On March 9, 2017 Curis, Inc. (NASDAQ:CRIS), a biotechnology company focused on the development and commercialization of innovative and effective drug candidates for the treatment of human cancers, reported its financial results for the fourth quarter and year ended December 31, 2016 (Press release, Curis, MAR 9, 2017, View Source [SID1234518052]).
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"We are pleased with the progress we’ve made in advancing our pipeline in 2016. For CUDC-907 and CA-170, we remain focused on patient enrollment in their respective trials to assess their benefit in cancer patients. The Phase 1 trial for CA-170 continues to progress on track through the dose escalation stage, and based on the early data, we have recently received regulatory approval to begin extension of the CA-170 Phase 1 study and enroll immunotherapy-naïve patients in Korea and Spain, with additional trial centers in other European countries projected to open in the second quarter. The Phase 2 trial of CUDC-907 in patients with relapsed/refractory MYC-altered diffuse large B cell lymphoma, or DLBCL is nearing completion of patient enrollment, and our goal is to assess CUDC-907’s efficacy in this patient population, as measured by the overall response rate in up to 60 patients. Depending on the Phase 2 trial results, we expect to hold discussions with the FDA regarding potential for accelerated approval of CUDC-907 as a monotherapy in this setting. In addition, we are completing IND-enabling studies of CA-327 and CA-4948," said Ali Fattaey, Ph.D., Curis’s CEO."
Dr. Fattaey continued, "Our collaboration with Aurigene continues to progress well. In September 2016, we completed a $24.5M financing with Aurigene. In October 2016, we licensed a second immuno-oncology program, and designated CA-327 as an oral small molecule development candidate targeting PDL1 and TIM3. We expect to file an IND for CA-327 in 2017. Our IRAK4 kinase inhibitor development candidate, CA-4948, has progressed well in preclinical characterization and IND-enabling studies, and we expect to file an IND for CA-4948 in mid-2017."
Royalty Financing Transaction
On March 6, 2017, Curis entered into an agreement with HealthCare Royalty Partners (HCR), for a $45 million debt transaction secured with future Erivedge royalties. As part of this transaction, Curis’s wholly-owned subsidiary, Curis Royalty LLC, borrowed $45 million at an annual interest rate of 9.95% interest to be repaid solely with Erivedge royalty payments received from Genentech. The transaction is expected to close later this month, at which time Curis would pay off the $18.4 million remaining balance on the existing loan from BioPharma-II.
"Erivedge represents an effective and medically important product for patients suffering from advanced forms of basal cell carcinoma, and we are pleased to partner with Curis in providing this non-dilutive financing as the company funds its oncology pipeline," said John Urquhart, Principal at HealthCare Royalty Partners.
"We continue to focus our capital and resources in developing our pipeline of innovative cancer therapies. We are especially pleased to work with HCR on this financing, which provides non-dilutive capital for our near-term development needs, while allowing us to retain the considerable upside potential in Erivedge. In its fifth year on the market, Erivedge revenue grew 21% to CHF 203 million in 2016. Genentech and Roche currently commercialize Erivedge in advanced basal cell carcinoma and are conducting clinical trials for its potential use in treating idiopathic pulmonary fibrosis and myelofibrosis," said James Dentzer, Curis’s Chief Financial and Chief Administrative Officer.
Full Year and Fourth Quarter 2016 Financial Results
For the year ended December 31, 2016, Curis reported a net loss of $60.4 million, or $(0.45) per share on both a basic and diluted basis, as compared to a net loss of $59.0 million, or $(0.48) per share on both a basic and diluted basis in 2015. For the fourth quarter of 2016, Curis reported a net loss of $11.3 million or $(0.08) per share on both basic and diluted basis, as compared to a net loss of $13.5 million, or $(0.10) per share on both basic and diluted basis for the same period in 2015. The net loss for the year ended December 31, 2016 includes a non-cash in-process research and development charge of $18.0 million related to the amendment of Curis’s license agreement with Aurigene. The net loss for the year ended December 31, 2015, includes a non-cash in-process research and development charge of $24.3 million related to Curis’s license agreement with Aurigene.
Revenues for the year ended December 31, 2016 were $7.5 million, as compared to $7.9 million for the same period in 2015. Revenues for both periods comprise primarily royalty revenues recorded on Genentech and Roche’s net sales of Erivedge. Revenues for the fourth quarters of 2016 and 2015 were $2.4 million and $2.1 million, respectively.
Operating expenses were $65.6 million for the year ended December 31, 2016, as compared to $64.4 million for the same period in 2015. Operating expenses for the fourth quarter of 2016 were $13.1 million, as compared to $15.3 million for the same period in 2015, and comprised the following:
Costs of Royalty Revenues. Costs of royalty revenues, primarily amounts due to third-party university patent licensors in connection with Genentech and Roche’s Erivedge net sales, were $0.4 million for both the years ended December 31, 2016 and 2015. Cost of royalty revenues for the fourth quarter of 2016 and 2015 were $0.1 million for both periods.
