Curis Inc (CRIS) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q1 2017 Curis Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I would like to introduce your host for today's conference, James Dentzer, Chief Financial, Chief Administrative Officer. You may begin.

Thank you, operator, and welcome to Curis' First Quarter 2017 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'll turn the call over to our President and CEO, Dr. Ali Fattaey.

Thank you, Jim. Good morning, everyone, and thank you for joining us today. Before we begin, I would like to announce that Jim McNab, the Chairman of the Board, will retire from the company's Board of Directors effective May 16. I also want to note that Martyn Greenacre, who was been a member of our Board of Directors since 2000, is nominated by the board to become the Chairman at that time.

I'd now like to start by reminding everyone that our business plan is to have multiple oncology drug candidates that we develop and that we expect to commercialize in certain territories, should they succeed in clinical trials and be approved. Our pipeline currently includes 4 drug candidates, 2 of which are in clinical development, including CUDC-907 and CA-170, and 2 that are completing IND-enabling studies, including CA-4948 and CA-327. This year, we expect initial readouts from the clinical trials of CUDC-907 and CA-170 and also expect to file INDs for CA-4948 and CA-327 to examine their effects in patients with advanced cancers. With our existing capital, our estimated cash runway will be beyond the initial data readouts from the CUDC-907 and CA-170 clinical trials and into the first half of 2018.

I would now like to provide an update on our programs and begin with CA-170, the first orally administered small molecule checkpoint antagonist in our collaboration with our partner, Aurigene. CA-170 targets the PD ligands and the VISTA inhibitory immune checkpoints. Dosing in the Phase I trial of CA-170 began last year in June in patients with advanced solid tumors or patients with lymphomas. We have conducted dose escalation from 50-milligram starting dose to 800 milligrams using a continuous once daily dosing schedule, and have observed no adverse events that limit dose escalation. We have also expanded the 400-milligram, 600-milligram and 800-milligram dose levels in order to further assess tumor and plasma biomarker dynamics in patient samples at these doses. These analyses are ongoing.

Our current efforts for the CA-170 trial are focused on enrollment of immunotherapy treatment-naive patients with cancers that are eligible for treatment with approved anti-PD1 or anti-PD-L1 antibody drugs. In this regard, we are opening multiple centers worldwide, with trial centers in Korea and Spain now open and patient enrollment ongoing. Our primary focus is enrollment of immunotherapy treatment-naive patients with melanoma, non-small cell lung cancer, renal, bladder or head and neck cancers.

Additional clinical trial centers in other European countries are expected to open for patient enrollment throughout the year. We expect to assess the preliminary clinical profile of CA-170 from early parts of the Phase I trial in the second half of 2017, based on data from approximately 30 to 40 patients with respect to pharmacokinetics, pharmacodynamics, safety and clinical activity.

I would now like to provide an update on CUDC-907. CUDC-907 is being investigated to assess its efficacy as a monotherapy treatment in an ongoing Phase II trial in up to 60 patients with relapsed refractory MYC-altered diffuse large B-cell lymphoma or DLBCL. Multiple studies have shown that approximately 35% of patients with DLBCL have MYC alterations, which is associated with a significantly poorer prognosis. The Phase II trial of CUDC-907 is continuing to enroll patients in the U.S. and in Europe, and we expect to complete enrollment within the first half of this year.

The primary endpoint of the Phase II study is objective response rate in up to 60 patients with MYC-altered relapsed refractory DLBCL. Secondary endpoints of durability of benefits and safety will also be evaluated. We expect to analyze sufficient clinical data from this study by mid to early second half of this year.

I would now like to update on our IRAK4 inhibitor drug candidate, CA-4948. As a brief background, IRAK4 kinase is the transducer of Toll-like receptor or TLR signals, and is activated upon engagement of these receptors by their specific ligands. Toll-like receptors play a significant role in innate immune responses. Within the TLR signaling pathway, a key adapter protein, M-Y-D-88, or MYD88, acts to connect TLRs to IRAK4. And in a number of different hematologic malignancies, MYD88 is mutated, leading to disregulated activation of the pathway, which is thought to contribute to oncogenesis.

We recently presented nonclinical data at the AACR annual conference at the beginning of April. The presentation showed that CA-4948 is a potent inhibitor of IRAK4 in biochemical assays and potently inhibits TLR signaling in cell-based assays. In in vivo animal models, CA-4948 resulted in significant downregulation of levels of cytokines that are associated with TLR signaling. In tumor-bearing animals, CA-4948 treatment resulted in significant inhibition of growth of human DLBCL xenograft tumors that harbor activating MYD88 gene mutations.

