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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2021
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from
to
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Commission File Number: 000-30347
CURIS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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04-3505116 |
(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer
Identification No.) |
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128 Spring Street, Building C - Suite 500, Lexington, Massachusetts
02421
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(Address of Principal Executive Offices) (Zip Code) |
Registrant’s Telephone Number, Including Area Code:
(617) 503-6500
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
Common Stock, Par Value $0.01 per share |
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CRIS |
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Nasdaq Global Market |
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90
days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.:
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). ☐ Yes ☒ No
As of May 10, 2021, there were 91,535,272 shares of the
registrant’s common stock, par value $0.01 per share,
outstanding.
CURIS, INC. AND SUBSIDIARIES QUARTERLY REPORT ON FORM
10-Q
Table of Contents
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Page
Number |
PART I. |
FINANCIAL INFORMATION |
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Item 1. |
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Item 2. |
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Item 3. |
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Item 4. |
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PART II. |
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Item 1A. |
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Item 6. |
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Cautionary Note Regarding Forward-Looking Statements and Industry
Data
This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995, which involve risks and
uncertainties. All statements other than statements of historical
fact contained in this report are statements that could be deemed
forward-looking statements, including without limitation any
statements with respect to the plans, strategies and objectives of
management for future operations; statements concerning product
research, development and commercialization plans, timelines and
anticipated results; statements of expectation or belief;
statements with respect to clinical trials and studies; statements
with respect to royalties and milestones; statements with respect
to the therapeutic potential of drug candidates; expectations of
revenue, expenses, earnings or losses from operations, or other
financial results; and statements of assumptions underlying any of
the foregoing. Without limiting the foregoing, the words
“anticipate(s)”, “believe(s)”, “focus(es)”, “could”, “estimate(s)”,
“expect(s)”, “intend(s)”, “may”, “plan(s)”, “seek(s)”, “will”,
“strategy”, “mission”, “potential”, “should”, “would" and other
similar language, whether in the negative or affirmative, are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words.
Forward-looking statements may include, but are not limited to,
statements about:
•the
initiation, timing, progress and results of future preclinical
studies and clinical trials, and our research and development
programs;
•our
plans to develop and commercialize our drug
candidates;
•our
collaborators’ plans to commercialize Erivedge;
•our
ability to establish and maintain collaborations or obtain
additional funding;
•the
timing or likelihood of regulatory filings and
approvals;
•the
implementation of our business model, strategic plans for our
business, drug candidates and technology;
•our
commercialization, marketing and manufacturing capabilities and
strategy;
•the
rate and degree of market acceptance and clinical utility of our
products;
•our
competitive position;
•our
intellectual property position;
•developments
and projections relating to our competitors and our
industry;
•the
potential of CA-4948, CI-8993, CA-170, fimepinostat, CA-327, and
other drug candidates that we in-license, or may elect to
in-license, or may acquire in the future;
•our
estimates of the period in which we anticipate that existing cash
and cash equivalents will enable us to fund our current and planned
operations;
•impacts
resulting from the COVID-19 pandemic and responsive actions
relating thereto;
•our
ability to maintain our listing on the Nasdaq Global Market;
and
•our
estimates regarding expenses, future revenue, capital requirements
and needs for additional financing.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results
could differ materially from those anticipated in these
forward-looking statements as a result of various factors. We
therefore caution you against relying on any of these
forward-looking statements. Important factors that could cause
actual results to differ materially from those in these
forward-looking statements include the factors discussed below
under the heading “Risk Factor Summary,” and the risk factors
detailed further in Item 1A, "Risk Factors" of Part 1 of our Annual
Report on Form 10-K for the year ended December 31, 2020 and, if
applicable, those included under Part II, Item 1A of this Quarterly
Report on Form 10-Q.
This report includes statistical and other industry and market data
that we obtained from industry publications and research, surveys,
and studies conducted by third parties as well as our own
estimates. All of the market data used in this report involve a
number of assumptions and limitations, and you are cautioned not to
give undue weight to such data. Industry publications and
third-party research, surveys, and studies generally indicate that
their information has been obtained from sources believed to be
reliable, although they do not guarantee the accuracy or
completeness of such information. Our estimates of the potential
market opportunities for our drug candidates include several key
assumptions based on our industry knowledge, industry publications,
third-party research, and other surveys, which may be based on a
small sample size and may fail to accurately reflect market
opportunities. While we believe that our internal assumptions are
reasonable, no independent source has verified such
assumptions.
The forward-looking statements included in this report represent
our estimates as of the filing date of this report. We specifically
disclaim any obligation to update these forward-looking statements
in the future. These forward-looking statements should not be
relied upon as representing our estimates or views as of any date
subsequent to the date of this report.
Risk Factor Summary
Investment in our securities involves risk. You should carefully
consider the following summary of what we believe to be the
principal risks facing our business, in addition to the risks
described more fully in Item 1A, “Risk Factors” of Part I of our
Annual Report on Form 10-K for the year ended December 31, 2020,
and, if applicable, those included under Part II, Item 1A of this
Quarterly Report on Form 10-Q and other information included in
this report. The risks and uncertainties described below are not
the only risks and uncertainties we face. Additional risks and
uncertainties not presently known to us or that we presently deem
less significant may also impair our business
operations.
If any of the following risks occurs, our business, financial
condition, and results of operations and future growth prospects
could be materially and adversely affected, and the actual outcomes
of matters as to which forward-looking statements are made in this
report could be materially different from those anticipated in such
forward-looking statements.
•We
have incurred substantial losses, expect to incur substantial
losses for the foreseeable future and may never generate
significant revenue or achieve or maintain
profitability.
•We
will require substantial additional funding, and if we are unable
to raise capital when needed, we could be forced to delay, reduce
or eliminate our drug development programs or commercialization
efforts.
•We
face risks related to the novel coronavirus pandemic, COVID-19,
which has delayed and may continue to delay our ability to complete
our ongoing clinical trials and the enrollment and initiation of
future clinical trials, and may disrupt regulatory activities,
cause substantial disruption in the financial markets and economy,
or have other adverse effects on our business and
operations.
•We
face substantial competition, and our competitors may discover,
develop or commercialize drugs before or more successfully than we
do. Furthermore, the amount of royalty revenue we received from
sales of Erivedge has been adversely affected by a competing drug,
and may be further affected in the future.
•We
depend heavily on the success of our most advanced drug candidates,
including CA-4948 and CI-8993. If we are unable to initiate or
complete the clinical development of, obtain marketing approval for
or successfully commercialize our drug candidates, either alone or
with a collaborator, or if we experience significant delays in
doing so, our business will be materially harmed.
•If
clinical trials of any drug candidates that we, or any
collaborators, may develop fail to satisfactorily demonstrate
safety and efficacy to the U.S. Food and Drug Administration, or
FDA, and other regulators, we, or any collaborators, may incur
additional costs or experience delays in completing, or ultimately
be unable to complete, the development and commercialization of
these drug candidates.
•Adverse
events or undesirable side effects caused by, or other unexpected
properties of, drug candidates that we develop may be identified
during development and could delay or prevent their marketing
approval or limit their use.
•We
rely on Genentech and Roche for the successful commercialization of
Erivedge, and if they do not successfully commercialize Erivedge
for advanced BCC, our future prospects may be substantially
harmed.
•We
rely in part on third parties to conduct clinical trials of our
internally-developed and in-licensed product candidates and for the
research, development and commercialization of certain programs,
and those third parties may not perform satisfactorily, including
by failing to meet deadlines for the completion of such trials,
research or testing.
•In
the event of a default by us or Curis Royalty under the Oberland
Purchase Agreement, we could, among other consequences, lose our
retained rights to future royalty and royalty related payments on
commercial sales of Erivedge, and our ability to enter into future
arrangements may be inhibited, all of which could have a material
adverse effect on our business, financial condition and stock
price.
•If
we are unable to obtain and maintain sufficient patent protection
for our technologies and drugs, or our licensors are not able to
obtain and maintain sufficient patent protection for the
technologies or drugs that we license from them, or if the scope of
the patent protection is not sufficiently broad, our competitors
could develop and commercialize drugs similar or identical to ours,
and our ability to successfully commercialize our drug candidates
may be adversely affected.
•If
we or our collaborators are not able to obtain, or if there are
delays in obtaining, required regulatory approvals, we or they will
not be able to commercialize, or will be delayed in
commercializing, our drug candidates, and our ability to generate
revenue will be materially impaired.
PART I—FINANCIAL INFORMATION
Item 1. UNAUDITED FINANCIAL
STATEMENTS
CURIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
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March 31, 2021 |
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December 31, 2020 |
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
111,031 |
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|
$ |
129,610 |
|
|
|
|
|
Short-term investments |
45,382 |
|
|
38,884 |
|
Accounts receivable |
2,183 |
|
|
3,043 |
|
Prepaid expenses and other current assets |
3,266 |
|
|
1,215 |
|
Total current assets |
161,862 |
|
|
172,752 |
|
Long-term investments |
11,937 |
|
|
14,564 |
|
Property and equipment, net |
620 |
|
|
663 |
|
Restricted cash, long-term |
816 |
|
|
816 |
|
Operating lease right-of-use asset |
6,376 |
|
|
6,578 |
|
Goodwill |
8,982 |
|
|
8,982 |
|
Other assets |
— |
|
|
3 |
|
Total assets |
$ |
190,593 |
|
|
$ |
204,358 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
3,429 |
|
|
$ |
4,166 |
|
Accrued liabilities |
2,062 |
|
|
3,625 |
|
Current portion of operating lease liability |
609 |
|
|
1,731 |
|
Current portion long-term debt |
891 |
|
|
557 |
|
Total current liabilities |
6,991 |
|
|
10,079 |
|
Long-term operating lease liability |
4,881 |
|
|
5,040 |
|
Liability related to the sale of future royalties, net |
56,806 |
|
|
58,235 |
|
Long-term debt |
— |
|
|
334 |
|
Total liabilities |
68,678 |
|
|
73,688 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value—151,875,000 shares authorized;
91,534,272 shares issued and outstanding at March 31, 2021;
151,875,000 shares authorized; 91,502,461 shares issued and
outstanding at December 31, 2020
|
916 |
|
|
915 |
|
Additional paid-in capital |
1,177,824 |
|
|
1,176,647 |
|
Accumulated deficit |
(1,056,816) |
|
|
(1,046,889) |
|
Accumulated other comprehensive income |
(9) |
|
|
(3) |
|
Total stockholders’ equity |
121,915 |
|
|
130,670 |
|
Total liabilities and stockholders’ equity |
$ |
190,593 |
|
|
$ |
204,358 |
|
|
|
|
|
The accompanying notes are an integral part of these Condensed
Consolidated Financial Statements.
CURIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
2021 |
|
2020 |
Revenues, net: |
|
|
|
Royalties |
$ |
2,187 |
|
|
$ |
2,515 |
|
Other revenue |
— |
|
|
211 |
|
Contra revenue, net |
2 |
|
|
(17) |
|
Total revenues, net |
2,189 |
|
|
2,709 |
|
Costs and expenses: |
|
|
|
Cost of royalties |
109 |
|
|
125 |
|
Research and development |
6,757 |
|
|
7,473 |
|
General and administrative |
4,123 |
|
|
3,593 |
|
Total costs and expenses |
10,989 |
|
|
11,191 |
|
Loss from operations |
(8,800) |
|
|
(8,482) |
|
Other expense: |
|
|
|
|
|
|
|
Interest income |
46 |
|
|
50 |
|
Imputed interest expense related to the sale of future
royalties |
(1,173) |
|
|
(1,298) |
|
|
|
|
|
Other income (expense), net
|
— |
|
|
21 |
|
Total other expense |
(1,127) |
|
|
(1,227) |
|
Net loss |
$ |
(9,927) |
|
|
$ |
(9,709) |
|
Net loss per common share (basic and diluted) |
$ |
(0.11) |
|
|
$ |
(0.28) |
|
Weighted average common shares (basic and diluted) |
91,507,518 |
|
|
34,453,189 |
|
Net loss |
$ |
(9,927) |
|
|
$ |
(9,709) |
|
Other comprehensive income: |
|
|
|
Unrealized gain on marketable securities |
(6) |
|
|
— |
|
Comprehensive loss |
$ |
(9,933) |
|
|
$ |
(9,709) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Condensed
Consolidated Financial Statements.
CURIS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(Deficit)
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional Paid-in Capital |
|
|
|
Accumulated Deficit |
|
Accumulated Other Comprehensive (Loss) Income |
|
Total Stockholders’ Equity |
|
Shares |
|
Amount |
|
December 31, 2020 |
91,502,461 |
|
|
$ |
915 |
|
|
$ |
1,176,647 |
|
|
|
|
$ |
(1,046,889) |
|
|
$ |
(3) |
|
|
$ |
130,670 |
|
Recognition of stock-based compensation |
— |
|
|
— |
|
|
1,099 |
|
|
|
|
— |
|
|
— |
|
|
1,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options |
31,811 |
|
|
1 |
|
|
78 |
|
|
|
|
— |
|
|
— |
|
|
79 |
|
Unrealized loss on marketable securities |
— |
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
(6) |
|
|
(6) |
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
|
|
(9,927) |
|
|
— |
|
|
(9,927) |
|
March 31, 2021 |
91,534,272 |
|
|
$ |
916 |
|
|
$ |
1,177,824 |
|
|
|
|
$ |
(1,056,816) |
|
|
$ |
(9) |
|
|
$ |
121,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional Paid-in Capital |
|
|
|
Accumulated Deficit |
|
Accumulated Other Comprehensive (Loss) Income |
|
Total Stockholders’ Deficit |
|
Shares |
|
Amount |
|
December 31, 2019 |
33,241,793 |
|
|
$ |
332 |
|
|
$ |
982,738 |
|
|
|
|
$ |
(1,016,981) |
|
|
$ |
— |
|
|
$ |
(33,911) |
|
Recognition of stock-based compensation |
— |
|
|
— |
|
|
625 |
|
|
|
|
— |
|
|
— |
|
|
625 |
|
Issuance of shares in connection with Aspire Capital Agreement, net
of issuance costs |
3,340,516 |
|
|
34 |
|
|
2,692 |
|
|
|
|
— |
|
|
— |
|
|
2,726 |
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
|
|
(9,709) |
|
|
— |
|
|
(9,709) |
|
March 31, 2020 |
36,582,309 |
|
|
$ |
366 |
|
|
$ |
986,055 |
|
|
|
|
$ |
(1,026,690) |
|
|
$ |
— |
|
|
$ |
(40,269) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Condensed
Consolidated Financial Statements.
CURIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
2021 |
|
2020 |
Cash flows from operating activities: |
|
|
|
Net loss |
$ |
(9,927) |
|
|
$ |
(9,709) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
43 |
|
|
25 |
|
Non-cash lease expense |
202 |
|
|
149 |
|
|
|
|
|
Stock-based compensation expense |
1,099 |
|
|
625 |
|
|
|
|
|
Non-cash imputed interest expense related to the sale of future
royalties |
(20) |
|
|
235 |
|
Non-cash interest expense on investments |
195 |
|
|
25 |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
860 |
|
|
737 |
|
Prepaid expenses and other assets |
(2,049) |
|
|
(248) |
|
Accounts payable and accrued and other liabilities |
(2,301) |
|
|
(689) |
|
Operating lease liability |
(1,281) |
|
|
(166) |
|
Total adjustments |
(3,252) |
|
|
693 |
|
Net cash used in operating activities |
(13,179) |
|
|
(9,016) |
|
Cash flows from investing activities: |
|
|
|
Purchase of investments |
(9,071) |
|
|
— |
|
Sales and maturities of investments |
5,000 |
|
|
5,082 |
|
Purchase of property and equipment |
— |
|
|
(241) |
|
Net cash provided by (used in) investing activities |
(4,071) |
|
|
4,841 |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds of Aspire Capital Agreement, net of issuance
costs |
— |
|
|
3,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock under the Company's
share-based compensation plan |
79 |
|
|
— |
|
Payment of liability of future royalties, net of imputed
interest |
(1,408) |
|
|
(1,723) |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
(1,329) |
|
|
1,277 |
|
Net decrease in cash and cash equivalents and restricted
cash |
(18,579) |
|
|
(2,898) |
|
Cash and cash equivalents and restricted cash, beginning of
period |
130,426 |
|
|
16,399 |
|
Cash and cash equivalents and restricted cash, end of
period |
$ |
111,847 |
|
|
$ |
13,501 |
|
Supplemental cash flow data: |
|
|
|
Accrued issuance costs |
281 |
|
$ |
274 |
|
Property and equipment purchases in accounts payable |
— |
|
|
26 |
|
Cash paid for interest |
1,193 |
|
|
1,062 |
|
Non-cash commitment shares issued to Aspire Capital |
— |
|
|
900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Condensed
Consolidated Financial Statements.
CURIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except share and per share data)
1. Nature
of Business
Curis, Inc. is a biotechnology company focused on the development
of first-in-class and innovative therapeutics for the treatment of
cancer. Throughout these Condensed Consolidated Financial
Statements, Curis, Inc. and its wholly owned subsidiaries are
collectively referred to as “the Company” or “Curis.”
The Company conducts its research and development programs both
internally and through strategic collaborations. The Company’s
clinical stage drug candidates are:
•CA-4948,
an orally available small molecule inhibitor of Interleukin-1
receptor-associated kinase 4 ("IRAK4"), which is currently
undergoing testing in a Phase 1/2 open-label dose escalating
clinical trial in patients with non-Hodgkin lymphomas, including
those with myeloid Differentiation Primary Response Protein 88
(“MYD88”) alterations. The trial was amended to include a
combination study of CA-4948 and ibrutinib, a BTK inhibitor, in
patients with non-Hodgkin lymphomas for which the Company enrolled
the first patient in February 2021. The Company is also conducting
a separate Phase 1/2 open-label, single arm dose escalating and
expansion trial in patients with acute myeloid leukemia (“AML”) and
myelodysplastic syndromes (“MDS”). The study was amended in April
2021 to include dose escalation cohorts of CA-4948 in combination
with azacitadine or venetoclax. In April 2021, CA-4948 was granted
Orphan Drug Designation for the treatment of AML and MDS by the
U.S. Food and Drug Administration ("FDA").
•CI-8993,
a monoclonal antibody designed to antagonize the V-domain Ig
suppressor of T cell activation (“VISTA”) signaling pathway. In
June 2020, the Company announced that the FDA had cleared its
Investigational New Drug (“IND”) application for CI-8993. In
September 2020, enrollment for a Phase 1 trial in patients with
solid tumors commenced. The Company has an option to license
CI-8993 from ImmuNext, Inc. ("ImmuNext").
The Company’s pipeline also includes the following:
•Fimepinostat,
a small molecule that potently inhibits the activity of histone
deacetylase and phosphotidyl-inositol 3 kinase enzymes, which has
been granted Orphan Drug Designation and Fast Track Designation for
the treatment of diffuse large B-cell lymphoma, by the FDA in April
2015 and May 2018, respectively. The Company is currently
evaluating future studies for fimepinostat.
•CA-170,
a small molecule antagonist of VISTA and PDL1, for which the
Company announced initial data from a clinical study in patients
with mesothelioma, in conjunction with the Society of lmmunotherapy
of Cancer conference in November 2019. Based on this data, no
further patients will be enrolled in the study. The Company is
currently evaluating future studies for CA-170.
•CA-327,
a small molecule antagonist of TIM3 and PDL1, is a pre-IND stage
oncology drug candidate.
The Company is party to a collaboration with Genentech Inc.
(“Genentech”), a member of the Roche Group, under which Genentech
and F. Hoffmann-La Roche Ltd (“Roche”) are commercializing
Erivedge® (vismodegib), a first-in-class orally administered small
molecule Hedgehog signaling pathway antagonist. Erivedge is
approved for the treatment of advanced basal cell carcinoma
(“BCC”).
In January 2015, the Company entered into an exclusive
collaboration agreement with Aurigene Discovery Technologies
Limited (“Aurigene”) for the discovery, development and
commercialization of small molecule compounds in the areas of
immuno-oncology and precision oncology, which was amended in
September 2016 and February 2020.
As of March 31, 2021, the Company had licensed four programs under
the Aurigene collaboration.
•IRAK4
Program - a precision oncology program of small molecule inhibitors
of IRAK4. The development candidate is CA-4948, an orally available
small molecule inhibitor of IRAK4.
•PD1/VISTA
Program - an immuno-oncology program of small molecule antagonists
of PD1 and VISTA immune checkpoint pathways. The development
candidate is CA-170, an orally available small molecule antagonist
of VISTA and PDL1.
•PD1/TIM3
Program - an immuno-oncology program of small molecule antagonists
of PD1 and TIM3 immune checkpoint pathways. The development
candidate is CA-327, an orally available small molecule antagonist
of PDL1 and TIM3.
•The
Company exercised its option to license a fourth program, which is
an immuno-oncology program.
The COVID-19 pandemic has had and may continue to have an adverse
effect on the Company’s business, financial condition, results of
operations, and prospects. With respect to ongoing clinical trials,
the anticipated timing of enrollment and the overall timelines of
the trials have experienced delays and could be further delayed to
the extent the Company experiences further delays in enrollment due
to the COVID-19 pandemic. The Company’s ability to collect patient
data in a timely fashion may also be impacted. The Company has
experienced delays in closing down its clinical trial sites related
to its fimepinostat and CA-170 trials due to restrictions on
non-essential workers imposed at those sites in response to
COVID-19, which delayed the winding down of these trials and may
result in additional costs and expenses. In addition, the Company
and its collaborators, third-party contract manufacturers, contract
research organizations and clinical sites could experience delays
or disruptions in supply and release of product candidates and/or
procuring items that are essential for the Company's research and
development activities, including, for example, raw materials used
in the manufacturing of its product candidates, basic medical and
laboratory supplies used in its clinical trials or preclinical
studies, or animals that are used for preclinical testing, in each
case, for which there may be shortages because of ongoing efforts
to address the outbreak. The Company cannot be certain what the
overall impact of the COVID-19 pandemic will be on its
business.
The Company is subject to risks common to companies in the
biotechnology industry as well as risks that are specific to the
Company’s business, including, but not limited to: the Company’s
ability to obtain adequate financing to fund its operations; the
Company’s ability to advance and expand its research and
development programs; the impacts of the COVID-19 pandemic and
responsive actions related thereto; the Company’s relationship with
Aurigene to support development of drug candidates under the
parties’ collaboration agreement; the Company’s reliance on Roche
and Genentech to successfully commercialize Erivedge in the
approved indication of advanced BCC and to progress its clinical
development in indications other than BCC; the ability of the
Company and its wholly owned subsidiary, Curis Royalty, LLC (“Curis
Royalty”) to satisfy the terms of the royalty interest purchase
agreement (the “Oberland Purchase Agreement”) with TPC Investments
I LP and TPC Investments II LP (the "Purchasers") each of which is
a Delaware limited partnership managed by Oberland Capital
Management, LLC, and Lind SA LLC (the "Agent") a Delaware limited
liability company managed by Oberland Capital Management, LLC, as
collateral agent for the Purchasers; the Company’s ability to
obtain and maintain necessary intellectual property protection;
development by the Company’s competitors of new or better
technological innovations; the Company's dependence on key
personnel; the Company’s ability to comply with regulatory
requirements; the Company's ability to obtain and maintain
applicable regulatory approvals and commercialize any approved
product candidates; the Company’s ability to execute on its overall
business strategies and the Company’s ability to maintain its
listing on the Nasdaq Global Market.
The Company’s future operating results will largely depend on the
progress of drug candidates currently in its development pipeline
and the magnitude of payments that it may receive and make under
its current and potential future collaborations. The results of the
Company’s operations have varied and will likely continue to vary
significantly from year to year and quarter to quarter and depend
on a number of factors, including, but not limited to: the timing,
outcome and cost of the Company’s preclinical studies and clinical
trials for its drug candidates; Aurigene’s ability to support
advancement of development candidates under the Company’s
collaboration with Aurigene, as well as the Company’s ability to
further develop programs under this collaboration; and Roche and
Genentech’s ability to successfully commercialize
Erivedge.
The Company will require substantial funds to maintain research and
development programs and support operations. The Company has
incurred net losses and negative cash flows from operations since
its inception. As of March 31, 2021, the Company had an accumulated
deficit of approximately $1.1 billion, and for the three months
ended March 31, 2021, the Company incurred a net loss of $9.9
million and used $13.2 million of cash in operations. The Company
expects to continue to generate operating losses in the foreseeable
future. The Company anticipates that its $168.4 million of existing
cash, cash equivalents and investments at March 31, 2021 will be
sufficient to fund operations for at least 12 months from the date
of filing this Quarterly Report on Form 10-Q.
The Company’s ability to raise additional funds will depend, among
other factors, on financial, economic and market conditions, many
of which are outside of its control and it may be unable to raise
financing when needed, or on terms favorable to the Company. If
necessary funds are not available, the Company will have to delay,
reduce the scope of, or eliminate some of its development programs,
potentially delaying the time to market for or preventing the
marketing of any of its product candidates.
2. Summary
of Significant Accounting Policies
(a)Basis
of Presentation and Principles of Consolidation
The accompanying Condensed Consolidated Financial Statements have
been prepared in accordance with the instructions to Form 10-Q and
Article 8 of Regulation S-X. These statements, however, are
condensed and do not include all disclosures required by accounting
principles generally accepted in the U.S. (“GAAP”), for complete
financial statements and should be read in conjunction with the
Company’s Annual Report on Form 10-K for the year ended December
31, 2020 as filed with the Securities and Exchange Commission
(“SEC”), on March 16, 2021.
In the opinion of the management of the Company, the unaudited
financial statements contain all adjustments (all of which were
considered normal and recurring) necessary for a fair statement of
the Company’s financial position at March 31, 2021; the results of
operations for the three-month periods ended March 31, 2021 and
2020; stockholders' equity (deficit) for the three-month periods
ended March 31, 2021 and 2020; and the cash flows for the
three-month periods ended March 31, 2021 and 2020. The Condensed
Consolidated Balance Sheet at December 31, 2020 was derived from
audited annual financial statements but does not contain all of the
footnote disclosures from the annual financial
statements.
(b)Use
of Estimates and Assumptions
The preparation of the Company’s Condensed Consolidated Financial
Statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts and
disclosure of certain assets and liabilities at the balance sheet
date. Such estimates include the performance obligations under the
Company’s collaboration agreements; the estimated repayment term of
the Company’s debt and related short- and long-term classification;
the collectability of receivables; the carrying value of property
and equipment and goodwill; and the assumptions used in the
Company’s valuation of stock-based compensation and the value of
certain investments and liabilities. Actual results may differ from
such estimates.
These interim results are not necessarily indicative of results to
be expected for a full year or subsequent interim
periods.
