Curis Inc (CRIS) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Curis, Inc. third-quarter 2015 earnings conference call. (Operator Instructions) As a reminder, today's conference may be recorded.

I would like to introduce your host for today's conference, Ms. Mani Mohindru. Ma'am, please go ahead.

Thank you, Michelle. Good morning, everyone, and thank you for joining us. During today's call we will provide you with an update on corporate developments and plans and also discuss our third-quarter 2015 and year-to-date financial results.

Before we begin, I'd like to advise you that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, statements relating to our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, the potential therapeutic benefits of our drug development program and our plans to advance the development of drug candidates within these programs, as well as our expectation about Genentech and Roche's continued development and commercialization of Erivedge.

Actual results may differ materially from those indicated by forward-looking statements in this conference call as a result of various important factors including those risk factors described in our quarterly report on Form 10-Q for the quarter ended June 30, 2015, and in other filings that we make with the SEC. And we encourage you to review these risk factors carefully.

We caution that forward-looking statements we make in this conference call speak only as of today and that we may not update any of these statements even if events and developments subsequent to the date of this call cause our estimates and expectations to change.

I would now like to introduce Ali Fattaey, our President and CEO, who will provide an update on the Company and our development program. Following Ali's remarks, Mike Gray, our Chief Financial and Chief Business Officer, will review our financial results for the third quarter 2015, after which we will open the call for questions. Ali?

Thank you, Mani. And thank you to the conference call and webcast participants for joining us this morning.

We continue to focus our efforts on building Curis into an oncology Company with strategic emphasis on our development capabilities as we expand our pipeline with the aim of eventual commercialization of innovative and effective drugs for the treatment of patients with cancer.

In addition to the progress with our proprietary clinical drug candidate, CUDC-907, we recently exercised two options under our collaboration with Aurigene. One of these involves a license to have three IND-stage oral immunomodulatory small molecules that targets PD ligand and VISA immune inhibitory checkpoint proteins. And from now on, this molecule is being referred to as PA-170.

And the second was a license to a preclinical program of potent and selective inhibitors of the IRAK4 [clinics]. I will provide additional details regarding these three programs today.

Let me begin with our most advanced molecule, CUDC-907, which is an oral dual HSC PI3 kinase inhibitor that we have been investigating in patients with relapsed or refractory aggressive lymphomas and separately in patients with certain solid tumors. We are very pleased with the progress being made with CUDC-907, especially in the setting of relapsed refractory diffused large B cell lymphoma, or DLBCL.

Earlier this year, we reported interim results from the Phase 1 trial of CUDC-907 in patients with relapsed refractory lymphoma and multiple myeloma at the ASCO annual meeting, the European Hematology Association annual meeting, as well as at the international congress on malignant lymphoma at Lugano. In these meetings, we reported that CUDC-907 monotherapy treatment was very safe. And 6 out of the 10 response-evaluable, heavily pre-treated patients with relapsed refractory DLBCL experienced objective responses, including 2 patients with complete responses and 4 patients with partial responses, while 2 out of the 10 patients had stable disease.

Since then, we have continued to enroll patients with DLBCL in expansion cohorts where CUDC-907 is administered as monotherapy or in combination with rituximab. At the upcoming ASH annual meeting in Orlando in December, the principal investigator for this trial, Dr. Anas Younes, will provide an update on CUDC-907 in an oral presentation. We expect to present an update on all evaluable patients, including those from the CUDC-907 plus rituximab combination treatment arm of the expansion phase of the trial.

In addition, we expect to present results that tumors from a number of patients with objective responses express the MYC oncogene protein at high levels and that these correlative results are very consistent with our preclinical observation. This correlation between MYC alterations and clinical benefit is being translated into the design of a phase 2 clinical trial with CUDC-907 in patients with relapsed refractory DLBCL, and that we intend to initiate this trial before year end. We continue to remain very optimistic about CUDC-907's potential in patients with relapsed refractory DLBCL and plan to share details of the proposed Phase 2 trial around the ASH conference as well.

In addition to the ongoing study in hematologic malignancies, we continue to enroll patients with advanced solid tumors in an independent Phase 1 trial for the treatment with CUDC-907. Based on CUDC-907's pharmacokinetic properties, the molecule appears to readily distribute to various tissues including the tumor tissue with a high resident half-life, thus exposing the tumors to significant concentrations of CUDC-907 in this solid tumor trial.

