of 2015, we brought in approximately $65 million in proceeds from a public offering of shares of our common stock, which we expect will provide the company with cash to fund our planned operations into 2017, the period in which we expect to achieve multiple milestones across our key programs. Regarding CUDC-907, we will be presenting the results from the Phase I hematologic cancer trial at the upcoming ASCO Annual Meeting on May 31, which will include majority of the data from the dose escalation stage of the trial as well as available data from the expansion stage of the trial, which is still ongoing. In addition to ASCO, we will also be presenting these results at the Congress of European Hematology Association in Vienna, Austria, and at the International Conference on Malignant Lymphoma in Lugano, Switzerland, both in June of this year. In the CUDC-907 Phase I trial in patients with relapsed and refractory lymphoma and multiple myeloma, we've previously reported that over 40 patients had been treated in the dose escalation stage in which we evaluated CUDC-907 at escalating doses using various treatment schedules. And I want to point out that since we will be presenting the Phase I data at ASCO, I will only reiterate what we have mentioned thus far

[Michael P. Gray:]

[Audio Gap] or $0.30 per share on both the basic and fully diluted basis for the first quarter of 2015, as compared to a net loss of $5.6 million, or $0.06 per share, and note that the net loss for the current period includes an in-process research and development charge of $24.3 million related to our issuance of common stock under our collaboration with Aurigene. Revenues for the first quarter of 2015 were $1.7 million as compared to $1.3 million for the same period in 2014. Both periods are comprised solely of royalty revenue from Genentech's and Roche's net sales of Erivedge. Operating expenses were $32.7 million for the first quarter of 2015 as compared to $6 million for the same period -- sorry, for the first quarter of 2015 as compared to the $6 million for the same period in 2014. The majority of the $26.7 million increase in operating expenses q-over-q was attributed to our recording of onetime charge for IP R&D or in-process research and development of $24.3 million, again associated with the issuance of shares to Aurigene under our collaboration. R&D expenses were $4.7 million for the first quarter of 2015 as compared to $3.1 million for the same period in 2014. The increase in R&D expense was primarily due to increase spending on CUDC-907 of $1.3 million related to the ongoing Phase I clinical trials. During the quarter ended March 31, 2015, we also paid Debiopharm $750,000 in connection with the transition agreement entered into between the parties related to CUDC-305, formally Debio 0932. These increases were partially offset by decreased spending on CUDC-427. G&A expenses were $3.5 million for the first quarter of 2015 as compared to $2.8 million for the same period in 2014. The increase was primarily due to an increase in legal, professional and consulting costs related to our Aurigene transaction. Costs associated with our intellectual property and stock-based compensation also increased as compared to the prior-year period. Other expense was $827,000 for the first quarter of 2015, as compared to $811,000 for the same period in 2014. Other expense primarily consisted of $867,000 and $951,000, respectively, and the interest expense related to the loan made by BioPharma II to Curis Royalty, a wholly owned sub of Curis. As of March 31, our cash, cash equivalent and investments totaled $107.2 million, and they were approximately 128.3 million shares of common stock outstanding. Just turning to our expectations for 2015, we expect to end 2015 with cash, cash equivalents and investments of between $65 million and $70 million. This excludes any potential future payments from existing or new collaborators. We expect that 2015 R&D expense will be between $37 million and $42 million, and the G&A expense will be between $12 million and $14 million. This expense expectations include approximately $800,000 and $2.4 million of the estimated 2015 stock-based compensation expense in R&D and G&A, respectively. With that, I'll turn the call back to the operator, and open up for questions.

[Operator:]

[Operator Instructions] Our first question for the day comes from the line of Adnan Butt from RBC Capital Markets.

[Adnan S. Butt:]

Let me start with a question on 907. So in terms of the expansion cohorts, Ali, did I hear you say that the expansion cohort would extend to a combination on as well? And then just broadly, what gives you confidence at this stage that progress to our registration directed Phase II is likely?

[Ali Fattaey:]

Thank you, Adnan, and thanks for your question. I think what I mentioned, hopefully, it was clear. We have the monotherapy expansion arm ongoing that enrolls DLBCL patients, and then we have opened up a separate expansion on that enrolls DLBCL patients that will be treated with CUDC-907 plus rituximab. So data will be available for us to make our decision with regards to a later trial this year from both of those perspectives, both monotherapy and in combination with rituximab. I think I was fairly clear in the context of what variables go into our decision with regards to the Phase II trial later on this year, which we intended to be registration-directed and registration-enabling in that regard. We will look at all of the data that is -- that will be available to us, both as monotherapy and the combination. And frankly, it's really the feasibility of being able to conduct the study as well as our discussions with the FDA that will result at. At this point, we fully intend and expect to initiate that study later on this year based on the data that we've presented thus far.