In patient-derived or PDX tumor-bearing animal models, CA-4948 treatment also resulted in significant inhibition of DLBCL tumor growth in MYD88 mutated tumors. CA-4948 is currently completing IND-enabling studies, and the drug product has been manufactured for clinical testing. We expect to file an IND application by mid to early second half of 2017 in order to test the CA-4948 in a Phase I trial in patients with hematologic malignancies. The initial Phase I trial will focus on patients with lymphomas, including those with MYD88 gene mutations.

In addition to establishing safety and recommended Phase II dose of CA-4948, we intend to evaluate potential correlations between clinical benefit and MYD88 gene alterations as well as assess other markers of IRAK4 pathway signaling in this trial. We expect these studies to assist in identifying a selected population of patients that may benefit significantly from CA-4948 treatment.

We have also continued to explore the effects of CA-4948 in other hematologic malignancies, including models of acute myeloid leukemia or AML and in collaboration in models of myelodysplastic syndromes or MDS. Initial data from our and our collaborators' work show encouraging effects of CA-4948 in these model systems, both in cell-based assays and in animal studies. Should these nonclinical studies continue to demonstrate a mechanism-based effect of CA-4948 in AML and MDS, we would expect to initiate clinical testing of this drug candidate in a separate Phase I trial for treatment of patients with these malignancies.

Now with regard to our drug candidate, CA-327, that is also in partnership with Aurigene. CA-327 is an orally bioavailable small molecule that targets PD-L1 and TIM-3 immune checkpoints. Data from the initial characterization and preclinical profile of CA-327 were presented by our Aurigene colleagues at scientific conferences in 2016. CA-327 is currently completing IND-enabling studies, and we expect to file an IND for this drug candidate in the second half of 2017 to begin its clinical development soon after.

Lastly, we are pleased to note Roche and Genentech's continued commitment to commercialize Erivedge globally for the treatment of patients with advanced basal cell carcinoma, as well as their efforts to explore Erivedge in combination therapy trials for treatment of patients with idiopathic pulmonary fibrosis and myelofibrosis.

With that, I will turn the call over to Jim for a discussion of our financial results as well as providing further details on the -- any other details as needed. Thank you.

Thank you, Ali. For the first quarter of 2017, we reported a net loss of $15.7 million or $0.11 per basic and diluted share, as compared to a net loss of $9.4 million or $0.07 per basic and diluted share for the prior year period. Revenues were $2.2 million and $1.7 million for the first quarter of 2017 and 2016, respectively. Revenues for both periods comprised primarily royalty revenues recorded on Genentech and Roche's net sales of Erivedge.

Operating expenses were $17.2 million for the first quarter of 2017, as compared to $10.5 million for the same period in 2016. Research and development expenses were $13.5 million for the first quarter of 2017 as compared to $6.8 million for the same period in 2016. The increase in research and development expense was primarily due to a $3.75 million exclusivity option payment made under our collaboration agreement with Aurigene in January 2017, and also an increase to 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 $3.5 million for the first quarter of 2017, as compared to $3.6 million for the same period in 2016. The decrease in general and administrative expenses was driven primarily by lower legal, professional and consulting services for the period. Other expense was $0.7 million for the first quarter of 2017, as compared to $0.6 million for the same period in 2016. Other expense primarily consisted of interest expense related to the loan obligations of Curis Royalty, a wholly owned subsidiary of Curis.

As of March 31, 2017, Curis' cash, cash equivalents, marketable securities and investments totaled $60.8 million, and there were approximately 143.7 million shares of common stock outstanding. On a fully diluted basis, which includes 18.7 million options, there were 162.4 million shares outstanding.

With that, we'll open up the call to questions.

(Operator Instructions) And our first question comes from the line of Chris Shibutani from Cowen.

On CUDC-907, it sounds like there's good progress, and we appreciate the updates there. In particular, you will complete enrollment in the first half of the year in the U.S. and Europe, you stated. So this mid to early second half data analysis -- will that be an interim analysis? And of the sites that you will have enrolled up to 60, will you continue to enroll more patients there? And can you help us understand kind of how you're thinking about coordinating a discussion with the FDA amidst all of that second half progress?