The extent to which COVID-19 has had and may continue to have
impacts on the Company’s business and financial results will depend
on numerous evolving factors including, but not limited to: the
magnitude and duration of the COVID-19 pandemic, the extent to
which it has impacted and may continue to impact worldwide
macroeconomic conditions including interest rates, employment rates
and health insurance coverage, the speed of the anticipated
recovery, and governmental and business responses to the pandemic.
The Company assessed certain accounting matters that generally
require consideration of forecasted financial information in
context with the information reasonably available to the Company
and the unknown future impacts of COVID-19 as of March 31, 2021 and
through the date of this report. The Company’s future assessment of
the magnitude and duration of the COVID-19 pandemic, as well as
other factors, could result in material impacts to the Company’s
consolidated financial statements in future reporting
periods.
(c)
Cash Equivalents, Restricted Cash, and Investments
Cash equivalents consist of highly liquid investments purchased
with original maturities of three months or less. All other liquid
investments are classified as marketable securities.
The Company classified $0.8 million and $0.8 million of its cash as
restricted cash, as of March 31, 2021 and December 31, 2020,
respectively. This amount represents the security deposit delivered
to the landlord of the Company's current Massachusetts
headquarters.
The Company's combined cash and restricted cash balances were
$111.8 million and $13.5 million as of March 31, 2021 and
March 31, 2020, respectively, as presented on the Company's
Condensed Consolidated Statements of Cash Flows.
The Company’s short-term investments are marketable debt securities
with original maturities of greater than three months from the date
of purchase, but less than twelve months from the balance sheet
date, and long-term investments are marketable debt securities with
original maturities of greater than twelve months from the balance
sheet. Marketable securities consist of commercial paper, corporate
bonds and notes, and/or government obligations. All of the
Company’s investments have been designated available-for-sale and
are stated at fair value. Unrealized gains and temporary losses on
investments are included in accumulated other comprehensive income
(loss) as a separate component of stockholders’ equity (deficit).
Realized gains and losses, dividends and interest income are
included in other income (expense) in the period during which the
securities are sold. Any premium or discount arising at purchase is
amortized and/or accreted to interest income.
(d)Leases
The Company determines if an arrangement is a lease at contract
inception. Operating lease assets represent the Company's right to
use an underlying asset for the lease term and operating lease
liabilities represent its obligation to make lease payments arising
from the lease. Operating lease assets and liabilities are
recognized at the commencement date of the
lease based upon the present value of lease payments over the lease
term. When determining the lease term, the Company includes options
to extend or terminate the lease when it is reasonably certain that
the Company will exercise that option.
As most of the Company's leases do not provide an implicit interest
rate, the Company uses its incremental borrowing rate, which is
based on rates that would be incurred to borrow on a collateralized
basis over a term equal to the lease payments in a similar economic
environment, in determining the present value of lease
payments.
Right-of-use assets and lease liabilities are recognized at the
lease commencement date based on the present value of lease
payments over the lease term. The lease payment used to determine
the operating lease asset may include lease incentives, stated rent
increases and was recognized as an operating lease right-of-use
asset in the Condensed Consolidated Balance Sheets. The Company's
lease agreements may include both lease and non-lease components,
which are accounted for as a single lease component when the
payments are fixed. Variable payments included in the lease
agreement are expensed as incurred.
The Company's operating lease is reflected in operating lease
right-of-use asset and operating lease liability in the Condensed
Consolidated Balance Sheets. Lease expense for lease payments is
recognized on a straight-line basis over the lease
term.
(e)Revenue
Recognition
The Company’s business strategy includes entering into
collaborative license and development agreements with biotechnology
and pharmaceutical companies for the development and
commercialization of the Company’s drug candidates. The terms of
the agreements typically include non-refundable license fees,
funding of research and development, payments based upon
achievement of clinical development and regulatory objectives, and
royalties on product sales.
License Fees and Multiple Element Arrangements
If a license to its intellectual property is determined to be
distinct from the other performance obligations identified in the
arrangement, the Company will recognize revenues from
non-refundable, up-front fees allocated to the license at such time
as the license is transferred to the licensee and the licensee is
able to use, and benefit from, the license. For licenses that are
bundled with other promises, the Company utilizes judgment to
assess the nature of the combined performance obligation to
determine whether the combined performance obligation is satisfied
over time or at a point in time and, if over time, the appropriate
method of measuring progress for purposes of recognizing revenue
from non-refundable, up-front fees. The Company evaluates the
measure of progress each reporting period and, if necessary, will
adjust the measure of performance and related revenue
recognition.
If the Company is involved in a steering committee as part of a
multiple element arrangement, the Company assesses whether its
involvement constitutes a performance obligation or a right to
participate. Steering committee services that are not determined to
be distinct performance obligations are combined with other
research services or performance obligations required under an
arrangement, if any, in determining the level of effort required in
an arrangement and the period over which the Company expects to
complete its aggregate performance obligations.
Appropriate methods of measuring progress include output methods
and input methods. In determining the appropriate method for
measuring progress, the Company considers the nature of service
that it promises to transfer to the customer. When the Company
decides on a method of measurement, the Company will apply that
single method of measuring progress for each performance obligation
satisfied over time and will apply that method consistently to
similar performance obligations and in similar
circumstances.
If the Company cannot reasonably measure its progress toward
complete satisfaction of a performance obligation because the
Company lacks reliable information that would be required to apply
an appropriate method of measuring progress, but it can reasonably
estimate when the performance ceases or the remaining obligations
become inconsequential and perfunctory, then revenue is not
recognized until the Company can reasonably estimate when the
performance obligation ceases or becomes inconsequential. Revenue
is then recognized over the remaining estimated period of
performance.
Significant management judgment is required in determining the
level of effort required under an arrangement and the period over
which the Company is expected to complete its performance
obligations under an arrangement.
Contingent Research Milestone Payments
Accounting Standards Codification ("ASC") 606 constrains the amount
of variable consideration included in the transaction price in that
either all, or a portion, of an amount of variable consideration
should be included in the transaction price. The variable
consideration amount should be included only to the extent that it
is probable that a significant reversal in the amount of cumulative
revenue recognized will not occur when the uncertainty associated
with the variable consideration is subsequently resolved. The
assessment of whether variable consideration should be constrained
is largely a qualitative one that has two elements: the likelihood
of a change in estimate, and the magnitude thereof. Variable
consideration is not constrained if the potential reversal of
cumulative revenue recognized is not significant, for
example.
If the consideration in a contract includes a variable amount, a
company will estimate the amount of consideration in exchange for
transfer of promised goods or services. The consideration also can
vary if a company’s entitlement to the consideration is contingent
on the occurrence or nonoccurrence of a future event. The Company
considers contingent research milestone payments to fall under the
scope of variable consideration, which should be estimated for
revenue recognition purposes at the inception of the contract and
reassessed ongoing at the end of each reporting
period.
The Company assesses whether contingent research milestones should
be considered variable consideration that should be constrained and
thus not part of the transaction price. This includes an assessment
of the probability that all or some of the milestone revenues could
be reversed when the uncertainty around whether or not the
achievement of each milestone is resolved, and the amount of
reversal could be significant.
GAAP provides factors to consider when assessing whether variable
consideration should be constrained. All of the factors should be
considered, and no factor is determinative. The Company considers
all relevant factors.
Reimbursement of Costs
Reimbursement of research and development costs by third-party
collaborators is recognized as revenue over time provided the
Company has determined that it transfers control (i.e. performs the
services) of a service over time and, therefore, satisfies a
performance obligation according to the provisions outlined in ASC
606-10-25-27,
Revenue Recognition.
Royalty Revenue
The Company recognizes royalty revenues related to Genentech’s and
Roche’s sales of Erivedge. For arrangements that include
sales-based royalties, including milestone payments based on the
level of sales, and where the license is deemed to be the
predominant item to which the royalties relate, the Company
recognizes revenue at the later of (i) when the related sales
occur, or (ii) when the performance obligation to which some or all
of the royalty has been allocated has been satisfied (or partially
satisfied). The Company expects to continue recognizing royalty
revenue from Genentech’s sales of Erivedge in the U.S. and in other
markets where Genentech and Roche successfully obtain marketing
approval, if any (see Note 9). However, a portion of potential
Erivedge royalties will be paid to the Purchasers pursuant to the
Oberland Purchase Agreement (see Note 8).
Contra Revenue, Net
Contra revenue, net represents shared costs, primarily related to
intellectual property, with the Company's collaboration partners,
and reserves for potential royalty reductions.
With respect to each of the foregoing areas of revenue recognition,
the Company exercises significant judgment in determining whether
an arrangement contains multiple elements, and, if so, how much
revenue is allocable to each element. In addition, the Company
exercises its judgment in determining when its significant
obligations have been met under such agreements and the specific
time periods over which the Company recognized revenue, such as
non-refundable, up-front license fees. To the extent that actual
facts and circumstances differ from the Company's initial
judgments, its revenue recognition with respect to such
transactions would change accordingly and any such change could
affect the Company's reported financial results.
Summary
During the three months ended March 31, 2021 and 2020 total gross
revenues were 100% and 92%, respectively, from the Company’s
collaboration with Genentech. In addition to the revenues received
from Genentech, the Company received a milestone payment from a
previously out-licensed technology in the first quarter of 2020
that was recorded in other revenues. There was no such revenues
recorded in the first quarter of 2021.
(f)Segment
Reporting
The Company operates in a single reportable segment, which is the
research and development of innovative cancer
therapeutics.
(g)New
Accounting Pronouncements
Issued, Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments. This standard requires that for most
financial assets, losses be based on an expected loss approach
which includes estimates of losses over the life of exposure that
considers historical, current and forecasted information. Expanded
disclosures related to the methods used to estimate the losses as
well as a specific disaggregation of balances for financial assets
are also required. The targeted transition relief standard allows
filers an option to irrevocably elect the fair value option of ASC
825-10, Financial Instruments-Overall, applied on an
instrument-by-instrument basis for eligible instruments. In
November 2019 the effective date for smaller reporting companies
was extended to January 1, 2023 with the issuance of ASU 2019-10
Financial Instruments-Credit Losses (Topic 326), Derivatives and
Hedging (Topic 815), and Leases (Topic 842) Effective Dates. The
Company adopted ASU 2016-13 as of January 1, 2021 and the adoption
did not have a material impact on the Consolidated Financial
Statements.
3. Fair
Value of Financial Instruments
The Company has adopted the provisions of the FASB Codification
Topic 820,
Fair Value Measurements and Disclosures
(“Topic 820”) for its financial assets and liabilities that are
re-measured and reported at fair value each reporting period and
the non-financial assets and liabilities that are re-measured and
reported at fair value on a non-recurring basis. Fair value is the
price that would be received from selling an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. When determining fair value,
the Company considers the principal or most advantageous market in
which it would transact and consider assumptions that market
participants would use when pricing the asset or liability. Topic
820 establishes a three-level valuation hierarchy for disclosure of
fair value measurements. Financial assets and liabilities are
categorized within the valuation hierarchy based upon the lowest
level of input that is significant to the measurement of fair
value. The three levels of the hierarchy are defined as
follows:
|
|
|
|
|
|
Level 1 |
Quoted prices in active markets for identical assets or
liabilities. |
|
|
Level 2 |
Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities. |
|
|
Level 3 |
Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities. |
In accordance with the fair value hierarchy, the following table
shows the fair value as of March 31, 2021 and December 31, 2020 of
those financial assets and liabilities that are measured at fair
value on a recurring basis, according to the valuation techniques
the Company used to determine their fair value. No financial assets
or liabilities are measured at fair value on a nonrecurring basis
at March 31, 2021 and December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Quoted Prices in
Active Markets
(Level 1) |
|
Other Observable
Inputs (Level 2) |
|
Unobservable
Inputs (Level 3) |
|
Fair Value |
As of March 31, 2021: |
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
Money market funds |
$ |
106,447 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
106,447 |
|
Short-term investments: |
— |
|
|
— |
|
|
— |
|
|
— |
|
Corporate commercial paper, bonds and notes |
— |
|
|
45,382 |
|
|
— |
|
|
45,382 |
|
Long-term investments: |
— |
|
|
— |
|
|
— |
|
|
— |
|
Corporate commercial paper, bonds and notes |
— |
|
|
11,937 |
|
|
— |
|
|
11,937 |
|
Total assets at fair value |
$ |
106,447 |
|
|
$ |
57,319 |
|
|
$ |
— |
|
|
$ |
163,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Quoted Prices in
Active Markets
(Level 1) |
|
Other Observable
Inputs (Level 2) |
|
Unobservable
Inputs (Level 3) |
|
Fair Value |
As of December 31, 2020: |
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
Money market funds |
$ |
115,278 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
115,278 |
|
Short-term investments: |
|
|
|
|
|
|
|
Corporate commercial paper, bonds and notes |
— |
|
|
38,884 |
|
|
— |
|
|
38,884 |
|
Long-term investments: |
|
|
|
|
|
|
|
Corporate commercial paper, bonds and notes |
— |
|
|
14,564 |
|
|
— |
|
|
14,564 |
|
Total assets at fair value |
$ |
115,278 |
|
|
$ |
53,448 |
|
|
$ |
— |
|
|
$ |
168,726 |
|
4. Investments
The amortized cost, unrealized gains and losses and fair value of
investments available-for-sale as of March 31, 2021 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Amortized
Cost |
|
Unrealized
Gain |
|
Unrealized
Loss |
|
Fair Value |
Corporate bonds and notes—short-term |
$ |
45,388 |
|
|
$ |
— |
|
|
$ |
(6) |
|
|
$ |
45,382 |
|
Corporate bonds and notes—long-term |
$ |
11,940 |
|
|
— |
|
|
(3) |
|
|
$ |
11,937 |
|
Total investments |
$ |
57,328 |
|
|
$ |
— |
|
|
$ |
(9) |
|
|
$ |
57,319 |
|
Short-term investments have maturities ranging from
one to twelve months with a weighted-average maturity of 0.4
years at March 31, 2021. The weighted average maturity of long-term
investments was 1.3 years at March 31, 2021.
