Curis' CEO Presents at 38th Annual Deutsche Bank Health Care Conference (Transcript)

May.29.13 | About: Curis, Inc. (CRIS)

Curis, Inc. (NASDAQ:CRIS)

38th Annual Deutsche Bank Health Care Conference

May 29, 2013 8:40 am ET


Daniel R. Passeri - Chief Executive Officer and Director

Unknown Analyst

Hey guys. Olivia Young [ph] here. I'm a biotech analyst here at Deutsche Bank. Today, we're happy to have Curis' Daniel Passeri, who is the CEO. And I'm going to turn it over to him, who will probably -- he'll probably present for about 30 minutes and then we'll have some questions at the end. Please?

Daniel R. Passeri

Okay. Thank you, Olivia. First, I want to thank Deutsche Bank for giving us an opportunity to present. Welcome, everyone and I want to welcome everyone who's listening on the webcast.

Just to remind that Curis is a NASDAQ-listed company, symbol CRIS. This presentation may contain some forward-looking statements.

To start off, first slide, I just want to give you a brief overview of the investment thesis of Curis. Why is Curis is an attractive investment opportunity. I think the primary rationale is we feel this is a high-potential business model that's been fundamentally derisked, in that we have high-potential proprietary programs that are completely controlled and owned by Curis. And we have that combined with partnered programs which give us the derisking aspect of this model that we have a growing baseline of royalty revenues.

We have 2 partnerships presently. First and foremost is our partnership with Genentech and Roche, which I'll elaborate upon in a moment. And that encompasses an approved drug, which was approved in early 2012, designated Erivedge, and I'll give you some of the details of that in a moment. And then we have a partnership with Debiopharm, an Hsp90 asset.

Focusing on our high-potential Curis-owned programs and controlled programs, CUDC-907 is the one I'm going to start off with first. It is a Phase I PI3 kinase/HDAC inhibitor, and we feel this differentiates the compound over a very crowded space. And we believe this has some very competitive and attractive attributes, which I'll elaborate. This is presently in Phase I dose escalation.

And then we have CUDC-427, which is a small-molecule IAP antagonist, that's inhibitor of apoptosis proteins. This is involved in protecting cancer cells from the apoptotic cascade that is either intrinsic or extrinsically being induced, and we believe that this compound shows tremendous promise of synergy with combining with compounds, which induce tumor necrosis factor. And again, I'll elaborate on those 2 programs in a moment.

What I just want to first address before I move on to giving you an overview of Erivedge, is the fact that we believe the current valuation of the company does not capture the upside potential of these 2 proprietary programs. We believe our current valuation, at a minimum, doesn't really even capture our 2 partnered programs in full. We believe that Erivedge has significant market potential and Genentech/Roche have been doing an outstanding job in increasing market coverage in the education of dermatologists for the utility of that drug in the BCC space. And we still have optimism that it will have other applications outside of BCC.

So I'm now going to touch upon our pipeline, and then I'm going to go through the Erivedge program followed by 907, 427 and touch very briefly on the Debiopharm partnership.

Our pipeline is basically a broad, diversified pipeline with various stages of development. I think the take-home message here is we have an approved drug market expansion potential of just that one asset. And then we have a number of value inflection points coming up over the next 6, 12, 18 months with this pipeline. And we think we're very well-positioned for generating significant shareholder value over the coming months.

Now I'm going to turn to Erivedge, which is our first-in-class drug that's been approved with Genentech and Roche. It's also the only-in-class drug that's approved for blocking the Hedgehog pathway and its involvement in BCC and potentially other cancers as well. This drug was approved in early 2012 for treating locally advanced metastatic basal cell carcinoma. However, what I want to emphasize here is the sort of soundness of the Genentech approach, the label that they've received is extremely attractive. And we believe it gives the alternative for continued market expansion even into the operable space.