Additionally, based on insights from our lymphoma study, we are planning to modify the solid tumor trial in order to examine the role of the MYC alterations and clinical benefit with CUDC-907 in patients with various solid tumors, including patients with NUT midline carcinoma. We look forward to providing further updates from the solid tumor study in the coming months.

I would now like to provide an update on our collaboration with Aurigene. Since the announcement of our agreement earlier this year, both Curis and Aurigene teams have been fully engaged with advancing molecules from our collaboration program towards IND filing and preparation for clinical testing. We recently exercised two options to license programs under this collaboration. Within the immuno-oncology field, we licensed a first-in-class oral small molecule that targets and antagonizes two immune check point regulators: CD ligand and VISTA. We have designated this molecule as CA-170 and are currently conducting IND-enabling studies with this molecule. Based on the in vitro and the in vivo data in multiple tumor models as well as the pharmacokinetic and pharmacodynamic properties, we selected CA-170 from a broad program that the two companies have focused on since the beginning of the collaboration.

Last Friday, our colleagues at Aurigene presented more detailed preclinical data from this program at the AACR-NCI-EORTC International meeting in Boston, and the presentation is available on our website for your review. I would like to take this opportunity to highlight some aspects of CA-170 here.

CA-170 is an orally available small molecule that targets the PD ligand and the VISTA checkpoint inhibitors, both of which are members of the B-7 superfamily of immune regulators and have structural similarity in their extracellular domain. Within the tumor microenvironment, the PD ligands appear to be expressed predominantly on tumor cells, whereas VISTA expression is restricted mainly to cells of the myeloid origin such as the myeloid dry suppressor cells within the tumor microenvironment.

Mechanistically, PD ligands and VISTA inhibit T cell activation, leading to degeneration of exhausted T cells. Our colleagues at Aurigene were able to show that CA-170 can rescue T cell proliferation and functional activity as measured by production of interferon gamma that had been specifically inhibited by PD ligand or by VISTA. However, if T cells are inhibited by other checkpoint regulators such as TIM-3 or CTLA4, CA-170 is not able to rescue such T cells, therefore suggesting that CA-170 only and specifically antagonizes PD ligand and VISTA check points.

Additionally, we and our Aurigene colleagues have tested CA-170 in multiple syngeneic tumor models such as those for the melanoma, colorectal cancer and breast cancer. CA-170 has demonstrated effective antitumor activity in these models, including in settings that are not effectively addressed by anti-PD-1 antibody-based treatments alone. This is in line with what has been reported preclinically by others that PD and VISTA pathways are non-redundant, and inhibition of both may synergize in mediating antitumor effects.

Based on these preclinical results, we expect that, in addition to tumors that are responsive to PD pathway-directed therapies, CA-170 may potentially be used for the treatment of tumors that are nonresponsive or that become refractory to these types of treatments.

CA-170 is currently undergoing evaluation in IND-enabling studies including GLP toxicology assessments, and we are pleased that thus far CA-170 appears safe with a very high therapeutic index in both rodents and nonhuman primate models. We expect to complete the IND-enabling studies and file the IND application and initiate a Phase 1 trial of CA-170 within the first half of 2016.

In addition to CA-170, we also selected a second preclinical program within the immuno-oncology collaboration with Aurigene. This program takes advantage of the novel chemistry that is developed by Aurigene and is focused on evaluating small-molecule antagonists with dual PDL-1 and T cell immunoglobulin in mucin domain containing protein 3, or TIM-3-targeting properties.

TIM-3 is an independent inhibitory checkpoint molecule that plays an important role in immune suppression and is generally co-expressed with PD-1 receptors on highly exhaustive cytotoxic T cells in the tumor tissues as well as being expressed on certain regulatory T cells. Elite compounds within this program show potent and selective rescue of T cell proliferation and function that is induced by PDL and TIM-3 but not by other checkpoint proteins.

Outside of immuno-oncology, we also exercised our option to license the IRAK4 inhibitor program, which was initiated at the beginning of our collaboration. Aurigene also presented preclinical data from this program during the weekend at the AACR-NCI-EORTC International meeting, and the poster for this presentation is available on our website for your review as well.

