Curis Inc (CRIS) 2009 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2009 Curis earnings conference call. My name is Stacy, and I'll be your conference moderator for today.

(Operator instructions).

As a reminder, this conference is being recorded for replay purposes.

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

Okay, thanks, Stacy. Good morning, and thanks for joining us. Today we'll provide, as usual, a corporate update and discuss our fourth quarter 2009 and year end financial results.

Before we begin, I'd like to advise you that this conference call contains forward-looking statements regarding Curis' future expectations, plans and prospects within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the expected progress of our Phase I clinical trial of CUDC-101 and our timetable for selecting an additional development candidate from our targeted cancer programs; statements regarding our and our collaborators' expectations concerning the further development of our Hedgehog pathway inhibitor program under collaboration with Genentech, as well as our Hsp90 technologies that are licensed to Debiopharm, including the timetable for regulatory filings and other clinical development milestones under these programs; our future cash position and our expected year-end 2010 cash balance and 2010 operating expenses.

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, including CUDC-101; Genentech's ability to successfully advance clinical trials of GDC-0449; and Debiopharm's ability to progress Debio 0932, which was formerly CUDC-305, into and through Phase I clinical testing; competitive pressures; our need to maintain our proprietary rights; our ability to successfully continue our collaborations with Genentech and Debiopharm, as well as to enter into new collaborations on favorable terms, if at all; unplanned operating expenses; our need to raise additional funds to finance our operations and other risk factors described in our Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2009, and in the reports that we periodically file with the SEC.

We caution you that we are making these forward-looking statements as of today and that we may not update any of these statements even if the events and development subsequent to the date of this call cause these estimates and expectations to change.

I'd like to now introduce Dan Passeri, Curis' President and CEO, 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 of 2009 as well as our -- as well as for the 2009 calendar year period, and then we'll open the call to questions.

Dan?

Thanks, Mike. Good morning to everyone, and thanks for joining us on today's call.

2009 was an important year for Curis as we worked with our collaborators, Genentech and Debiopharm, and continued to advance our clinical and preclinical pipeline of promising cancer therapies. Leveraging our balanced approach of developing proprietary drug candidates and working with our collaborators, we believe that we've developed a broad portfolio of targeted small molecule cancer compounds which have significant market opportunities, and we're looking forward to reporting on several key milestones of these programs throughout 2010.

Notably, we announced several important achievements during the fourth quarter of 2009 and early 2010. Recently, we announced that Chugai Pharmaceutical Co. had exercised its right of first refusal for the development and commercialization within the Japan market of GDC-0449 under an existing agreement with Roche. GDC-0449 is being developed by Genentech, which is a wholly owned member of the Roche Group, under the 2003 collaboration agreement between Genentech and Curis. The Company believes that the combined development efforts of Genentech, Roche and now Chugai will provide significant opportunities for the development of 0449 in the majority of the significant global pharmaceutical markets. Also, Genentech completed enrollment of the ongoing 0449 Phase II clinical trial in advanced ovarian cancer patients during the fourth quarter of 2009.

Next, in February of this year, our licensee, Debiopharm, notified us that the French regulatory authorities had formally accepted Debiopharm's clinical trial application, or CTA, which is basically the French equivalent of a US-filed investigational new drug, or IND application, for Debio 0932. And, as Mike, you've stated earlier, that is formerly known as CUDC-305, which is an Hsp90 inhibitor discovered by Curis scientists and licensed to Debiopharm in August of 2009. As a result, Curis earned an $8 million milestone payment from Debiopharm under the parties' August 2009 license agreement, which we expect will be received during the first quarter of this year.

We took further steps to solidify our balance sheet by completing a registered direct offering of common stock and warrants in January 2010 that brought us net proceeds of $15 million. We believe that we now have adequate capital to fund our business into the first half of 2012, and this cash life estimate does not include additional development milestone payments that we could receive from existing collaborators, Genentech and Debiopharm, nor does it include any new corporate partnerships that we may enter into during this time. We expect that we could receive additional milestone payments before the first half of 2012 from Genentech and Debiopharm if the results of the ongoing clinical trials are successful. As such, additional amounts would further strengthen and bolster our financial position.

Lastly, we continue to enroll patients in a Phase I dose escalation clinical trial of CUDC-101, which is our Curis-controlled, proprietary, first-in-class HDAC, EGFR, HER2 inhibitor, and we currently anticipate maximum tolerated dose, or MTD, will be established and dose escalation study completed within the first half of 2010.

In addition to these key milestones, we have also made significant advances during the quarter that we believe to be an attractive series of molecules targeting HDAC and PI3 kinase. We continue to focus on the selection of highly active compounds and expect to select a lead development candidate from this series of compounds in mid 2010.

Let me now move on to a detailed review of our pipeline. I'll begin first with a discussion of our programs under collaboration with Genentech and Debiopharm, and then we'll turn to CUDC-101 and our other proprietary cancer programs.