So the literal language on the label provides for treatment with patients that have metastatic -- adults that have metastatic BCC or BCCs that recur after surgery, and we believe that also encompasses the category of BCC patients called Gorlin Syndrome. And these are patients that are born heterozygous mutant, where one of the copies of a Hedgehog pathway member have mutated to the highly susceptible multiple BCCs throughout life, or, and this is the real important one, not amenable to surgery or radiation, and that provides the physician with discretion.

And we believe that third category allows for expansion into the operable setting, where the drug can be used as a neoadjuvant prior to surgery to provide a better therapeutic outcome. For instance, this would be where a patient has a BCC lesion on the earlobe. Rather than amputate part of the ear or part of the face or in a cosmetically sensitive region such as the eyelid or nose, they can use Erivedge prior to surgery to, at a minimum, shrink the lesion and possibly even clear the lesion. And I'll go through some of the metrics that we've observed historically.

It's presently in Phase II testing, by the way, to treat operable BCC patients where we believe that would be used for educating dermatologists and Mohs surgeons for expansion of the market into the operable setting. So the statistics here come from a Roche slide. We think this actually supports the value proposition of the drug in terms of significant market potential.

To remind everyone, there are over 2 million new cases of BCC annually in the United States alone. So a small percentage of that total is a significant market. So a restrictive reading of this label would cover metastatic substantial deformity and inoperable, and that's 1.5% of the total. And we believe with the poor surgical candidate in the operable setting, that would encompass another 2%. So we believe, just in the restrictive reading, there are approximately 40,000 patients in the top 2 markets alone that are amenable for Erivedge.

And then with the expansion of the market into that operable setting, where the drug could be used as a neoadjuvant, that would add potentially another 55,000 additional patients. So this is a very attractive niche market that we have approval on. Prior to Erivedge, there was no therapeutic alternative for these patients. So this actually is a very important breakthrough for this indication, and we're very proud to be part of this program.

In terms of current marketing plan, Roche and Genentech, again, have received U.S. approval in early 2012 but have clearly demonstrated the commitment to this program for global expansion. The drug is currently approved in the U.S., a recent approval in Australia. It's approved for Israel, Korea and Mexico. And we just recently received from the CHMP a recommendation for conditional approval in the EU. The conditional approval is predicated on a continued follow-up of safety data, because the approval in the U.S. was based upon a pivotal Phase II. So we're very encouraged by what we're seeing from Genentech and Roche.

The quarterly sales continue to increase. We had a 20% increase Q1 of this year over Q4 of 2012. And those numbers continue to demonstrate a nice increment on a monthly basis. And that results in increasing revenue to Curis. The EU approval is expected within the next 3 months and that will trigger an additional milestone to Curis. I'll cover our cash position at the end of this presentation but we're in a very good position right now, and we believe these partnerships create further continuity and stability for the business model.

And then finally, just to remind everyone, the operable BCC Phase II study results are expected to read out in the second half of this year, and that data is meant to buttress the existing data package from the pivotal Phase II, and that will be the ability to assess the potential use for our earlier disease settings in the operable environment, using this drug as a neoadjuvant for better improvement. I'll just briefly remind everyone that we already had a readout on 1 of the 3 cohorts of the operable study. The data was very encouraging.

So they had -- in the first cohort, they reported out a 42% complete histological clearance. So there's no evidence of any residual BCC lesion. 96% had either a complete response or a significant PR. So this bodes extremely well for the potential use of this drug as a neoadjuvant and we look forward to that data readout on second half of this year. And again, that should result in a dramatic enhancement of the market potential.

I'm now going to shift to our proprietary program which is 100% controlled and owned by Curis, designated CUDC-907. This is the first-in-class and, as far as we know, only-i-class dual PI3 kinase/HDAC inhibitor. And this drug is not the result of chemical promiscuity hitting various targets. It is highly specific and highly selective for PI3 kinase and HDAC. It was designed this way. And the rationale is we didn't want to emerge us yet another small biotech with yet another PI3 kinase inhibitor, although this is a very attractive space, very attractive target. What we wanted to do is emerge with what we felt was a competitive approach to differentiate our drug over the significant number of PI3 kinase inhibitors. And we believe we've achieved that with the way this drug is designed.

