Curis Inc (CRIS) 2016 Q1 法說會逐字稿

Good morning and welcome to the Curis first quarter 2016 earnings call. (Operator Instructions). I would now like to introduce your host for today's conference, the Chief Financial and Chief Administrative Officer of the Company, Mr. James Dentzer.

Thank you, operator, and welcome to Curis's first quarter 2016 earnings call. Before we begin, I'd like to encourage everyone to go to the investor section of Curis.com to find our earnings press release and related financial tables. I would also like to remind everyone that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult our SEC filings for additional detail.

Now I'll turn the call over to our President and CEO, Dr. Ali Fattaey.

Thank you, Jim, and I just want to note that this is Jim's first quarterly earnings call with us. So welcome, Jim, to the Company has our new Chief Financial and Chief Administrative Officer as well. And good morning, everyone, and thank you for joining us today. It is a pleasure to provide an update on Curis and our progress in developing innovative drugs for patients with cancer, including our two most advanced programs, CUDC-907 and CA-170.

Allow me to begin. Our most advanced program is CUDC-907, and it is being tested in an ongoing Phase II clinical trial to treat patients with relapsed refractory DLBCL. As a reminder, last December at the ASH Conference we presented results from our Phase I study of CUDC-907 as monotherapy, where we enrolled 22 patients with relapsed refractory DLBCL and reported seven objective responses out of the 16 evaluable patients.

As of today, we have now completed the enrollment in the monotherapy arm of the Phase I, and of the total 25 patients in this arm of the study, eight patients have experienced an objective response out of the total 19 response-evaluable patients. Note that this does not include the one complete response that we reported at the ASH Conference for a patient with DLBCL that was treated with CUDC-907 in combination with rituximab in a separate expansion arm of the study.

In addition, a retrospective analysis by us of the Phase I data indicates that the clinical benefit that we observed may be related to an inhibition of MYC oncogene, as there was a correlation between patients who reported objective responses and their DLBCL tumors harboring alterations in the MYC oncogene. These alterations included MYC gene copy number gains or elevated levels of MYC protein in the tumor cells, per criteria that have been set in the field.

This clinical analysis is very exciting and is consistent with our preclinical findings, which showed that CUDC-907 treatment of DLBCL models, either in culture or in vivo, eliminates MYC protein levels in a dose-dependent manner and at low nanomolar concentrations. In light of these findings, we designed our Phase II study of CUDC-907 to specifically treat the roughly one-third of DLBCL patients who have MYC alterations based on the criteria that we indicated. We expect this patient enrichment to increase the probability of a successful Phase II clinical trial for us, and that study is ongoing.

Finally, examination of CUDC-907 for treatment of patients with solid tumors in our independent Phase I trial is ongoing and we have now limited enrollment in this study to patients with solid tumors that harbor alterations of the MYC oncogene or to patients with NUT midline carcinoma. Our second, less advanced program is CA-170, the first orally administered small molecule checkpoint antagonist. With the significant clinical benefit and the incredible launch trajectory of the first two PD-1 pathway targeting drugs to hit the market, and those are on track for multibillion dollars this year, the immuno-oncology treatment paradigm has certainly become very exciting.

Several companies have also announced new programs targeting checkpoint proteins. However, all of these programs employ monoclonal antibody biologics that are administered intravenously, including OPDIVO and KEYTRUDA, the anti-PD-1 antibodies that are approved. CA-170 establishes a new class of immuno-oncology therapy by using oral administration of small molecules. Later this quarter, we expect CA-170 to become the world's first orally administered checkpoint targeting immuno-oncology drug candidate to enter the clinic.

CA-170 targets PD ligands, including PD-L1 and PD-L2, and VISTA, which are members of the B7 immunoglobulin superfamily of immune regulators that share 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 the hematopoietic cells, including myeloid-derived cells within the tumor environment.

CA-170 has been shown to selectively rescue T cell proliferation and function specifically inhibited by PD ligands or VISTA, but not by other checkpoint regulators, suggesting the specificity of CA-170's mechanism of action. Our Phase I study of CA-170 is expected to enroll patients with advanced solid tumors and will include those that are naive to immunotherapy as well as patients that are refractory or have relapsed on anti-checkpoint pathway based therapy.

Finally, I'll turn to Erivedge, which is commercialize globally by our collaborative partners Genentech and Roche for the treatment of advanced basal cell carcinoma. We are pleased to note that Roche has initiated enrollment in two clinical studies with Erivedge outside of BCC. One study in patients with intermediate or high risk myelofibrosis, where Erivedge is being studied in combination with ruxolitinib, a JAK inhibitor, and a second study in idiopathic pulmonary fibrosis patients, or IPF, where Erivedge is being investigated in combination with pirfenidone, the standard of care for these patients.

With that, I will turn the call over to Jim Dentzer for a discussion of our financial results, after which we will open the call for question and answers.

