Curis Inc (CRIS) 2016 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Q3 2016 Curis, Inc. Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions).

I would now like to turn the call over to Jim Dentzer, Chief Financial and Chief Administrative Officer. Please go ahead.

Thank you operator, and welcome to Curis' third quarter 2016 earnings call. Before we begin, I would like to encourage everyone to go to the Investors 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 will turn the call over to our President and CEO, Dr. Ali Fattaey.

Thank you, Jim and good morning everyone, and thank you for joining us today. It is my pleasure to provide you an update on Curis, and our progress in developing multiple innovative drugs for patients with cancer, including our two most advanced programs; CA-170 and CUDC-907.

First, I would like to discuss CA-170, which is the first orally-administered small molecule checkpoint antagonist that was discovered in our collaboration with Aurigene and targets the PD-1 ligand and VISTA immune checkpoints, and is now in clinical development. We recently presented pre-clinical findings from the CA-170 program at the AACR Tumor Immunology and Immunotherapy conference last month, describing how CA-170 treatment in tumor bearing mice resulted in increased numbers of activated T-cells and increased expression of T-cell markers of activation when measured in mouse blood samples, in tumor draining lymph nodes, and in excised tumor samples.

As we have previously shown in these same pre-clinical mouse models and in our studies, CA-170 also resulted in significant anti-tumor activity when compared to anti PD-1 antibodies that were tested in the same studies. With regards to CA-170 clinical development, patient dosing with oral CA-170 in the clinic began in June of this year, and has progressed through multiple dose levels with no safety events thus far that merit limiting dose or continued treatment of ongoing patients. At each dose level examined, we continue to analyze patient samples to assess markers of immune modulation, including some of the same markers that we assessed in our pre-clinical studies.

We also monitor extensively for safety and any signals of clinical activity as well as drug exposure and analysis of PK parameters of oral CA-170. We anticipate CA-170's behavior in patients to be comparable to what we have observed in multiple non-clinical animal models. We intend to use this data to guide the selection of recommended dose in the expansion phase of this study.

We look forward to discussing these data at upcoming scientific conferences and upon initiation of the expansion stage, which is currently expected in 2017. In the expansion stage, we expect to enroll patients who are naive to anti PD-1 or PD-L1 treatment, with specific tumor types that have been shown to benefit from checkpoint targeting therapy.

To effectively enroll such patients, we are opening the CA-170 trial in multiple centers in Europe and in Asia, where access to approved checkpoint targeting drugs in these tumors types is limited. While anti PD-1, PD-L1 treatment naive patients are of primary interest, we also intend to enroll patients previously treated with these treatments as CA-170 targets the VISTA checkpoint as well as the PD ligands. If successful in demonstrating clinical benefit in this pre-treated patient population, it may allow for a relatively rapid path to registration for CA-170.

Now I'd like to turn to discussion for CUDC-907, which is being investigated as a monotherapy in an ongoing Phase 2 trial in up to 60 patients with relapsed refractory DLBCL to assess its efficacy specifically in DLBCL patients with MYC-altered cancers. The primary endpoint of this study is overall objective response rate, with secondary endpoint of durability of clinical benefit among other end points.

Based on an analysis of published historical trial results, we anticipate that a response rate in the Phase 2 trial that is similar to the overall response rate that we have observed in patients with DLBCL in our Phase 1 trial, combined with demonstrable durability of the clinical benefit, should provide the basis for discussion with the FDA. For reference, the historical median progression free survival duration in this population of patients is approximately three months.

Our Phase 2 trial is currently open and enrolling patients in multiple centers in the US and in Europe. We expect to analyze sufficient clinical data from this study in the first half of 2017, and provided sufficient clinical benefit is observed, we expect to request a meeting with the FDA to discuss a potential path for accelerated approval of CUDC-907 monotherapy in this indication.

To summarize the results from the Phase 1 trial of CUDC-907, in a total of 88 patients with advanced lymphoma or multiple myeloma that were enrolled in the study, among the 25 patients with relapsed refractory DLBCL treated with CUDC-907 monotherapy, as we have noted before, three patients achieved complete response, five achieved partial responses, and four achieved stable disease for an overall response rate of approximately 30%, and a disease control rate of approximately 50%.

A retrospective analysis of these data confirm that among the five patients with known MYC-altered DLBCL disease, four achieved objective responses, including all three patients who achieved a complete response on monotherapy.

Now, to comment briefly on our pre-clinical pipeline. Last month, we licensed the second immunooncology program in our partnership with Aurigene. This program is focused on generating and optimizing oral small molecule candidates that target the PD-1 and TIM-3 immune checkpoint pathways. We've also identified CA-327 as the development candidates in this program and have initiated IND-enabling studies using this compound, with the intent of filing an IND by approximately mid-2017.

Finally, I'll turn to Erivedge, which is commercialized globally by our collaboration partners, Genentech and Roche, for the treatment of advanced basal cell carcinoma. We are pleased to note that Roche and Genentech continue with their commitment to develop Erivedge and indications beyond basal cell carcinoma, where they are now conducting two exploratory combination therapy trials treating patients with IPF and myelofibrosis.

