Curis Inc (CRIS) 2008 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2008 Curis earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded for replay purposes.

I will now turn the call over to Mr. Michael Gray, Chief Operating and Financial Officer. Please proceed.

Okay. Thank you. Good morning and thank you for joining us. Welcome to the Curis Q1 2008 conference call. Today, we'll provide a corporate update and discuss the financial results for the first quarter of 2008.

Before we begin, I'd like to advise you that this call may contain statements about our future expectations, plans, prospects that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the expected progress of our internal programs, our Hedgehog Antagonist Program under collaboration with Genentech, our internal targeted-cancer programs, including CUDC-101.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including risks relating to both our and our collaborator, Genentech's inability to successfully advance the research and the clinical development of our product pipeline, our and Genentech's failure to obtain and maintain necessary proprietary protection for our technologies and product candidates, including those developed internally and under collaboration, competitive pressures, our failure to maintain our current collaborations with Genentech or to enter into new collaborations on favorable terms, if at all, our need to raise additional funds to finance our operations, and other factors, including those described in our annual report on Form 10K for the year ended December 31st, 2007, and the other reports that we periodically file with the SEC.

I'd now like to introduce Dan Passeri, our President and Chief Executive Officer, who will begin with our corporate highlights for the first quarter and to date. Dan will also provide an update on our pipeline. Following Dan's remarks, I'll return to review our financial results for the first quarter, and then we'll open up the call to any questions. Dan?

Thanks, Mike. Good morning and thanks to everyone for joining us on today's call. I'd like to begin my remarks with a review of the progress that we have made on our programs in 2008, including the Hedgehog Antagonist Program, which is under collaboration with Genentech, and our proprietary targeted-cancer programs, which include what we call CUDC-101. For the remainder of the presentation, I'll call it 101, which is a small molecule inhibitor of several targets, namely HDAC, EGFR, and Her2.

Regarding overview of the pipeline, as many of you are aware, our most advanced program is the Hedgehog Antagonist Program, which is being advanced under our June 2003 collaboration agreement with Genentech. Hedgehog Pathway is one of the key developmental pathways involved in cell proliferation, differentiation and angiogenesis.

Genentech indicated that it expect to initiate a Phase II clinical trial of the designated Hedgehog Antagonist compound, which is designated GDC0449 in metastatic colorectal cancer for the first half of 2008. GDC0449 will be evaluated in approximately 150 patients with metastatic colorectal cancer in combination with the current standard of care as first-line therapy in a randomized placebo-controlled, double-blind Phase II trial.

Patients will receive either a FOLFOX or FOLFIRI chemotherapy in combination with Avastin and will be randomized to receive the Hedgehog Antagonist GDC0449 or placebo. They'll be stratified based on the chemotherapy regimen chosen and whether or not response evaluation criteria in solid tumor or resist measurable disease is present at baseline.

The primary objective of the Phase II clinical trial is progression-free survival from randomization to disease progression or death. Secondary outcome measures include the measurement of Hedgehog protein expression in archival tissue and tracking of any adverse events.

Genentech also has indicated that it plans to initiate an additional Phase II clinical trial of GDC0449 in an undisclosed advanced solid tumor of epithelial origin during the second half of 2008.

A product initiation of each of the colorectal in the epithelial solid tumor Phase II trials, Genentech is obligated to make a $3 million cash payment to Curis under our June 2003 collaboration agreement for a total of $6 million if both Phase II trials are initiated.

In addition, Genentech has also stated their plans to initiate a Phase II clinical trial of GDCO449 in advanced basal cell carcinoma during the second half of 2008. And to give you some background on the program, in January of 2007, Genentech began a Phase I dose-escalation clinical trial to test GDC0449, which is an orally administered small molecule Hedgehog Antagonist in cancers.

The primary objectives of the Phase I clinical trial were to evaluate the safety and tolerability of escalating doses of GDC0449 and to establish the maximum tolerated dose and dose-limiting toxicities.

