-- Company Announces $45 million Debt Transaction
with HealthCare Royalty Partners Secured with Future Erivedge®
Royalty --
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, today reported its
financial results for the fourth quarter and year ended
December 31, 2016.
"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) 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 Annual Meeting and
EORTC-NCI-AACR 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’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 ActivitiesCuris 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
Conference Call Information Curis
management will host a conference call today, March 9, 2017,
at 8:30 a.m. EST, to discuss these financial results, as well as
provide a corporate update.
To access the live conference call, please dial (877) 868-1829
from the United States or (253) 237-1135 from other locations,
shortly before 8:30 a.m. EST. The conference ID number is 84640331.
The conference call can also be accessed on the Curis website at
www.curis.com in the Investors section.
About HealthCare Royalty PartnersHCR is a
private investment firm that purchases royalties and uses debt-like
structures to invest in commercial or near-commercial stage life
science assets. HCR has $3.4 billion in cumulative capital
commitments with offices in Stamford (CT), San Francisco and
Boston. Over the past decade, HCR's senior professionals have
completed more than 60 healthcare investments. For more
information, visit www.healthcareroyalty.com.
About Curis, Inc. Curis is a biotechnology
company seeking to develop and commercialize innovative and
effective drug candidates for the treatment of human cancers,
including its lead development candidate, CUDC-907 that is being
investigated in clinical studies in patients with lymphomas and
solid tumors. Curis is also engaged in a broad collaboration
with Aurigene in the areas of immuno-oncology and precision
oncology. As part of this collaboration, Curis has exclusive
licenses to oral small molecule antagonists of the PD1 and VISTA
pathways, including PDL1/VISTA antagonist CA-170, and oral small
molecule antagonists of the PD1 and TIM3 pathways, including
PDL1/TIM3 antagonist CA-327, as well as to molecules designed to
inhibit the IRAK4 kinase, including CA-4948. Curis is
currently conducting a Phase 1 trial of CA-170in patients with
advanced solid tumors and lymphomas. Curis is also party to a
collaboration with Genentech, a member of the Roche Group, under
which Genentech and Roche are commercializing Erivedge® for the
treatment of advanced basal cell carcinoma, and are further
developing Erivedge in other diseases including idiopathic
pulmonary fibrosis and myelofibrosis. For more information, visit
Curis's website at www.curis.com.
Cautionary Note Regarding Forward-Looking
Statements:This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including without limitation statements
regarding the plans, strategies and objectives of management for
future operations; the Company’s plans to advance its development
programs, including the timing of IND filings for CA-327 and
CA-4948; and the expected closing of the royalty financing
transaction. Forward-looking statements may contain the words
"believes," "expects," "anticipates," "plans," "seeks,"
"estimates," "assumes," "will," "may," "could" or similar
expressions. These forward-looking statements are not guarantees of
future performance and involve risks, uncertainties, assumptions
and other important factors that may cause actual results to be
materially different from those indicated by such forward-looking
statements. For example, Curis may experience adverse results,
delays and/or failures in its drug development programs and may not
be able to successfully advance the development of its drug
candidates in the time frames it projects, if at all. Curis's drug
candidates may cause unexpected toxicities, fail to demonstrate
sufficient safety and efficacy in clinical studies and/or may never
achieve the requisite regulatory approvals needed for
commercialization. Favorable results seen in preclinical studies
and early clinical trials of Curis's drug candidates may not be
replicated in later trials. There can be no guarantee that the
collaboration agreement with Aurigene will continue for its full
term, that Curis or Aurigene will each maintain the financial and
other resources necessary to continue financing its portion of the
research, development and commercialization costs, or that the
parties will successfully discover, develop or commercialize drug
candidates under the collaboration. Regulatory authorities may
determine to delay or restrict Genentech's and/or Roche's ability
to continue to develop or commercialize Erivedge in BCC. Erivedge
may not demonstrate sufficient or any activity to merit its further
development in disease indications other than BCC. Competing drugs
may be developed that are superior to Erivedge. Curis faces risks
relating to its wholly-owned subsidiary's royalty-collateralized
loan transaction, including the risk that it may not receive
sufficient levels of royalty revenue from sales of Erivedge to
satisfy the debt obligation or may otherwise lose its rights to
royalties and royalty-related payments as a result of a foreclosure
of the loan. Curis requires substantial additional capital to fund
its business in the near term and such capital may not be available
on reasonable terms, or at all. Curis faces substantial
competition. Curis also faces risks relating to potential adverse
decisions made by the FDA and other regulatory authorities,
investigational review boards, and publication review bodies. Curis
may not obtain or maintain necessary patent protection and could
become involved in expensive and time consuming patent litigation
and interference proceedings. Unstable market and economic
conditions and unplanned expenses may adversely affect Curis's
financial conditions. The royalty financing transaction with
Healthcare Royalty may not close as anticipated. Important
factors that may cause or contribute to such differences include
the factors set forth under the caption “Risk Factors” in our in
our most recent Form 10-K and Form 10-Q and the factors that are
discussed in other filings that we periodically make with the
Securities and Exchange Commission (“SEC”).