With that, I will now turn the call over to our CFO, Jim Dentzer for a discussion of our financial results. Jim?

Thank you, Ali. For the quarter ended September 30, 2016, we reported a net loss of $28.3 million, or $0.21 per basic and diluted share, as compared to a net loss of $5.5 million, or $0.04 per basic and diluted share for the same prior-year period. Revenues were $1.8 million and $2.0 million for the third quarter of 2016 and 2015 respectively. Revenues for both periods comprised primarily royalty revenues recorded on Genentech and Roche's net sales of Erivedge.

Operating expenses were $29.5 million for the third quarter of 2016, as compared to $6.9 million for the same period in 2015. Operating expenses and net loss for the three months ended September 30, 2016 include a non-cash in-process research and development charge of $18 million related to the amendment of Curis's license agreement with Aurigene.

Research and development expenses were $6.8 million for the third quarter of 2016, as compared to $4.0 million for the same period in 2015. The increase in research and development expense was primarily due to increased direct spending over the prior year period related to outside services supporting the ongoing clinical activities of CUDC-907 and direct costs for programs under the Aurigene collaboration. Finally, employee-related expenses increased over the prior year, primarily due to additional headcount.

General and administrative expenses were $4.7 million for the third quarter of 2016, as compared to $2.8 million for the same period in 2015. The increase in general and administrative expenses was driven primarily by higher personnel costs and stock-based compensation expense, due to increased headcount and an increase in legal service costs.

Other expense was $0.6 million for the third quarter of 2016, as compared to $0.7 million for the same period in 2015. Other expense for both periods primarily consisted of interest expense related to the loan made by BioPharma-II to Curis Royalty, a wholly owned subsidiary of Curis.

As of September 30, 2016, Curis's cash, cash equivalents, marketable securities and investments totaled $53.4 million and there were approximately 140.0 million shares of common stock outstanding. The increase in common stock outstanding reflects the Q3 investment in Curis by our collaboration partner, Aurigene. As a reminder, Curis issued 10.2 million shares of Curis stock to Aurigene, in lieu of receiving $24.5 million of milestone and other payments, which represented a 39% premium to the closing stock price at the time of the investment.

With that we'll open the call for questions.

(Operator Instructions) Adnan Butt, RBC Capital Markets.

Good morning, and thanks for the question. First on CA-170, could you be a little more specific about when in 2017 you might expect to reach a decision on the expansion cohort?

Good morning Adnan. And yes, our current expectation is that, for the remainder of 2016, we are very likely to continue with our dose escalation and within the first half of 2017 is our expectation for expansion stage of the study.

And Ali, what would inform the decision on going into the expansion cohort? Is there specific criteria that you're looking for?

So there are -- I'll give you that in general and then how it will work for CA-170. As I tried to point out, there are really four parameters in a sense that we look for in general, in a clinical study, which includes the exposure of PK, safety, pharmacodynamic activity markers and of course any signals of clinical activity. That's what we use to help us guide what the recommended Phase 2 dose should be, potentially what types of cancers we would intend to expand into and of course the timing of the expansion for the study. In the case of CA-170, we expect those same four parameters of exposure, safety, pharmacodynamic activity and signals of clinical activity to help us guide that as well.

Since we've had from the pre-clinical studies that we've conducted and the GLP toxicology studies, the drug has been -- has had a very good safety profile. Our expectation is that the parameters of exposure, pharmacodynamic activity mainly in this case we would refer to immune activation in patients and then of course any signs of clinical activity that correlates with that to drive and guide the expansion, the initiation of the expansion and also the recommended dose for that expansion. That's what we are at this point looking for Adnan.

Okay, thank you. Just one on 170 before I get back in line. Will the Company announce when the monotherapy study is fully enrolled? And am I correct it's an open label study, so are you blinded to the data or do you see the data?

If you're referring to the CA-170 Phase 1 trial --

I'm sorry. Forgive me. It's CUDC-907, sorry.

Thank you, Adnan. Yes, the study is open label. We are not blinded to the information that comes from the Phase 2 trial. It is a monotherapy trial that is treating patients only with CUDC-907 in that one arm. And so yes, we are not blinded to it and we would expect as I indicated, once we have sufficient information regarding the response rates as well as the durability of the benefit, which we expect to be, again, in the first half of 2017, for us to use that information to communicate and discuss with the FDA for a potential accelerated approval path for CUDC-907, but we are not blinded to it, to the data, and we look forward obviously to updating on that information when appropriate as well.

And then would you tell us when the study is fully enrolled, the monotherapy arm?

The monotherapy arm, so the study as I indicated is enrolling up to 60 patients with monotherapy CUDC-907. And I think what we would indicate is when we have sufficient data from this study to merit going forward with discussion with the FDA. That's the guidance -- that's the best guidance that we would give at this point.

Okay, I'll get back in line. Thank you.

Peter Lawson, SunTrust Robinson.

Morning Ali. Just on 170, the no limit in AEs] is very encouraging. Is that going to speed up dosing or enrolment in any way? And what number of patients do we have currently on trial?

I apologize. I didn't quite hear the first part of your question, Peter.