The dose escalation Phase I study was a 3-plus-3 design in which patients received dosages of 150, 270 or 540 milligrams of the compound orally as a single dose on the first day of treatment, followed by a one-week break, and then received daily continuous dosing beginning on Day Eight for a 28-day period.

In October of 2007, Genentech notified Curis that the initial objectives of the dose-escalation study were achieved, and that Genentech had initiated a Phase I clinical trial expansion cohort to enroll additional patients with advanced basal cell carcinoma, which includes patients with locally advanced multi-focal or metastatic basal cell carcinoma.

The primary objectives of the ongoing Phase I expansion cohort are to assess the preliminary signs of biological activity, as well as to continue to accumulate Phase I safety data. The Phase I expansion cohort patients are administered 150 milligrams of the compound in daily continuous dosing, beginning on the first day of treatment.

Importantly, earlier this month, Dr. Daniel Von Hoff, a Phase I study investigator, presented Phase I clinical trial data at the AACR Annual Meeting, which demonstrated anti-tumor activity in almost all basal cell carcinoma patients that were treated with the compound.

The data presented at AACR were from nine patients and included the following results. In five patients with metastatic basal cell carcinoma to the lungs, two patients had confirmed, resist partial responses; two had ongoing stable disease and one had progressive disease. Resist provides standard parameters to be used when documenting patient responses with solid tumors.

In four patients with clinically evaluable, locally advanced or multi-focal basal cell carcinoma, two patients exhibited complete response in subcutaneous masses by physical exam and two patients had improvement in skin lesions. Metabolic responses by the European Organization for Research and Treatment of Cancer, Positron Emission Topography, or PET, metabolic response criteria were achieved in five out of five patients that received PET scans to date. Time on study for all nine patients ranges from 39 days to over 438 days with a medium of over 176 days as of April 5th, 2008.

In addition, Gle1, which is a biomarker for Hedgehog signaling activity, was reduced in all patients. No dose-limiting toxicities have been seen in GDC0449 in Phase I studies. Some patients experienced some loss of sense of taste and there has been a small amount of hair loss and weight loss.

Genentech has indicated that additional Phase I data, including full toxicity data, are expected to be presented at the upcoming ASCO Annual Meeting being held in Chicago, Illinois, on May 30th to June 3rd, 2008.

We're highly encouraged by the early, yet promising result that Genentech has disclosed from GDC0449's Phase I studies, and look forward to providing further updates on this program. It's an important part of our evolving business model and product portfolio, and we're very pleased that Genentech has indicated that it plans to explore the candidate in three separate Phase II trials in three different solid tumor indications.

We anticipate -- we'll provide further details on this program as Phase II clinical testing is initiated or as Genentech communicates other important scientific and/or clinical observations.

In addition to the progress of our Hedgehog Antagonist Program, we have continued to advance our proprietary targeted-cancer programs, which include a number of small molecule-targeted inhibitor drug candidates. Our lead targeted-cancer drug candidate is designated CUDC-101, which I will refer to as 101.

101 is a multi-targeted compound that is specifically designed to inhibit HDAC, EGFR and Her2. We've completed all IND-enabling toxicology studies. The Phase I clinical drug product has been manufactured and assuming that product release testing is successful, we expect that all significant aspects of the Phase I drug product will be completed in early May. We're confident that we'll file the IND for 101 by the end of May.

We believe that our first patient will be treated with this compound by mid-2008, provided that the FDA does not seek further information on our IND submission. We had originally anticipated that we would be filing our IND at the end of the first quarter of 2008, but experienced a slight filing delay, which was primarily due to the need for completing development validation and application of the CGMP release assays for the first lot of the Phase I clinical drug product.

We believe we've successfully completed these activities and that 101 is properly formulated and should be ready for Phase I trial pending the final product release. We're currently compiling the IND submission package and look forward to its submission to the FDA.

The Phase I trial is designed as an open-label 3-plus-3 dose-escalating trial in 18 to 40 patients with advanced and refractory solid tumors. We plan to conduct a study at two clinical centers, including South Texas Accelerated Research Therapeutics, or START, in San Antonio, Texas, with our Phase I principal investigator, Dr. Anthony Tolcher, and at the Barbara Ann Karmanos Cancer Institute in Detroit, Michigan, with Patricia LaRusso.