So just as a primer, PI3 kinase, its family has a number of isoforms. And these isoforms have various biological roles. The primary ones involved in tumor genecity and tumor biology are alpha and delta. Alterations in various tissues drive various tumors, and targeting those isoforms can target cancer treatment. Alpha is known to be involved in a number of solid tumors, and a number of alpha mutations are known to be driver mutations in solid tumors. The role of delta, I think, is recently been very clearly established in the hematological space. There are a number of delta-specific inhibitors.

What's also emerged in use of those inhibitors and comparing them with alpha-delta inhibitors is that delta alone is often not enough in several of these hematological settings, where the tumor will adapt and bypass delta blockade by upper-regulating alpha. So these isoforms can crosstalk in redundancies, an essential element in a number of these signaling cascades. If it was just a one linear pathway, we'd have a lot more fatal tumors emerging. There's a lot of crosstalk and redundancy built into biology, so that we can tolerate blockade of our noise in one of these pathways. So if you block delta, the cancer will adapt with an alpha bypass. So we believe having the delta and alpha component is an advantage.

Furthermore, HDACs had been shown to synergize with a number of these targeted agents. And what HDACs do is they basically play a role in the hardware-software interface of cell molecular mechanisms and that they allows cells to dedifferentiate and access additional transcripts. So HDACs are involved in relation of transcriptional machinery as well as activation and inactivation of proteins that are involved in cell response. So by blocking access to the HDAC enzymes, we believe what we're doing here is blocking PI3 as a primary driver. And then by blocking HDAC, you're making it much more difficult for the tumor cell to adapt to that blockade. And this has been shown by a number of third parties in preclinical models. Recently, Gilead showed this with their delta inhibitor in combination with an HDAC inhibitor.

So our drug combines the benefits of PI3 alpha-delta combined with an HDAC blocking moiety. I'll get into the specifics of that in a moment is presently. It's presently -- excuse me, 907 is presently in development for Phase I dose escalation in lymphoma and multiple myeloma, and we believe there's compelling rationale for hitting both alpha and delta, particularly the bypass mechanisms that I alluded to.

907 is an oral -- orally available small molecule which combines these 2 synergistic anticancer mechanisms. 907 is potent against alpha and delta, also hits beta but less potently than alpha and delta. And on the HDAC side, it's principally HDAC 1, 2, and 3, which is Class 1 involved in transcriptional regulation and HDAC6 and 10, which is involved in the activation of various cytoplasmic proteins.

So the mechanism of action of 907 is that we are clearly interfering with cell perforation signaling through PI3 blockade. And then through the HDAC inhibition moiety, we believe we are making it more difficult for the tumor to adapt through cellular stress responses and having a more durable response. And I'll show you a slide which underscores that principle.

So in this 1 compound, we're combining 2 clinically proven activities. And we believe having it in 1 molecule has certain mechanistic advantages regarding blocking drug resistance mechanisms. And this compound has shown to be active in a number of preclinical models in both lymphomas and multiple myelomas.

This is just showing that the drug is indeed active against alpha, delta and beta, principally it's alpha and delta. And can you can see in the gel here that we are blocking in comparison with a leading PI3 kinase inhibitor that is in the clinic. Both compounds demonstrate to block downstream phosphorylation of Akt and then we're also inhibiting HDAC, very potently 1, 2, 3, 6 and 10.

This next slide demonstrates what we think are the mechanistic advantages of this combination. And what you see here is in the top gel is a treatment at 1 hour with 907 and a very potent alpha-delta inhibitor. And you can see both of them in a corresponding -- it's descending from left to right, ascending from right to left. And what you can see is both compounds at 1 hour are inhibiting phosphorylation of Akt, which is downstream of PI3K. So this demonstrates that you are inhibiting the shuttling of the phosphate from PI3 kinase down to Akt.

