Curis Inc (CRIS) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Curis earnings conference call. My name is Crystal and I will be your operator for today. (Operator Instructions) As a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Mike Gray, Chief Operating Officer and Chief Financial Officer. Please proceed, sir.

Okay. Thank you. Good morning everybody and thanks for joining us as always. During today's call we'll provide an update on corporate developments and discuss our fourth quarter 2010 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 related to the expected progress of our ongoing and planned clinical trials of our clinical development candidate, CUDC-101, as well as our timetable for progressing development candidates from our network-targeted cancer program; statements regarding our and our collaborators' expectations concerning the further development of our programs under collaboration, including the timetable for clinical trial data, regulatory filings and other clinical development milestones under those programs.

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 proprietary network-targeted cancer programs, including CUDC-101 and CUDC-907; Genentech's ability to successfully advance ongoing clinical trials of GDC-0449; and Debiopharm's ability to successfully progress Debio 0932 through Phase I clinical testing; competitive pressures; our ability 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; general adverse economic conditions and other risk factors described more fully in our quarterly report on Form 10-Q for the quarter ended September 30, 2010 and in other 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 events and developments subsequent to the date of this call cause these estimates and expectations to change.

I'd now like to introduce Dan Passeri, Curis' President and Chief Executive Officer, who will discuss our corporate highlights and will provide an update on our pipeline. Following Dan's remarks, I'll return to review our financial results for the fourth quarter and year-end 2010 and then we'll open the call up for any questions. Dan?

Thanks, Mike. Good morning and thanks for joining us today. The fourth quarter was a productive one for Curis, with the continued enrollment of our ongoing Phase Ib clinical trial of our lead proprietary drug candidate CUDC-101, which is a first-in-class, multi-targeted inhibitor targeting HDAC EGFR and Her2 and our recent selection of CUDC-907, which is an orally administered PI3 kinase HDAC inhibitor as a development candidate.

In addition to our ongoing Phase Ib study, we also expect to initiate, in the near-term, a Phase I study of CUDC-101 used in combination with Cisplatin and radiation in head and neck cancer patients that have not been previously treated with chemotherapy, radiation, or a prior therapy. So these are going to be treatment nave patients that specifically and directly will target EGFR, Her2, and HDAC. And for various reasons, upon which I'll elaborate further later in the call, we believe that this indication, head and neck cancer, is an ideal patient population in which to study CUDC-101 in its current formulation and also because of the mechanism of action.

We have also recently begun formation studies, as well as other IND-enabling work, as we seek to advance an oral formulation of CUDC-101 into clinical testing later this year or early in 2012.

On the research front, we continue to be very pleased with the professionalism and productivity of our research group's efforts in advancing another cancer and network-disrupting compound into the development stage with our selection of CUDC-907 and again, that's a PI3 kinase HDAC inhibitor. We are currently advancing this molecule through formulation and other IND-enabling studies and anticipate we'll file an IND for this molecule later this year.

Our research group is continuing its efforts to discover additional novel network-targeted drug candidates for cancer indications, including efforts focused on histone methyltransferase inhibitors, B-Raf, HDAC inhibitors, a SRC-Abl, HDAC inhibitor and a BLK HDAC inhibitor.

Our partnered programs continue to advance as well. During the fourth quarter our collaborator, Genentech, a member of the Roche group, initiated a Phase II clinical trial of GDC-0449, which is also known as RG3616, in patients with operable nodular basic cell carcinoma, or BCC, which we believe demonstrates Genentech's ongoing commitment to exploring the treatment of various forms of BCC with GDC-0449.

Genentech and Roche are also studying 0449 in advanced BCC, a severe form of the disease that includes cutaneous BCC is considered inoperable by the treating physician as well as BCCs that have metastasized to other tissues or organs, as we'll further elaborate upon shortly. We expect data from this advanced BCC study in the first quarter of this year. Additionally, our partner Debiopharm advanced the Hsp90 inhibitor, Debio0932, which was formerly CUDC-305, into Phase I clinical testing in April 2010 and Debio continues to treat patients in this Phase I trial.

Let me now talk through all of these programs in greater detail prior to turning the call back over to Mike to review our fourth quarter and full year 2010 financial results.

I'll begin with an overview of GDC-0449 in the trial with advanced BCC, which includes patients with inoperable, locally advanced or metastatic BCCs. Genentech and Roche have completed enrollment in approximately a 100-patient, pivotal Phase II clinical trial of GDC-0449 in advanced BCC, in which Genentech and Roche are treating patients with locally advanced or metastatic BCC in a single arm, two-cohort, global clinical trial and just to clarify, the pivotal Phase II is in essence equivalent to a Phase III.

One cohort includes all patients with histologically confirmed resist-measurable metastatic BCC. The second cohort includes histologically confirmed, locally advanced BCC that is considered inoperable by the treating physician. All patients receive a daily dose of GDC-0449 at 150mg per day and the primary end point on this study is to measure patient response to 0449 therapy in these advanced BCCs. Also, just to recap and to make sure everyone's aware, this patient population of advanced BCC have no effective therapeutic alternative available to them currently.

As you recall, Genentech had previously reported compelling proof of concept data from a Phase I clinical trial of 0449 in patients suffering from advanced BCC, including the observation of a 55% response rate in thirty-three advanced BCC patients. In the Phase I study of 0449 the most frequent adverse events, including muscle spasms, altered sensation of taste or loss of sensation of taste, weight loss, and hyponatremia, which is sodium imbalanced. Now these AE's are also transient upon cessation or temporary cessation of drug administration.

Roche also recently indicated that it expects data from this study in the first quarter of 2011 and that narrows its previous guidance that it expected data in the first half of 2011. Roche also stated that, assuming successful results, Genentech and Roche could file regulatory approval submissions in 2011.