In addition, any forward-looking statements represent the views
of Curis only as of today and should not be relied upon as
representing Curis's views as of any subsequent date. Curis
disclaims any intention or obligation to update any of the
forward-looking statements after the date of this press release
whether as a result of new information, future events or otherwise,
except as may be required by law.
CURIS, INC.CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
|
(UNAUDITED)(In thousands,
except share and per share data) |
|
|
|
Three months ended |
|
Year ended |
|
|
December 31, |
|
December 31, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
|
|
|
Royalties |
|
$ |
2,407 |
|
|
$ |
2,033 |
|
|
$ |
7,810 |
|
|
$ |
8,031 |
|
Research
and development, net |
|
(45 |
) |
|
59 |
|
|
(283 |
) |
|
(153 |
) |
Total
revenues |
|
2,362 |
|
|
2,092 |
|
|
7,527 |
|
|
7,878 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Costs of
royalty revenues |
|
121 |
|
|
103 |
|
|
399 |
|
|
406 |
|
Research
and development |
|
9,159 |
|
|
12,041 |
|
|
31,590 |
|
|
26,699 |
|
In-process research and development |
|
- |
|
|
- |
|
|
17,989 |
|
|
24,348 |
|
General
and administrative |
|
3,845 |
|
|
3,194 |
|
|
15,588 |
|
|
12,906 |
|
Total
operating expenses |
|
13,125 |
|
|
15,338 |
|
|
65,566 |
|
|
64,359 |
|
|
|
|
|
|
|
|
|
|
Net loss from
operations |
|
(10,763 |
) |
|
(13,246 |
) |
|
(58,039 |
) |
|
(56,481 |
) |
|
|
|
|
|
|
|
|
|
Interest income |
|
80 |
|
|
573 |
|
|
405 |
|
|
825 |
|
Interest expense |
|
(652 |
) |
|
(788 |
) |
|
(2,777 |
) |
|
(3,325 |
) |
Other expense, net |
|
(572 |
) |
|
(215 |
) |
|
(2,372 |
) |
|
(2,500 |
) |
Net
loss |
|
(11,335 |
) |
|
(13,461 |
) |
|
(60,411 |
) |
|
(58,981 |
) |
|
|
|
|
|
|
|
|
|
Basic and diluted net
loss per common share |
|
$ |
(0.08 |
) |
|
$ |
(0.10 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.48 |
) |
Basic and diluted
weighted average common shares outstanding |
|
140,715,621 |
|
|
128,501,098 |
|
|
132,785,687 |
|
|
123,365,195 |
|
CURIS, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS |
|
(UNAUDITED)(In
thousands) |
|
|
|
December 31, 2016 |
|
December 31, 2015 |
ASSETS |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents
and investments |
|
$ |
44,485 |
|
|
$ |
82,191 |
|
Investments –
restricted |
|
153 |
|
|
153 |
|
Accounts
receivable |
|
2,459 |
|
|
2,106 |
|
Property and equipment,
net |
|
413 |
|
|
278 |
|
Goodwill |
|
8,982 |
|
|
8,982 |
|
Other assets |
|
1,260 |
|
|
1,255 |
|
Total
assets |
|
$ |
57,752 |
|
|
$ |
94,965 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Accounts payable,
accrued expenses and other liabilities |
|
$ |
8,626 |
|
|
$ |
6,290 |
|
Debt obligations,
net |
|
19,860 |
|
|
24,165 |
|
Total
liabilities |
|
28,486 |
|
|
30,455 |
|
Total stockholders'
equity |
|
29,266 |
|
|
64,510 |
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
57,752 |
|
|
$ |
94,965 |
|
For More Information:
James E. Dentzer
Chief Financial Officer & Chief Administrative Officer
Curis, Inc.
617-503-6500
jdentzer@curis.com
Media Contact
David Schull
Russo Partners
(212) 845-4271
david.schull@russopartnersllc.com
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