What's relevant here is when you look at the 16-hour, now this is after a washout, and you see 16 hours later, our drug has a very potent blockade of this cascade. And we believe this is the advantage of the PI3 moiety combined with the HDAC moiety. You do not see that with the lead -- with a very potent and leading PI3 kinase inhibitor, which is blocking both alpha and delta. So we believe this should translate into a more durable response clinically. We are presently in Phase I dose escalation. The study design is an oral dose escalation, treating refractory or relapsed lymphoma or multiple myeloma patients. This is a once-daily dosing until we see either disease progression or unacceptable toxicity. And the expansion cohort will be put into place upon determination of the recommended dose.

We have 3 study sites that we are accessing, the Sarah Cannon, the Memorial Sloan-Kettering in MD Anderson, and we're very pleased to have such high quality organizations in this program. And the study status, first cohort of 3 patients fully enrolled, no DLTs emerged. I'll give you further details on that in a moment. And we're pleased that we have a couple of patients still receiving drug. Second cohort, we have 3 patients enrolled. In the first dose escalation cohort, these were 3 patients treated at 30 milligrams daily. 2 multiple myeloma, 1 lymphoma patient enrolled, again no DLTs. What's encouraging is we saw AEs that are consistent with known mechanism of action for both HDAC, as well as PI3. We have the first patient, which was a multiple myeloma patient completed cycle 5 and now ongoing, we believe, is receiving drug in cycle 6. And we have 1 B-cell lymphoma patient that completed cycle 4 and we believe is now receiving drug in cycle 5. 1 of the multiple myeloma patient is discontinued after cycle 3 for progressive disease. Second dose escalation cohort is 60 milligrams daily. We have 3 patients enrolled and that cohort is an ongoing, and we look forward to providing you with updates as data emerges.

What is encouraging is on the PKPD analysis, albeit this is anecdotal, very early data in small numbers, but we're encouraged by what we're seeing. We believe we have encouraging drug exposure. We also believe this drug has a very interesting metabolic outcome where the parent drug is metabolized as a relatively short t1/2, which is good for the HDAC moiety, because it has a prolonged PD, and we have an active metabolite which retains its PI3 kinase activity in very potent form. So as we generate more specific data on that, we look forward to providing you with the particulars. But we're very encouraged by what we're seeing to date. We look forward to giving you updates as they become available.

So again in summary, this is a competitively positioned drug in a crowded space where we're hitting, what we think, are the primary drivers of tumor genecity, which is alpha and delta. So we should have application of both hematological cancer as well as solid cancer. This drug is orally available. And with the HDAC moiety built into this drug scaffold, we believe what we should be able to demonstrate is rapid and durable responses, where we should be addressing some of the bypass mechanisms that have been reported recently with PI3 kinase inhibitors alone.

Principally, the delta inhibitors' resistance mechanisms have been shown in mantle cell lymphoma, and alpha and delta is also thought to be involved in multiple myeloma. So we're presently in Phase I dose escalation and we expect that to complete by end of year. We're also looking at the prospects based on the safety profile of the hematological study second half of the year. We're looking at the prospects of launching a solid tumor campaign with 907.

Now I'm going to switch to CUDC-427, which is an antagonist of inhibitor of apoptosis proteins. This is a Phase II-ready program that we in-licensed in November of last year from Genentech. We received an exclusive worldwide license for development and commercialization. What I want to emphasize here is this is the first compound that Genentech has ever out-licensed, and we're very proud that they contacted us as their long-standing partner for the Hedgehog program. We believe that it underscores the quality of our science and our reputation with Genentech. This is an oral small molecule, peptide mimetic, which targets IAP, isoforms cIAP 1 and 2 XIAP and MLIAP. We have been asked, why would Genentech out-license the program? If it's a program that they had a lot of confidence in? And I think it really is based upon the following:

Roche compelled a portfolio review of a very significant early clinical pipeline, with an emphasis on those programs predicated on precision medicine, which is targeted therapy on driver mutations where they can select patients in Phase I, coupled with the diagnostic where the Phase II is tantamount to a Phase III in terms of patient selection. This drug candidate does not meet that emphasis. It's by design meant to be used in combination with drugs that induce tumor necrosis factor. And this is one of the highest quality programs that we have had the privilege to review, and we're very pleased that we've been able to in-license it.