Assuming that these submissions are accepted by the regulatory agencies, we would be eligible to receive milestone payments for both the U.S. and European territories. This is clearly a key in near-term milestones for Curis and the Hedgehog program in 2011and we look forward to providing further details when Genentech and Roche provide that trial results to us later this quarter.

As there is currently no standard of care for patients with these type of BCCs, we would be extremely pleased and proud to be part of a potential therapeutic alternative that could benefit these patients suffering from this form of cancer.

In addition to the advanced BCC pivotal study, Genentech initiated a Phase II clinical trial of 0449 in a single-agent therapy for patients with operable BCC during the fourth quarter of 2010. In this study, Genentech expects to evaluate the drug in approximately 50 patients with operable, nodular BCC in a U.S.-based, open label, two cohort clinical trial. All patients will receive 150 milligrams daily oral dose of 0449 for twelve weeks.

For cohort one, the primary outcome measure is the rate of complete histological clearance of the target nodular BCC lesion at the time of tumor excision, which may occur up to twelve weeks following initiation of treatment. For cohort two, the primary outcome measure is the rate of durable complete clearance of target nodular BCC lesions at the time of excision, which may occur up to thirty-six weeks following initiation of treatment. The secondary outcome measures for both cohorts is to determine the time to complete histological clinical clearance of target nodular BCC lesions.

In addition to the two clinical trials being conducted directly by Genentech and Roche, GDC-0449 is also currently being tested in multiple other cancer types, in NCI-sponsored trials, under a collaborative relationship between Genentech and the NCI, including in medulloblastoma, sarcoma, glioblastoma multiforme, as well as in pancreatic, small cell lung, gastroesophageal junction, gastric, breast, and prostate cancers among others. For further details for all of the GDC-0449 clinical trials, please visit the site ClinicalTrials.gov.

I'll now provide an update on CUDC-101, our lead drug candidate from our network-targeted cancer programs. We believe that CUDC-101 is exemplary of our overall approach to designing novel drug candidates in which we aim to enhance the therapeutic affect and durability of clinical response, by designing molecules that attack cancer cells at multiple points of intervention that is a network-disruption.

In April of 2010 we completed a dose-escalation Phase I clinical trial of this molecule. This Phase I trial was designed as an open-label, dose-escalation study of CUDC-101 in patients with advanced refractory solid tumors in which the primary objectives will evaluate safety and tolerability of escalating doses of CUDC-101 and to establish the maximum tolerated dose, or MTD, in dose-limiting toxicities. Secondary objectives included the assessment of clinical activity.

The study was conducted at two clinical sites within the U.S. and enrolled 25 patients across several dose-escalating cohorts. This data was presented, from the Phase I dose-escalation study, at the 22nd EORTC-NCI-AACR meeting in Berlin, Germany on November 2010.

In this study, CUDC-101 demonstrated promising evidence of antitumor activity in the study at doses ranging from 150 milligrams per meter-squared and 275 milligrams per meter2, including one confirmed partial response that was achieved in a gastric cancer patient at 275 milligrams per meter-squared and a stable disease of greater than three months observed in a refractory breast cancer patient cancer patient that was dosed at 150 milligrams per meter2. So we think we have an attractive therapeutic window here between 150 and 275.

Also, two head and neck cancer patients, including one patient with salivary gland adenocarcinoma and one patient with squamous cell carcinoma of the tongue, exhibited anti-tumor activity with a decrease of greater than 20% in their respective target lesions. We concluded dosing in this Phase I dose-escalation study in April 2010 and determined that 275 milligrams per meter2 represented the maximum tolerated dose of CUDC-101.

CUDC-101 also exhibited dose-proportionate increases in pharmacological parameters and we believe this to be the drug to have a favorable safety profile and again, giving us an attractive therapeutic window. The most frequent adverse events were mild-to-moderate and included fatigue, nausea, dyspnea, which is shortness of breath, pyrexia, which is fever, and dry skin.

In August of 2010, we initiated a Phase Ib expansion trial to test CUDC-101 in approximately 50 patients with specific tumor types, including head and neck, nonsmall cell lung, breast, gastric and liver cancers and have enrolled 32 patients to date in this study. We chose these various indications, really, predicated on our preclinical evidence of mechanism of action, that the specific targets the drugs are designed to hit have evidence of involvement in these cancer types and also because of the observations we made in the Phase I dose-escalation trial.

The Phase Ib expansion trial is designed as an open-label study in which these patients are treated with CUDC-101 at maximum tolerated doses of 275 milligrams per meter2, at between six and eight study centers in the United States. The primary objectives of this study are to compare the safety and tolerability of CUDC-101 in subjects with specific advanced solid tumors when the drug is administered on either a five days per week schedule - and that's one week on/one week off - which was the dosing schedule used in our Phase I dose-escalation clinical trial, or on a three times per week, so every other day, and that would be three weeks on/one week off. And just to remind everyone, the current formulation is an IV drug, so the three times a week schedule would be more convenient.

The secondary study objectives include evaluation of the pharmacokinetics and pharmacodynamic biomarkers following CUDC-101 administration and to assess the activity of CUDC-101 in the indications begin surveyed. We anticipate that we'll complete enrollment during the first half of 2011 and we'll report full data on this study at a scientific conference during the second half of the year.

In the meantime, I'd like to share a few observations with you that we've made from this study to date. First, to date the patients appear to generally tolerate CUDC-101 at either dose regimen, that is at the five times a week, one week on/one week off, with toxicities deemed likely attributed to 101 similar to those during the Phase I dose-escalation trial, and also it seems to be very well tolerated with the three times per week, three weeks on/three weeks off, dosing schedule.

This is an important objective of this study, as we believe that the three times per week dosing schedule could be clinically preferable for our planned Phase I head and neck study having to do with convenience and also the regimen that those patients are undergoing in addition to 101 in the head and neck cancer trial that's planned. I'll touch upon that momentarily.

