Curis Inc (CRIS) 2008 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q4 2008 Curis earnings conference call. My name is Becky and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions).

I would now like to turn the presentation over to your host for today's call, Mr. Mike Gray, Chief Financial Officer. Please proceed.

Good morning and thanks for joining us. Today as usual we will provide a corporate update and discuss our 2008 fourth-quarter and year-end financial results.

Before we begin, I'd like to advise you this conference call contains forward-looking statements regarding Curis's future expectations, plans and prospects within the meaning of the Private Securities Litigation Reform Act of 1995 including statements relating to the expected progress and benefits of our internal targeted cancer programs including CUDC-101 and CUDC-305 and our Hedgehog Pathway Inhibitor program under collaboration with Genentech as well as financial guidance including projections of our future cash position.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including risks relating to our ability to successfully advance the research and clinical development of our targeted cancer programs; Genentech's ability to successfully advance clinical trials of GDC-0449; competitive pressures and our need to maintain our proprietary rights; our ability to successfully continue our collaboration with Genentech as well as enter into new collaborations on favorable terms with other parties; unplanned operating expenses; our need to raise additional funds to finance our operations; and risk factors described in our quarterly report on Form 10-Q for the quarter ended September 30, 2008 as well as other reports that we periodically file with the SEC.

We caution you that we are making these forward-looking statements as of today and 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 would like to now introduce Dan Passeri, Curis's President and Chief Executive Officer, who will discuss our corporate highlights and will provide an update on our pipeline. Following Dan's remarks, I will return to review our financial results for the fourth quarter and year-end 2008 and then we will open up the call to questions. Dan?

Thanks, Mike. Good morning, everyone, and thank you for joining us today on the call. As many of you know, the fourth quarter of 2008 and early 2009 have been highly productive periods at Curis. We continue to make good progress with CUDC-101, our first-in-class HDAC EGFR Her2 inhibitor, and its ongoing Phase I clinical trial. We also have progressed our Hsp90 inhibitor, CUDC-305 substantially through GLP toxicology studies with preliminary data suggesting a favorable safety profile. In addition, our collaborated Genentech has made significant progress recently and in 2008 with its development of GDC-0449. And I will begin my program with an overview and discussion of this asset, namely 0449.

0449 is a first-in-class orally administered small molecule Hedgehog Pathway Inhibitor that is being developed under our June 2003 collaboration agreement with Genentech. Genentech and Roche collaborate on the clinical development and commercialization of 0449 and Curis is eligible to receive cash payments upon successful achievement of certain clinical development and regulatory approval milestones and royalties upon commercialization of the drug.

Genentech has initiated two Phase II clinical trials of 0449 including trials in metastatic colorectal cancer and advanced ovarian cancer and has recently announced plans to initiate a pivotal trial in advanced basal cell carcinoma or BCC in early 2009. These trials represent an important source of non-dilutive capital for Curis with the Company receiving an aggregate $6 million for the initiation of the colorectal and ovarian cancer trials.

In addition, we will receive an additional $6 million following the initiation of the advanced BCC trial. These funds are especially important given the very challenging financial environment in 2008 and we expect that this will continue well into 2009.

In the Phase II colorectal cancer trials, Genentech will evaluate the 0449 in approximately 150 patients with metastatic colorectal cancer in combination with the current standard of care in a randomized placebo-controlled double-blind trial. Patients will receive either FOLFOX or FOLFIRI chemotherapy in combination with Avastin and will be randomized to receive 0449 or placebo.

The primary objective of this trial is progression-free survival from randomization to disease progression or death and secondary outcome measures include the measurement of hedgehog protein expression in archival tissue and tracking of adverse events.

In the advanced ovarian cancer Phase II trial, 0449 will be evaluated in approximately 100 patients with ovarian cancer in second or third complete remission. Patients will receive either 0449 or a placebo comparator. The primary end point of the trial is progression-free survival and secondary outcome measures include overall survival, the amount of hedgehog protein expression in archival tissue and the tracking of adverse events.