The primary objectives of the Phase I trial are to establish the maximum tolerated dose and to assess the safety and tolerability of 101. The secondary objectives of the study include assessment of the pharmacokinetics of 101 in the evaluation of dose ranges for 101 to be explored in future studies.

We expect that the initial Phase I dose of the drug candidate will be approximately 140 milligrams, which will be administered by IV infusion. Each treatment cycle will be 14 days, with patients receiving 101 on days one through five, followed by nine days of off-treatment. Additional treatment cycles will be administered until the patient withdraws consent or experiences an event that requires withdrawal from the trial or if there's documented tumor progression.

Subsequent three patient cohorts will be treated at each dose level until the first instance of the dose-limiting toxicity in cycle one is seen, after which up to six subjects will be treated at that dose level.

If the second dose-limiting toxicity is observed in up to six patients, the dose-limiting toxicity dose level will have been reached and additional patients will be added to the next lower dose level up to a total of six patients. The maximum tolerated dose is the highest dose at which less than 33% of at least six or more patients experience a dose-limiting toxicity. Once the maximum tolerated dose is established, we may treat up to ten additional patients at this dose.

As we prepare for our clinical testing, 101 continues to generate meaningful pre-clinical data. During the first quarter of 2008, we received our audited GLP toxicity reports. 101 was evaluated at standard GLP safety, pharmacology and toxicology studies using rats and dogs. For rats, single-dose and repeat-dose studies were performed. For dogs, escalating-dose and repeat-dose studies were performed. Drug administration was by 30-minute IV infusion. The repeat-dose studies for both rats and dogs involved two cycles of treatment, once daily for seven days, followed by seven days of rest, then repeated for a total of 28 days.

This dosing schedule was chosen to match the proposed clinical trial design. Each study also had a recovery arm of approximately one month. Pilot studies indicated that neither central nervous system nor respiratory assessment studies were needed, which received concurrence by the FDA during the reviews of the safety and toxicology plan at the pre-IND meeting.

Among the key findings, there were minimal effects on white cells, platelets and red cells, the significant depression of which can lead to susceptibility and infection, clotting problems and anemia, respectively. Potentially affected organs included lung, kidney, testes, spleen and liver and histopathology descriptions were typically minimal to mild, with the effects largely reversed or reversing by the end of the recovery period.

With respect to potential cardiovascular problems, 101 did not block the HERG channel and with IC-50, a 15.7 micromole and a GLP cardiovascular telemetry study did not reveal any hemodynamic effects of concern. 101 was also negative in an [AIMS] mutagenesis study. Overall, from in vitro in animal studies, 101 appears to have a very favorable safety profile.

In addition, earlier this month, we presented a poster on 101 at the American Chemical Society National Meeting in New Orleans, Louisiana. Our presentation described the strategic compound design and research underlying the development of proprietary drug compounds belonging to a class of chemical structures called quinazolines, which includes 101. These compounds were designed to inhibit multiple validated biological targets known to play key roles in the development and maintenance of certain cancers, and which may provide therapeutic synergy when concurrently inhibited.

Our presentation also discussed the design of this chemical class, presenting structure and activity relationship requirements, along with pre-clinical data, demonstrating 101's potency and efficacy across 30 different cancer cell lines in several animal xenograft models collectively including lung, liver, colon, pancreatic, breast and other cancers.

The presentation provided data showing greater efficacy of 101 in comparison to marketed HDAC, EGFR and dual EGFR Her2 inhibitors when such drugs are administered either alone or in combination. Of particular interest is 101's compelling activity in pre-clinical xenograft cancer models of cell lines that are resistant to inhibitors that target only EGFR and/or Her2.

Also in April, we presented a poster at AACR which provided pre-clinical data supporting the potential of 101 as a therapeutic for liver cancer. Published reports have demonstrated a correlation between liver cancer development and abnormal HDAC expression, which is one of the primary targets of our compound 101.