You are correct that our analysis will be an interim analysis of the data based on the number of patients that we're able to evaluate. Our primary and initial goal is to look at the primary endpoints, which is response rates, and durability of clinical benefit would come later in terms of the analysis and availability of data. So that's with regards to the analysis.

With regards to the enrollment and continued enrollments of patients, as you may be aware from an operational perspective, it's difficult to stop enrollment and start. So we are looking at how to best to manage that, and we want to make sure that we do it in a seamless manner. As we've indicated, should the trial results be positive and we have a positive discussion with the FDA with regards to the clinical data, we would initially need to expand and extend the study to roughly 100 or more patients for the Phase II trial. So we'll make sure that it's done in a logistically efficient manner in that regard. With regard to the communication for the FDA, based on the primary endpoints of response rates, depending on the data, we would request a meeting with the FDA to discuss that data at the time that it's available.

Great. If I could ask a quick follow-up on CA-170. I appreciate the additional information about the indications that you're targeting, and we'll certainly look forward to updates on that 30 or 40 patients in the second half of the year. Could you just help us understand a sense for what portion of those patients might be I/O naive versus I/O previously experienced patients?

Sure. And I can give you a little bit more with our current and also the expected patients that would continue to enroll outside of the U.S. As we discussed probably on the last earnings call, at that time, majority of our patients -- or I should say, all of our patients had been enrolled in the U.S. In the U.S., there's not really a possibility for enrolling immunotherapy-naive patients, treatment-naive patients in the indications that have approvals for PD-1 or PD-L1 antibodies.

That does not necessarily mean that the patients that we treated were all prior treated. Some of those patients were prior treated. Some were immunotherapy treatment-naive, but from other cancer types, if that makes sense.

The focus that I indicated for us outside of the U.S., including Korea and Spain that are open now, has been to get immunotherapy treatment-naive patients from those specific indications that have approvals, at least in the U.S. and perhaps in some of the other countries as well. So I would say rather than just -- I think a good fraction or a proportion of the patients overall will be immunotherapy treatment naive. The question will become -- the things that you should look to and the way we look at it -- is how many are immunotherapy treatment-naive patients from approved indications? How many are immunotherapy treatment naive from other indications? And how many are prior treated patients? Now we would like for that balance to be fairly healthy between those 3 populations.

And our next question comes from the line of Brian Skorney from Robert Baird.

Just to dig in a little more on the CA-170 indications that are being targeted, I guess, do you guys have an internal threshold by tumor type that you're thinking about to classify as confirming proof of concept? And how are you kind of setting up what you think would be considered confirmation of the thesis or not, based on tumor type?

It's a good question. Thank you, Brian. So let me maybe elaborate just a little bit and see if I help answer your question as well. I think you're putting it correctly. We have 2 goals, really, with the CA-170 current Phase I trial in addition to the safety and dose selection. We also view the -- at least the initial parts of the Phase I as providing us with a proof of concept.

For us, proof of concept can be generation and generating clinical benefit in the form of objective responses in patients. I think that's a proof of concept that demonstrate that a small molecule that targets inhibitory immune checkpoints can provide objective responses as a means of clinical benefit. That's the first, in a sense, objective and proof of concept for that.

With respect to types of cancers, we also fairly heavily evaluate the patient samples, including blood and including tumor samples, prior to treatment and after treatment, predominantly for 2 reasons, as you can very much appreciate. One is to demonstrate the activity of the drug, so as a biomarker of activity. The second, and predominantly from the pretreatment profile, for us to be able to see whether there are correlations between the patient tumors or the immune profile, whether there are correlations with clinical benefit that may then help us select populations of patients that may benefit with CA-170 treatment.

Because our drug, CA-170, targets 2 different immune checkpoints, PD-L1 as well as VISTA, we believe that the clinical benefit for CA-170 could be quite unique and therefore can be provided in, perhaps, patient populations or patients from cancer types that we don't necessarily normally think about with anti-PD1 or PD-L1 treatments. For that reason, we want both the clinical benefit as well as the biomarker correlation activities that we want to look at to drive our selection of paths for continued development of CA-170 and how we place it potentially on a -- in a sense, a registration path. We want those things to guide that selection. I hope that answered it in a manner that helps you recognize what we're trying to do with the trial as well.