We observed that, of the patients who are medically stable enough in this Phase I to receive drug up to the first scheduled scan, and that's at eight weeks, and therefore are scanned for evidence of disease progression, eight of those patients demonstrated stable disease.

Notably of importance is the observation that we achieved stable disease for all four liver cancer patients that remained on study long enough to be scanned and two of those patients continue to receive drug, with one patient continuing to receive CUDC-101 for nearly twenty weeks and that's at four-and-a-half months. So we're very intrigued by this observation and pleased to see another indication that seems to be showing some clinical response.

Of note, with this patient that's still on drug with the stable disease for nearly twenty weeks, this patient is on a three times per week dosing schedule rather than the every other day, so we're really pleased with this observation, since that's the dosing schedule we're going to be going forward with in the head and neck trial.

We've also observed stable disease at eight weeks in three breast cancer patients, in addition to a head and neck cancer patient to date and we look forward to continued enrollment of these patients in this study and providing further updates over the coming months.

In addition, we've been collecting circulating tumor cells from all patients involved in this study in an effort to demonstrate that CUDC-101 is hitting its intended targets. And a preliminary analysis of circulating tumor cells isolated from eight patients enrolled in the Phase Ib study showed that, in at least 63% of patients, we had at least two or more of the protein targets - namely EGFR, Her2, and HDAC - were effectively modulated following CUDC-101 therapy in a way consistent with the drug's proposed mechanism of action. So we're very encouraged by this early data, albeit still incomplete. Additional samples are being collected from all patients enrolled in the study and data will be presented in future updates.

As I mentioned earlier, we also anticipate initiating a Phase I clinical trial of CUDC-101 during the first half of 2011 in patients with advanced head and neck cancer whose cancer is human papilloma virus-negative. And that's important because its been demonstrated that HPV-negative patients have a lower response rate and a poorer outcome when compared to patients whose tumors are HPV-positive, basically because being HPV-positive the tumor's probably etiology is driven by the viral integration of its genome and that therefore was more responsive to radiation disruption of the DNA.

Patients HPV-negative do not respond as favorably, so we believe this represents a cancer population with a significant unmet medical need and I think we feel it's ideally positioned for CUDC-101.

The primary objectives of this study are expected to evaluate the safety and tolerability of CUDC-101 when administrated in combination with the current standard of care, which is Cisplatin and radiation. Upon determination of the maximum tolerated dose and assuming the successful completion of the Phase I trial, we expect that we'll conduct a randomized Phase II two-armed trial in which head and neck cancer patients will receive Cisplatin and radiation, plus or minus CUDC-101.

The Phase II part of the study would seek to evaluate whether the addition of CUDC-101 can prove the efficacy and durability of Cisplatin and radiation therapy in this patient population. And again, the HPV-negative head and neck cancer patients are the ones we'll be targeting and they do not respond as favorably to Cisplatin and radiation as HPV-positive patients do.

We believe that the head and neck cancer indication represents a promising tumor type for CUDC-101 based on the molecular characteristics of head and neck cancer pertaining to EGFR, Her2 signaling and HDAC and that HDAC inhibiters reportedly synergize with radiation therapy and there is clinical evidence that the majority of head and neck cancer patients are EGFR-positive, with about 40% also Her 2-positive.

We also believe, based on the strength of our preclinical data regarding head and neck cancer tumor cell lines, as well as the biological activity we observed in the two head and neck cancer patients in our Phase I dose-escalation study that this is a very attractive indication for us to be focusing on. There are approximately 30,000 newly diagnosed advanced head and neck cancer patients in the U.S. annually, of which we estimate that approximately 60% to 70% have tumors that are HPV-negative. So its been shown that head and neck cancer tumors also overexpress EGFR, as I stated, in 80% to 100% of cases and as I stated, up to 40% of those cases also overexpress Her2.

The CUDC-101 is designed to inhibit both EGFR and Her2, specifically and potently, and it potentially provides the added benefit for our patients in that it has an HDAC moiety built into it and that's been reported to provide synergistic effects when combined with radiation therapy. So, lastly, we believe that CUDC-101's current IV formulation will be suitable for this patient population, since patients are required to receive daily radiation therapy for several weeks at their respective clinical centers.

Finally, we believe the convenience of our oral formulation of CUDC-101 will make it an even more advantageous drug in other cancer types. We believe this would include non-small cell lung cancer, for instance, for which patients are generally on therapy for several months with oral drugs being available presently. Pending the successful completion of ongoing formulation and preclinical development work, we would seek to file the approximately regulatory documents for the use of an oral formulation of CUDC-101 in clinical trials late in 2011.

Also, last month we announced the selection of CUDC-907, which is an orally available synthetic small molecule inhibitor of PI3 kinase and HDAC as a development candidate of our network-targeted cancer programs. We believe that our selection of this compound, along with previously selected candidate CUDC-101, as well as Debio 0932, again formerly CUDC-305, which is an Hsp90 inhibitor. They continue to provide validation of the quality of our science and our efforts for developing innovative next-generation targeted cancer therapies for a wide range of cancer types.

CUDC-907, a PI3 kinase HDAC inhibitor, is going to be used in cancers where there's activation of PI3 kinase signaling. Activation of PI3 kinase signaling is believed to play a crucial role in cancer development and progression. As a result, the inhibition of this pathway is currently being investigated extensively as a potential cancer therapy by many pharmaceutical companies.

However, primary or acquired resistence appears to present a major challenge to the success of single-targeted molecules that are designed to inhibit PI3 kinase pathways, due to the existence of redundancies and compensatory pathways in cancer cells. Therefore, we believe that CUDC-907's synergistic inhibition of PI3 kinase in conjunction with HDAC modification, therefore epigenetic modification, may enhance the antitumor activity and overcome these limitations of resistence through durable blockade of cancer networks, as opposed to a single node of intervention.

We expect to initiate IND-enabling studies for CUDC-907 in the near-term and assuming a favorable outcome, we plan to file an IND application for this compound in late 2011.