As many of you know, 0449 is a first-in-class orally administered small molecule Hedgehog pathway inhibitor. In February, we announced that Chugai Pharmaceuticals has exercised its right of first refusal for the development and commercialization within the Japan market of 0449 under an existing agreement with Roche. 0449 is being developed by Genentech under the 2003 collaboration agreement between Genentech and Curis. We're pleased that Chugai will lead the development and commercialization efforts for 0449 within the Japan market, and we believe that the combined development efforts of Genentech, Roche and now Chugai will provide significant opportunities for the development of 0449 in the majority of the significant global pharmaceutical markets, and we believe that Chugai's development and marketing expertise within Japan will further enhance Genentech and Roche's ongoing development efforts of this first-in-class and what promises potentially to be best-in-class molecule.

Of the three tumor types being investigated in the ongoing 0449 Phase II clinical studies, we believe that the colorectal cancer and ovarian cancer trials have the potential to offer significant opportunities in the Japan market, as it is estimated that there will be approximately 62,000 new cases of colorectal cancer and 6,000 newly diagnosed ovarian cancer patients within Japan itself in 2010. With the addition of Chugai to the global development efforts of 0449, Genentech, Roche and now Chugai are responsible for the clinical development and commercialization of 0449, and Curis is eligible to receive cash payments upon the successful achievement of certain clinical development and regulatory approval milestones and royalties upon commercialization of the drug.

As you are aware, Genentech is currently conducting these core clinical trials with 0449, including a pivotal Phase II trial in advanced basal cell carcinoma, or BCC, that was initiated in February 2009 and two Phase II clinical trials in metastatic colorectal cancer and in advanced ovarian cancer that began in 2008. In the pivotal Phase II clinical trial of 0449, approximately 100 patients with locally advanced or metastatic BCC are being evaluated in a single-arm, two-cohort global clinical trial. One cohort includes all patients with histologically confirmed, RECIST measurable metastatic BCC. The second cohort includes histologically confirmed locally advanced BCC that's considered to be inoperable by the treating physician.

All patients will receive a daily dose of 0449 at 150 mg per day. The primary endpoint in this study is to measure patient response to 0449 therapy. Just to make sure it's clear, there's currently no standard of care for patients with these types of BCC, and pending a successful outcome of the ongoing pivotal study, Roche projects that regulatory submissions for 0449 in advanced basal cell carcinoma could occur in 2011.

This pivotal Phase II clinical trial also represents a significant development milestone for 0449 in locally advanced and metastatic BCC and seeks to further build upon highly encouraging Phase I safety and efficacy data obtained for the drug, which was highlighted in a September 2009 New England Journal of Medicine article published by the Phase I study investigators. This article reported data on 33 advanced BCC patients that were treated in the Phase I clinical trial. Of these patients, 18, or 55%, responded to 0449, including two complete responses and 16 partial responses. Of the remaining 15 patients, 11 had stable disease as a best response, and four patients had progressive disease.

0449 showed no dose-limiting toxicities and no grade 5, or fatal, adverse events observed. There were also no grade 4, or life-threatening, adverse events observed related to the study drug. There were, however, several grade 3 adverse events observed, including fatigue; hyponatremia, which is a sodium imbalance; weight loss; and dyspnea.

Genentech also reported significant progress with its Phase II clinical trials of 0449 in colorectal and advanced ovarian cancer. Genentech initiated the Phase II clinical trial of 0449 in metastatic colorectal cancer in May of 2008 and completed enrollment in the second quarter of 2009. GDC-0449 is being evaluated in the study in approximately 190 patients with metastatic colorectal cancer in combination with the current standard of care in a randomized, placebo-controlled, double-blind Phase II trial. Patients receive either FOLFOX or FOLFIRI chemotherapy regimen in combination with Avastin, which is specific for VEGF, and are randomized to receive a 150-mg daily dose of 0449 or a placebo.

The primary objective of the trial is to measure the period of 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 adverse events. We currently expect data from this trial in the second half of 2010.

1 ratio to receive either a 150-mg dose of 0449 or placebo and are stratified based on whether their cancer is in a second or a third complete remission.

The primary endpoint of the trial is progression-free survival. Secondary outcome measures include overall survival, measurement of Hedgehog ligand expression in archival tissue and a number -- and number and attribution of adverse events. We believe that there is a significant unmet treatment need for patients with relapsed ovarian cancer. While many advanced ovarian cancer patients initially experience clinical remission with current therapies, the disease recurs with most patients. Genentech designed this Phase II clinical trial to investigate whether 0449 may help delay and/or attenuate tumor regrowth following clinical remission of cancer after second-line chemotherapy treatment for recurrent disease.

We're also very pleased with the progress of the collaboration between Genentech and the National Cancer Institute, or NCI. As a means of gaining additional clinical insight into 0449, Genentech and the NCI entered into a collaborative relationship in 2009 allowing the NCI to explore 0449 in additional cancer indications not presently being evaluated by Genentech or Roche, and there are now several additional clinical trials ongoing under this arrangement with the NCI. Further details for all 0449 clinical trials are posted to clinicaltrials.gov. We look forward to providing further GDC-0449 updates as additional clinical trials are initiated as well as when Genentech and/or Roche communicates other important scientific and clinical observations.