Lastly in the pivotal Phase II clinical trial of 0449, Genentech will evaluate approximately 100 patients with metastatic or locally advanced BCC in a global single arm two cohorts trial. One cohort includes all patients with histologically confirmed RECIST measurable metastatic BCC. The second cohort includes histologically confirmed locally advanced BCC that is considered inoperable by the treating physician. All patients will receive a daily oral dose of 0449.

We believe that this trial represents a significant development milestone for 0449 in metastatic and locally advanced BCC and that it builds upon the strong Phase I safety and efficacy data demonstrated by the drug which showed clinical benefit in a substantial proportion of advanced BCC patients.

We are pleased that our collaborator Genentech has worked with the FDA on the study design of this Phase II trial in advanced BCC. There is currently no standard of care for patients with these types of BCC and its pivotal trial was designed so that its data if positive may serve as the basis for NDA submission by Genentech.

Another development to the 0449 program came in November 2008 when we learned that Genentech has granted a license to Hoffman-La Roche or Roche for ex-US rights to 0449. Roche brings its significant clinical developer commercialization experience to advance in market 0449 outside the US and as such, we believe the collaborative worldwide development activities of Genentech and Roche could greatly expand the potential value of 0449.

Lastly, we are pleased that Genentech and the National Cancer Institute's or NCI's division of cancer treatment and diagnosis have entered into a collaborative research relationship which will allow the NCI to explore the drug 0449 in cancer indications other than those being evaluated by Genentech. We believe the clinical trials conducted under this agreement may have a significant impact on the overall development of 0449 since they provide an opportunity to generate additional data in tumor types not already under investigation by Genentech. We look forward to the possible future initiation of clinical trials under this NCI collaboration which we hope will build on the exciting biological activity previously reported in advanced basal cell carcinoma.

Under the arrangement, a Phase I clinical trial is expected to be initiated to evaluate dose and safety of 0449 in pediatric patients with medulloblastoma. Medulloblastoma is a rare but highly malignant brain tumor that occurs most often in children. In addition to this Phase I medulloblastoma clinical trial, Curis expects that additional clinical trials will be sponsored by the NCI under this agreement including in small lung and pancreatic cancers among others.

Trial details of the medulloblastoma Phase I trial are available on clinicaltrials.gov. The trial information is expected to be posted on clinicaltrials.gov as the respective trials near initiation. We look forward to providing further 0449 updates as additional clinical trials are initiated as well as when Genentech communicates other important scientific and clinical observations.

Now moving onto our internal programs, in August 2008, we began dosing patients in our Phase I clinical trial of CUDC-101, a first-in-class small molecule inhibitor of HDAC, EGFR, and Her2. The Phase I trial is designed as an open label dose escalation study of CUDC-101 in patients with advanced refractory solid tumors. The primary objectives of the Phase I trial are to evaluate the safety and tolerability of escalating doses of CUDC-101 and to establish the maximum tolerated dose and dose-limiting toxicities.

Secondary objectives will be to assess the pharmacokinetics, efficacy, and ability of 101 to inhibit HDAC EGFR and Her2 in this patient population. The study is being conducted at two sites within the United States and is expected to enroll between 18 and 40 patients across several dose-escalating cohorts.

We recently opened for enrollment the third cohort in our Phase I trial at a dosing level of 300 milligrams per meter squared. The first patient of the third cohort represents the eighth patient tested in this trial with the first and second cohorts being dosed at 75 and 150 milligrams per meter squared respectively. There have been no dose-limiting toxicities observed in either of the first dosing levels, which has allowed us to double the dose to this third cohort. We are hopeful that we are entering into a meaningful dose level with this third dosing cohort.

Our clinical observations to date include certain biomarker observations such as a reduction in total Her2 protein in a patient population -- I'm sorry -- in a patient tumor sample following four days of 101 treatment in an apparent inhibition of EGFR signaling observed in skin biopsies obtained from patients treated with 101. In addition to these biomarker signals which suggest that 101 appears to be hitting at least two of the intended targets within man, we have observed dose dependent pharmacokinetic data with a patient exposure to 101 approximately doubling from the first to the second cohort.