The mechanism of action is that it induces apoptosis by liberating the IAP blockade. IAPs basically interfere with intrinsic apoptosis as well as extrinsic tumor necrosis factor family receptor pathways. This drug synergizes with TNF and chemotherapeutic agents which induce TNF. And I'll show you some supporting data on that in a moment. Clinical status Phase I was completed by Genentech. We are going to have an oral presentation at ASCO on that data. And that we expect to launch a Phase II campaign in the second half of this year.

Just a primer, IAP activity, this is a hallmark of cancer that tumors are able to invade the apoptotic cascade. The body tries to induce apoptosis intrinsically through a number of mechanisms that will induce the apoptotic cascade and IAPs basically protect tumor cells from accessing caspase, either intrinsic or extrinsic through TNF. IAP proteins play a critical role in evasion of apoptosis, and they also are critical in the TNF receptor family signaling in blocking the induction of apoptosis through TNF.

So this slide generated by Genentech demonstrates that if you take a tumor xenograft from a model which has TNF over-expression but are not undergoing apoptosis and you expose that model to an IAP inhibitor, you release the buffer and basically allow the apoptotic cascade to be induced. And that's what you see here. This is a breast cancer model from an inflammatory breast cancer model where these are TNF over-expressors. But they are not undergoing apoptosis because of the protection afforded by IAPs. When you use 427, that's 4 hours post single dose exposure, you see a very dramatic measurement of caspase, which is indicative of the induction of the apoptotic cascade.

This is also Genentech data showing the synergy of using 427 in preclinical models when you combine it with TNF-inducing chemotherapies. In the first model, again, this is an inflammatory model where these breast cancer xenografts are expressing endogenous levels of TNF on their own. So if you use 427 as a single agent, you are seeing apoptosis and an inhibition of growth. 5-FU will induce further TNF, but if you use the 2 agents together, you're seeing a really nice synergy when you combine 427 with 5-FU. It's releasing that apoptotic cascade, basically allowing for -- looks here like approximately 50% additional reduction of tumor mass. And that has been replicated in the pancreatic cancer model using it with gemcitabine, also known to induce TNF. You see good synergy when you combine 427 with a TNF-inducing agent.

So Phase I trial was completed by Genentech, 42 patients were treated. No maximum tolerated dose was reached. The exposure basically is equivalent to preclinically defined IC90, so we're very encouraged. It was rapid -- demonstration of rapid down regulation of cIAP target in the peripheral blood cells as well as tumor biopsies. Importantly, we had 2 patients with single-agent complete response. We had an ovarian patient as well as a MALT lymphoma patient. So we're accessing the potential use of this as a monotherapy. We need further evidence of the mechanistic rationale of that. We had 4 patients with stable disease of greater than or equal to 3 months. Again, it's important that I emphasize this. As a single agent, you don't expect this class of drug to work this well as a single agent. So we're very encouraged by the data that was generated. And the abstract was selected for oral presentation at ASCO this coming week -- this weekend.

Phase II development campaign, we will be launching second half of this year. And we'll be treating Her2-negative breast cancer patients in combination with Xeloda. Xeloda is known to induce TNF expression and has quite a bit of data demonstrating the 427 modulates TNF signaling towards apoptosis and synergizes with Xeloda. We look forward to launching that company. And again, we're also accessing the potential application as a monotherapy.

So in summary, this is a potent antagonist of the IAP proteins. It's already available. This drug came from Genentech, a very high-quality data package. See the closest competitor is a Novartis program, which is now entering a Phase II in ovarian cancer. Very encouraging data they presented in the poster showing their drug in combination with paclitaxel also. We believe we're in a very good position. Breast cancer with Xeloda, we believe is an attractive indication for us to demonstrate this synergy, and we look forward to providing you with updates as we launch that Phase II campaign.