I'm now going to turn to our Hsp90 inhibitor development candidate, now designated as Debio 0932. And, as a reminder, in the third quarter of 2009 we received one of our core corporate objectives when we successfully licensed this candidate to Debio, which is a Swiss pharmaceutical corporation. Under the agreement, we granted Debiopharm a worldwide, exclusive, royalty-bearing license to our Hsp90 inhibitor technologies, including Debio 0932. And, as I stated earlier, this was formerly called CUDC-305, and it's a potentially best-in-class small molecule Hsp90 inhibitor. As I mentioned earlier, in February 2010 Debiopharm notified Curis that French regulatory authorities had formally accepted its CTA, which is the equivalent of an IND filing, for Debio 0932, and as a result we earned an $8 million milestone payment from Debiopharm under the terms of our agreement.

Debiopharm plans to open a Phase I clinical trial evaluating the safety of Debio 0932 during the second quarter of 2010. The study will be an open-label, multicenter, dose escalation trial evaluating the safety and maximum tolerated dose of multiple doses of 0932 in patients suffering from advanced solid tumors or lymphoma. Importantly, we will earn an additional milestone payment upon the administration of Debio 0932 in the fifth patient in the first Phase I clinical trial. Now, we've been highly impressed and very pleased with Debiopharm as a partner, including with its efforts to create a clinical development plan and advance 0932 towards Phase I clinical testing. I look forward to providing you with further updates regarding 0932 as more data becomes available.

And then, lastly, I want to provide an update on our multitarget inhibitor CUDC-101, our first-in-class small molecule inhibitor of HDAC, EGFR and HER2, and the first of our proprietary multitargeted cancer programs to progress into clinical trials. There's a growing body of evidence from both internal preclinical Curis research as well as from published literature from multiple third-party researchers demonstrating synergistic effects of concurrent inhibition of HDAC activity and kinase activity such as EGFR and HER2. It's believed that that concurrent HDAC inhibition primes the cancer cells to be more sensitive to kinase inhibition and may prevent or attenuate the emergence of drug resistance often seen with kinase inhibitors, such as that observed with marketed compounds such as Tarceva, for example, an EGFR inhibitor, and Tykerb, an EGFR/HER2 inhibitor.

As I mentioned earlier, we are continuing to enroll patients in a Phase I dose escalation clinical trial of this molecule and currently expect that we will complete the dose escalation Phase I study in the first half of 2010. The current 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, or MTD, and dose-limiting toxicities. Secondary objectives will be to assess the pharmacokinetics, to evaluate pharmacodynamic biomarkers and to assess efficacy and the ability of CUDC-101 to effectively inhibit its respective targets, namely, HDAC, EGFR and HER2, in this patient population.

The study is being conducted at two clinical sites within the United States and is expected to enroll up to 40 patients across several dose-escalating cohorts until the MTD is determined. To date, we've enrolled a total of 24 patients in this study at five dose levels. We initially doubled the dose of 101 over three cohorts, in which the first nine patients included four patients treated at 75 mg/m2, three patients treated at 150 mg/m2, and two patients treated at 300 mg/m2.

The drug was well tolerated at the 75 and the 150 mg levels. At the 300 mg/m2 dosing level, the first two patients treated encountered a transient grade 2 adverse event deemed possibly related to the study drug, including a rapid but transient increase in creatinine levels. The adverse events were both reversible upon discontinuation of the drug. Though the events were only grade 2 in severity, under the terms of the protocol they were deemed dose-limiting toxicities, as patients missed a scheduled treatment day.

As a result, we dosed down and treated three additional patients at 150 mg/m2, 225 and 275 mg/m2 dose levels, noting that the drug was well tolerated at each of these dosing levels. We then revisited the 300 mg/m2 dose level, and, upon treating three additional patients, observed transient grade 2 increase in creatinine levels in one of the patients treated. As such, it's been determined that at the 300 mg/m2 dose level, the rapid rise in creatinine levels, albeit transient and at a grade 2 level, is a dose-limiting toxicity, or DLT.

We're now treating an additional three patients at the 275 mg/m2 dosing level to determine whether this is the MTD dose. I'd like to note that, based upon comparison and extrapolation of the human PK data obtained from clinical studies, and comparing that with the preclinical xenograph models, it's predicted that CUDC-101 doses of 150 mg/m2 and above should be within the range that's expected to be therapeutic. Although the study is still ongoing and as yet still incomplete, we believe that the dose escalation study supports a broad therapeutic dosing range or window of between 150 mg/m2 and 275 mg/m2.