The amortized cost, unrealized gains and losses and fair value of
investments available-for-sale as of December 31, 2020 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Amortized
Cost |
|
Unrealized
Gain |
|
Unrealized
Loss |
|
Fair Value |
Corporate bonds and notes—short-term |
$ |
38,888 |
|
|
$ |
— |
|
|
$ |
(4) |
|
|
$ |
38,884 |
|
Corporate bonds and notes—long-term |
14,563 |
|
|
1 |
|
|
— |
|
|
14,564 |
|
Total investments |
$ |
53,451 |
|
|
$ |
1 |
|
|
$ |
(4) |
|
|
$ |
53,448 |
|
As of March 31, 2021 and December 31, 2020, the Company held no
investments that have been in a continuous unrealized loss position
for 12 months or longer.
No credit losses on available-for-sale securities were recognized
during the three months ended March 31, 2021 or March 31, 2020. In
its evaluation to determine expected credit losses, management
considered all available historical and current information,
expectations of future economic conditions, the type of security,
the credit rating of the security, and the size of the loss
position, as well as other relevant information. The Company does
not intend to sell, and is unlikely to be required to sell, any of
these available-for-sale investments before their effective
maturity or market price recovery.
Short-term investments have maturities ranging from
one to twelve months with a weighted-average maturity of 0.6
years at December 31, 2020. The weighted average maturity of
long-term investments was 1.5 years at December 31,
2020.
5. Accrued
Liabilities
Accrued liabilities consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
March 31, 2021 |
|
December 31, 2020 |
Compensation and related costs |
$ |
1,004 |
|
|
$ |
2,638 |
|
Chemistry, manufacturing and controls costs |
435 |
|
|
— |
|
Professional fees |
232 |
|
|
307 |
|
License fees |
188 |
|
|
375 |
|
Other |
203 |
|
|
305 |
|
Total |
$ |
2,062 |
|
|
$ |
3,625 |
|
6. Debt
On April 21, 2020, the Company entered into a promissory note
evidencing an unsecured $0.9 million loan (the “PPP Loan”)
under the Paycheck Protection Program (“PPP”), of the Coronavirus
Aid, Relief, and Economic Security Act, (“CARES Act”).
The PPP Loan was made by Silicon Valley Bank (“SVB”). The term of
the PPP Loan is 24-months. The interest rate on the PPP Loan is 1%.
Interest and principal payments have been deferred to the third
quarter of fiscal year 2021. The Company may prepay the PPP Loan at
any time without payment of penalty or premium. The promissory note
evidencing the PPP Loan contains customary events of default
relating to, among other things, payment defaults, breach of
representations and warranties, or provisions of the promissory
note, and cross-default provisions. The occurrence of an event of
default may result in the repayment of all amounts outstanding,
collection of all amounts the Company owes, and/or filing suit and
obtaining judgment against the Company.
Under the terms of the CARES Act and the Paycheck Protection
Program Flexibility Act of 2020, PPP Loan recipients can apply for
and be granted forgiveness for all or a portion of loans granted
under the PPP. The Company applied for such forgiveness in 2020.
Such forgiveness will be determined, subject to limitations, based
on the use of loan proceeds for payroll costs and mortgage
interest, rent or utility costs and the maintenance of employee and
compensation levels. Any forgiveness of the PPP Loan will be made
in accordance with U.S. Small Business Administration (“SBA”)
requirements and subject to approval by SVB. No assurance is
provided that the Company will obtain forgiveness of the PPP Loan
in whole or in part. The Company will remain responsible for
amounts due under the promissory note that are not forgiven,
together with interest accrued and unpaid thereon at the rate set
forth above. Interest payable on the PPP Loan may be forgiven only
if the SBA agrees to pay such interest on the forgiven principal
amount of the PPP Loan. There is no assurance that any interest
payable on the PPP Loan will be forgiven in whole or in part. As of
March 31, 2021, the Company recorded the full obligation of the PPP
Loan of $0.9 million as short-term debt. As of December 31, 2020,
the Company recorded short- and long-term debt related to the PPP
Loan of $0.6 million and $0.3 million, respectively.
7. Lease
The Company has a single lease for real estate, including
laboratory and office space, and certain equipment. The lease for
the current real estate property used for office, research and
laboratory space located at 128 Spring Street in Lexington,
Massachusetts commenced on May 1, 2020 which is the date when the
property became available for use to the Company. In accordance
with the accounting requirements under ASC 842, the lease
obligation was not recorded until its commencement. In January 2021
and July 2020 the Company prospectively remeasured the lease as a
result of a change to the timing of lease payments, which change
was not material. The discount rate associated with the Company's
right-of-use asset is 9.95%.
As of March 31, 2021, the Company had an operating lease liability
of $5.5 million and related right-of-use asset of $6.4 million
related to its operating lease. As of December 31, 2020, the
Company had an operating lease liability of $6.8 million and
related right-of-use asset of $6.6 million related to its operating
lease. The Company recorded a lease cost of $0.3 million for the
three months ended March 31, 2021. The Company did not have a
corresponding lease cost during the three months ended March 31,
2020. The total cash obligations over the seven year term of this
lease is approximately $9.3 million, of which $1.4 million was paid
during the three months ended March 31, 2021. The payments included
a one-time payment of $1.1 million for tenant improvements. The
Company did not have a corresponding lease cost related to the
facility at 128 Spring Street nor did the Company make cash
payments during the three months ended March 31, 2020.
8. Liability
Related to the Sale of Future Royalties
On March 22, 2019, the Company and Curis Royalty entered into
the royalty interest purchase agreement (“Oberland Purchase
Agreement”) with entities managed by Oberland Capital Management,
LLC (the “Purchasers”). The Company sold to the Purchasers a
portion of its rights to receive royalties from Genentech on
potential net sales of Erivedge. Concurrently with the closing of
the Oberland Purchase Agreement Curis Royalty used a portion of the
proceeds to terminate and repay the then existing loan with
HealthCare Royalty Partners, III, L.P..
As upfront consideration for the purchase of the royalty rights, at
closing the Purchasers paid to Curis Royalty $65.0 million less
certain transaction expenses. Curis Royalty will also be entitled
to receive up to approximately $70.7 million in milestone payments
based on sales of Erivedge as follows: (i) $17.2 million if the
Purchasers and Curis Royalty receive aggregate royalty payments
pursuant to the Oberland Purchase Agreement in excess of $18.0
million during the calendar year 2021, subject to certain
exceptions and (ii) $53.5 million if the Purchasers receive
payments pursuant to the Oberland Purchase Agreement in excess of
$117.0 million on or prior to December 31, 2026.
The Oberland Purchase Agreement provides that after the occurrence
of an event of default as defined under the security agreement by
Curis Royalty, the Purchasers shall have the option, for a period
of 180 days, to require Curis Royalty to
repurchase a portion of certain royalty and royalty related
payments, excluding a portion of non U.S. royalties retained by
Curis Royalty (the “Purchased Receivables”), at a price (the
“Put/Call Price”), equal to a percentage, beginning at a low triple
digit percentage and increasing over time up to a low mid triple
digit percentage of the sum of the upfront purchase price and any
portion of the milestone payments paid in a lump sum by the
Purchasers, if any, minus certain payments previously received by
the Purchasers with respect to the Purchased Receivables.
Additionally, Curis Royalty shall have the option at any time to
repurchase the Purchased Receivables at the Put/Call Price as of
the date of such repurchase. No events of default existed as of
March 31, 2021.
As a result of the obligation to pay future royalties to Oberland,
the Company recorded the proceeds from this transaction as a
liability on its Consolidated Balance Sheet that will be accounted
for using the interest method over the estimated life of the
Oberland Purchase Agreement. As a result, the Company imputes
interest on the transaction and records imputed interest expense at
the estimated interest rate. The Company's estimate of the interest
rate under the agreement is based on the amount of royalty payments
expected to be received by Oberland over the life of the
arrangement. The projected amount of royalty payments expected to
be paid to Oberland involves the use of significant estimates and
assumptions with respect to the revenue growth rate in the
Company's projections of sales of Erivedge. The Company
periodically assesses the expected royalty payments to Curis
Royalty from Genentech using a combination of historical results
and forecasts from market data sources. To the extent such payments
are greater or less than its initial estimates or the timing of
such payments is materially different than its original estimates,
the Company will adjust the amortization of the
liability.
The Company determined the fair value of the liability related to
the sale of future royalties at the time of the Oberland Purchase
Agreement to be $65.0 million, with a current effective annual
imputed interest rate of 8.0%. The Company incurred $0.6 million of
transaction costs in connection with the agreement. These
transaction costs will be amortized to imputed interest expense
over the estimated term of the Oberland Purchase Agreement. The
Company determined that the fair value assessment of the liability
related to the sale of future royalties is a Level 3 assessment
within the valuation hierarchy.
The following table shows the activity with respect to the
liability related to the sale of future royalties during the three
months ended March 31, 2021.
|
|
|
|
|
|
(in thousands) |
|
Carrying value of liability related to the sale of future royalties
at January 1, 2021 |
$ |
58,235 |
|
Amortization of capitalized issuance costs |
1,158 |
|
Imputed interest expense recognized for the three months ending
March 31, 2021 |
15 |
|
Less: payments to Oberland Capital, LLC |
(2,602) |
|
Carrying value of liability related to the sale of future royalties
at March 31, 2021 |
$ |
56,806 |
|
The following table shows the activity with respect to the
liability related to the sale of future royalties from the
inception of the Oberland Purchase Agreement through December 31,
2020.
|
|
|
|
|
|
(in thousands) |
|
Liability related to the sale of future royalties at January 1,
2020 |
$ |
62,477 |
|
Amortization of capitalized issuance costs |
61 |
|
Imputed interest expense recognized for the year ended December 31,
2020 |
5,034 |
|
Less: payments to Oberland Capital, LLC |
(9,337) |
|
Carrying value of liability related to the sale of future royalties
at December 31, 2020 |
$ |
58,235 |
|
9. Research
and Development Collaborations
(a)Genentech
In June 2003, the Company licensed its proprietary Hedgehog pathway
antagonist technologies to Genentech for human therapeutic use. The
primary focus of the collaborative research plan has been to
develop molecules that inhibit the Hedgehog pathway for the
treatment of various cancers. The collaboration is currently
focused on the development of Erivedge, which is being
commercialized by Genentech in the U.S. and by Genentech’s parent
company, Roche, in several other countries for the treatment of
advanced BCC. Pursuant to the agreement, the Company is eligible to
receive up to an aggregate of $115.0 million in contingent cash
milestone payments, exclusive of royalty payments, in connection
with the development of Erivedge or another small molecule Hedgehog
pathway inhibitor, assuming the successful achievement by Genentech
and Roche of specified clinical development and regulatory
objectives. Of this amount, the Company has received $59.0 million
in cash milestone payments as of March 31, 2021.
In addition to these payments and pursuant to the collaboration
agreement, the Company is entitled to a royalty on net sales of
Erivedge that ranges from 5% to 7.5%. The royalty rate applicable
to Erivedge may be decreased by 2% on a country-by-country basis in
certain specified circumstances.
The Company recognized $2.2 million and $2.5 million in royalty
revenue under the Genentech collaboration during the three months
ended March 31, 2021 and 2020, respectively. The Company also
recorded costs of royalty revenues within the costs and expenses
section of its Condensed Consolidated Statements of Operations and
Comprehensive Loss of $0.1 million during three months ended March
31, 2021 and March 31, 2020. Cost of royalty revenues comprises 5%
of the royalty payments that Curis Royalty receives from Genentech,
through February 2022, which the Company is obligated to pay to
university licensors.
Under this collaboration, the Company is obligated to reimburse
Genentech, and the Company records contra-revenues in its Condensed
Consolidated Statements of Operations and Comprehensive Loss. The
Company will continue to recognize revenue for expense
reimbursement as such reimbursable expenses are incurred, provided
that the provisions of ASC 606 are met. Genentech incurred
immaterial expense during the three months ended March 31, 2021,
and 2020, respectively.
The Company recorded receivables from Genentech under this
collaboration, comprised primarily of Erivedge royalties earned in
the first half of 2021 and 2020, respectively. The receivable
recorded in the Company's current assets section of its Condensed
Consolidated Balance Sheets amounted to $2.2 million and $3.0
million as of March 31, 2021 and December 31, 2020,
respectively.
As previously discussed in Note 8,
Liability Related to the Sale of Future Royalties
a portion of royalty revenues received from Genentech on net sales
of Erivedge will be paid to the Purchasers pursuant to the Oberland
Purchase Agreement.
(b)Aurigene
In January 2015, the Company entered into an exclusive
collaboration agreement with Aurigene for the discovery,
development and commercialization of small molecule compounds in
the areas of immuno-oncology and selected precision oncology
targets, which was amended in September 2016. Under the
collaboration agreement, Aurigene granted the Company an option to
obtain exclusive, royalty-bearing licenses to relevant Aurigene
technology to develop, manufacture and commercialize products
containing certain of such compounds anywhere in the world, except
for India and Russia, which are territories retained by Aurigene.