Just CA-170 no limit in AEs that you've seen, is that going to speed up dosing in any way or enrollment?

It's a good point. As I indicated, our expectation is in general that CA-170 is going to behave similarly in patients as it has in multiple non-clinical models that we've ran and tested the drug in, in this case. The absence of limiting adverse events does help us in the context of being able to dose escalate in a very timely manner, and in an expeditious manner. And I believe that it does help us to be able to enroll patients in each one of these escalating cohorts as rapidly as is possible. So I wouldn't say it accelerates it beyond what is possible, but it certainly helps us get it done as rapidly as is possible in each of the dose escalations.

I'm sure you're familiar with the requirements for clearance of a particular dose during a cycle of treatment before we can accelerate to other doses. At this stage, I would say we're accelerating as rapidly as is possible within the time frame of the study.

Thank you. And the number of patients you have currently on trial, is that I think maybe two or three patients that are already on. Just thinking about the six-week period you have between dosing.

It's a good question. I think we've discussed the design of the study for the first four dose cohorts or the doses that we would enroll. We've indicated that in discussion with the FDA, we reached an agreement and they allowed us to enroll a single patient in each of those four cohorts, provided that of course we don't see any adverse events in those patients that may require additional patients to be enrolled in each of those doses.

The study started in June, so we've been increasing with the single patient dose cohorts until now.

Got you. Thank you. That's great. I'll jump back into the queue. Thank you so much.

Brian Skorney, Robert Baird.

Hi, good morning guys. Talking about CA-170, maybe you could just refresh our memory in terms of what you saw in the animal models in terms of oral bio-availability, and it would seem even at this stage you would have some PK data to indicate how predictive those models were in terms of bio-availabilities. So I was hoping maybe you could just frame it up from the pre-clinical data and just qualitatively discuss if it's in line with those animal models, or if the oral bio-availability is any different than you would have expected.

Good morning, Brian, and thank you for the question. So we have tested and I think we've presented that at least in some presentations before. CA-170 in rodent models, in multiple rodent models, in the dog model, and also in non-human primates, in the cyno monkeys. And in all of those models, it has had a very similar pharmacokinetic profile that we've tested. Obviously we've also treated patients now, human patients and have continued to dose escalate.

And as I indicated, our expectation is that CUDC-907, based on our assessment of non-clinical shouldn't have any different behavior in patients. That's what our modeling tells us. I would also like to maybe potentially at this point indicate that we do intend to present at the SITC conference, which is next week. Occurring next week in Maryland, the SITC conference, immunotherapy conference. And we may present some of this information at that conference as well.

Okay. So I guess the question was really on the clinical side of things. Is the PK that you're seeing from the initial patients similar to the rodent, dog and non-human primate model?

I think that's what I was indicating that we would like to present next week at the SITC conference, give you a sense of how the clinical PK compares with the non-clinical PK.

Okay, thanks.

(Operator Instructions). Christopher James, FBR & Co.

Hi, good morning guys. Thanks for taking the question. Most of them have been answered regarding CA-170. Let me maybe pivot to 327. I think you said IND filing mid-2017. Can you comment on some of the gating factors for that filing and what additional work needs to be completed? Thanks.

So thank you Chris, and good to have you on the call as well. In general, what is required for us to get at and maybe I'll describe what we -- what a development candidate really means in the collaboration for us and also for Curis. In this regard, all of the preclinical profile of the compound has been addressed for us, including ex vivo analysis, the potency of the compound, the selectivity in vivo activity of the compound in models, its PK profile and some of the initial safety. Those are the things that obviously we look at fairly closely and those are the parameters that guide for us to select one compound or another from a particular program in this case.

And for 327, that's also been things that have been assessed and examined in order to select 327 as the right drug candidate that targets PD-L1 and TIM-3. Now in terms of what's remaining to be conducted prior to IND filing, the predominate amount of work that's required to be completed are the GLP toxicology studies, which also requires manufacturing of the drug at sufficient scale in a GLP form. And also of course manufacturing of the drug in a GMP form for preparation for the human testing of the drug.

Those are really the two main remaining items to be conducted, which is manufacturing as well as the GLP toxicology studies. Majority of the non-clinical assessment of the drug has been conducted already.

Great. Thanks Ali, I'll jump back in the queue.

I'm showing no further questions. I would now like to turn the call back over to the CEO Dr. Ali Fattaey for any further remarks.

Thank you very much and thank you for joining the call this morning for our earnings update. I also want to thank everyone who's been involved here at Curis, particularly the teams in our non-clinical and in our clinical team, as well as all the teams that contribute to our progress with our drug candidates, as well as running the Company. I also want to thank our partners, in particular Aurigene and Genentech and Roche, which are both very fruitful collaborations for us. I also want to thank our treating physicians and investigators who participate in our clinical trials and have their trust in our drugs and in us to treat their patients with our drug candidates.

And mostly, I would like to finally thank the patients and their families for participating in our trials and making all of the results that we see happen, so that we can get our drugs potentially registered and made available to a broader population of patients. So thank you.

Ladies and gentlemen, thank you for participating in today's conference. You may all disconnect.