Furthermore, we've seen biomarker activity at even the lowest dose of 75 mg/m2. We saw a mixed clinical response in a head and neck cancer patient, and I would like to reemphasize these are refractory patients that have been exposed to a number of other therapies, so the head and neck cancer patient had a 30% reduction in one of the target lesions at 150 mg/m2 and a stable disease in metastatic breast cancer at 150 mg/m2. We also had a confirmed partial response in an advanced gastrointestinal cancer patient, with an approximately 55% reduction of the target lesion at the 275 mg/m2 dose level. This patient stayed on study for 14 weeks. We're hopeful that we will continue to see evidence of biological and clinical activity in additional patients in the Phase I -- as the Phase I study concludes.

We're encouraged by the early data of this Phase I dose escalation trial demonstrating that CUDC-101 appears to be well tolerated, and we look forward to providing further updates on this program as new relevant metrics become available. Upon completion of the dose escalation study in the Phase I trial, it's our intent to enroll approximately 10 patients per indication at the MTD in three to four cancer indications, such as gastrointestinal cancer, liver cancer, head and neck cancer and/or breast cancer. Also, we intend to initiate a Phase I/II study for studying various dosing schedules in non-small cell lung cancer patients.

As I mentioned earlier, we're also diligently advancing our preclinical pipeline and expect that we may select a new development candidate from a series of molecules targeting HDAC and PI3 kinase in mid 2010. The preclinical data generated to date supports the premise that we have a highly potent PI3 kinase and HDAC inhibitor with synergistic blockade of cancer pathway networks for enhanced sensitivity and potentially preventing resistance seen with single-target agents.

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

Okay, thanks, Dan. I'll now briefly discuss our fourth quarter and year end 2009 results as well as give some guidance for 2010.

We reported a net loss of $2.7 million, or $0.04 per share, for the fourth quarter of 2009, as compared to a net loss of $2.2 million, or $0.03 per share, for the same period in '08. Our revenues for the fourth quarter of 2009 were $1.7 million, as compared to $3.1 million for the same period in 2008. The decrease in revenues from the prior year period was due to the recognition of $3 million in license fee revenue during the fourth quarter of 2008 related to our collaborator, Genentech's, initiation of a Phase II advanced ovarian trial in December, which occurred in December of 2008. During the fourth quarter of 2009 we recognized license fee revenue of $1 million and research and development revenue of $500,000 related to our August 2009 license agreement with Debiopharm.

Operating expenses for the fourth quarter of 2009 were $4.5 million, as compared to $5.4 million for the same period in 2008. R&D spending was $2.4 million for the fourth quarter of 2009, as compared to $3.5 million for the same period in 2008. The decrease is primarily attributable to lower spending on Curis' CUDC-305, now Debio 0932 program. As a result of licensing this program to Debiopharm in August 2009, all subsequent development costs have been assumed by Debiopharm on that asset. Offsetting this decrease, we increased spending on some of our other preclinical targeted cancer programs, and, as Dan mentioned, we expect to select an additional development candidate in the middle of this year.

G&A spending was $2 million for the fourth quarter of 2009, as compared to $1.9 million for the same period in '08. The increase was primarily due to consulting and legal services associated with various corporate matters, including an arbitration proceeding that we filed against a former collaborator in 2009, which was settled this month, February 2010.

For the year ended December 31, '09, we reported a net loss of $9.8 million, or $0.15 per share, as compared to a net loss of $12.1 million, or $0.19 per share, for the same period in the prior year.

Revenues for the year ended December 31, 2009 were $8.6 million, as compared to $8.4 million for the same period in 2008. Operating expenses were $18.6 million for the year ended December 31, 2009, as compared to $21.5 million for 2008.

As of December 31, 2009, our cash, cash equivalents and marketable securities were $25 million, and there were 67.3 million shares of common stock outstanding. Just to update that common stock, today we have approximately 75.5 million shares of common stock outstanding, largely as the result of a registered direct offering that we completed in January, where we issued about 6.45 million shares, and then an additional 1.75 million shares were issued to warrant holders from our August 2007 private placement that were exercised in January and February of 2010.

We currently expect that we'll end 2010 with about $30 million to $35 million in cash, and we project that this year our cash -- I'm sorry, this year-end cash will fund our currently planned operations into the first half of 2012. This projection includes our funding of a number of programs, including the continued investment in clinical testing of CUDC-101 as well as the selection and advancement of at least two additional development candidates from our proprietary targeted cancer program.

I'd just like to point out that the cash life into the first half of 2012 excludes any potential future payments that we could receive from existing or new collaborations and collaborators. We're eligible for additional near-term payment from our licensee, Debiopharm, upon its treatment of the fifth patient in the Phase I study and expect that if the results from ongoing clinical studies being conducted by Genentech and the soon-to-be-initiated study from Debiopharm are favorable that we could receive additional payments from these collaborators in the 2011 and '12 time period.