I'd like to now briefly turn to our Hsp90 program, which is partnered with Debiopharm. The lead candidate under this agreement is Debio 0932, which is a synthetic, non-geldanamycin small molecule Hsp90 inhibitor. This candidate is being developed by Debiopharm under our August 2009 license agreement. Under this agreement, we granted Debiopharm a worldwide exclusive royalty-bearing license to all of our Hsp90 inhibitor technologies, including Debio 0932 and again, that was previously designated CUDC-305.

Debiopharm initiated a Phase I clinical trial of Debio 0932 in April of 2010 and the Phase I clinical trial is designed to evaluate the maximum tolerated dose, or MTD, and the safety of 0932. The first part of the study, which is a Phase Ia, is an open-label, multi-center, dose escalation trial evaluating the safety and tolerability of escalating multiple dose levels of Debio 0932 as a single agent given orally in patients suffering from advanced solid tumors or lymphoma. The dose-limiting toxicities, maximum tolerated dose, and pharmacokinetic parameters will be determined using both an every other day and a daily administration regimen to guide the recommended Phase Ib dose and schedule. The secondary objective will be to assess whether changes in pharmacodynamic biomarkers indicative of Hsp90 inhibition by Debio 0932 can be reliably measured in patient samples. The objective of the Phase Ib study, which will be an expansion cohort of certain solid tumor and/or lymphoma patients, will be to further assess the safety profile, pharmacokinetics and pharmacodynamics of Debio 0932 at a potential Phase II dose level and to make a preliminary assessment of anti-tumor activity in patients with advanced solid tumors. We will be eligible for our next milestone under the agreement if and when Debio treats its fifth patient in a Phase II clinical trial, assuming that the compound successfully completes the ongoing Phase I trial and that Debiopharm advances 0932 into Phase II clinical testing. We continue to be highly impressed with Debiopharm's professionalism and dedication and its efforts to date and we look forward to providing you with future development updates regarding Debio 0932 in the future. I'd now like to turn the call back over to Mike for the financial discussions and then, following Mike's remarks, we'll open the call up for questions.

Okay, thanks, Dan.

For the fourth quarter of 2010, we reported a net loss of $5.6 million, or $0.07 per share, as compared to a net loss of $2.7 million, or $0.04 per share for the same period in 2009, or for the year of 2009. Revenues for the fourth -- sorry, for the quarter, fourth quarter of 2009. Revenues fourth quarter of 2010 were $100,000, as compared to $1.7 million for the same period in 2009. The decrease is primarily due to revenue that we recognized under our relationship with Debiopharm in 2009.

Operating expenses for the fourth quarter of 2010 were $5.7 million, as compared to $4.5 million for the same period in 2009. Research and development spending was $3.7 million for the fourth quarter of 2010, as compared to $2.4 million in 2009. The increase is primarily attributable to increased spending associated with our ongoing Phase Ib expansion trial of CUDC-101.

G&A spending was $2.1 million for the fourth quarter of 2010, as compared to $2.0 million in 2009. The increase is primarily due to an increase in occupancy-related costs associated with our move in December to Lexington, Massachusetts from our former Cambridge offices.

Other income for the fourth quarter of 2010 consisted primarily of federal tax grants totaling $500,000 that we were awarded pursuant to the Qualifying Therapeutic Discovery Project Tax Credit program, under the Patient Protection and Affordable Care Act of 2010. Offsetting other income was an increase in the fair value of the warrant liability associated with our issuance of warrants pursuant to our registered direct offering in January of 2010 and resulted in a charge of $500,000 for the fourth quarter of 2010.

For the year ended December 31, 2010 we reported a net loss of $4.4 million or $0.06 per share, as compared to a net loss of $9.8 million or $0.06 per share, as compared to a net loss of $9.8 million or $0.15 per share for the same period in 2009.

Revenues for the year ended December 31, 2009 were $16 million, as compared to $8.6 million in 2009. The increase was primarily due to $11 million in license fee revenue that we received in 2010 from Debiopharm. Revenues also included, in 2010, $4.0 million in settlement proceeds under a settlement agreement that we entered into with a third party in Q1 2010.

Revenues for the year ended December 31, 2009 were primarily comprised of a $6.0 million payment that we received from Genentech for its initiation of the pivotal Phase II clinical trial in advanced BCC and $1.7 million in revenue related to the amortization of a $2.0 million upfront payment under our license fee agreement with Debiopharm.

Operating expenses were $21.6 million for the year ended December 31, 2010, as compared to $18.6 million for 2009. R&D expenses were $11.4 million for 2010, as compared to $9.9 million in 2009. The increase again related to CUDC-101 spending.

G&A expense was $10.3 million for 2010, as compared to $8.7 million for 2009. The increase was primarily due to approximately $800,000 in increased spending for legal services related to the settlement proceeds referred to earlier, as compared to 2009 and increased personnel costs of $500,000 related to short-term incentive compensation payments made to our employees and officers as well as the elimination of executive pay reductions that were implemented in 2008.

Other income of $1.2 million for 2010 was primarily comprised of a $600,000 gain related to the change in the fair value of our warrant liability and the receipt of $500,000 in previously mentioned federal tax grant proceeds. Other income for 2009 was $200,000.

As of December 31, 2010 our cash, cash equivalents and marketable securities totaled $40.4 million and there were 75.8 million shares of our common stock outstanding. We expect to end 2011 with cash, cash equivalents and marketable securities in the range of $18 million to $22 million. This guidance excludes any payments from existing or new collaborations that we could potentially receive in 2011.

I'd just like to note also that this cash would provide us with sufficient cash to fund our operations into Q4 2012, so somewhere in the neighborhood of twenty-one or twenty-two months cash from today.

We do anticipate additional milestone payments from Genentech in 2011 and 2012, provided that the advance basil cell carcinoma data is positive and that Genentech and Roche make regulatory submissions as planned in 2011 and that the drug is ultimately commercialized for approval in 2012.