In February 2020, the collaboration agreement was further amended
whereby Aurigene received rights to develop and commercialize
CA-170 in Asia in addition to its existing rights in India and
Russia, and the Company became entitled to receive royalty payments
on potential future sales of CA-170 in Asia at percentage rates
ranging from the high single digits up to 10% subject to specified
reductions.
As of March 31, 2021, the Company has exercised its option to
license the following four programs under the
collaboration:
1.IRAK4
Program - a precision oncology program of small molecule inhibitors
of IRAK4. The development candidate is CA-4948, an orally available
small molecule inhibitor of IRAK4.
2.PD1/VISTA
Program - an immuno-oncology program of small molecule antagonists
of PD1 and VISTA immune checkpoint pathways. The development
candidate is CA-170, an orally available small molecule antagonist
of VISTA and PDL1.
3.PD1/TIM3
Program - an immuno-oncology program of small molecule antagonists
of PD1 and TIM3 immune checkpoint pathways. The development
candidate is CA-327, an orally available small molecule antagonist
of PDL1 and TIM3.
4.In
March 2018, the Company exercised its option to license a fourth
program, which is an immuno-oncology program.
Since January 2015, the Company has paid $14.5 million in
research payments and Aurigene has waived $19.5 million in
milestone payments. For each of the IRAK4, PD1/VISTA, and PD1/TIM3
programs, and the fourth immuno-oncology program: the Company has
remaining unpaid or unwaived payment obligations of
$42.5 million per program, related to regulatory approval and
commercial sales milestones, plus specified additional payments for
approvals for additional indications, if any. The Company is
further obligated to pay Aurigene tiered royalties on the Company's
and its affiliates' annual net sales of products at percentage
rates ranging from the high single digits up to 10%, subject to
specified reductions. In addition, the Company agreed to make
certain payments to Aurigene upon its entry into sublicense
agreements on any program(s).
In addition to the collaboration agreement, the Company has entered
into a master development and manufacturing agreement with Aurigene
for the supply of drug substance and drug product. Under this
agreement, the Company incurred $0.4 million in research and
development expense during the three months ended March 31, 2021.
The Company recorded a $0.6 million prepaid balance as March 31,
2021 associated with this agreement. The Company incurred
immaterial expenses related to Aurigene for the three months ended
March 31, 2020.
(c)ImmuNext
The Company has entered into an option and license agreement with
ImmuNext (the “ImmuNext Agreement”). Under the terms of the
ImmuNext Agreement, the Company agreed to engage in a collaborative
effort with ImmuNext, and to conduct a Phase 1 clinical trial of
CI-8993. In exchange, ImmuNext granted the Company an exclusive
option, exercisable until the earlier of January 2024 or (b) 90
days after database lock for the first Phase 1 trial in which the
endpoints are satisfied (the “Option Period”), to obtain an
exclusive, worldwide license to develop and commercialize certain
VISTA antagonizing compounds and products containing these
compounds in the field of oncology.
During the Option Period, the Company is obligated to pay a
semi-annual fee of $0.4 million to ImmuNext and will conduct the
Phase 1 trial, and ImmuNext will conduct certain agreed upon
non-clinical research activities to support the Phase 1 trial.
Additionally, the Company will assign to ImmuNext all right, title
and interest in and to, inventions made by the Company alone or
jointly with ImmuNext in conducting clinical and non-clinical
activities under the ImmuNext Agreement and any patent rights
covering those inventions. If the option is exercised, ImmuNext
will assign to the Company (i) all such inventions that were made
solely by the Company and any patent rights covering those
inventions that were assigned by the Company to ImmuNext during the
Option Period and (ii) a joint ownership interest in all such
inventions that were made jointly by the Company and ImmuNext and
patent rights covering those inventions that were assigned by the
Company to ImmuNext during the Option Period, except for any of
those inventions that relates to certain compounds to which
ImmuNext has retained exclusive rights. In addition, the Company
has agreed to reimburse ImmuNext for certain documented external
costs and expenses incurred by ImmuNext in carrying out
non-clinical research activities approved by the joint steering
committee, up to $0.3 million per calendar year, unless otherwise
agreed to by both parties in writing.
ImmuNext will be eligible to receive up to $4.6 million in
potential development milestones, up to $84.3 million in
potential regulatory approval milestones, and up to
$125.0 million in potential sales milestone payments from us.
ImmuNext is also eligible to receive tiered royalties on annual net
sales on a product-by-product and country-by-country basis, at
percentage rates ranging from high single digits to low double
digits, subject to specified adjustments. In addition, the Company
has agreed to pay ImmuNext a low double-digit percentage of
sublicense revenue received by the Company or its
affiliates.
If the Company elects to exercise the option, the Company has
agreed to pay to ImmuNext an option exercise fee of
$20.0 million.
10. Common
Stock
(a)2021
Sales Agreement with Cantor Fitzgerald & Co. and JonesTrading
Institutional Services LLC
On March 16, 2021, the Company entered into a sales agreement (the
“2021 Sales Agreement”) with Cantor Fitzgerald & Co., or
Cantor, and JonesTrading Institutional Services LLC , or
JonesTrading, to sell from time to time up to $100.0 million
of the Company’s common stock through an “at the market offering”
program under which Cantor and JonesTrading act as sales agents.
Subject to the terms and conditions of the 2021 Sales Agreement,
Cantor and JonesTrading can sell the common stock by any method
deemed to be an “at-the-market” offering as defined in Rule 415
promulgated under the Securities Act of 1933, as amended (the
“Securities Act”).
Pursuant to the terms of the 2021 Sales Agreement, the aggregate
compensation payable to each of Cantor and JonesTrading is 3% of
the gross proceeds from sales of the common stock sold by Cantor or
JonesTrading, as applicable, pursuant to the 2021 Sales Agreement.
Each party agreed in the 2021 Sales Agreement to provide
indemnification and contribution against certain liabilities,
including liabilities under the Securities Act, subject to the
terms of the 2021 Sales Agreement. To date, the Company has not
made any sales of common stock pursuant to the 2021 Sales
Agreement.
The securities in this transaction were offered pursuant to an
automatic shelf registration statement on Form S-3ASR (File No.
333-254362) that was filed with the SEC on March 16,
2021.
(b)2020
Public Offering
In December 2020, the Company completed an underwritten public
offering of 29,500,000 shares of the Company's common stock,
including 3,847,826 shares issued and sold to the underwriters upon
the exercise in full of their option to purchase additional shares,
at a price of $5.75 per share, for aggregate gross proceeds of
$169.6 million, before deducting underwriting discounts and
commissions and other offering expenses of $10.2 million. The
securities in this transaction were offered pursuant to a shelf
registration statement on Form S-3 (File No. 333-224627) that was
filed with the SEC on May 3, 2018 and declared effective by the SEC
on May 17, 2018 and an additional registration statement on Form
S-3 (File No. 333-251211) filed pursuant to Rule 462(b) which
became automatically effective on December 9, 2020.
(c)2020
Registered Direct Offering
In June 2020, the Company entered into a securities purchase
agreement with certain institutional investors, pursuant to which
the Company issued and sold, in a registered direct offering, an
aggregate of 14,000,000 shares of the Company's common stock at a
purchase price per share of $1.25, for aggregate gross proceeds of
$17.5 million, before deducting fees of approximately
$1.0 million paid to the placement agent and other estimated
offering expenses of approximately $0.5 million paid by the
Company. JonesTrading acted as the exclusive placement agent for
the transaction, and the shares were offered by the Company
pursuant to its universal shelf registration statement on Form S-3,
which was filed with the SEC on May 3, 2018 and declared effective
by the SEC on May 17, 2018 (File No. 333-224627), and a prospectus
supplement thereunder.
(d)2020
Charter Amendment
On June 4, 2020, the Company's stockholders approved an increase to
the number of authorized shares of its common stock from
101,250,000 shares to 151,875,000 shares. The Company filed an
amendment to its certificate of incorporation on June 4, 2020 to
effect such increase.
(e)2020
Sales Agreement with JonesTrading Institutional Services
LLC
On March 4, 2020, the Company entered into a Capital on Demand™
Sales Agreement (the “Sales Agreement”) with JonesTrading to sell
from time to time up to $30.0 million of the Company’s common stock
through an “at-the-market” equity offering program under which
JonesTrading acted as sales agent. Subject to the terms and
conditions of the Sales Agreement, JonesTrading could sell the
common stock by any method deemed to be an “at-the-market” offering
as defined in Rule 415 promulgated under the Securities Act,
including sales made directly on the Nasdaq Global Market, on any
other existing trading market for the common stock or to or through
a market maker other than on an exchange. In addition, with the
Company’s prior written approval, JonesTrading could also sell the
common stock by any other method permitted by law, including in
privately negotiated transactions.
Pursuant to the terms of the Sales Agreement, the aggregate
compensation payable to JonesTrading was 3% of the gross proceeds
from sales of the common stock sold by JonesTrading pursuant to the
Sales Agreement. Each party agreed in the Sales Agreement to
provide indemnification and contribution against certain
liabilities, including liabilities under the Securities Act,
subject to the terms of the Sales Agreement.
The Company terminated this sales agreement effective as of
December 9, 2020. The Company did not incur any termination
penalties as a result of the termination. As of the effective date
of the termination of the Sales Agreement, the Company had sold an
aggregate of 6,298,648 shares of common stock under the sales
agreement for aggregate gross proceeds of $8.3 million and net
proceeds of $7.9 million after deducting commissions and
offering expenses. The $21.7 million of common stock that remained
unsold at the time of termination is no longer
available.
(f)Aspire
Capital Fund LLC
On February 26, 2020, the Company entered into a common stock
purchase agreement (the “Agreement”) with Aspire Capital Fund, LLC
(“Aspire Capital”) for the sale of up to $30.0 million of the
Company's common stock. Under the terms of the Agreement, Aspire
Capital has committed to purchase such shares of the Company's
common stock at the Company’s request, from time to time during a
30-month period at prices based on the market price at the time of
each sale, subject to specified terms and limitations.
Aspire Capital made an initial investment of $3.0 million through
the purchase of 2,693,965 shares of the Company's common stock. In
2020, Aspire Capital subsequently purchased an additional 4,650,000
shares of the Company's common stock for $5.4 million. In addition,
as consideration for Aspire Capital’s obligation under the
Agreement, the Company issued 646,551 shares of common stock to
Aspire Capital as a commitment fee. As of March 31, 2021 and
December 31, 2020, a total of $21.6 million remained available
under the Agreement. The Company did not sell shares of common
stock under the Agreement during the three months ended March 31,
2021. Except for the initial investment, the Company did not sell
share of common stock under the Agreement during the three months
ended March 31, 2020.
Under the terms of the Agreement, the Company has the right to sell
up to 150,000 shares of common stock per day to Aspire Capital,
which total may be increased by mutual agreement up to an
additional 2,000,000 shares per day. The extent to which the
Company relies on Aspire Capital as a source of funding will depend
on a number of factors, including the prevailing market price of
its common stock and the extent to which it is able to secure
working capital from other sources.
There are no warrants, derivatives, or other share classes
associated with this Agreement. The Company will control the timing
and amount of the further sale of its common stock to Aspire
Capital. There are no restrictions on future financings and there
are no financial covenants, participation rights, rights of first
refusal, or penalties in the Agreement. The Company has the right
to terminate the Agreement at any time without any additional cost
or penalty.
The Company also entered into a Registration Rights Agreement with
Aspire Capital in connection with its entry into the
Agreement.
11. Stock
Plans and Stock-Based Compensation
As of March 31, 2021, the Company had two shareholder-approved,
stock-based compensation plans: (i) the Amended and Restated 2010
Employee Stock Purchase Plan, (“ESPP”), adopted by the Board of
Directors in April 2017 and approved by shareholders in June 2017,
and (ii) the Third Amended and Restated 2010 Stock Incentive
Plan, (“2010 Plan”). New employees are typically issued options as
an inducement equity award under Nasdaq Listing Rule 5635(c)(4)
outside of the 2010 Plan.
The Third Amended and Restated 2010 Stock Incentive
Plan
The 2010 Plan permits the granting of incentive and non-qualified
stock options and stock awards to employees, officers, directors,
and consultants of the Company and its subsidiaries at prices
determined by the Company’s Board of Directors. On June 4, 2020 the
Company's shareholders approved an amendment to the Company's Third
Amended and Restated 2010 Stock Incentive Plan to reserve an
additional 1,300,000 shares of common stock for issuance under the
2010 Plan. The Company can issue up to 12,190,000 shares of its
common stock pursuant to awards granted under the 2010 Plan.
Options become exercisable as determined by the Board of Directors
and expire up to ten years from the date of grant. The 2010 Plan
uses a “fungible share” concept under which each share of stock
subject to awards granted as options and stock appreciation rights
(“SARs”), will cause one share per share under the award to be
removed from the available share pool, while each share of stock
subject to awards granted as restricted stock, restricted stock
units, other stock-based awards or performance awards where the
price charged for the award is less than 100% of the fair market
value of the Company’s common stock will cause 1.3 shares per share
under the award to be removed from the available share pool. As of
March 31, 2021 the Company had only granted options to purchase
shares of the Company’s common stock with an exercise price equal
to the closing market price of the Company’s common stock on the
Nasdaq Global Market on the grant date. As of March 31, 2021,
2,590,840 shares remained available for grant under the 2010
Plan.