This is particularly encouraging since we started doubling in the exposure but did not see a corresponding increase in the observed adverse events. This PK data also shows us that we expect to be able to double again into the third cohort and hopefully we will have a well-tolerated dose at that point and should be in a predicted therapeutic range.

We are encouraged by the early signs from this Phase I trial and are currently estimating that it will be completed in mid-2009 dependent of course on a number of factors including the rate of patient enrollment and the number of cohorts that are required to dose to reach our maximum tolerated dose.

In addition to CUDC-101, we are actively advancing our other preclinical drug candidates including CUDC-305, which is an orally available synthetic small molecule inhibitor of heat shock protein 90 or Hsp90. CUDC-305 is nearing completion of GLP toxicology testing that is required to support a future IND filing. The 28-day in life dosing and respective 28-day recovery periods have been completed in this study and early data suggests that 305 has a favorable safety profile. We expect that we will receive initial draft reports in mid-February with final reports available by the end of March.

We currently anticipate filing an IND application for 305 in mid-2009. We are currently involved in discussions with several pharmaceutical and biopharmaceutical companies regarding the potential development collaboration for this compound. We believe that favorable data in the interim and histological toxicology reports for 305 are key to our ability to enter into a partnership for this asset.

We believe that 305 may possess unique pharmacological properties in addition to its good safety profile. For example in October, one of our scientists presented a poster at the EORTC in Geneva, Switzerland highlighting key pre-clinical data demonstrating that 305 has a strong combination of pharmacological properties that may contribute to its potent efficacy in pre-clinical cancer models. In preclinical xenograft mouse models, the orally administered compound exhibited high oral bioavailability and a prolonged terminal half-life of 20.5 hours in tumors versus approximately six hours in plasma.

In addition, preclinical brain pharmacokinetic data demonstrates that 305 is highly brain penetrable suggesting that the compound could have potential advantages for the treatment of primary or metastatic brain cancers. For example, in a mouse xenograft model for brain cancer wherein the tumor cells derive from a human glioblastoma were implanted subcutaneously, 305 exhibited dose dependent [inhibition] of tumor growth.

Furthermore on a separate mouse xenograft study in which glioblastoma tumor cells were implanted intracranially, 305 treated -- treatment significantly prolonged survival in the treated mice. In addition to our progress with 305 and 101, we continue to engage in active preclinical development efforts on our other targeted cancer programs and hope to select another development candidate in 2009.

So apart from advancing our product candidates, a major focus for the management team has been to secure collaborative and licensing relationships and we've been in discussions with several biopharmaceutical and pharmaceutical companies to this end principally around partnering CUDC-305 and potentially also CUDC-101. We believe that interest in these programs from potential collaborators will be stimulated by initiation of open enrollment of the third cohort of our Phase I dose escalation trial in 101 and the good preliminary safety data from our IND-enabling toxicology studies of CUDC-305.

Partnering continues to be a top priority for us and we will -- and we believe that we can enter into a transaction around at least one of these molecules by mid-2009.

Before we move on to the financial discussion, I would like to thank our employees who have worked very diligently over the past year, our directors, and our investors. The past year has been a challenging time in many industries particularly at small biotechnology companies and we appreciate the efforts and loyalty of our employees, the guidance of our Board, and the continued support of our shareholders through these trying times. I look forward to providing you all with further updates on our pipeline and pre-clinical programs as the year progresses.

I would now like to turn the call back over to Mike.

Okay, thanks, Dan. I will briefly review our fourth quarter and year-end 2008 financial results.

For the fourth quarter of 2008, Curis reported a net loss of $2.2 million or $0.03 per share as compared to net income of $4.3 million or $0.07 per share for the same period in the prior year. Revenues for the fourth quarter of 2008 were $3.1 million as compared to $11.5 million for the same period in the prior year. We recognized $3 million in license revenues during the fourth quarter of 2008 which were related to a contractual payment from Genentech under our Hedgehog Pathway Inhibitor collaboration.