For a last comment just on guidance related to expenses, 2011 R&D expenses we estimate will in the range of $13 million to $16 million, which is up from 2010, as we continue to move candidates into development. G&A expenses will be between $7.0 million and $8.0 million, which is a significant reduction from 2010, as we do not anticipate some of the onetime costs like the increased legal charges associated with the settlement proceeds this year, in 2010.

That concludes my remarks and I think we'll open it up for questions.

(Operator Instructions) Jason Kantor, RBC Capital Markets

Great. Thanks for taking the question. Could you give us some sense of the magnitude of potential milestones; I guess both from Debiopharm for the fifth patient in a Phase II as well as the Genentech milestones for filing an approval?

It's Mike. I'll take a crack at this one. So, for Debio first, we haven't really provided guidance other than $90 million in total, of which we received $13 million. The payments to date, if you'll recall, $8.0 million from the CTA was filed, which is a European equivalent of IND acceptance, and $3.0 million on the fifth patient in that Phase I study. I will say that the next payment is north as these things typically go. It's not a huge milestone payment, but I think outside of that we can't give much more guidance.

On the Genentech milestones, what we have publically disclosed is that milestones associated with the small molecule, there are $97 million remaining in that license agreement. We haven't disclosed specifics on the milestones. I will, again, point you back to previous milestones when Genentech initiated the pivotal Phase II, which contractually is considered a Phase III, since the end point of that study would lead to potential registration. We received $6.0 million.

I will say again, these payments on registration -- acceptance, rather, of the NDA submissions would be north of that and that the approval milestones if the drug is ultimately approved are north of that. It's clearly not the whole $97 million that's left. There are other indications, but the aggregate, if this were approved in all the territories, would be in the tens of millions of dollars to Curis, so it's quite significant relative to our burn.

Okay and then just on the CUDC-101 Phase II or Phase Ib or whatever, IIa, whatever you're calling it, you said that for patients that were able to be assessed a good number of those have stable disease. I mean, isn't that -- aren't you just pulling out the patients who had progressive disease from that analysis, I guess?

Yes. So, well, that's exactly right and I think the issue to emphasize is Phase I patients are highly pre-dosed with other therapeutics and refractory, so they're very sick, in a very bad state. We've had some of these patients actually have to come off within a week because of medical conditions.

So the issue being that you have some patients that are so sick and we wish we could select patients that were in a better state, but that's the nature of Phase I's, that they're so sick that they're not exposed to the drug really long enough to even assess a medical effect.

So the comment of those patients that can stay on drug long enough to be scanned, it's to be at a point where they've received, in several plus cycles of the drug where you can now evaluate, is there any clinical benefit to the drug at the time of scanning, or is the disease progressing. So that was the emphasis. We're taking out the patients that weren't even on the drug long enough to really be able to assess.

Okay, one last question. What is your plans for partnering CUDC-101 and what, from a data flow perspective, when is sort of the right time to (inaudible - multiple speakers)?

Yes, it's an important question, Jason and what we're attempting to do is to hold onto the drug as long as we can to generate proof of concept. The objective now is obviously with the head and neck cancer trial showing activity, both biomarker and clinical benefit and other indications in the Phase Ib survey. So what we want to do is get through proof of concept, if we can.

We're looking at various alternatives. One would be a possible territory carve out with an Asia-based partnership. Or at the end of Phase II, looking at with a large pharma a strategy where we can retain greater upside. So we're not in a position where we need to partner for cash and survival right now, so our intent is to hold onto the drug until we hit a greater value inflection point.

Thank you.

Okay, thank you.

Ted Tenthoff, Piper Jaffray

Great. Sorry about that. I was just taking you off speaker phone. Congrats on a good year and it looks like a pretty exciting 2011 shaping up here.

Yes, thanks Ted.

So and Jason got a good way into some of the questions here. I thought maybe it would make a little bit more sense to highlight this Ib in the neck cancer. I thought it was very interest what you were saying about the HPV patients. But talk just a little bit about the safety of this regime, just due to the Cisplatin there and I think you've given some details in the past about how the HDAC moiety seems to synergize with radiation. If you could just kind of give us a little bit more on potential safety concerns, but also really the synergy or additivity that you see in these patients?

Okay, thanks, Ted, so there's a couple of components to the question. So the first I'll just start off with the prospective synergies and the rationale. So the disease is known to be driven primarily with an EGFR involvement, as we stated, in the vast majority of patients; 80% to 100% of them have an EGFR involvement and 20% to 40% also have Her2 involvement.

On the HPV side, there are 30% to 40% of head and neck cancers, the etiology is driven by the viral genome and those patients respond well to radiation and it's likely because the viral genome is susceptible to degradation by the radiation, therefore inactivating the driving factor. So we're going after the HPV-negative, which is the majority of this patient population that still are not responding that favorably to the current standard of care, which is radiation, in Cisplatin.

We have a good body of preclinical evidence regarding head and neck cancer cell lines in animal models. Also, in terms of the targets, we know that the drug is hitting the targets it's designed to hit. So, in terms of this patient population in the trial discussion, as you stated, there's a growing body of evidence that HDAC inhibitors are synergistic with radiation, which adds another feature to the drug. That's probably because HDACs deacetylate histones, which result in chromosomes being tightly wound around them

So I think, even just on a physical basis, the chromosomes are not as susceptible or accessible to radiation to break the strands up. So, when you relax the coils through inhibiting HDAC, you're probably providing greater access to the DNA for radiation, so it's probably one of the reasons why you're seeing synergy. The other is probably you're also impeding DNA repair mechanisms. So that's the rationale.

And now, on the trial design and safety concerns, so what we're going to be doing is using CUDC-101 in conjunction with standard of care, which is Cisplatin and radiation, Cisplatin is known to have some significant toxicities and you're adding in a third element here. So what we're pleased with is through decisions with clinical researchers, specialists in head and neck cancer, what we have come up with is a trial design which allows us to dose 101, for a week prior to starting the Cisplatin radiation to assess tolerability of the patient, and then start Cisplatin and radiation.