Thank you, Ali. For the quarter ended March 31, 2016, we reported a net loss of $9.4 million or $0.07 per basic and fully diluted share, as compared to a net loss of $31.8 million, or $0.30 per basic and diluted share, for the comparable prior year period. The net loss for the prior year period includes a one-time charge for in-process research and development expense of $24.3 million associated with the issuance of 17.1 million shares of Curis common stock to Aurigene as partial consideration for the rights granted under the terms of our January 2015 collaboration agreement.

Revenues were $1.7 million for each of the first quarters of 2016 and 2017 (sic - see press release, "2015"). Revenues for both periods are comprised primarily of royalty revenues recorded on Genentech and Roche's net sales of Erivedge. Operating expenses were $10.5 million for the first quarter of 2016, as compared to $32.7 million for the same period in 2015. As noted earlier, we recorded a one-time charge in 2015 for in-process R&D of $24.3 million associated with the issuance of common stock to Aurigene. No such expenses were recorded for the three months ended March 31, 2016.

R&D expenses were $6.8 million for the first quarter of 2016 as compared to $4.7 million for the same period in 2015. The increase in R&D was primarily due to increased direct spending related to outside services supporting the ongoing clinical activities of CUDC-907, including initial costs for the Phase II trial that was initiated in January 2016 and direct costs for programs under the Aurigene collaboration over the prior year period. Finally, employee related expenses increased over the prior year, primarily due to increased headcount.

General and administrative expenses increased to $3.6 million for the first quarter of 2016 from $3.5 million for the same period in 2015 due to increased personnel costs. Other expense was $635,000 for the first quarter of 2016 as compared to $827,000 for the same period in 2015. Other expense primarily consisted of $740,000 and $867,000 in interest expense for the quarters ended March 31, 2016 and 2015, respectively, related to the loan made by BioPharma-II to Curis Royalty, a wholly owned subsidiary of Curis. As of March 31, 2016, Curis's cash, cash equivalents, marketable securities, and investments totaled $73.1 million and there were approximately 129 million shares of common stock outstanding.

With that we'll open the call for questions.

(Operator Instructions). Adnan Butt, RBC Capital Markets.

Good morning. Thanks for the question and welcome to Jim. First on 907, Ali, have you discussed any response thresholds with the Agency at this time? And then could something emerge from the combination data that could alter your plans for monotherapy?

Thank you, Adnan, and thanks for calling in as well. In terms of thresholds for responses, first of all, we think the Phase I data that we've discussed based on the 25 patients, as I just outlined, certainly represents a very good response rate and a solid response rate in this population of patients, relapsed refractory DLBCL in that regards. With the Agency, since we are going after a selected patient population, we've presented that that's what we are going after. And once we have more data we would go back to them to present that information.

Obviously we've discussed what we think are the right thresholds associated with this, but I also want to draw your attention that we think the response rate we've seen so far in the Phase I monotherapy is a very healthy clinical benefit threshold. In the context of the combination treatments, as we discussed, we see the monotherapy path for CUDC-907 in this relapsed refractory population as our primary regulatory path, and that's the basis of our discussions with the FDA.

Potentially we would go for accelerated approval based on that information. The combination treatment strategy, we view that, as we've discussed, as a -- for the required Phase III or the randomized trial that we would have to run, and that's where we look at certainly the combination treatment strategy. So, I think we are very comfortable with the monotherapy strategy right now as our primary regulatory strategy going forward.

Okay. And if I can ask one on CA-170. What's the rationale for expecting or actually enrolling patients who might have failed checkpoint inhibitors already in the Phase I? And congrats on getting it to Phase I, by the way.

I think, based on the mechanism of action of the drug, targeting both the PD ligands as well as the VISTA, we view that certainly patients that are eligible for immunotherapy based on PD eligibility should be enrolled in this study. And we view that as one of the populations, based on some information that has come out over the last period of time in publications. Certainly at the moment in the preclinical setting we view the VISTA as a possible mechanism, an independent mechanism for patients that may not necessarily respond to PD-based therapy. And therefore, based on the VISTA inhibitory mechanism of our drug, we view that as, in a sense, an independent population of patients. Which may include patients that have already had checkpoint-based therapies, including PD-based therapies at this point.

But just to be clear, you do see value as an alternative to antibodies, right? Even in naive patients or patients new to therapy?

Yes, we view our drug is having both mechanisms of action, targeting patients that can be treated with PD-based therapies, whether it's based on PDL expression or not. Patients that can be treated with PD based therapies, PD-1 or PD-L1 therapies, should be eligible, and we see that mechanism of action in our drug. And then separately the VISTA inhibitory mechanism that can be an independent mechanism for it. So, yes.

Okay. Just lastly before I get back in line, any update on the IRAK4 inhibitor?

We continue to progress the program very nicely. We've been looking at multiple different indications besides diffuse large B cell lymphoma, where we've had our focus based on the mutation rates of that. And I think it's been fairly exciting on the preclinical side examining that target and that pathway in other indications besides DLBCL. I think we had a presentation on that at the AACR as well, so I would draw your attention to that at this point.

Brian Skorney, Robert W. Baird.