We recorded $11 million of license revenues for the fourth quarter in the prior year, primarily related to $10.5 million in license revenue that we recognized under that same Hedgehog Pathway Inhibitor collaboration with Genentech. The majority of those revenues resulted from a change to our estimated performance period under this collaboration.

Operating expenses for the fourth quarter of 2008 were $5.4 million as compared to $7.7 million for the fourth quarter of 2007. In October of 2008, we implemented spending reductions in various preclinical research and G&A areas which accounted for some of this decline.

Research and development spending was $3.5 million for the fourth quarter of 2008 as compared to $5.2 million for the fourth quarter of 2007. The decrease is attributable to decreased spending of $400,000 under former collaboration with Wyeth as well as decreased spending of $600,000 on our targeted cancer programs which primarily related to GLP toxicology testing of CUDC-101 that occurred during the fourth quarter of 2007. Also in the fourth quarter 2007, R&D expenses was a $750,000 license fee payment to a former collaborator as a result of our December 2007 BMP-7 transaction with Stryker Corporation.

General and administrative spending was $1.9 for the fourth quarter of 2008 as compared to $2.4 million for the same period in the prior year. The decrease in G&A expenses was primarily due to decreases in stock-based compensation, personnel costs, and legal fees primarily resulting from spending reductions implemented during October 2008.

For the year ended December 31, 2008, Curis reported a net loss of $12.1 million or $0.19 per share as compared to a net loss of $7 million or $0.13 per share for the prior year. Revenues for the year ended December 31, 2008 were $8.4 million as compared to $16.4 million for 2007. Operating expenses were $21.5 million for 2008 as compared to $24.8 million for 2007.

R&D expenses were $13.2 million for 2008 as compared to $14.8 million for 2007 and G&A expenses were $8.3 million for 2008 as compared to $10 million for 2007. As of December 31, 2008, our cash, cash equivalents and marketable securities totaled $28.9 million and there was 63.7 million shares of common stock outstanding.

I would like to now briefly provide some financial guidance particularly around our cash and expense areas. We currently expect that we will end 2009 with cash, cash equivalents, and marketable securities of between $12 million and $16 million, which includes the $6 million that we expect to receive from Genentech following the initiation of its pivotal Phase II advanced basal cell carcinoma trial which we expect to occur in February.

We projected this year-end cash will fund our currently planned operations through mid-2010. This projection includes our funding of a number of programs including the continued clinical testing of CUDC-101, the planned IND filing and Phase I clinical testing of CUDC-305 as well as the selection and advancement of at least one additional development candidate from our proprietary targeted cancer programs.

This projected cash life also excludes any other potential payments from Genentech or new collaborators in 2009. Our successful entry into a meaningful collaboration or our deferral of investment in certain research and development programs could materially lengthen the period in which we can fund our operations beyond mid-2010.

We expect R&D expenses for 2009 will be in a range of $15 million to $18 million and G&A expenses will range between $7 million and $9 million. Those projections include $400,000 to $600,000 and $800,000 to $1 million in stock-based compensation expense for R&D and G&A expense categories respectfully. Actual stock-based comp will likely differ as the Company typically gives out stock-based awards as part of our compensation program.

That concludes the prepared remarks. We would now like to turn the call back over to the operator to open it up for any questions. Thank you.

(Operator Instructions) Ren Benjamin, Rodman & Renshaw.

Good morning, Dan and Mike, and congratulations on ending the year with significant cash and enough to last at least for another 18 months. A couple of questions for you and you may have some trouble answering this, but I figure I'll ask anyway. Can you give us an idea or do you have any sort of thoughts internally or in conjunction with Genentech regarding the timing of the three trials that are ongoing as to when we might see data or when enrollment may complete -- anything at all?