Research and Development Expenses. Research and development expenses were $31.6 million for the year ended December 31, 2016, as compared to $26.7 million for the same period in 2015. The increase was primarily due to increased direct spending related to clinical development activities of CUDC-907 and programs under the Aurigene collaboration over the prior year period. Employee-related expenses increased over the prior year period primarily due to additional headcount to support the multiple programs. Research and development expenses were $9.2 million for the fourth quarter of 2016 as compared to $12.0 million for the same period in 2015.
In-Process Research and Development Expense. In-process research and development expense was $18.0 million for the year ended December 31, 2016, as compared to $24.3 million for the same period in 2015. These charges are associated with the stock issuances of 10,208,333 and 17,120,131 shares of Curis common stock to Aurigene, in 2016 and 2015 respectively. These shares were issued as consideration for the rights granted under the terms of the September 2016 amendment to the collaboration agreement and partial consideration for the rights granted under the terms of the January 2015 collaboration agreement, respectively.
General and Administrative Expenses. General and administrative expenses were $15.6 million for the year ended December 31, 2016 as compared to $12.9 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, an increase in legal service costs and professional and consulting services. General and administrative expenses were $3.8 million for the fourth quarter of 2016, as compared to $3.2 million for the same period in prior 2015.
Other expense, net was $2.4 million for the year ended December 31, 2016, as compared to $2.5 million for the same period in 2015. Other expense, net was $0.6 million and $0.2 million for the fourth quarter of 2016 and 2015, respectively. Other expense, net primarily consisted of interest expense related to the loan made by BioPharma-II (an investment fund managed by Pharmakon Advisors) to Curis Royalty (a wholly owned subsidiary of Curis).
As of December 31, 2016, Curis’s cash, cash equivalents and investments totaled $44.5 million and there were approximately 141.1 million shares of common stock outstanding.
Recent Operational Highlights
Curis – Aurigene collaboration:
In January 2017, Curis exercised its option to extend the exclusivity period with Aurigene under the collaboration, license and option agreement established in January 2015. The extension of exclusivity is associated with a payment of $7.5 million to Aurigene, payable in two equal installments. The first installment was paid in January 2017 and the second installment is estimated to be paid in the third quarter of 2017.
CA-170 (PDL1/VISTA antagonist):
In November 2016, Curis presented preliminary clinical pharmacokinetic (PK) and early biomarker data from the ongoing dose escalation stage of its Phase 1 trial of CA-170 at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting. Clinical data from a limited number of patients demonstrated that, similar to the preclinical findings, orally-administered CA-170 has a dose proportional and predictable PK profile in patients treated at various escalating doses. Additionally, analysis of patient blood samples showed that CA-170 is biologically active in modulating the immune system, with a several-fold increase in the percentage of circulating CD8+ T cells expressing activation markers within 24 hours of oral dosing.
CA-327 (PDL1/TIM3 antagonist):
In November 2016, Curis collaborator, Aurigene presented pre-clinical data at the SITC (Free SITC Whitepaper) Annual Meeting and EORTC-NCI-AACR (Free EORTC-NCI-AACR Whitepaper) Molecular Targets and Cancer Therapeutics Symposium for CA-327, the development candidate targeting PDL1 and TIM3 immune checkpoints. The data from various in vitro and in vivo studies with CA-327 demonstrated potency and selectivity, oral bioavailability, desirable safety profile, and anti-tumor activity in multiple mouse syngeneic tumor models.
CUDC-907 (HDAC/PI3K inhibitor):
In December 2016, Curis presented non-clinical data from combination studies of CUDC-907 and venetoclax, a BH3 mimetic and BCL2 antagonist at the American Society of Hematology (ASH) (Free ASH Whitepaper)’s annual meeting. In multiple DLBCL cell lines, the CUDC-907 and venetoclax combination exhibited synergistic activity resulting in reduced cell viability. The additive/ synergistic anti-tumor effects were also observed in vivo in mice bearing various DLBCL xenograft tumor models.
Erivedge:
In November 2016, the European Commission granted full approval to Erivedge (vismodegib) for the treatment of adult patients with symptomatic metastatic basal cell carcinoma (BCC) or locally advanced BCC inappropriate for surgery or radiotherapy. Erivedge was originally granted ‘conditional approval’ in July, 2013 in the European Union. Erivedge was approved in the U.S. in 2012 for the treatment of adults with metastatic basal cell carcinoma, or with locally advanced basal cell carcinoma that has recurred following surgery or who are not candidates for surgery or radiation. Erivedge was developed and is marketed by Roche and Genentech, a member of the Roche Group, under a collaboration agreement between Curis and Genentech.
Other:
In November 2016, Curis announced the appointment of Lori A. Kunkel, M.D. to its Board of Directors. Dr. Kunkel currently serves on the Board of Directors at Loxo Oncology, Amphivera Therapeutics Inc., Tocagen Inc., and Harpoon Therapeutics. In the past, Dr. Kunkel has served as CMO at Pharmacyclics, Inc., Proteolix Inc. (acquired by Onyx), Syndax, and ACT Biotech. She has also spent a number of years in academic/clinical medicine. She trained in internal medicine at Baylor College of Medicine, hematology at USC and oncology at UCLA, earning board certifications in these specialties.
Upcoming Activities
Curis expects that it will make presentations at the following conferences through April 2017:
Presentation of preclinical results from CA-4948 at the annual meeting of The American Association of Cancer Research in April, 2017