Good morning, guys. Thanks for taking the questions. Two quick ones. To start on CA-170, can you just refresh our memories in terms of what you saw in the animal studies? (technical difficulty)

Sorry. Thank you, Brian. So, you broke up a little bit. If you can repeat your question that would be great, Brian.

Yes. I was just asking about what you saw in terms of animal study bioavailability, and what would you anticipate to see in humans for a therapeutic dose? How many dose escalation steps we might require before we start seeing PD-1 inhibition? And then just in terms of any update in terms of a time line for the opt-in decision for the PD-L1 TIM-3 program?

Sure. So, I think the basic summary from the animal preclinical studies, for IND-enabling studies certainly, on CA-170 -- in addition to seeing the preclinical benefit in animal models and multiple different models -- melanomas and colorectal carcinomas that we presented -- as well as the safety studies that we indicated -- the GLP toxicology studies in both species were completed at up to 1,000 milligram per kilogram per day. Oral availability has been tested in multiple species. In the mice I think we presented in the range of 60% to 90%, depending on the dose, in terms of oral availability.

And it had very nice oral availability and PK in multiple models, including the monkeys that was the second species for the toxicology studies that we've completed. In the case of dose ranging and starting dose and expected doses, as you well know, Brian, we will wait to see what the pharmacokinetics, at least in the initial set of patients in the clinic, looks like and oral availability. However, I would say that we certainly sense that both our starting dose and, assuming low to moderate even bioavailability in the humans, we certainly expect that we are starting at a fairly healthy dose for the drug in the clinical setting.

Allow us to get there in the context of when we would expect to see PD-1 inhibition or targeting at this point, fairly difficult to say before we've gone into patients. In the context of PDL TIM-3, we presented some of the data at AACR for that, and at the moment those compounds have had very nice both potency -- have been very selective; a series of compounds that we presented the data on. And they've also had very nice in vivo activity as we presented, especially in preclinical models that don't have a response to anti-PD-1 antibodies. And those are selected for us to be able to see the activity beyond PD-1 based therapy as well.

Our expectation is that we would exercise in the second half of this year with regards to licensing that program. So it's fairly well on track for us to exercise that license in the second half.

Peter Lawson, SunTrust.

Good morning. Just as regards to management changes, where are we for adds? Is there anything else that's required or needed?

Hello, Peter, and thank you for calling in as well. Obviously, I recognized Jim Dentzer having joined us in this quarter, and of course Dr. David Tuck, who is our recently appointed Chief Medical Officer in the organization. David has been growing the organization in terms of clinical development, including additional MDs that have recently joined him. And I think the majority of our increased headcount or increased expertise, I should say, and the talent coming into the Company is all in the clinical development area.

The other areas that we certainly look at bolstering our expertise, whether it's internalizing those talents or continuing to use external, we certainly see us heading fairly heavily into the diagnostic arena, both for CUDC-907 with MYC-altered tumors but also CA-170, both wanting to immuno-profile the patients but also look at our target expressions. That's an area of expertise that we certainly look at very strongly in the organization to continue to bolster. So I would say majority in clinical development and in diagnostic arena, are the two areas that we are growing the organization.

Thank you. And just on 170, when do we expect the next read-out, so the first read-out for patients? And I guess how fast could we see response rates?

Yes, that's a good question, Peter. Obviously, as we've noted this quarter is -- or this first half of the year, basically this quarter -- is when we are expecting it to be in the clinic. So, be patient with us. It will be a dose escalation study. As we said, we think we are starting at a good dose but we will evaluate that. I think the most likely -- if we were going to pick a time to imagine clinical data coming out, would have to be ASCO of next year.

Unless we present data outside of a medical conference. We expect to go into patients with solid tumors for this trial, so the most likely clinical setting would be at ASCO next year for a potential data update. Unless of course, as I mentioned, based on the emerging data, should they come, we would do it sooner than that.

Perfect. And then when could we see Phase II MYC-positive data? Is that second half? And what venue could that be?

We potentially can have some data in the second half. As you know, the ASH abstracts are of course due in August. So, as our trial is ongoing we will continue to evaluate whether ASH this year is an appropriate time for us or not. So we can't really commit to that one. And then opportunities potentially in 2017 for dissemination of more of the information for that.

We do have an ongoing trials in progress at ASCO this year. That will be an update on the -- basically describing the Phase II trial, then potentially giving some update as we discussed just today. And then we'll evaluate whether ASH is an opportune time for us for CUDC-907 this year or not.

Perfect. Thank you so much.

(Operator Instructions). And I am showing no further questions. I would now like to turn the call back over to Ali Fattaey, President and CEO, for any further remarks.

So thanks, everyone, for joining the call today. I would especially like to thank all of our employees for their hard work in bringing the progress of Curis to this point. I also want to thank our partners, including Genentech and Roche and Aurigene, for all the work that they do in collaboration with us. But especially I want to thank all patients and their families who are participating in our clinical trials and allowing us to further progress our drugs for treatment of patients with cancer. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. You may all disconnect. Everyone have a great day.