We expect that 2010 research and development expense will be between $13 million and $17 million and that G&A expense will be between $8 million and $9 million. These expense projections include $500,000 to $700,000 and $1.2 million to $1.4 million, respectively, of stock-based compensation expense for R&D and G&A. These stock-based compensation numbers may be higher since we issue additional awards consistent with past practice during the year.

So that concludes the financial remarks. I'd now like to open the call for any questions. Stacy?

(Operator instructions).

Your first question comes from the line of Joe Pantginis, with Roth Capital Partners. Please proceed.

Hi, guys. Good morning, and thanks for the update. A couple of quick questions, first a quick milestone reminder. Roche, you said, is guiding for an NDA in 2011 for 0449, but do you think we'll see data from the BCC study in 2010?

Well, I mean, the past public statements that Genentech's made -- we're kind of hopeful. They have a -- Roche has a call or an investor meeting in a few weeks here and maybe there'll be some updates, but the past public statements have been as follows. One is NDA submission in 2011. Earlier last year there were statements that the drug could be launched in I think it was Q4 2011. So I think the data is, if it's not end of 2010, it can't be much beyond that.

Got you.

But that's about the best guidance I can give on that right now, Joe.

Great. Okay, that's sort of what I recalled. I just wanted to make sure. And then more on the business development strategy, obviously you've outlicensed a couple of lead products. That has been validating to your pipeline and your discovery platform, but can you outline now the business development strategy for 101 and your earlier stage compounds, how long you might look to hold on to them or when you might want to or not partner them?

Yes, so that's a very important question, and we partnered our Hedgehog asset preclinically out of necessity, but we've been evolving our business model with the objective that we can, one, develop competencies that are further along the development continuum and hold on to our assets longer through a more stable business model so that we can create greater shareholder value, and that's the objective with CUDC-101 and the preclinical pipeline. We'd like to be able to hold on to the program at least through Phase II. If we do partner prior to the end of Phase II it would be in a relationship where we would like to retain co-development rights so that we can retain a greater upside and continue to evolve clinical development capabilities and competencies within the Company.

Great. Thanks a lot.

Okay, thanks, Joe.

Thanks, Joe.

Your next question comes from the line of Brian Skorney, with ThinkEquity. Please proceed.

Hi, good morning, guys. Congratulations on a good 2009. Just a couple of quick questions. The first one's kind of housekeeping slash future development plans for 101. So, we're kind of stepping up a little bit on the R&D spend, and I'm just wondering, I'm assuming that is as we move into the next stage of clinical work with 101, and so, I don't know if, Mike, could you just give us a little timing? I mean, should we look at first quarter and second quarter R&D spend this year as being essentially flat from last year and then see it pick up toward the end of the year?

I think it's fair. I think second quarter maybe picks up a little, according to our projections, but really at the back half of the year is when I think R&D spend will start to increase.

Okay, great. And then --

And then --

-- another question --

-- Brian, just to clarify that, the spending is twofold, so one is related to 101, but then the second is if we're successful in selecting a development candidate in the middle of the year, some of that sort of Q4 spend is on the GMP manufacturer and GLP tox, which ramps up development spending a little bit, as well.

Got you. That's great. And then, in terms of the announcement by Chugai that they were exercising their option, do you guys have any details about the terms of the collaboration between Roche and Chugai as far as what would lead them to opt in ahead of Phase II data, and do you know, were there any economics exchanged as a result of the option?

The only thing that we know is, or as the relationship's been described on Roche's website or Chugai's website, is the relationship's basically a right of first refusal when Roche decides that it wants to go into Japan. So I don't know that it's time-specific like some of the other arrangements are, some of the other deals that we've seen. But what we've seen is that it's just as simple as when Roche is ready to go into Japan, Chugai is then offered the decision to make a choice if they want to participate in development. The only financial term that we saw from a Chugai-related press release was that there are some -- there's some financial exchange between -- from Chugai to Roche when they exercise that right of first refusal, but that wasn't -- is not disclosed, either.

Okay.

So, sorry, that's about the best clarity we can give on that.

No, no, that's good. Anything's helpful in these large pharma Japanese deals, all right? And then just as far as the next stage of 101 development goes, could you kind of give us some color as to what the plans? I mean, we're pretty close to wrapping up this part of the clinical development. Do you have a plan in place and clinical sites ready to go online once we actually have the definitive DLT?

Yes, so we have basically a two-prong strategy. One is to survey several indications with a Phase Ib expansion cohort, and that's up to 10 patients per indication at the MTD. And, as I stated, there are several cancers we're looking at, including a GI cancer, liver cancer. We're also looking at the prospects of potentially breast cancer. And then we're looking at a Phase I/II where we're looking at different dosing schedules. What we've done here is we're doing an IV five days a week, five days on and then a nine-day break. That's what the Phase I dose escalation is.

Based on the PK data and extrapolating looking at the preclinical model data on PK/PD, we believe we have good efficacy in a therapeutic range of between 150 mg and above. So right now, based on the data that we have, we think we have a broad therapeutic window. Also, with the PK data that we've obtained, we believe we should be able to do an every-other-day or twice-a-week dosing, which would be far more convenient for patients, since this is an IV.