Yes, that's obviously a difficult question for us from a number of reasons. But to try to give you some guidance, well, we are probably looking at in 2010 at the earliest for the three of the programs. We are encouraged by the progress they are making to date and I think right now it's really focusing on enrolling patients and enriching the trials to get a representation of data that would be meaningful to present to the public. But I think 2010 is probably the earliest, Ren.

Okay. And then regarding the -- I know they are starting their pivotal BCC trial, but they were still following a patient with the previous I, II trial. Do you have any sort of an update as to what's happening there or do we have any updated data from that trial?

The last data that was presented by Genentech was presented at EORTC, which, Dan, actually you didn't touch on that in this call. You touched on that at last call. Poster presentation which updated Phase I data through June. I think there will be an update. I'm just not sure if you will see it through a publication and at one of the cancer conferences coming up to report out the remaining data. That's in Genentech's court.

Okay. And then finally, as you guys know, it's all about the data and while the partnership and the potential partnership for either 305 or 101 can significantly extend the runway clearly in building value, data is pretty key here. You mentioned that the 101 compound is in the third cohort. You gave some color around that regarding the first two cohorts. Can you give us an idea as to when we might begin to see results from this trial, even preliminary results? Would ASCO be hoping too much? Or do you think enrollment is going well enough that we could get a preliminary peek at ASCO?

Yes, ASCO may be a little early. We are expecting to complete the Phase Ia by midyear. I think this next cohort, Ren, is a real important one because we are at a significant dosing. And I just want to underscore that there have been a significant number of third-party studies showing synergy in the molecular mechanism when you co-treat with an HDAC inhibitor and a kinase inhibitor and unfortunately, that has not been able to be tested in the clinic because of toxicity.

So we are very encouraged by the data that we have derived to date where the drug appears to be well tolerated. This next dosing is very important because it's at a dosing level where we feel the exposure should be sufficient for therapeutic effect. So we are hopeful that by the end of Ia, we are going to have some emergence of relevant not just biomarket data but some clinical manifestation that's going to give us color on how to then approach the Phase Ib to expand out on certain patient cohorts.

And so the prediction of the dose where you should be seeing effect, is that based on sort of preclinical models and translating that into what does you might see in effect in humans?

Yes, it's an extrapolation of the dosing where we saw the efficacy start to emerge and where we saw really profound efficacy in terms of aggression in our mouse models.

And are you seeing any --? I know it's an all comers trial, but are you seeing any one type of tumor type getting enrolled in the trial? I know that we had talked about evaluating this drug in triple negative breast cancer patients. Are you seeing any sort of clumps of patients coming in or is it still pretty much all over?

Well, it's all comers and the first patient in the third color will represent only the eighth patient treated, so it is all comers. That being said, we are -- the PI, Tony Tolcher, understands the mechanism, the molecular potential benefits of this drug at a molecular level. So he is looking at enriching if he can to just get a representation of particular cancer types such as breast cancer.

Okay. I guess a final question just moving down the pipeline. We know about 305 and you covered it pretty well in the call. But, Mike, I think mentioned that you would be picking yet another compound from sort of a vast array of preclinical compounds that you have. Can you give us an idea as to what might be next on the horizon?

Yes, so we are looking at a number of programs that have generated promising data. I'll just focus on the two that we are most encouraged by from the MTI platform, so we have one that's an HDAC PI3 kinase inhibitor multi-target inhibitor structure. The preclinical data looks very encouraging in terms of the potency and synergy that we are seeing with this compound. As you know, PI3 kinase is an attractive target right now with a number of companies engaged in activities around that target.

So that's one we are very encouraged by and we have an HDAC/Bcr-Abl program. We also have a cMET HDAC program that is earlier in development but to date looks encouraging.

Terrific. Thank you guys very much and good luck this year.

Thank you. Thanks for your interest.

(Operator Instructions) I'm showing you have no further questions at this time, gentlemen.

Okay. Thank you very much for your time and attention and we look forward to giving you further updates as they become available. Thank you.

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