IRAK4 is a serine/threonine kinase that is an important mediator of toll-like receptor and interleukin-1 receptor signaling and thus plays an important role in innate immune signaling. Based on its function in this pathway, IRAK4 has been of interest as a target to discover drug candidates for treatment of inflammatory diseases. In certain human cancers also, such as a subset of DLBCL, CLL and Waldenstrom's macroglobulinemia, oncogenic mutations in the MYD88 mutation gene lead to (inaudible) activation of IRAK4, leading to the malignant phenotype. Preclinical data from the IRAK4 program show that the lead compounds from this program are potent selective inhibitors of IRAK4 and have potent antitumor activity in in vivo tumor models with activating MYD88 mutation.

In addition to the cancer model, some of these compounds also demonstrate activity in in vivo inflammatory disease models, indicating the potential of targeting IRAK4 in both oncology and inflammatory diseases. We are continuing to develop lead molecules and assess their activity in both cancer and inflammatory disease models, and have initiated IND-enabling studies and expect to file an IND application during the first half of 2016 for clinical testing of these lead candidates.

We are very pleased with the progress being made within our collaboration with Aurigene, where the two companies are working with a mission of aligning our complementary expertise to expedite development of promising molecules in the field of cancer therapeutics.

We continue to remain disciplined in building our development capabilities and advancing our drug candidates in the coming months. Our focus will remain on advancing CUDC-907 into phase 2 clinical testing in a select group of patients with relapsed refractory DLBCL and also completing the IND-enabling studies for CA-170 and IRAK4 inhibitors to advance these molecules into the clinic.

I will now turn to Erivedge, which is being developed and commercialized globally by Genentech and Roche under our collaboration. Roche continues to concentrate on the global commercialization of Erivedge for the treatment of advanced basal cell carcinoma in key territories worldwide. In this regard, we recorded royalty revenues of approximately $2.3 million for the third quarter this year as compared to $1.8 million for the third quarter of 2014. Year to date, royalty revenues were $6 million as compared to $4.9 million for the nine-month period ending September 30, 2014.

Recently, our partner Roche disclosed its intent to initiate a clinical study to examine the effectiveness of Erivedge in patients with intermediate or high-risk myelofibrosis in combination with ruxolitinib, or Jakafi, which is a JAK kinase inhibitor approved for the treatment of patients with this disease. Myelofibrosis is a serious bone marrow disorder that disrupts the body's normal production of blood cells, resulting in an extensive scarring in the bone marrow leading to anemia, weakness, fatigue and often an enlarged spleen and liver.

Now, the Phase 1b portion of this study will assess the safety of Erivedge plus ruxolitinib combined therapy. After the safety of the combination regimen is confirmed, a randomized controlled portion of this study may begin. The primary endpoints of this study include reduction in spleen volume and overall response rate. The details of this study can be found on Clinicaltrials.gov.

Outside of oncology, Roche continues to indicate an interest in investigating Erivedge in idiopathic pulmonary fibrosis, or IPF. In June of 2014, Roche filed an IND application with the FDA to initiate a multicenter phase 2 clinical study of Erivedge in patients with IPF. After the Phase 2 study opened but prior to patient enrollment, Roche suspended the study in August of 2014 in order to amend the protocol to incorporate Esbriet, or pirfenidone, the new standard of care for IPF, into the trial design. We are very pleased that Roche continues to invest in Erivedge and look forward to providing further updates as they become available regarding all of these trials.

Lastly, I would like to note that James Tobin has resigned as a Director of the Company effective November 4, 2015 after having served as a Director since the inception of the Company. We are grateful for the many significant contributions that Jim has made during his tenure as a Curis Board member, and we wish him well in his future endeavors. The Company has benefited greatly from Jim's experience and insights, and I join the rest of the Board and management team at Curis in thanking Jim for his many years of valuable service.

I would now like to turn the call over to Mike Gray, our Chief Financial Officer and Chief Business Officer, for his discussion of our financial results, after which we will open the call for Q&A.