So we're looking at a Phase I/II in non-small cell lung cancer patients, and the rationale for that indication is it's a well characterized EGFR over-expressing cancer and there's a wealth of data in how that patient population responds to a drug such as Tarceva, probably the best known EGFR inhibitor, where 90% of that patient population over-expresses EGFR and only 10% respond to the drug, and there's a real problem of drug resistance emerging. So we believe that's a very attractive indication where we can get a wealth of information in a Phase I/Phase II and think that really would be a grand slam if we could show that we are hitting a broader set of patients.

If I could just clarify one thing, the first part of that, this two-part study is, just to be clear, it's a protocol amendment to the current Phase I, which would be the number, four or five indications where we're looking at additional activity at either five days a week or maybe the five on, nine day off protocol that we have now, or a two-day --

A week.

-- what we're thinking about right now, yes, two days a week, with maybe three weeks on, one week off. We're still finalizing that, but that's the trial that should start, or that should continue the existing Phase I study as soon as we hit the MTD. And we have identified additional sites to run that trial. And that's a nearer term start. The second study, the Phase I/II non-small cell lung cancer study, is probably a second half event, under a separate new protocol with several additional centers.

Right. Thanks so much, guys.

Okay.

Thank you.

Your next question comes from the line of Ren Benjamin, with Rodman. Please proceed.

Hi. Good morning, guys, and thanks for taking the questions. I guess starting off with Debio 0932, can you talk to us a little bit more, or do you have any more details regarding this Phase I trial? I understand it's open-label, multi-center. Is it going to be all over Europe, just in France? What dose will you start off with? And you mentioned both advanced solid tumors and lymphoma. What's the rationale for lymphoma out of all the other hematological malignancies? And then I have a couple more questions.

I mean, I'll comment that I think Debiopharm would prefer that most of the -- it's a standard dose escalation study, but Debiopharm is a private Swiss company and they would prefer that some of the dosing and -- sort of the dosing schedule and starting doses are kept confidential at this time. So I think the only guidance we can really give is it's a standard, all comers, solid tumor plus lymphoma, three-plus-three dose escalation study that should start very soon. And obviously we'll -- the next news from Curis on that will be on the treatment, Debiopharm's treatment of the fifth patient in the Phase I, which entitles us to an additional milestone payment.

And how much is that milestone payment, Mike?

We have not disclosed. What we have generally stated is that this deal, we [sought a] $10 million to $15 million upfront, and that the sum of our three payments, which are upfront license fee of $2 million, this next payment on the CTA acceptance of $8 million, and then the CTA payment are in that range. So it's not the size of the $8 million CTA payment. It's in the single-digit millions, based on that guidance.

Okay. And how long might that -- might this trial -- I mean, I know it's -- based on our experience with 101, it's kind of tough to say, but maybe through your discussions with Debiopharm and a review of the preclinical results, you have a general idea as to how long this trial might take and what the top dose might be.

I can't comment on top dose. I can say the study is probably at least a year, 12- to 15-month range, maybe 18 months at the outer edge.

Okay. And why lymphoma?

Yes, I think there's some supporting data that's emerged in the role of Hsp90 inhibition being effective against lymphoma, and that's an indication that's been highlighted because of preclinical research.

Okay. Switching gears to 101 real quick, the three additional patients that are at the -- correct me if I'm wrong -- at the 275-mg/m2 dose, have they all been enrolled so far and are being treated, or you're enrolling the three patients?

We're enrolling.

But we have one more patient --

Yes, one more patient to go.

-- who's been identified and is being screened right now for Monday.

Oh, okay.

So, assuming the screen goes well, that should be the last patient.

And have there been, if you can just -- I know that there were some responses in the head and neck patients, in the breast cancer patient and the gastric patients, but have there been any sort of groups of patients or tumor types besides the ones that you've identified, the gastric, the liver, head and neck and breast, that seem somewhat promising, that the physicians who are currently conducting the trial think this drug could be promising with?

Yes, so I think they characterized that, Ren. The response to partial confirmed PR we got in the gastrointestinal cancer patient, that got some attention by the PI. These are very sick patients that are refractory to other therapies, and that patient had a quite robust response where we had about a 55% regression. So, GI is clearly a cancer that we would like to survey going forward. Breast is intriguing simply from the fact that we are seeing in our preclinical data really good HER2 inhibition and degradation, so it's hitting the blockade of signaling, but also we're seeing degradation of the HER2 protein. Our drug appears to be effectively preclinically in HER2-positive, HER2-negative and triple-negative breast cancer. And then we've seen really robust preclinical data in liver cancer. Then we had a response in head and neck, which also corresponds to good preclinical data. So we're intending on surveying those in the dose escalation -- I mean in the expansion cohort.

Is there anything more from the biomarker data that you can conclude, especially maybe regarding the non-responders? Has there been anything that's come out of that analysis that can help you going forward?