We're also going to be doing biopsies pre-101 treatment and then post that first week. So we'll have a good metric in looking at drug activity by accessing tumor biopsies, looking for the presence of EGFR and Her2 and then assessing the impedance of the targets, namely EGFR, Her2 and HDAC in the post treatment. And that's really important data, because we'll be showing basically molecular activity and in looking at patients results we may be able to do patient stratification as a result of that survey.

So that's basically the way we're going to be structuring it, is one week on CUDC-101 alone, then combining it with Cisplatin and radiation. It will be the every other day dosing schedule for three weeks on drug/one week off/ three weeks on. And then typically these patients are receiving radiation therapy for a seven-week period of time and (inaudible - multiple speakers) --.

Okay, well that sounds --.

Sorry.

Yes. I was just going to say also, Ted, we have to do a dose-escalation in the Phase I for that reason.

Yes. Yes, of course. Well, that's sounds like a really neat study, so I look forward to hearing more about your guys' progress this year.

Appreciate it, Ted, thank you.

Ren Benjamin; Rodman & Renshaw - Analyst

Hi, good morning, guys, and congratulations on the year.

Thank you.

A couple of questions, I guess just starting off with some data that was recently presented at a dermatology meeting but didn't get a press release from you guys and I didn't really see it anywhere else, except in a Medscape article. Don't know if you guys were aware of this data or not, but it seemed like some interesting data came out from a Stanford study, a Phase II randomized study in Gorlin Syndrome. Are you guys aware of this and can you comment a little bit of this data?

Yes. Thanks for the question. We are aware of it. It's out of Stanford. It was not a trial that was being conducted by Genentech and as such, we're not free to just put out press releases without coordinating with Genentech. It's an investigator-sponsored trial. I think the lead investigator was Jean Tang out of Stanford and it was a two-cohort where they were treating Gorlins patients, as you stated.

And just to reiterate, Gorlins patients, they're patients that have their heterozygous mutant, so they are born with one copy of the two copies of the gene already mutated, so they're highly susceptible to multiple BCCs ongoing throughout life, a real poor state of affairs and the only treatment available is they have to continually have surgical excision of these many lesions on an ongoing basis.

So the trial basically surveyed 0449 versus placebo and they saw some very encouraging results. They noted a very significant delta between two cohorts in measuring the number of new lesions in each patient. The one group had, on average, about two new lesions per month versus the other group, which was .07 per month and based on that difference, they felt out of ethical considerations they had to unblind it and no longer keep patients on placebo.

The other important thing to underscore, which we were really pleased to see, is no drug resistence emerged or developed and again, we think that if patients have not received the therapy that's a DNA-damaging agent like radiation or chemotherapy that's DNA-damaging, you much have a much lower incidence of resistence emerging.

So we're very encouraged, Ren, by the results that were reported and these apparently, these results will be formally reported, possibility going forward, in a meeting, but I think what we have to do is coordinate with Genentech.

And can you help us just maybe draw the correlation between Basal Cell Nevus Syndrome and BCC? At least in my mind you have a randomized study that showed statistical significance in about, I think it was, around 40 patients or so. And just wanted to see how we can -- is there a -- can we draw kind of a straight line between this trial and the ongoing pivotal study? Is there any sort of conclusions we can make in comparing the two standards or is kind of one independent from the other?

Very important questions. So the nexus is the etiology of the disease is that the disease is driven, in both circumstances, by mutations in patched, which is the receptor for the Hedgehog protein, which then results in the pathway being permanently on. So the difference is that with a nevus syndrome patient, they are already born with one copy mutated and therefore are highly susceptible to the other copy being mutated. Wherein a person who has two normal copies of patch, you basically have to have both copies being mutated for the disease to progress.

Okay and I guess just another question regarding the safety profile. From the data that was presented, we couldn't get our hands on kind of more than just sort of the top-line results. I think you mentioned on the call that these results will be updated in a future scientific meeting, but can you talk a little bit about the side effects profile that we've seen and the dropout rate that we've seen from this study?

Yes. The safety profile is consistent with what we've seen previously. The AEs are -- in the majority of cases it's the loss of the sense of taste and that's probably because of the involvement of the Hedgehog pathway involved in regeneration of taste buds basically from progenitor cells that are turning over on a regular basis, muscle cramps, hair thinning. Again, it's the same concept.

This is not the same mechanism as chemotherapy alopecia, which kills hair follicles. It's that when a hair shaft falls out normally and the hair follicle goes into the resting phase. Hedgehog is the inducer of the follicles that go back into the growth phase. So antagonizing that pathway keeps the follicle from turning back on. So those are the primary AEs observed. About 20% of the patients in this study decided to come off drug as a result of the AEs, but I think when you look at the situation with this indication and advancement of static BCC, I think these are really very acceptable AEs for this type of disease indication.

I think also, Ren, when you think about as it applies potentially to the ongoing trials, in the case of the operable Phase II study, patients are treated for 12 weeks. These patients were followed for --.

Chronically, yes.

Chronically for eight months and in this case, these patients are generally -- I think their lesions are more similar, generally, to what we find in the operable BCC study, generally just continually going in for surgical procedures to have the tumors excised. And going to the other extreme on the advance BCC - locally advanced, metastatic disease, you have no surgical options, so your options include, or treatment options today have included radiation/chemotherapy, various chemotherapies and the side effects are much less of an issue, I think, in a case where you really don't have another viable treatment option.

Okay and actually that provides a nice segue into my next question having to do with the operable trial. Obviously we know that is ongoing. Do you have any sort of an idea as to how enrollment is going right now and has Genentech provided any sort of an update as to when they think it could complete, where we might see some data?