[Adnan S. Butt:]

And Ali, in terms of the data at ASH, do you expect the monotherapy expansion cohort to be updated, right? And I'll get back in line. Sorry, at ASCO.

[Ali Fattaey:]

Yes, thank you. I think at the ASCO presentation, what we intend to present is all of the dose escalation stage of the study across all patients, not just the DLBCL patients of course. And as much of the data that's available and evaluable from the expansion cohort, which would be all monotherapy at this point, would be included in that presentation as well.

[Operator:]

Our next questioner comes from the line of Stephanie Mariah [ph] from Oppenheimer.

[Michelle Gilson:]

This is actually Michelle Gilson in for Chris Marai. And we wondering what you expect to -- when you expect to see first-in-human proof of mechanism data for your oral PD-L1? And then also when you might have data for HED-HED [ph] trials against other PD-L1 and PD-1 therapeutics?

[Ali Fattaey:]

Sure. Thank you, Michelle, and extend our regards to Chris as well when you see him. And regarding the timelines for the PD-L1 antagonists, our first small molecule immuno-oncology drug in collaboration Aurigene, the stage that we are expecting to initiate GLP toxicology studies shortly, potentially in this second quarter of this year. We would then expect to file an IND before the end of this year and initiate clinical testing of the drug candidate shortly after that. If everything goes well, I would expect to have proof-of-concept in initial clinical data in 2016. I don't think we have indicated anything with regards to conducting trials head-to-head against other therapeutics against PD-1 or PD-L1 at this point. We do expect to see clinical data for this in the 2016 timeframe.

[Operator:]

Our next questioner comes from the line of Joe Pantginis from Roth Capital Partners.

[Joseph Pantginis:]

I guess, my first question, Ali, has to do with IRAK4 compound. Obviously, there's a lot of increasing exposure on this target here. Just looking to see how you look to potentially differentiate the development path for this product. And also, I know you mentioned it briefly in your prepared comments, but do you see any potential in autoimmune types of indications?

[Ali Fattaey:]

Sure. Thank you, Joe. We are actually quite excited about the work that our colleagues and the discovery that our colleagues at Aurigene have made regarding IRAK4. It's been an extended amount of chemistry efforts that they have gone into generating the molecules and optimizing them. The major criteria for us, for the molecule, of course, their potency, their selectivity, which is very important, and also their activity in both of those systems and models, meaning both oncology and anti-inflammatory diseases. I think IRAK4 certainly deserves assessment in that based on its function and based on its regulation in both of those disease areas. With regards to differentiation, I think since none of the drug candidates against IRAK4 that we are aware of have really been in the clinic yet or are in the early stages of clinical testing in people, the real mark comes in the context of their activity in the clinic, and we're fairly confidence with the compounds that we're looking at with regards to their preclinical data. Again, the key factors for us would be, in fact, selectivity and their current activity, which we do see. We would intend to take them into the oncology setting first. That's our first and foremost focus at this stage. We do see the opportunity in the lymphoma setting and in particular, in the Diffuse Large B-cell lymphoma to start with. However, because of the role that IRAK4 plays, I would not be honestly surprised if the potential and the utility of the drug expands beyond or the drug candidate expands beyond just MYD88 mutated DLBCL population. We do look at those, obviously, in the preclinical setting as well and hope to continue presenting data from that regard as well. With regards to inflammatory disease, as I mentioned, the compounds are active in the preclinical setting. I think, in general, IRAK4 inhibitors would be expected to have activity in autoimmune or inflammatory disease setting. At this stage, we don't have plans for initiating studies, but I do think the -- both the compounds and IRAK4 do present a very good opportunity in that direction for us. But for us at this point, our focus is in the oncology setting with the drug candidate.

[Operator:]

[Operator Instructions] And it looks of all the questions that we have in the queue, so I'd like to turn the call back over to management for closing remarks.

[Ali Fattaey:]

So I'd like to thank everyone who participated in the call today. I would also like to thank all of our employees in the company that have been working very hard, also thank our colleagues at Aurigene and our collaborators at Genentech for their hard work with respect to our drug candidates. And also, importantly, I'd like to thank the patients and their families for participating in our clinical studies. Thank you.

[Operator:]

Ladies and gentlemen, thank you, again, for your participation in today's conference. This now concludes the program, and you may all disconnect your telephone lines. Everyone, have a great day.