Great. And then just on 907, I think you said that if you got a qualifying OR that you think meets a specific threshold that you would expand to up to 100 patients before potentially utilizing as a registrational package. I'm just wondering is that new? Is that based on a conversation that you've had with FDA? I thought the original protocol was for 60 MYC-altered and 100 non-MYC-altered just overall relapsed refractory DLBCL. Was there a protocol change in there?

No. I think our guidance -- it's just not based on communication -- any new communication with the FDA. This was our expectations based on the statistical analysis that we need up to 60 patients to see a significant positive result. That would then still require us to get up to 100 patients to fill in the -- both the safety database in a sense for CUDC-907 as well as have additional confirmatory data associated with it. So no change in that context for us from what we estimate to be required for a discussion.

Okay. So just to be clear, is the 100 patients -- or would the 100 patients be all MYC-altered? Or is the 60 MYC-altered, and up to 100 would be just in general relapsed refractory DLBCL?

I think our estimates of -- in the end, what would be required for possible use of the Phase II trial would be 100 MYC-altered patients with the filing. Our view and our assessment is that the 60 -- up to 60 MYC-altered patients allow us to see the clinical benefit rate in the -- with CUDC-907 in this population for us to have a conversation with the FDA.

(Operator Instructions) And our next question comes from the line of Peter Lawson from SunTrust Robinson Humphrey.

Just on the retirement of Jim McNab, what expertise are you kind of looking for to complement the rest of the board? And should we expect, I guess, Jim's holdings to kind of go to 0 over the near term?

I can certainly answer the first question for you, and maybe I'll ask you to repeat your second question so that I understand it. In the -- with respect to the board itself, first, I would say that -- reiterate that Martyn Greenacre will become the new chairperson of Curis as of the time that Jim McNab retires on May 16.

Secondly, I think we have a very experienced board for Curis with fairly diverse backgrounds in terms of both technical from the field of -- our field in biotech and health care, in general, and drug development. So certainly, I think we have a very seasoned and experienced board. We will continue to add to the board, as you noted last year, with Lori Kunkel joining the Board of Directors. And we will continue to look for expertise, in particular with respect to the transition that Curis wants to do and continues to do in terms of both drug development and expectation to commercialize some of these drugs ourselves. Those are the types of expertise that we continue to strive for, and we have those on the board, and we'll continue to build it in that direction as well. I apologize -- maybe if you can repeat your second question for me so I understand it?

Just -- Jim McNab had been selling stock over the last, I guess, couple of weeks or so. And I just wondered if that was going to go to 0, like his holdings were going to go to 0. If you've got any insight there.

No insight. I would see that as part of his personal -- Jim McNab's personal decision in terms of his stock sale. So I think that's part of a plan that had been put in place in the past, and these are all automatic sales. So no insights into that from our side.

Got you. And then just on the 907 combos, where do they stand as regards to enrolling, or have they been deprioritized until we can kind of get an interim look?

I would say, I think, our primary focus is really demonstrating CUDC-907's critical benefit as a monotherapy in this population of patients. We certainly did test in the Phase I trial as a separate cohort CUDC-907 in combination with rituximab. Those 2 drugs combined very well without any adverse events or any additional adverse events in a sense.

Non-clinically, obviously, we have tested CUDC-907 in combination with other drug candidates. Some of that we have published, and probably the more recent one has been the combinations that we presented at the ASH conference at the end of the year. We think CUDC-907, in addition to its monotherapy activity, can be combined with other drugs for further benefit or for other -- benefit of other patients besides the current population that we target. But I think much of that, we think, is best addressed after demonstration of the clinical activity in this population as a monotherapy.

And I'm showing no further questions at this time. I would like to turn the call back over to Ali Fattaey, CEO, for closing remarks.

Great. Thank you. First of all, thanks, everyone, for joining the call this morning. I want to first acknowledge Jim McNab, who was a founder of Curis and has provided leadership and guidance throughout his chairmanship for the company. We also wish him very well on behalf of the board, the employees of the company and the management, in all of his endeavors.

Next, I would like to thank our Curis team for the amazing work that they do in generating and progressing our drug candidates, which are really the focus, the main focus for the company. I would also like to thank our partners, and in particular, Aurigene, which we have worked very closely with in the development of our now 3 drug candidates, 1 in the clinic and 2 to come into the clinic this year; as well as our partners, Genentech and Roche, with commercialization of Erivedge. But most of all, I would like to thank the patients and their families for participating in our trials and making the potential for our drug candidates to become a reality.

Thank you. With that, and I will end the call at this point.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone, have a great day.