Stock Options
During the quarter ended March 31, 2021, the Company’s board of
directors granted options to purchase 1,086,000 shares of the
Company’s common stock to the officers and employees of the
Company, under the 2010 Plan. Shares granted to officers and
employees vest as to 25% of the shares underlying the award on the
first anniversary of the grant date and as to an additional 6.25%
of the shares underlying the award at the end of each subsequent
quarter, based upon continued employment over a four year period,
and are exercisable at a price equal to the closing price of the
Company’s common stock on the Nasdaq Global Market on the grant
dates.
During the quarter ended March 31, 2021, the Company’s board of
directors granted options to its non-employee directors to purchase
132,000 shares of common stock under the 2010 Plan, which will vest
and become exercisable one year from the grant date. In addition,
the Company's board of directors issued options to newly-hired
employees as an inducement equity award under Nasdaq Listing Rule
5635(c)(4) outside of the 2010 Plan to purchase 185,000 shares of
common stock. These options will vest as to 25% of the shares
underlying the option on the first anniversary of the grant date,
and as to an additional 6.25% of the shares underlying the option
on each successive three-month period thereafter. All option awards
are exercisable at a price equal to the closing price of the
Company’s common stock on the Nasdaq Global Market on the grant
dates.
A summary of stock option activity under the 2010 Plan and
inducement awards are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares |
|
Weighted
Average
Exercise
Price per
Share |
|
Weighted
Average
Remaining Contractual Life |
|
Aggregate Intrinsic Value |
Outstanding, December 31, 2020 |
8,668,005 |
|
|
$ |
2.71 |
|
|
7.98 |
|
|
Granted |
1,403,000 |
|
|
9.13 |
|
|
|
|
|
Exercised |
(31,649) |
|
|
2.49 |
|
|
|
|
|
Canceled |
(43,325) |
|
|
11.05 |
|
|
|
|
|
Outstanding, March 31, 2021 |
9,996,031 |
|
|
$ |
3.57 |
|
|
8.06 |
|
$ |
79,202 |
|
Exercisable at March 31, 2021 |
4,939,398 |
|
|
$ |
3.59 |
|
|
7.35 |
|
$ |
39,909 |
|
Vested and unvested expected to vest at March 31, 2021 |
9,560,551 |
|
|
$ |
3.54 |
|
|
8.02 |
|
$ |
76,109 |
|
The weighted average grant date fair values of the stock options
granted during the three months ended March 31, 2021 and 2020 were
$9.13 and $0.76, respectively, and were calculated using the
following estimated assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
2021 |
|
2020 |
Expected term (years)
–
directors, officers and employees
|
5.5 |
|
5.5 |
|
|
|
|
|
|
|
|
Risk free interest rate |
0.4-0.7%
|
|
0.9-1.7%
|
Expected Volatility |
107 |
% |
|
80 |
% |
Expected Dividends |
None |
|
None |
As of March 31, 2021, there was approximately $11.3 million of
unrecognized compensation cost related to unvested employee stock
option awards outstanding, net of the impact of estimated
forfeitures that is expected to be recognized as expense over a
weighted average period of 2.55 years. The intrinsic value of
employee stock options exercised during the three months ended
March 31, 2021 was $0.3 million. There were no options
exercised during the three months ended March 31,
2020.
Restricted Stock Awards
The following table presents a summary of unvested restricted stock
awards (“RSAs”) under the 2010 Plan as of March 31,
2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares |
|
Weighted
Average
Grant Date Fair Value |
Unvested, December 31, 2020 |
20,624 |
|
|
$ |
3.45 |
|
Awarded |
— |
|
|
— |
|
Vested |
(10,312) |
|
|
3.45 |
|
Forfeited |
— |
|
|
— |
|
Unvested, March 31, 2021 |
10,312 |
|
|
$ |
3.45 |
|
As of March 31, 2021, there were 10,312 shares outstanding covered
by RSAs that are expected to vest. The weighted average grant date
fair value of these shares of restricted stock was $3.45 per share
and the aggregate fair value of these shares of restricted stock
was approximately $0.1 million. As of March 31, 2021, there was an
immaterial amount less than $0.1 million of unrecognized
compensation costs, net of estimated forfeitures, related to RSAs
granted to officers, which are expected to be recognized as expense
over a remaining weighted average period of 0.81
years.
Second Amended and Restated 2010 Employee Stock Purchase
Plan
The Company has reserved 2,000,000 shares of common stock for
issuance under the ESPP. Eligible employees may purchase shares of
the Company’s common stock at 85% of the lower closing market price
of the common stock at the beginning of the enrollment period or
ending date of the purchase period within a two-year enrollment
period, as defined. The Company has four six-month purchase periods
per each two-year enrollment period. If, within any one of the four
purchase periods in an enrollment period, the purchase period
ending stock price is lower than the stock price at the beginning
of the enrollment period, the two-year enrollment resets at the new
lower stock price. This aspect of the plan was amended in 2017.
Prior to 2017, the plan included two six-month purchase periods per
year with no defined enrollment period. No shares were issued under
the ESPP during the three months ended March 31, 2021. As of March
31, 2021, there were 1,597,390 shares available for future purchase
under the ESPP.
ESPP compensation expense for the three months ended March 31, 2021
and 2020 was not material.
Total Stock-Based Compensation Expense
For the three months ended March 31, 2021 and 2020, the Company
recorded stock-based compensation expense to the following line
items in its costs and expenses section of the Condensed
Consolidated Statements of Operations and Comprehensive Loss,
including expense related to its ESPP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
|
(in thousands) |
2021 |
|
2020 |
|
|
|
|
Research and development expenses |
$ |
338 |
|
|
$ |
170 |
|
|
|
|
|
General and administrative expenses |
761 |
|
|
455 |
|
|
|
|
|
Total stock-based compensation expense |
$ |
1,099 |
|
|
$ |
625 |
|
|
|
|
|
12. Loss
Per Common Share
Basic and diluted loss per common share is computed by dividing net
loss attributable to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted net
loss per common share is the same as basic net loss per common
share for the three months ended March 31, 2021 and 2020, because
the effect of the potential common stock equivalents would be
antidilutive due to the Company’s net loss position for these
periods. Antidilutive securities consist of stock options
outstanding of 9,996,031 and 9,360,427 as of March 31, 2021 and
2020, respectively.
13. Related
Party Transactions
(a)Agreement
with Head of Research and Development - Robert E. Martell,
M.D.,
Ph.D.
On October 17, 2018, the Company entered into an exclusive
option and license agreement with Epi-Cure Pharmaceuticals, Inc.,
(“Epi-Cure”) a privately held early stage biotechnology company.
Robert E. Martell, M.D., Ph.D., the Company’s Head of Research and
Development and a former director of the Company, is a founder of
Epi-Cure, was formerly an officer and director of Epi-Cure, and is
currently a holder of a convertible promissory note to Epi-Cure.
Under the terms of the option and license agreement, Epi-Cure
granted Curis an exclusive option to certain program compounds that
may arise during the initial research and development period, and
any extension thereof. Upon execution of the option and license
agreement, the Company paid Epi-Cure an upfront payment of $0.1
million for legal and consulting costs incurred by Epi-Cure in
connection with the transaction. In July 2019, the Company extended
the research and development period of the program until April
2020, as permitted under the terms of the agreement.
Under the terms of the agreement, Epi-Cure had primary
responsibility for conducting research and development activities
and Curis was responsible for funding up to $0.5 million of the
research and development program costs and expenses during the
initial research and development period. After the end of the
research and development period, which ended in April 2020, Curis
had sixty days to elect to exercise its option to license the
program compounds. In June 2020, the Company decided not to
exercise its option to license the program compounds, and the
agreement expired.
In 2020, the Company expensed $0.1 million of fees related to
this agreement. No expense was incurred following the expiration of
the agreement in June 2020.
Item 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the Condensed
Consolidated Financial Statements and the related notes appearing
elsewhere in this report. Some of the information contained in this
discussion and analysis and set forth elsewhere in this report,
including information with respect to our plans and strategy for
our business, includes forward-looking statements, based on current
expectations and related to future events and our future financial
and operational performance, that involve risks and uncertainties.
You should review the discussion above under the heading “Risk
Factor Summary,” the risk factors detailed further in Item 1A,
"Risk Factors" of Part 1 of our Annual Report on Form 10-K for the
year ended December 31, 2020, and, if applicable, those included
under Part II, Item 1A of this Quarterly Report on Form 10-Q for a
discussion of important factors that could cause actual results to
differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion
and analysis. As used throughout this report, the terms “the
Company,” “we,” “us,” and “our” refer to the business of Curis,
Inc. and its wholly owned subsidiaries, except where the context
otherwise requires, and the term “Curis” refers to Curis,
Inc.
Overview
We are a biotechnology company focused on the development of
first-in-class and innovative therapeutics for the treatment of
cancer.
We conduct our research and development programs both internally
and through strategic collaborations. Our clinical stage drug
candidates are:
•CA-4948,
an orally-available small molecule inhibitor of Interleukin-1
receptor-associated kinase 4, or IRAK4, which is currently
undergoing testing in a Phase 1/2 open-label dose escalating
clinical trial in patients with non-Hodgkin lymphomas, including
those with Myeloid Differentiation Primary Response Protein 88, or
MYD88 alterations. We reported updated preliminary clinical data
from the study in December 2020. The trial was amended to include a
combination study of CA-4948 and ibrutinib, a BTK inhibitor, in
patients with non-Hodgkin lymphomas for which we enrolled the first
patient in February 2021. We expect to provide initial data from
the combination study in the second half of 2021. We are also
conducting a separate Phase 1/2 open-label, single arm dose
escalating and expansion trial in patients with acute myeloid
leukemia, or AML, and myelodysplastic syndromes, or MDS, and
announced preliminary clinical data from this study in December
2020. The study was amended in April 2021 to include dose
escalation cohorts of CA-4948 in combination with azacitadine or
venetoclax. In April 2021, CA-4948 was granted Orphan Drug
Designation for the treatment of AML and MDS by the U.S. Food and
Drug Administration, or FDA.
•CI-8993,
a monoclonal antibody designed to antagonize the V-domain Ig
suppressor of T cell activation, or VISTA signaling pathway. In
June 2020, we announced the FDA had cleared our Investigational New
Drug, or IND, application for CI-8993. In September 2020, we began
enrollment in our Phase 1 trial of CI-8993 in patients with solid
tumors. We have an option to license CI-8993 from ImmuNext, Inc.,
or ImmuNext.
Our pipeline also includes the following:
•Fimepinostat,
a small molecule that potently inhibits the activity of histone
deacetylase, or HDAC, and phosphotidyl-inositol 3 kinase, or PI3
kinase enzymes, which has been granted Orphan Drug Designation and
Fast Track Designation for the treatment of diffuse large B-cell
lymphoma, or DLBCL, by the FDA in April 2015 and May 2018,
respectively. In 2019, we began enrollment in a Phase 1 combination
study with venetoclax in DLBCL patients, including patients with
translocations in both MYC and the BCL2 gene, also referred to as
double-hit lymphoma, or high-grade B-cell lymphoma, or HGBL. We
reported preliminary clinical data from this combination study in
December 2019. In March 2020, we announced that although we
observed no significant drug-drug interaction in our Phase 1 study
of fimepinostat in combination with venetoclax, we did not see an
efficacy signal that would warrant continuation of the study.
Accordingly, no further patients will be enrolled in this study. We
are currently evaluating future studies for
fimepinostat.
•CA-170,
a small molecule antagonist of VISTA and PDL1, for which we
announced initial data from a clinical study in patients with
mesothelioma in conjunction with the Society of Immunotherapy of
Cancer conference in November 2019. Based on this data, no further
patients will be enrolled in the study. We are currently evaluating
future studies for CA-170.
•CA-327,
a small molecule antagonist of PDL1 and TIM3, which is a pre-IND,
stage oncology drug candidate.
We are party to a collaboration with Genentech Inc., or Genentech,
a member of the Roche Group, under which F. Hoffmann-La Roche Ltd,
or Roche and Genentech are commercializing
Erivedge®
(vismodegib), a first-in-class orally administered small molecule
Hedgehog signaling pathway antagonist. Erivedge is approved for the
treatment of advanced basal cell carcinoma, or BCC.
In January 2015, we entered into an exclusive collaboration
agreement focused on immuno-oncology and selected precision
oncology targets with Aurigene Discovery Technologies Limited, or
Aurigene, which was amended in September 2016 and February 2020. As
of March 31, 2021, we have licensed four programs under the
Aurigene collaboration.
1.IRAK4
Program - a precision oncology program of small molecule inhibitors
of IRAK4. The development candidate is CA-4948.
2.PD1/VISTA
Program - an immuno-oncology program of small molecule antagonists
of PD1 and VISTA immune checkpoint pathways. The development
candidate is CA-170.
3.PD1/TIM3
Program - an immuno-oncology program of small molecule antagonists
of PD1 and TIM3 immune checkpoint pathways. The development
candidate is CA-327.
4.In
March 2018, we exercised our option to license a fourth program,
which is an immuno-oncology program.
In addition, we are party to an option and license agreement with
ImmuNext. Pursuant to the terms of the option and license
agreement, we have an option, exercisable for a specified period as
set forth in the option and license agreement to obtain an
exclusive license to develop and commercialize certain VISTA
antagonizing compounds, including ImmuNext's lead compound,
CI-8993, and products containing these compounds in the field of
oncology.
Based on our clinical development plans for our pipeline, we intend
to predominantly focus our available resources on the continued
development of CA-4948, in collaboration with Aurigene, and
CI-8993, in collaboration with ImmuNext, in the near
term.