And now I'm going to very briefly touch upon our partnership with Debiopharm, which is for Debio 0932, which is the designation of our small molecule Hsp90 inhibitor that we've partnered with Debiopharm. This is in a Phase I/II campaign. This is a second-generation orally available small molecule. It's a non-geldanamycin, so this drug does not have the toxicities that were associated with geldanamycin derivatives. The target is Hsp90. The mechanism of action of Hsp90s, as the name designates, heat shock protein, is when cells are stressed, the HSPs are typical up-regulated to protect and chaperone proteins from being degradated, particularly where we believe this has application -- is in combination with chemotherapies, which are adding stress to protein integrity, but also as a single agent, potentially, where you'll have mutant driver proteins that are unstable without HSP protecting them. And that's what we saw in the Phase I as a single agent.

Of 8 non-small cell lung cancer patients, we had a partial response in a KRAS mutant patient. That was very encouraging because what that's what we expected to see. And then we had 4 stable disease. The program is currently in a Phase I/II development campaign for non-small cell lung cancer in combination with standard of care. That's designated as a HALO study. Debiopharm has an exclusive worldwide license from Curis that was launched in August of 2009. The total deal value is $90 million in potential milestones of upfront and milestone payments and then we will receive royalty upon net sales.

They've progressed the asset through Phase I, they're now in a Phase I/II. The Phase II portion of that HALO study is anticipated in 2014, which will trigger a milestone payment. Which brings us to our financial data and projections. I think at this point, I'd like to just underscore that Curis is in a very solid position financially, which underscores how we started off with saying this was a derisked model. We have a very good cash position. We have about 2 years of cash right now, not incorporating the additional infusion of foregoing milestones. We have increasing revenues with Erivedge, which we think will continue to put is in a very good position to supplement and support our proprietary programs.

And again, what I want to emphasize here in closing is where I began. This business model has a significant amount of potential with our proprietary programs with a number of value-creating inflection points over the next coming months. We don't believe our current valuation captures the potential of our proprietary programs, let alone, just Erivedge, as well as Debiopharm.

So coming up, we have milestone readouts of Erivedge for the operable study. The European approval, continued market expansion. Milestone triggering upon European approval. With 907, we have data readouts, this is open label obviously. We expect the Phase I dose escalation study to be completed by the end of the year. We're also anticipating the potential filing for surveying 907 in solid tumors. And then with 427, we anticipate the filing of our Phase II campaign in the second half of this year.

So we have a few minutes for Q&A session and I want to thank you for your attention. Thank you very much.

Question-and-Answer Session

Unknown Analyst

Any questions? Maybe I'll ask one quick one. It's just -- it seems like you guys have a lot going on and I'm just kind of curious when we're seating here 12 months from now, where do you think the company kind of will be?

Daniel R. Passeri

Yes. It's an important question, because we think this next 6 to 12 months is really an important transition. We are clearly evolving more and more capabilities and capacities in clinical development. We think with increasing Erivedge revenues, progress with 907, progress with 427, we'll be in an excellent position in a year from now, with -- hopefully with demonstrated competitive positioning of 907. I think 427 is a relatively new target for the financial markets to understand. I think I would welcome everyone to look at the Novartis data on their compound. It's a very important area, this apoptotic regulation. A number of companies are developing antibodies, which play a role in this same mechanism. So I think in about 12 months, we'll be very well-positioned with a clearly articulated value proposition with our proprietary programs. And then, we think, the Erivedge asset, will be protecting investors on the downside with an increasing floor.

Unknown Analyst

All right. Any questions?

Daniel R. Passeri

All right. Thank you very much for your attention.

Unknown Analyst

Thanks, Daniel.

Daniel R. Passeri

All right. Thanks.

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