Okay, so that study started in October of this year. There's been no update on enrollment or data timing. What I will say is if you recall, and I think Dan described it, but there are two arms. One of the arms, there's a follow up period before surgery, benefit the tumor is excised to a complete histological clearance for twenty-four weeks, which is on top of the twelve weeks of therapy. So you have sort of a nine-month window in that arm. Based on sort of nine months of treatment to tumor excise, I think we're looking sort of most likely end of 2011, early 2012 for that trial to wrap up.

Okay and just keeping with 0449 for a second, any sort of an idea as to when some of these investigator-sponsored trials may begin reporting results? Because obviously you have quite a few of them ongoing, but has there been any sort of connection or communication with these investigators?

So I'll take a shot, initially on that, Ren. We don't have guidance as to when data will be available on these trials and studies, but if you extrapolate out of it what we were expecting, in 2011 we certainly should see some of these standards being reported on. There's a very significant trial, 170 patients were enrolled for a small cell lung cancer trial. There are several pancreatic cancer trials that have been surveyed for a significant amount of time.

So we don't have specific guidance as of yet, Ren, but we have ongoing discussions with Genentech and they'll be notifying us when these results will be reported on.

Okay, so switching gears to 101 very quickly. Can we get just a little bit -- are we waiting for the complete enrollment of the Phase Ib trial, the entire 50-patient cohort, before initiating the head and neck study? Or are we waiting on something else for the head and neck study to begin, or is that pretty much imminent?

And actually, thanks for asking that, because since that wasn't clear, it should be made clear. Yes, we're not waiting for the Ib to be completely enrolled and completed. We're planning on initiating the head and neck hopefully the end of this month where we're hoping we can start enrolling patients.

Okay, and then in the ongoing trial right now, the cohort expansion trials, I know you went through some of the details, especially regarding the eight patients who have an SD. I think you had mentioned in your prepared remarks three breast cancer patients, one head and neck, and I think four liver, but if you can confirm that, that'd be great.

The other thing I wanted to ask you was do you have -- can you give us a sense of how bad off these patients were? So, for example, what was their time on treatment in the previous treatment, in the prior treatment that they had? Or give us a sense of just how bad it is, how bad these patients are, so that when we look at let's say a five-week or a twenty-week SD, we have something to compare it to.

Yes, so I want to answer the first half of that, which is the indications. That is correct. Those are the numbers and tumor types that we've observed so far and I'll just, as a general statement, I'll say that the patients are -- it's a mixed population. They've been heavily pretreated with a number of other drugs, including a lot of DNA-damaging agents, refractory and it's a mixed population, some of them are. They shouldn't be in really bad state, but some of them are.

I mean, we've had patients actually have to come off within a week, having nothing to do with exposure to the drug, just they're in such a bad medical state and all of them have been refractory to prior therapies. And as you know, as each patient as you go through a therapeutic regimen and you end up with a relapse, your prognosis is worse and worse with each cycle and that's because the cancer is becoming more and more unstable and more aggressive. So we have a mixed population of patients, but these are very sick refractory patients by and large. And Mike, did you want to add?

Yes. I just want to add one comment on that. I'm trying to get the exact numbers right. But when we reported the Phase I study data, so this is still, even though it's a Phase Ib expansion, we're still generally in the same pool of patients. I believe that the prior therapies that these patients had been exposed to ranged between one and twelve and I think the average was four or five, so that's a significant, fairly significant number of treatment to have progressed.

Okay, and regarding the circulating T-cells, have you used that assay primarily to -- for biomarker purposes, to look at EGFR and Her2 expression? Have you looked at it just in totality to see if there's a decreases in circulation tumor cells? Or is it just primarily biomarker?

Yes. We're doing cell count, extrapolating on circulating tumor cell counts and then those particular markers that are relevant to the drug's activity for biomarker analysis.

And so I know in the prepared remarks you mentioned a percentage - I think it was greater than 60% - of the responding patients had decreases in EGFR and Her2. Can you give us a sense as to the total number of cells decreased in these patients?

Yes. That's also the trend in patients where you see the decrease in biomarkers. You're seeing a decrease in cell count. We actually have had a couple of patients with increased circulating tumor cells where you have a decreases in the biomarkers, which is counterintuitive, but many, many factors can influence that. If you're having an effect on the tumor's ability to grow, you may end up with cells breaking off. So we've just don't -- we don't have a handle on it yet.

We have to complete the survey and analyze the data, but wanted to give some color on what we've seen to date. So what's encouraging is we are seeing, on average, the right direction on all of the metrics that we're measuring.

Okay, that makes sense. Regarding the Hsp90 program, your best guess as to when -- because I mean, clearly you're talking with Debiopharm, you like them as a partner. You probably have an idea as to which cohort and stuff they're in. But I know you don't like to provide me any guidance on this, but do you have a best guess as to when maybe the Phase I expansion cohort may be completed and when a Phase II might start?

So what I can provide color on is, first of all, we've really been impressed by the progress they're making. The fact that they haven't hit an (inaudible) to date is very encouraging and as you know, the Hsp90 space was, and that's past tense, a very crowed and competitive and a number of them have fallen away because of toxicities, particularly the Geldanamycin derivative.

So we're really pleased that the drug is still in dose escalation and we've certainly been at a dose where we would expect it to be at a therapeutic range, so we're very pleased with the data to date. We're not privy to give any details of what's been observed to date, but let's say it's been very encouraging and we're pleased with the progress being made.

That being said, I think the only color we've given, Ren, is we're expecting a Phase II filing if we complete Phase I effectively in 2012.

Okay, alright, thanks and as one final comment, an early congratulations from us to Mike on the soon-to-be-new member of the Gray family. Thank you very much. Good luck.

Thank you very much. Thank you.