Thank you, Ali. We reported a net loss of $5.5 million, or $0.04 per share, on both a basic and fully diluted basis for the third quarter of 2015, as compared to a net loss of $5.6 million, or $0.06 per share, on both a basic and fully diluted basis for the third quarter of 2014. We reported a net loss of $45.5 million, or $0.30 per share, again on both a basic and fully diluted basis for the nine-month ended September 30, 2015, as compared to a net loss of $13 million, or $0.15 per share, in the prior-year period. The net loss for the first nine months of 2015 includes an in-process research and development charge of $24.3 million related to our collaboration agreement with Aurigene.

Revenues for the third quarter of 2015 were $2 million, as compared to $1.8 million for the same period in 2014. The increase in revenues was primarily due to an increase in royalty revenues reported on Genentech and Roche's net sales of Erivedge, which increased to $2.3 million during the third quarter of 2015, as compared to $1.8 million for the third quarter of 2014.

Revenues for the nine months ended September 30, 2015 were $5.8 million, as compared to $7.9 million for the same period in 2014. The decrease was primarily related to a $3 million milestone payment that we received in 2014 related to our Genentech collaboration, offset in part by an increase in royalty revenues recorded on net sales of Erivedge.

Operating expenses for the third quarter of 2015 were $6.9 million, as compared to $6.5 million for the same period in 2014. Operating expenses for the nine months ended September 30, 2015 were $49 million, as compared to $18.9 million for the same period of 2014. Within operating expenses, again, we recorded a one-time charge for in-process research and development expense of $24.3 million during the nine-month period ended September 30, 2015, associated with our issuance of 17.1 million shares of Curis common stock to Aurigene as partial consideration for the rights granted under the terms of our collaboration agreement.

R&D expenses were $4 million for the third quarter of 2015 as compared to $3.7 million for the same period in 2014. The increase in third-quarter 2015 R&D expense was primarily due to increased spending on CUDC-907 and preclinical programs under our collaboration with Aurigene, offset in part by spending decreases on CUDC-427 and other programs. R&D expenses were $14.7 million for the nine months ended September 30, 2015, as compared to $10.2 million for the same period in 2014.

G&A expenses were $2.8 million dollars for the third quarter of 2015, as compared to $2.7 million for the same period in 2014, and were $9.7 million for the nine months ended September 30, 2015, as compared to $8.5 million for the same period in 2014.

Other expense was approximately $700,000 for the third quarter of 2015, as compared to approximately $825,000 for the same period in 2014. Other expense primarily consists of $825,000 and $925,000 in interest expense for the quarters ended September 30, 2015 and 2014, respectively, related to the loan made by Biopharma to Curis Royalty, which is a wholly-owned subsidiary of Curis. Other expense was $2.3 million and $2 million for the nine-month periods ended September 30, 2015 and 2014, respectively.

As of September 30, 2015, our cash, cash equivalents and marketable securities and investments totaled $93.5 million, and there were approximately 128.4 million shares of our common stock outstanding.

With that, I would like to open the call for questions. As a reminder, during the Q&A period, as a courtesy to others seeking to ask questions, we asked that participants limit themselves to one or two questions.

(Operator Instructions) Brian Skorney, Robert Baird.

Just one question on CUDC-907. Just thoughts on your Phase 2 plans in relapsed refractory NHL. I know in the ASH abstract it discusses the planning, has an emphasis on MYK aberrations. So just wanted to get your higher-level thoughts on enrichment for this Phase 2 study. Would it be purely based on a specific biomarker, or are you just looking to enroll overall a greater proportion? And how exactly do we think about the funding? And does immunohistochemistry for MYK and VCL, to -- is that standard practice at this point?

I think some of the things I will discuss at ASH -- and, as indicated in the abstract as well, some of the patients that have had responses with CUDC-907 -- these are relapsed refractory DLBCL patients. We've seen that they've had high expressions of MYK. And we have been evaluating all the patients so far that we have tissues available from with regards to their MYK alterations, both genetically and by immunohistochemistry, for protein level. Both of these are relatively standard assays that can be tested for patients in that regard. Our study will incorporate this information, including MYK gene aberrations as well as MYK protein expression levels into selection of patients for treatment. I think our expectation right now is that we would restrict it to those patients for the enrollment rather than just an enrichment or predominantly in those patients.

Great. Thanks, Ali.

Boris Peaker, Cowen.

