Curis, Inc. (NASDAQ:CRIS) Q1 2019 Results Earnings Conference Call May 14, 2019 4:30 PM ET
Bill Steinkrauss - VP, Finance
James Dentzer - President and CEO
Bob Martell - Head of R&D
Conference Call Participants
Good afternoon. And welcome to the Curis First Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to the Company's Vice President of Finance, Bill Steinkrauss. Please go ahead.
Thank you, operator, and welcome to Curis' first quarter 2019 earnings call. Before we begin, I would encourage everyone to go to the Investors section of the Company's website at www.curis.com to find our first quarter 2019 earnings release and related financial tables.
I would like to also remind everyone that during the call, management 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 actual results may differ materially. For additional details, please see our SEC filings.
Now, I will turn the call over to our President and Chief Executive Officer, Jim Dentzer.
Thank you, Bill. Good afternoon everyone, and thank you for joining us today for our first quarter 2019 earnings call and business update. Joining me today are Bill Steinkrauss, our Vice President of Finance who will provide an overview of our financial results and Bob Martell, our Head of R&D. Bob, Bill and I will be available to answer your questions during the Q&A portion of the call.
So far, 2019 is turning out to be a transformational year for Curis. In the first year with our new leadership team, we have leveraged our fast track designation from the FDA, pressed on the accelerator on clinical execution and in a unique revenue sharing partnership with Oberland Capital raised more cash than our market cap without any dilution. It’s been an incredible start to the year and we're moving full steam ahead.
Now for an update on our novel pipeline of three first-in-class therapeutics. Fimepinostat, our anti-MYC program targets both the genetic transcription and the protein degradation of MYC, a classic oncogene that has stymied companies and academic labs for decades. With fimepinostat, Curis is charting new ground.
In clinical studies to-date, fimepinostat had shown a 23% ORR, a median duration of response of 13.6 months and provided clear benefit, even in the Double Hit population of DLBCL, the patients with the most challenging prognosis.
In our current clinical trial, we are targeting this Double Hit population specifically. The Double Hit of Double Hit Lymphoma, means patients have a translocation in both the MYC gene and the BCL2 gene. Our clinical trial treats these patients with a combination therapy of an anti-MYC drug fimepinostat with an anti-BCL2 drug, venetoclax. We think it’s the perfect scientific solution for a perfectly intractable disease.
Our second program is CA-4948, which inhibits IRAK4 a critical component of the myddosome in the TLR pathway, which leads downstream to B-cell proliferation. This regulation of this pathway is known to cause cancer yet-to-date there are no approved therapies targeting it. We now have a therapy that blocks this pathway.
Earlier this quarter, we announced that our ongoing clinical trial has advanced [ph] to the 200 milligram BID dosing level. As a reminder, it was at this concentration that we began to see efficacy in the lab. As you can imagine, we are very excited to get to this level in patients and we look forward to reporting data in this study later this summer.
Our third program is CA-170, our anti-VISTA program, which we are developing with our partner Aurigene. After several articles were published last year, highlighting the importance of VISTA as an oncology target, we ramped up our internal lab work and initiated a clinical study in mesothelioma, a disease characterized by high VISTA expression.
Earlier this year, we said that we expected to fully enroll this study in the first half of this year. We are pleased to report that enrolment was completed ahead of schedule. We are now fully enrolled and looking forward to reporting initial clinical data later this year.
Six months ago, we set an ambitious goal. I'm sure some people thought at the time it was a bit too ambitious. We said, we were going to cut our cash burn by 27% and at the same time produce more clinical data, more quickly than ever before, and that we would cut our cash burn to $8 million a quarter.
Today, we are reporting that our actual operating expenses for Q1 were $7.3 million. We said we would report initial data in all three studies in 2019. As of today, May 14th, I am pleased to report that all three studies are currently on track, or ahead of schedule.