BrianSkorney, ThinkEquity LLC

Hey guys, good morning. Thanks for taking the question. Most of my questions have actually been answered, but maybe you can just talk a little bit about a partnership strategy, particularly with the pipeline. 101 is progressing very well and I'm very enthusiastic about 907. Could you just speak -- I mean, when you're out there discussing with potential partners, is it really on the entire platform or are you looking to potentially do a deal with 101 and maybe use that to finance 907, given that development pathway for -- a solid tumor indication might be much more expensive than for a liquid tumor, PI3, HDAC, where you could feasibly go through Phase III on your own?

Okay, thanks Brian. Yes, we don't have a clearly defined partnering strategy as of yet. We're looking at it as iteratively and sort of dynamically as what our situation is. Right now we're in a good position and we don't need to partner, nor do we intend to partner imminently.

We're looking at various alternatives. So one alternative may be a territory carve-out partner with an Asia-based pharma company where we would collaborate on supplementing our patient surveys with patients in the Asian population that were maybe different than what we're surveying in the U.S. and using that capital to subsidize further development.

If we went with sort of a standard global large pharma deal, we don't know if that would entail just 101 or possibility with option where we haven't really made that decision as of yet. The encouraging thing is we're starting to get attention where this network approach is clearly becoming an accepted and practiced paradigm.

If you just look at what large pharma is doing with targeted therapies, they're all now using combinations of trying to hit cancers at various nodes that are, at least, complimentary and potentially synergistic, PI3 being a great case study.

It's a very attractive target. It's a very active, crowded space, with large pharma developing proprietary PI3 kinase inhibitors. You've got a number of them that went through Phase II and did not see single-agent activity and now they're going back and doing Phase Is, combining it with MEK inhibitors, which is a bypass mechanism, also novel compounds.

So we're really in interesting territory here with clinical trials being conducted with two novel compounds and we believe that's really the advantage of our approach. 101 being the first, but 907 specifically designed to block PI3 kinase and with the epigenetic modification blocking the bypass mechanism with MEK. So we really think we're in a very good competitive space and we feel this is an emerging trend for network-disruption.

So the short answer is we don't know with definition yet what partnering strategy we will embrace going forward. The encouraging thing is we're starting to get a significant amount of interest in what we're doing and we think we're really well positioned right now for the emerging trends of patient stratification and network-disruption.

Great. Thanks so much, guys.

Yes, thank you.

Thank you.

Ling Wang, Brean Murray, Carret & Co.

Good morning. Thank you for taking my questions. I was wondering whether you know the incidence of the Basal Cell Nevus Syndrome and also for 101? Can you give us an update on the enrollment of the Phase Ib trial, especially in specific tumor types? And also, for the HDAC (inaudible - heavily accented language) cancer, if you can give us some color on the efficacy of the current standard of care for the HPV-negative patients, that'd be great. Thank you.

Okay. So, thank you, Ling. So if I -- let me reiterate the questions. I think what you're looking for is clarity if we have more clarity and definition on the numbers of Gorlins or Nevus Syndrome patients and the short answer on that is we don't have, with total clarity, what this patient population represents. We know it is a relatively small number. It's a smaller percentage than what we have with the ADVANCE program, which is about let's say 1.5% of the total BCC population.

So it's a rare disorder. Its not a significant number of patients, but it's an important niche population and again, these are patients that ongoing throughout life have multiple BCCs, so they would remain potentially on drug for chronically and possibility all coming off drug for a period of time to have recovery from AEs. So that's the best I can do on that answer, unfortunately.

Thank you. Yes?

Mike?

The only thing that I've found reported in basal cell often isn't carved up into sub-indications. It's generally not as severe as some of the other cancers, but an incidence rate of between 1 in 50,000 and 1 in 150,000 of the population.

I'm sorry, can you say it again?

It's basically -- 1 in 50,000 to 1 in 150,000 and that roughly translates into, in the U.S. anyway, a couple thousand patients, potentially, so it's a small market.

Okay, thanks.

But obviously potentially additive. Okay. How about the 101, enrollment for the Phase Ib and the standard of care for head and neck cancer?

Yes, so we were very pleased to see the enrollment rate increase quite dramatically, actually, over the Ia, so we've been able to enroll patients quite effectively. We have thirty-two patients enrolled to date and that's been, on average --.

Actually, it's thirty-five.

It's thirty-five?

We did three more.

Three more, yes, so its --.

(Inaudible - multiple speakers) now as of today.

Okay. Okay. So we're enrolling at a very good rate, Ling, and in terms of the indications that we've selected, those five are all predicated on evidence that we have preclinically of there being a roll with EGFR, Her2 and HDAC in the disease etiology.

And then on the head and neck, in terms of standard of care for HPV-negative, I don't have the statistics in front of me, unfortunately. I think there's about a 20% to 30% response rate that's quite robust, with the HPV-negative. The remainder of them, when they have relapsed, is an increasingly worse situation as they go through therapies. So by the time they go through the second and third relapse, it's an extremely unstable situation.

So there's a significant number of patients that really have no effective alternative and the majority of HPV-negative I believe do not have a durable response with radiation and Cisplatin. I don't have the statistics right in front of me, but we certainly will be putting that into our presentation going forward when we start the trial.

Okay, thank you very much. Thanks.

Dr. Oliver Grin, Private Investor

Good morning and thank you for an excellent presentation there. My question is really quite simple. Is there any consideration of using this in melanoma, particularly in metastatic melanoma?

Currently, no. I think with metastatic melanoma, I believe there's a Raf inhibitor that's been showing some promising results that Genentech and Roche are surveying, but with Hedgehog I don't believe that we have, to date, I don't believe there's evidence that would warrant going forward with that.

Thank you.

Thank you.

That was the final question. I'd like to turn it back to Mr. Mike Gray for closing comments.

Okay, so this is Dan Passeri. I just want to thank everyone for your attention and interest and we obviously look forward to providing you with the update when it becomes available on the ADVANCE basal cell carcinoma trial and our other programs as well and again, thank you for your interest and attention.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.