Just wanted to focus on CA-170. Just curious how do the kinetics of the oral drug compare to the IV formulation of PD-1 drugs? And part to that question is how do you plan to differentiate throughout development and from the approved PD-1 agents? Is it just going to be the route of administration or there's going to be (inaudible) clinical strategy for getting differentiated data?

With regards to the pharmacokinetics of CA-170, it is a small molecule and it has, so far at least, in preclinical models that we've tested including rodents and dogs and nonhuman primates -- it appears to have a PK or half-life similar to what we find for other small molecules, relatively short, less than a day half-life in that regard.

Therefore, all of the studies that we've so far conducted in animal studies has been using once-daily administration of the drug. And our expectation is that the drug will be used similarly in the clinic, once-daily administration at least to start with until we learn more regarding the pharmacokinetics in humans.

Based on the profile and the target profile of CA-170, that it targets both PDL, ligands, as well as VISTA, our expectation is that the drug can be used in patients that express PDL and therefore are currently being treated with PD pathway-directed drugs. But it can also potentially go beyond that based on VISTA inhibition and treat patients that have either relapsed or don't really respond to PD-based treatment.

As we indicated in the call this morning, we have tested the drug in a number of different syngeneic animal model testings, some of those that are responsive to PD-based therapies and some that are not. And the compound seems to address both of those and provide an antitumor effect in both types of animal model studies. We believe that that can result in similar clinical benefits for patients, although of course we would have to go into the clinic and test that.

So the differentiation can come not only from the oral dosing of the drug in this regard, but also potentially expand beyond just PDL expressing and those patients that are treated with TD-directed drug candidates at this point.

Got you. Just a last quick question on Erivedge, in terms of the timeline, if we think about myelofibrosis versus lung fibrosis, do you have a sense which one is likely to be the lead indication?

We don't. I think, as we noted this morning, they have definitely indicated their interest in testing the drug in combination for myelofibrosis, which is already a trial that shows up in Clinicaltrials.gov -- not recruiting yet. Secondly, in IPF, Roche, based on their guidance that they have given, they continue to be very interested in continuing to develop Erivedge in IPF. But with regards to priorities and their strategies in these different fibrotic disease indications, our assumption is that they are interested in all of those.

All right. Well, great. Thank you for taking my questions.

(Operator Instructions) (inaudible), ROTH Capital Markets.

There was some very interesting data presented at at [SIPSI] this past weekend by Dr. Le Mercier at Dartmouth about anti-VISTA and how it synergizes with anti-PD1. So I just wanted to know two things. One is how the AC-170 effectively targets both (inaudible) and how -- what do you see in your hands with regards to that.

And another thing, she presented data about early versus late intervention. That was specifically in colon carcinoma. But still, I'd like to know what are your thoughts about going early versus late stage because it appears that late intervention actually achieves better effect with the combination rather than early effect.

With regards to -- thank you for the question. With regards to CA-170, we have indicated actually on the presentation that we made, our colleagues at Aurigene made on Friday, that, so far, the EC50 for the ability of CA-170 to rescue T cells from either PDL inhibition or VISTA inhibition appears to be relatively the same. These are low double-digits animal activity for those molecules. In models that we test, most of these animal models that have been tested by us are with established tumor models. So it's difficult to determine where they are going early versus late, based on preclinical studies can determine that.

So I think at this point, our assessments or expectation is that, at least in the Phase 1 testing, we will be looking at fairly established late-stage tumors for CA-170. Recall that in the Phase 1 we will have to determine both the safety and tolerability of the drug, which so far in animal studies appears to be very safe. And obviously we will be looking at not only patients' responses but the profiling of the patients with regards to their immune system and immune profile as well.

I don't think I can comment on early versus late at this point, based on information that we have.

Got it. Thank you. Very helpful, thanks.

I am showing no further questions at this time. And I'd like to turn the conference back over to management for any closing remarks.

Thank you again for participating in our call and potentially later on the webcast as well. I want to take this opportunity to thank all of Curis' employees for all their efforts regarding our programs as well as our partners and collaborators, Aurigene and Roche. But most importantly, I'd like to thank the patients and their families for participating in our clinical trials and allowing us to advance our drugs for the treatment of patients with cancer. Thanks, everyone.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.