Liquidity
Since our inception, we have funded our operations primarily
through private and public placements of our equity securities,
license fees, contingent cash payments, research and development
funding from our corporate collaborators, debt financings and the
monetization of certain royalty rights. We have never been
profitable on an annual basis and have an accumulated deficit of
$1.1 billion as of March 31, 2021. For the three months ended March
31, 2021, we incurred a net loss of $9.9 million and used
$13.2 million of cash in operations. We expect that our $168.4
million cash, cash equivalents and investments as of March 31, 2021
should enable us to maintain our planned operations into 2024. We
have based this assessment on assumptions that may prove to be
wrong, and we could exhaust our available capital resources sooner
than we expect.
We will need to generate significant revenues to achieve
profitability, and do not expect to achieve profitability in the
foreseeable future, if at all. If sufficient funds are not
available, we will have to delay, reduce the scope of, or eliminate
some of our research and development programs, including related
clinical trials and operating expenses, potentially delaying the
time to market for or preventing the marketing of any of our
product candidates, which could adversely affect our business
prospects and our ability to continue our operations, and would
have a negative impact on our financial condition and ability to
pursue our business strategies. In addition, we may seek to engage
in one or more strategic alternatives, such as a strategic
partnership with one or more parties, the licensing, sale or
divestiture of some of our assets or proprietary technologies or
the sale of our company, but there can be no assurance that we
would be able to enter into such a transaction or transactions on a
timely basis or on terms favorable to us, or at all.
COVID-19 Pandemic
The COVID-19 pandemic has spread worldwide, causing many
governments to implement measures to slow the spread of the
outbreak through quarantines, strict travel restrictions,
heightened border scrutiny, and other measures. The outbreak and
government measures taken in response have had a significant
impact, both direct and indirect, on businesses and commerce. While
the COVID-19 pandemic has had adverse effects on our business and
we expect the outbreak to have an adverse effect on our business,
financial conditions and results of operations in the future, we
are unable to predict the extent or nature of the future
progression of the COVID-19 pandemic or its effects on our business
and operations at this time.
We have enrolled, and will seek to enroll, cancer patients in
clinical trials at sites located both in the United States and
internationally. Many of our clinical trial sites have imposed
restrictions as a result of the COVID-19 pandemic, which have had
and may continue to have a negative impact on our ability to
conduct our clinical trials. We have encountered and may continue
to face difficulties recruiting and retaining patients in our
ongoing and planned clinical trials to the extent patients are
affected by the virus or are fearful of visiting or traveling to
our clinical trial sites because of the outbreak. In addition, we
do not currently know the duration or to what degree medical
facilities, including our clinical trial sites, will continue to be
impacted by the pandemic. For example, all of our clinical trial
sites for our ongoing Phase 1 clinical trial for CA-4948 in
patients with non-Hodgkin lymphomas, including those with MYD88
alterations, are at large academic research hospitals that have
imposed restrictions on entry which have in some instances
prohibited, and in other instances may potentially prohibit in the
future, clinical trial monitors and patients from entering the
trial sites. We are actively working with our clinical trial sites
to follow FDA guidelines for conducting clinical trials during the
COVID-19 pandemic, including performing remote monitoring to the
extent possible and arranging for the shipment of medicine directly
from the clinical trial site to patients who are enrolled in our
trials, if required; however, there is no assurance such
arrangements will be successful. As a result, further enrollment in
our ongoing clinical trial for CA-4948 in patients with non-Hodgkin
lymphomas, including those with MYD88 alterations, has been delayed
and may continue to be delayed and patients currently enrolled in
the trial may cease treatment due to the restrictions described
above or fear of visiting or inability to visit our trial sites. As
a result, enrollment in this trial has been slower than expected
and the timeline of this trial has been delayed and may continue to
be delayed. In addition, in July 2020, we commenced enrollment in
our Phase 1 clinical trial in CA-4948 in patients with AML and MDS.
Clinical trial sites for this study have also imposed and may
continue to impose restrictions similar to those described above.
As a result, we may not be able to enroll this trial on our planned
timeline, which would cause a delay in the overall timeline for
this trial. Similarly, enrollment in and the overall timeline of
our combination study of CA-4948 and ibrutinib, for which we
commenced enrollment
in February 2021, and our Phase 1 clinical trial for CI-8993, for
which we commenced enrollment in September 2020, have been delayed
and may continue to be delayed due to the factors discussed above.
To the extent clinical trial sites are slowed down or closed to
enrollment in our ongoing and planned clinical trials, this could
also have a material adverse impact on our clinical trial plans and
timelines. These restrictions may also impact our ability to
collect patient data in a timely fashion. In addition, we do not
know whether and to what extent potential exposure to COVID-19 of
patients in our clinical trials could impact the efficacy of
CA-4948 or CI-8993. The response to the COVID-19 pandemic may
redirect resources of regulators in a way that would adversely
impact our ability to progress regulatory approvals. In addition,
we may face impediments to regulatory meetings and approvals
relating to our clinical trials due to measures intended to limit
in-person interactions.
We and our collaborators, third-party contract manufacturers,
contract research organizations and clinical sites may experience
delays or disruptions in supply and release of product candidates
and/or procuring items that are essential for our research and
development activities, including, for example, raw materials used
in the manufacturing of our product candidates, basic medical and
laboratory supplies used in our clinical trials or preclinical
studies or animals that are used for preclinical testing, in each
case, for which there may be shortages because of ongoing efforts
to address the outbreak. While we believe that we currently have
sufficient supply of our product candidates to continue our ongoing
clinical trials, some of our product candidates, or materials
contained therein, come from facilities located in areas impacted
by COVID-19, including India, China, and Europe. In addition, any
disruptions could impact the supply, manufacturing or distribution
of Erivedge, and sales of Erivedge may be negatively impacted by a
decrease in new prescriptions as a result of a decline in patient
medical visits due to the COVID-19 pandemic, which has had and
could continue to have a negative impact on the amount and timing
of any royalty revenue we may receive from Genentech related to
Erivedge. There is no guarantee that the COVID-19 pandemic, or any
potential future outbreak, would not impact our supply chain, which
could have a material adverse impact on our clinical trial plans
and business operations.
We are also experiencing delays in closing down our clinical trial
sites related to our fimepinostat and CA-170 trials due to
restrictions on non-essential workers imposed at those sites in
response to COVID-19, which has delayed the winding down of these
trials and may result in additional costs and
expenses.
Any negative impact that the COVID-19 pandemic has on the ability
of our suppliers to provide materials for our product candidates or
on recruiting or retaining patients in our clinical trials could
cause costly delays to clinical trial activities, which could
adversely affect our ability to obtain regulatory approval for and
to commercialize our product candidates, increase our operating
expenses, and have a material adverse effect on our financial
results. Additionally, the pandemic has already caused significant
disruptions in the financial markets, and may continue to cause
such disruptions, which could impact our ability to raise
additional funds and has also impacted, and may continue to impact,
the volatility of our stock price and trading in our stock.
Moreover, the pandemic has significantly impacted economies
worldwide, which could result in adverse effects on our business
and operations. We cannot be certain what the overall impact of the
COVID-19 pandemic will be on our business and it has had and may
continue to have an adverse effect on our business, financial
condition, results of operations, and prospects.
Key Drivers
We believe that near term key drivers to our success will
include:
•our
ability to successfully plan, finance and complete current and
planned clinical trials for CA-4948 and CI-8993, as well as for
such clinical trials to generate favorable data; and
•our
ability to raise additional financing, when required, to fund
operations.
In the longer term, a key driver to our success will be our
ability, and the ability of any current or future collaborator or
licensee, to successfully develop and commercialize drug
candidates.
Our Collaborations and License Agreements
For information regarding our collaboration and license agreements,
refer to Note 9,
Research and Development Collaborations,
in the accompanying Notes to the Condensed Consolidated Financial
Statements included in Item 1 of Part I of this Quarterly Report on
Form 10-Q and Note 11,
Research and Development Collaborations,
in Item 8 of our Annual Report on Form 10-K for the year ended
December 31, 2020 as filed with the Securities and Exchange
Commission, or SEC, on March 16, 2021.
Financial Operations Overview
General.
Our future operating results will largely depend on the progress of
drug candidates currently in our research and development pipeline.
The results of our operations will vary significantly from year to
year and quarter to quarter and depend on, among other factors, the
cost and outcome of any preclinical development or clinical trials
then being conducted. For a discussion of our liquidity and funding
requirements, see “- Liquidity” and “- Liquidity and Capital
Resources - Funding Requirements”.
Liability Related to the Sale of Future
Royalties.
In connection with the termination and repayment in full of our
prior loan with HealthCare Royalty Partners, III, L.P., or
HealthCare Royalty, we and Curis Royalty entered into the royalty
interest purchase agreement, or Oberland Purchase Agreement, with
entities managed by Oberland Capital Management, LLC, or the
Purchasers. Upon closing of the Oberland Purchase Agreement, Curis
Royalty received an upfront purchase price of $65.0 million from
the Purchasers, approximately $33.8 million of which was used to
pay off the remaining loan principal to HealthCare Royalty, and
$3.7 million of which was used to pay transaction costs, including
$3.4 million to HealthCare Royalty in accrued and unpaid interest
and prepayment fees under the loan, resulting in net proceeds of
$27.5 million. Curis Royalty will also be entitled to receive
milestone payments of (i) $17.2 million if the Purchasers and Curis
Royalty receive aggregate royalty payments pursuant to the Oberland
Purchase Agreement in excess of $18.0 million during the calendar
year 2021, subject to certain exceptions, and (ii) $53.5 million if
the Purchasers receive payments pursuant to the Oberland Purchase
Agreement in excess of $117.0 million on or prior to December 31,
2026, which milestone payments may each be paid, at the option of
the Purchasers, in a lump sum in cash or out of the Purchaser’s
portion of future payments under the Oberland Purchase Agreement.
For a discussion of the Oberland Purchase Agreement, see “Liquidity
and Capital Resources – Royalty Interest Purchase
Agreement”.
Revenue.
We do not expect to generate any revenues from our direct sale of
products for several years, if ever. Substantially all of our
revenues to date have been derived from license fees, research and
development payments, and other amounts that we have received from
our strategic collaborators and licensees, including royalty
payments. Since the first quarter of 2012, we have recognized
royalty revenues related to Genentech’s sales of Erivedge and we
expect to continue to recognize royalty revenue in future quarters
from Genentech’s sales of Erivedge in the U.S. and Roche’s sales of
Erivedge outside of the U.S. However, a portion of our royalty and
royalty-related revenues under our collaboration with Genentech
will be paid to the Purchasers, pursuant to the Oberland Purchase
Agreement. The Oberland Purchase Agreement will terminate upon the
earlier to occur of (i) the date on which Curis Royalty’s rights to
receive the Purchased Receivables owed by Genentech under the
Genentech collaboration agreement have terminated in their entirety
and (ii) the date on which payment in full of the put/call price is
received by the Purchasers pursuant to the Purchasers’ exercise of
their put option or Curis Royalty’s exercise of its call right.For
additional information regarding the terms and termination
provisions of this agreement, see Note 8,
Liability Related to the Sale of Future
Royalties,
in the accompanying Notes to the Condensed Consolidated Financial
Statements included in Item 1 of Part I of this Quarterly Report on
Form 10-Q.
We could receive additional milestone payments from Genentech,
provided that contractually specified development and regulatory
objectives are met. Also, we could receive milestone payments from
the Purchasers, provided that contractually specified royalty
payment amounts are met within applicable time periods. Our only
source of revenues and/or cash flows from operations for the
foreseeable future will be royalty payments that are contingent
upon the continued commercialization of Erivedge under our
collaboration with Genentech, and contingent cash payments for the
achievement of clinical, development and regulatory objectives, if
any, that are met, under our collaboration with Genentech. Our
receipt of additional payments under our collaboration with
Genentech cannot be assured, nor can we predict the timing of any
such payments, as the case may be.
Cost of Royalty Revenues.
Cost of royalty revenues consists of all expenses incurred that are
associated with royalty revenues that we record as revenues in our
Condensed Consolidated Statements of Operations and Comprehensive
Loss. These costs currently consist of payments we are obligated to
make to university licensors on royalties that Curis Royalty
receives from Genentech on net sales of Erivedge. In all
territories other than Australia, our obligation is equal to 5% of
the royalty payments that we receive from Genentech for a period of
10 years from the first commercial sale of Erivedge, which occurred
in February 2012 in the U.S.
Research and Development.
Research and development expense consists of costs incurred to
develop our drug candidates. These expenses consist primarily
of:
•salaries
and related expenses for personnel, including stock-based
compensation expense;
•costs
of conducting clinical trials, including amounts paid to clinical
centers, clinical research organizations and consultants, among
others;
•
other outside service costs including costs of contract
manufacturing;
•sublicense
payments;
•the
costs of supplies and reagents;
•occupancy
and depreciation charges;
•certain
payments that we make under our collaboration agreements,
including, for example, semi-annual payments, option exercise fees
and milestone payments;
•payments
that we are obligated to make to certain third-party university
licensors upon our receipt of payments from Genentech related to
the achievement of clinical development and regulatory objectives
under our collaboration agreement; and
•internal
and external costs of complying with the requirements of the FDA or
another regulatory authority.
We expense research and development costs as incurred. We are
currently incurring research and development costs under our
Hedgehog signaling pathway antagonist collaboration with Genentech
related to the maintenance of third-party licenses to certain
background technologies.