Yes, we haven't completed the biomarker survey. We basically wanted to consolidate the biopsies and the samples so we would be more cost-efficient. So, based on the biomarker data that we already have access to, I think the only thing I can convey is we have demonstrated that the drug is, based on those metrics, does appear to be hitting targets that it's been designed to. So we've seen a dramatic reduction in HER2 in a breast cancer patient sample. Based on the hematological metrics that you typically associate with HDAC inhibition, we're seeing that. And we have seen a good trend toward EGFR inhibition. We've seen dry skin at I think 150, 225, and at 275 we saw rash, and that's indicative of EGFR inhibition.

Okay. Regarding the dosing schedule that's going to be explored, can you just help me kind of flesh out what's the rationale for changing the dosing schedule? Is it to try to ameliorate some of the side effects? Is it to try to get more efficacy? What's the -- and why pick the two days a week for three weeks on and one week off, as opposed to something else?

Yes, so that's an important question, and it really has to do with observations of the drug's behavior from an activity standpoint, and it is not a tox-related issue. And, more importantly, what it has to do with is convenience for the patient. Our assessment is if we're doing five days on, where patients have to come into the clinic five days a week, the inconvenience factor may make it difficult to enroll a broad set of patients. So what we're trying to do to make this more attractive is to make it as convenient as possible but still demonstrate that with, for instance, two days a week would be ideal, where we're still silencing the targets and having a prolonged PD effect. And one of the benefits of HDAC inhibition is you have a prolonged PD, so you may have a relatively short t1/2 on the PK, but once you target HDAC it has a prolonged effect. So what we're trying to assess is what is the optimum dosing schedule balancing efficacy with convenience.

Okay. I guess somewhat related to that, clearly this is what we like to call, I guess, an all-in-one drug, several proteins being inhibited here, and one would think that since there are multiple proteins being inhibited that you should just use this as a monotherapy. But clearly there's got to be some sort of -- maybe you started thinking about it, the potential benefit of combining it with a broad-based chemotherapy. Have you guys been thinking about that? Is there an indication that you might (inaudible)?

Yes, it's an important question. So the basic theme here is cancer network disruption, and that is really the sort of growing trend in cancer therapy. Combination therapies are being more and more widely used, and the rationale is that if you hit a cancer with one highly specific therapeutic, tumors are very dynamic and responsive and they will adapt to that insult, where it's much more difficult to adapt when you're hitting it with more than one. And the objective is to disrupt the networks that are accessible to cancer. And this is much like what we've seen with HIV therapy, for instance, with AZT -- highly promising, and it turned out the virus was able to adapt to it, so now you're seeing cocktails of drugs being used. Well, that same paradigm is being accepted by the oncology treating physicians.

So, case in point to your question, we have seen preclinically synergistic efficacy when you use 101 along with chemotherapy. So we used in a resistant breast cancer model, I think it was a triple-negative breast cancer model, we showed synergy with Paclitaxel with CUDC-101. So 101 alone was equivalent in its efficacy with Paclitaxel, which is a standard of care, I believe, for triple-negative, and when you combine the two drugs we saw a synergistic effect. So that is something we are assessing, Ren, and will investigate on a going forward basis.

Okay. I guess one final question, milestones and presentations for the remainder of the year. I mean, we kind of went over the clinical milestones, for sure, but maybe you can give us some idea as to the presentations that are coming up, any other milestones we might not have talked about.

Yes, so 2010 is a very important year for Curis. I would even call it transforming, in that we have quite a deep pipeline and a balanced business model. I think with Debiopharm we just achieved the first milestone of the $8 million CTA acceptance. We expect and anticipate an additional milestone, which will be the fifth patient treated in the first Phase I, so that should be a near-term milestone, and then, again, that's additional nondilutive capital, which will extend the runway out even further.

We anticipate a data readout in the Genentech-Roche 0449 trials probably beginning with the colorectal and then the ovarian, and then, as Mike stated, we are anticipating a possible NDA submission in early 2011, so we would expect the possibility of a readout for the pivotal trial in late 2010. And then we also have the MCI trials, in collaboration with Genentech, and the most advanced, I believe, is the pancreatic, where we could have a readout on that, and that's being used in a combination therapy. I believe it's 0449 in combination with Tarceva and gemcitabine.

And then the milestones on 101, we're going to be, once we complete the Phase I dose escalation we will compile the data and release that information and then initiate the expansion cohorts and then the initiation of the Phase I/Phase II in non-small lung cancer. We also have -- I wouldn't rule out the possibility of some other events occurring that we don't presently have baked in.

The -- sorry, I know that was my last question, but this is really my last question, the presentations, AACR, ASCO, AACR/NCI, anything planned for those conferences?

I think the most likely is a second half of 2010 conference for 101, just based on the time that it's taken to get through the MTD and then the time that it's going to take to compile the final cohort of biomarker data. Dan mentioned that we aggregated all the biomarker data, but we've actually started having that evaluated for all doses prior to these last few patients at 275.