In addition, in a published report from researchers at the Massachusetts General Hospital, compelling evidence was provided that aberrant signaling of EGFR plays a key role in the development of liver cancer. Although drugs that specifically inhibit EGFR signaling have been developed and marketed, none have yet been approved for the treatment of liver cancer.

And based on the data generated internally and by outside third parties, the combination of HDAC and EGFR Her2 inhibition may be synergistic, meaning that HDAC inhibition sensitizes tumor cells to the effects of EGFR inhibition, and importantly, suppresses several components of the resistance pathways that compensate for EGFR blockade.

Our poster highlighted data from pre-clinical liver cancer animal models, demonstrated that 101's ability to effectively induce tumor growth inhibition or aggression while maintaining a favorable safety profile. These studies included in vivo comparisons to treatment with marketed HDAC or EGFR inhibitors, and in each case, animals treated with 101 exhibited greater inhibition or regression than that observed with the administration of the marketed drugs.

We continue to believe that with increasing trends towards combination therapies for the treatment of cancers, the targeting of EGFR, Her2 and HDAC in a single drug, such as our 101, could potentially provide cancer patients with the advantages of pathway synergies without the cost and administration burdens associated with the delivery of multiple separate drugs.

Additionally, we believe that our approach has the added benefit of providing aligned pharmacokinetics, meaning that the drug with these multiple targets is degraded simultaneously for better control of drug exposure, and therefore, may provide a better safety profile.

In addition to 101, other programs under development include a proprietary class of orally available targeted HSP-90 inhibitors, as well as multi-targeted drug candidates designed to inhibit HDAC in combination with one or more validated cancer targets.

In particular, in pre-clinical testing, our Hsp90 inhibitor candidate exhibits the unique ability to effectively cross the blood-brain barrier and may have cross-platform potential in both ornithological and central nervous system disorders.

Moreover, it has demonstrated a remarkable tumor retention period, meaning that it gets into the tumor and stays there for a substantial time period, whereas it's cleared relatively quickly in normal tissue. Assuming that the results of ongoing experiments, particularly non-GOP safety experiments go as planned, we expect to select an Hsp90 inhibitor as a development candidate by the end of the second quarter.

As an example of these other programs, we presented a poster at AACR, which provided in vitro biological data for a broad range of hematological and solid tumor cell lines for a promising class of novel multi-targeted inhibitors, which is presented -- I'm sorry -- represented by CUO201. CUO201 is a rationally designed drug to inhibit HDAC, as well as ABL and SRC family kinases. These kinases are believed to contribute to uncontrolled cell growth and survival associated with various forms of cancer.

CUO201 seeks to enhance efficacy in unresponsive and resistant cancer populations by targeting concurrently HDAC, in addition to targeting cancer pathways mediated by Bcr-Abl and Src, our first in-class combination of these targets in a single molecule.

The data presented in the poster supports this rationale by demonstrating that CUO201 inhibits cell proliferation in cancer model cell lines that are insensitive or resistant to approved targeted drugs. We believe that CUO201 provides another example of a multi-targeted inhibitor which could overcome limitations observed in certain cancers treated with traditional kinase inhibitors.

While CUO201 is still in the early stages of development, we're highly encouraged by the promising initial results, and we're hopeful that it, or another candidate from this class of compounds, will ultimately progress into human testing.

I'm now going to switch over and provide a brief status update on our Hedgehog Antagonist Program. In March, Wyeth decided that it would no longer pursue its development efforts on our Hedgehog Antagonist Program and would terminate the January 2004 collaboration agreement with Curis. Pursuant to the agreement, the collaboration will conclude on May 6th, 2008.

Our research efforts under the collaboration have focused on the pre-clinical development of small molecule and/or our protein Hedgehog Antagonist primarily for the application in stroke and cardiovascular indications. While we're highly disappointed in Wyeth's decision to conclude our collaboration, we believe significant progress has been made on the Hedgehog Antagonist Program through our research with Wyeth.

Based on our initial data and published work in this area, we feel strongly about the future prospects of the Hedgehog Antagonist as a potential therapeutic for a range of diseases, in particular for neurological disorders, including stroke, cardiovascular indications, bone disorders, as well as for wound healing and hair growth.