Perhaps the biggest positive surprise for shareholders so far this year, was the Erivedge revenue partnership we announced with Oberland Capital. With this transaction, we sold part of one of our programs, and raised more cash than our market cap. With an upfront representing more than half a decade of revenue, we eliminated the downside risk of Erivedge. At the same time, we are splitting the upside of Erivedge 65-35 with Curis getting the 65.
It was a transformational transaction for Curis and it ensures that we have sufficient cash to fund all three programs to their value creating catalysts and beyond. Six months ago, we promised to reduce our expenses, increase our focus on clinical execution, and unlock the significant value we saw at Curis. As we sit here today, we are hitting on all cylinders. We are not yet finished, but we are very proud of our progress so far.
With that, I'll turn the call over to Bill for a discussion of our financial results. Bill?
Thank you, Jim. Now, for an update on our financial results. For the first quarter of 2019, we reported a net loss of $9.9 million or $0.30 per basic and fully diluted share as compared to a net loss of $10.7 million or $0.33 per basic and fully diluted share for the same prior year period.
Revenues were $1.8 million and $2.5 million for the first quarter 2019 and 2018 respectively. Revenues for both periods comprised primarily of royalty revenues recorded on Genentech and Roche's net sales of Erivedge.
Operating expenses were $7.3 million for the first quarter of 2019, as compared to $12.4 million for the same period in 2018.
Research and development expenses were $4.1 million for the first quarter of 2019 as compared to $8.3 million for the same period in 2018. The decrease in research and development expense was primarily due to decreased cost related to clinical and manufacturing activities and decreased employee related expenses.
General and administrative expenses were $3.1 million for the first quarter of 2019 as compared to $4 million for the same period in 2018. The decrease in general administrative expenses was driven primarily by lower personnel, legal and stock based compensation for the period.
Other expense was $4.3 million for the first quarter of 2019 as compared to $0.8 million for the same period in 2018. Other expense primarily consisted of the loss on debt extinguishment of $3.5 million and interest expense of $0.8 million related to Curis royalties, wholly owned subsidiary of Curis debt obligations.
As of March 31, 2019, our cash, cash equivalents and investments, totaled $42.8 million and there were approximately 33.2 million shares of common stock outstanding. Lastly, I would like to provide some additional details on how the transaction with Oberland Capital that we announced in March is reflected in our first quarter 2019 results.
To recap the key elements of this transaction, we sold a portion of our future Erivedge royalty revenue to Oberland in exchange for up to $135.7 million. $65 million was received as non-refundable upfront payment, and we may earn up to an additional $70.7 million in potential future milestones.
With the upfront proceeds, we paid off our debt, and added the remaining $28 million to the balance sheet. While we have sold certain rights to future royalties under U.S. Generally Accepted Accounting Principles, this transaction is required to be recorded as a liability on our balance sheet.
The liability represents the present value of the expected future royalties to be received. Each period going forward, we will reduce the liability for payments made to Oberland as well as record non-cash imputed interest expense to account for the time value of money.
Again, it is important to note that despite the accounting presentation, the upfront payment received by Curis is non-refundable. This liability represents our expected payments of future royalties, and we are only obligated to pay these amounts as royalties are paid to us.
In closing, we are very excited about this deal for Curis and our shareholders. We look forward to our partnership with Oberland Capital and the continued success of Erivedge.
With that, we'll open the call for questions. Operator?
Showing no questions, this concludes our question and answer session. I would like to turn the conference back over to the company's President and Chief Executive Officer James Dentzer for any closing remarks.
Thank you everyone and thank you operator. I'd like to end today's conference call by thanking the Curis team for their continuous hard work and our partner Aurigene for the productive relationships and shared vision in making a difference in patient care.
I’d also like to thank our partners, Genentech and Roche for the commercialization work that they do with our approved drug Erivedge, as well as our investigators for their support and dedication to the development of truly innovative therapeutics.
Most importantly, I would like to thank the patients in our clinical studies and their families for being an essential part of the process of developing the new generation of targeted drugs for the treatment of cancer. Thank you everyone.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.