Great, guys. Thank you very much.

Thank you.

Thank you.

Your next question comes from the line of Adnan Butt, with RBC. Please proceed.

Hi, everyone. It's Adnan for Jason Kantor.

Hi, Adnan.

Dan, a couple of questions for you. Could you go over the, maybe the powering assumptions for the colorectal study, basically what's driving the timing? And then, are there scenarios where it could be sooner or later than second half? And also, on 101, will non-small lung cancer, will that also be included in the expansion cohorts, or is that a decision to go straight into Phase I/II in the second half? And then for Mike a question, so the cash guidance for the end of the year, does it include the milestone from the potential fifth patient getting enrolled in the Debiopharm study, and what could be the timing of other milestones that were mentioned in the release?

Okay. Want me to take the easy ones?

Go ahead, yes.

The fifth patient is not included in the cash guidance. I think that generally our other milestones are on sort of initiation of next study. That's typically how our contracts look. So, I mean, data alone, so, for example, the colorectal study data from Genentech, wouldn't generate an additional payment. We'd have to have the trial initiate. So I think the way we're thinking about it is that the Debiopharm next milestone payment is probably the last partner revenue that we'll get in 2010, but that 2011 could be a very significant year for Curis.

Okay. I just wanted to make sure that that was not included in the guidance.

Okay, so the questions you posed for me, I'll start with the non-small cell lung cancer one first. I think your question was do we also intend on including that in the expansion cohort. The present thinking is no. That would be a focused Phase I/Phase II because it's such a well-characterized indication with EGFR and we think we'll get a really robust set of data from that, so we'd like to focus on that separately. And we have been, as Mike stated, networking with a number of clinical centers that are highly interested in that trial.

And then on the Genentech-Roche colorectal, metastatic colorectal trial, I think you wanted basically a synopsis of the timing, why we're looking at second half for a readout. There are 190 patients in that trial. It's fully enrolled. And I think what's driving it is basically the key metric is the evaluation of -- it's a double-blind study, so you're going to have two cohorts. One is receiving chemotherapy plus Avastin plus placebo, the other is chemotherapy, Avastin plus 0449.

Now, bear in mind this is -- this strategy is aligned with our multitarget platform, but what it is is a network disruption, and the objective here is to show that Hedgehog inhibition used in conjunction with Avastin, which is a VEGF inhibitor, should give one prolonged progression-free survival. So the objective here is to follow out two patient cohorts, one placebo, one with 0449, and to see a statistical delta in progression-free survival. And I think what's driving the timing is the average disease or progression-free survival of patients treated with standard of care and then looking at enhanced progression-free survival when one adds in the Hedgehog inhibitor. So I think what they want to do is make sure they're following out this patient cohort as long as practical to get a robust statistical representation.

Okay. That's fine. I'll get back in queue.

Okay.

Great. Thanks for the questions.

Your next question comes from the line of Edward Tenthoff, with Piper Jaffray. Please proceed.

Great. Thank you. The majority of my questions have been asked, but keep up the good work.

Ted, how are you doing?

Your next question comes from the line of George Zavoico, with MLV. Please proceed.

Hi, Dan, Mike. Congratulations on a nice quarter. Most of my questions have also been answered. I have two very brief follow-ups. You mentioned in the biomarker study at 75 mg you saw biomarker activity in EGFR and HER2. Did you also see HDAC biomarker activity? That's the first question. And the second question regards to your combination in your preclinical. You seem to be focusing a lot on HDAC plus some other target. Are you -- in the long term, are you considering other networks, perhaps even combining a Hedgehog inhibitor with some other pathway?

So, I'll answer the second part of that first. So, we are prohibited from using Hedgehog in the development of other therapeutics, so we can't make a Hedgehog-based multitarget inhibitor unless we're authorized to do so by Genentech and Roche.

Okay.

We've licensed the Hedgehog antagonist field to Genentech. Regarding the biomarker activity, regarding HDAC, to date what we've looked at are sort of surrogate markers for HDAC, which is a number of hematological, like hypoglycemia is indicative of HDAC inhibition. So we've been looking at a number of hematological markers. We are going to be surveying HDAC specifically as we complete the biomarker analysis from the samples that we've been getting. But based on the data we've observed to date, it appears that we are indeed inhibiting HDAC, based on these surrogate proxy markers.

And all of them pretty much at 75 mg?

No, as one goes up. The 75 mg we saw HER2 suppression. That was the very first biopsy we took on a metastatic breast cancer patient.

Okay. Okay, thanks.

Thank you.

And at this time I'd like to turn the presentation back to Mr. Gray for closing remarks.

Okay, well, that wraps up the call. I thank everybody for dialing in and for all the great questions, and I look forward to updating you throughout 2010.

Okay. Thank you very much.

We thank you for your participation in today's conference. This does conclude your presentation. You may now disconnect, and have a great day.