Curis is committed to the development of our platform, the next generation of cancer therapies, and as such, we do not currently expect we will pursue internal development of this asset, and instead, will seek a new partner to continue advancing this program.

We're continuing to pursue collaboration strategies on our targeted-cancer drugs that we expect will allow us to retain proprietary development of 101 in the majority of the worldwide market in early clinical testing, and we aim to accomplish this by initially seeking an Asia-only territory partnering agreement for 101.

We also are pursing a collaboration for one or more of the earlier stage targeted-cancer programs. During the course of 2008, we hope to establish a significant partnership for 101, or one or more of our other targeted-cancer drugs, such as Hsp90 or HDAC Hsp90 or other of our multi-targeted-cancer drugs.

I'd like to take this opportunity to thank the Curis employees and our supporters. I look forward to providing you all with further future updates on the Hedgehog Antagonist Program under collaboration with Genentech, as well as on 101 and our other targeted-cancer programs as the year progresses.

I'd like to now turn the call back over to Mike.

Thanks, Dan. I'll now discuss our first quarter 2008 financial highlights. For the first quarter of '08, Curis reported a net loss of $3.4 million or $0.05 per share as compared to a net loss of $3.5 million or $0.07 per share for the same period the prior year.

During the first quarter of 2008, license fee revenues were $1.9 million as compared to $1.1 million for the same period of 2007, an increase of $800,000 or 73%. The increase is due to $1.8 million in license fee revenue that we recognized during the first quarter of '08 for the sale and assignment of our remaining BMP assets to Stryker Corporation.

This increase was primarily offset by a decrease in the first quarter of 2008 of $900,000 in license fee revenue recognized under our Wnt signaling pathway discovery collaboration with Genentech as compared to the same period in 2007.

Operating expenses for the first quarter of 2008 were $5.9 million as compared to $6.2 million for the first quarter of 2007, a decrease of $300,000 or 5%.

The primary changes in R&D and G&A expense were as follows. Our research and development expenses increased by $200,000 or 6% to $3.5 million for the first quarter of 2008 as compared to $3.3 million for the same period in the prior year. The spending increase was due to increased spending of $1.2 million on our targeted-cancer programs, which include 101.

Spending on these programs was partially offset by decreased R&D spending on programs under collaborations with Genentech and particularly, the Wnt collaboration, Wyeth, the Hedgehog Antagonist collaboration, and Centocor, a BMP-7 small molecule screening collaboration that were in place in 2007.

G&A expenses decreased by $500,000 or 17% to $2.4 million for the first quarter in 2008 as compared to $2.9 million for the same period last year. Legal services decreased $400,000 during the first quarter of March 31st, 2008, primarily related to costs associated with foreign patent applications in the prior year.

In addition, stock-based compensation expense decreased by $100,000 in the first quarter of 2008 as compared to last year.

As of March 31st, our cash, cash equivalents and marketable securities totaled $35.2 million and there were 63.3 million shares of our common stock outstanding. We expect that our existing cash, cash equivalents and marketable securities will provide us with adequate capital to reach into the fourth quarter of 2009.

In addition to our existing cash, cash equivalents and marketable securities, we expect to receive a $3 million cash payment from Genentech within 30 days of Genentech's initiation of the Phase II first-line metastatic colorectal cancer trial that Dan mentioned earlier. In addition, we would receive another $3 million cash payment, should Genentech initiate a Phase II trial on an undisclosed advanced epithelial solid tumor.

Genentech has publicly stated that it plans to initiate the Phase II metastatic colorectal trial this quarter and that it expects to initiate the epithelial solid tumor trial in the second half of 2008.

That concludes the financial remarks and we'll now open the call up to questions. Operator?

(OPERATOR INSTRUCTIONS). And there are no questions at this time.

Okay. Well, thank you very much for joining us on the call and we look forward to updating you on our progress in the coming months. Thank you very much for your time.

Thank you for your participation in today's conference. This concludes our presentation and you may now disconnect. Have a great day.