Research and development activities are central to our business
model. Product candidates in later stages of clinical development
generally have higher development costs than those in earlier
stages, primarily due to the increased size and duration of
later-stage clinical trials. As a result, we expect that our
research and development expenses will increase substantially over
the next several years as we conduct our clinical trials of CA-4948
and CI-8993; prepare regulatory filings for our product candidates;
continue to develop additional product candidates; and potentially
advance our product candidates into later stages of clinical
development.
The successful development and commercialization of our product
candidates is highly uncertain. At this time, we cannot reasonably
estimate or know the nature, timing and costs of the efforts that
will be necessary to complete the preclinical and clinical
development of any of our product candidates. This uncertainty is
due to the numerous risks and uncertainties associated with product
development and commercialization, including the uncertainty
of:
•our
ability to successfully enroll our current and future clinical
trials and our ability to initiate future clinical trials, which
has been and may continue to be negatively impacted by the COVID-19
pandemic and responsive measures relating thereto;
•the
scope, quality of data, rate of progress and cost of clinical
trials and other research and development activities undertaken by
us or our collaborators;
•the
results of future preclinical studies and clinical
trials;
•the
cost and timing of regulatory approvals and maintaining compliance
with regulatory requirements;
•the
cost and timing of establishing sales, marketing and distribution
capabilities;
•the
cost of establishing clinical and commercial supplies of our drug
candidates and any products that we may develop;
•the
effect of competing technological and market developments;
and
•the
cost and effectiveness of filing, prosecuting, defending and
enforcing any patent claims and other intellectual property
rights.
Any changes in the outcome of any of these variables with respect
to the development of our product candidates could mean a
significant change in the costs and timing associated with the
development of these product candidates. For example, if the FDA or
another regulatory authority were to delay our clinical trials or
require us to conduct clinical trials or other testing beyond those
that we currently expect, or if we experience significant delays in
enrollment in any of our clinical trials, we could be required to
expend significant additional financial resources and time to
complete clinical development of that product candidate. We may
never obtain regulatory approval for any of our product candidates.
If we do obtain regulatory approval for our product candidates,
drug commercialization will take several years and millions of
dollars in development costs.
A further discussion of some of the risks and uncertainties
associated with completing our research and development programs on
schedule, or at all, and some consequences of failing to do so, are
set forth under Item 1A, "Risk Factors" of Part 1 of our Annual
Report on Form 10-K for the year ended December 31,
2020.
General and Administrative.
General and administrative expense consists primarily of salaries,
stock-based compensation expense and other related costs for
personnel in executive, finance, accounting, business development,
legal, information technology, corporate communications and human
resource functions. Other costs include facility costs not
otherwise included
in research and development expense, insurance, and professional
fees for legal, patent and accounting services. Patent costs
include certain patents covered under collaborations, a portion of
which is reimbursed by collaborators and a portion of which is
borne by us.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in
conformity with accounting principles generally accepted in the
United States requires that we make estimates and assumptions that
affect the reported amounts and disclosure of certain assets and
liabilities at our balance sheet date. Such estimates and judgments
include the carrying value of property and equipment and intangible
assets, revenue recognition, the value of certain liabilities, debt
classification and stock-based compensation. We base our estimates
on historical experience and on various other factors that we
believe to be appropriate under the circumstances, the results of
which form the basis for making judgments about the carrying value
of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under
different assumptions or conditions.
During the three months ended March 31, 2021, there were no
material changes to our critical accounting policies and estimates
as reported in our Annual Report on Form 10-K for the year ended
December 31, 2020, which was filed with the SEC on March 16,
2021.
Results of Operations
Three Months Ended March 31, 2021 and March 31, 2020
The following table summarizes our results of operations for
the three months ended March 31,
2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31, |
|
Percentage
Increase
(Decrease) |
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Revenues, net: |
$ |
2,189 |
|
|
$ |
2,709 |
|
|
(19) |
% |
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Cost of royalty revenues |
109 |
|
|
125 |
|
|
(13) |
% |
|
|
|
|
|
|
Research and development |
6,757 |
|
|
7,473 |
|
|
(10) |
% |
|
|
|
|
|
|
General and administrative |
4,123 |
|
|
3,593 |
|
|
15 |
% |
|
|
|
|
|
|
Other expense, net |
1,127 |
|
|
1,227 |
|
|
(8) |
% |
|
|
|
|
|
|
Net loss |
$ |
(9,927) |
|
|
$ |
(9,709) |
|
|
2 |
% |
|
|
|
|
|
|
Revenues. Total
revenues are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31, |
|
Percentage
Increase
(Decrease) |
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Revenues, net: |
|
|
|
|
|
|
|
|
|
|
|
Royalties |
$ |
2,187 |
|
|
$ |
2,515 |
|
|
(13) |
% |
|
|
|
|
|
|
Other revenue |
— |
|
|
211 |
|
|
(100) |
% |
|
|
|
|
|
|
Contra revenue, net |
2 |
|
|
(17) |
|
|
(100)% |
|
|
|
|
|
|
Total revenues, net |
$ |
2,189 |
|
|
$ |
2,709 |
|
|
(19) |
% |
|
|
|
|
|
|
Total revenues of $2.2 million decreased by 19% for the three
months ended March 31, 2021 as compared to the the same period in
2020. The decrease was driven by a reduction in royalty revenues
arising from Genentech and Roche’s net sales of Erivedge during the
three months ended March 31, 2021, as compared to the prior year
period, and due to the inclusion of a milestone payment from an
out-licensed technology that occurred in the first quarter of 2020
for which there was no such amount in 2021.
Cost of Royalty Revenues.
Cost of royalty revenues decreased by 13% for the three months
ended March 31, 2021 as compared to the same period in 2020, which
is consistent with the increase in royalty revenue. We are
obligated to make payments to two university licensors on royalties
that Curis Royalty earns from Genentech on net sales of
Erivedge.
Research and Development Expenses. The
following table summarizes our research and development expenses
incurred during the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31, |
|
Percentage
Increase
(Decrease) |
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Direct research and development expenses |
$ |
4,268 |
|
|
$ |
5,283 |
|
|
(19) |
% |
|
|
|
|
|
|
Employee related expenses |
2,064 |
|
|
1,747 |
|
|
18 |
% |
|
|
|
|
|
|
Facilities, depreciation and other expenses |
425 |
|
|
443 |
|
|
(4) |
% |
|
|
|
|
|
|
Total research and development expenses |
$ |
6,757 |
|
|
$ |
7,473 |
|
|
(10) |
% |
|
|
|
|
|
|
Research and development expenses were $6.8 million for the three
months ended March 31, 2021 as compared to $7.5 million in the same
period in 2020, a decrease of approximately $0.7 million, or 10%.
Direct research and development expenses decreased by $1.0 million
for the three months ended March 31, 2021 as compared to the same
period in 2020. The decrease in direct research and development
expenses for the quarter is primarily attributable to the upfront
license fee expense from our option and license agreement with
ImmuNext that occurred during the first quarter of 2020. These
costs were partially offset by a $0.3 million increase in employee
related costs.
We expect that a majority of our research and development expenses
for the foreseeable future will be incurred in connection with our
efforts to advance our programs, including clinical and preclinical
development costs, manufacturing, option exercise fees, and
potential milestone payments upon achievement of certain
milestones.
General and Administrative Expenses.
General and administrative expenses are summarized as
follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31, |
|
Percentage
Increase
(Decrease) |
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Personnel |
$ |
1,178 |
|
|
$ |
1,116 |
|
|
6 |
% |
|
|
|
|
|
|
Occupancy and depreciation |
146 |
|
|
123 |
|
|
19 |
% |
|
|
|
|
|
|
Legal services |
865 |
|
|
1,182 |
|
|
(27) |
% |
|
|
|
|
|
|
Professional and consulting services |
757 |
|
|
388 |
|
|
95 |
% |
|
|
|
|
|
|
Insurance costs |
154 |
|
|
106 |
|
|
45 |
% |
|
|
|
|
|
|
Stock-based compensation |
761 |
|
|
455 |
|
|
67 |
% |
|
|
|
|
|
|
Other general and administrative expenses |
262 |
|
|
223 |
|
|
17 |
% |
|
|
|
|
|
|
Total general and administrative expenses |
$ |
4,123 |
|
|
$ |
3,593 |
|
|
15 |
% |
|
|
|
|
|
|
General and administrative expenses were $4.1 million for the three
months ended March 31, 2021, as compared to $3.6 million in the
same period in 2020, an increase of $0.5 million, or 15%. The
increase in general administrative expense was driven primarily by
higher costs for stock-based compensation and professional and
consulting services, partially offset by lower legal services costs
during the three months ended March 31, 2021.
Other Expense.
Other expense decreased by $0.1 million, or 8% for the three months
ended March 31, 2021 as compared to the same period in 2020. Net
other expense for the first quarters of 2021 and 2020 primarily
consisted of imputed interest expense related to future royalty
payments.
Liquidity and Capital Resources
We have financed our operations primarily through private and
public placements of our equity securities, license fees,
contingent cash payments and research and development funding from
our corporate collaborators, debt financings, and the monetization
of certain royalty rights. See “Funding Requirements” and Note 1 to
the Condensed Consolidated Financial Statements appearing in this
Quarterly Report on Form 10-Q for a further discussion of our
liquidity.
At March 31, 2021, our principal sources of liquidity consisted of
cash, cash equivalents and investments of $168.4 million, excluding
our restricted cash of $0.8 million. Our cash and cash equivalents
are highly liquid investments with a
maturity of three months or less at date of purchase. Our short and
long-term investments primarily include commercial paper and
securities. We maintain cash balances with financial institutions
in excess of insured limits.
Common Stock Purchase Agreement
In February 2020, we entered into a common stock purchase
agreement, or the “Agreement”, with Aspire Capital Fund, LLC, or
Aspire Capital,for the sale of up to $30.0 million of our common
stock. Under the terms of the Agreement, Aspire Capital has
committed to purchase such shares of our common stock at our
request, from time to time during a 30-month period at prices based
on the market price at the time of each sale, subject to specified
terms and limitations.
Aspire Capital made an initial investment of $3.0 million through
the purchase of 2,693,965 shares of the our common stock. In 2020,
Aspire Capital subsequently purchased an additional 4,650,000
shares of our common stock for $5.4 million. In addition, as
consideration for Aspire Capital’s obligation under the Agreement,
we issued 646,551 shares of common stock to Aspire Capital as a
commitment fee. We also entered into a registration rights
agreement with Aspire Capital in connection with our entry into the
Agreement in which we agreed to file with the SEC one or more
registration statements, as necessary, and to the extent
permissible and subject to certain exceptions, to register under
the Securities Act, the sale of the shares of our common stock that
have been and may be issued to Aspire Capital under the Agreement.
As of March 31, 2021 and December 31, 2020, a total of $21.6
million remained available under the Agreement. We did not sell
shares of common stock under this Agreement during the three months
ended March 31, 2021 and March 31, 2020.
Under the terms of the Agreement, we have the right to sell up to
150,000 shares of common stock per day to Aspire Capital, which
total may be increased by mutual agreement up to an additional
2,000,000 shares per day. The extent to which we rely on Aspire
Capital as a source of funding will depend on a number of factors,
including the prevailing market price of our common stock and the
extent to which we are able to secure working capital from other
sources.
Pursuant to the Agreement, we will control the timing and amount of
the further sale of our common stock to Aspire Capital. We plan to
use the proceeds for general corporate purposes, including research
and development, clinical trial activity and working capital. There
are no restrictions on future financings and there are no financial
covenants, participation rights, rights of first refusal, or
penalties in the Agreement. We have the right to terminate the
Agreement at any time without any additional cost or
penalty.
Equity Offerings
On March 4, 2020, we entered into a Capital on Demand™ Sales
Agreement with JonesTrading Institutional Services LLC, or
JonesTrading, to sell from time to time up to $30.0 million of our
common stock through an “at the market offering” program under
which JonesTrading acted as sales agent. We terminated this sales
agreement effective as of December 9, 2020. We did not incur any
termination penalties as a result of the termination. As of the
effective date of the termination of this sales agreement, we had
sold an aggregate of 6,298,648 shares of common stock under the
sales agreement for aggregate gross proceeds of $8.3 million and
net proceeds of $7.9 million, after deducting commissions and
offering expenses. The $21.7 million of common stock that remained
unsold under this sales agreement at the time of termination is no
longer available.
In June 2020, we entered into a securities purchase agreement with
certain institutional investors, pursuant to which we issued and
sold, in a registered direct offering, an aggregate of 14,000,000
shares of our common stock at a purchase price per share of $1.25,
for aggregate gross proceeds of $17.5 million, before
deducting fees of approximately $1.0 million paid to the
placement agent and other offering expenses of approximately
$0.5 million paid by us. JonesTrading acted as the exclusive
placement agent for the transaction, and we offered the shares
pursuant to our universal shelf registration statement on Form S-3,
or the 2018 Shelf, which was filed with the SEC on May 3, 2018 and
declared effective by the SEC on May 17, 2018 (File No.
333-224627), and a prospectus supplement thereunder.
In December 2020, we completed an underwritten public offering of
29,500,000 shares of our common stock, including 3,847,826 shares
issued and sold upon the exercise in full of the underwriters’
option to purchase additional shares, at a public offering price of
$5.75 per share, for aggregate gross proceeds of $169.6 million
before deducting underwriting discounts and commissions and other
offering expenses of $10.2 million. The securities in this
transaction were offered pursuant to the 2018 Shelf and an
additional registration statement on Form S-3 (File No. 333-251211)
filed pursuant to Rule 462(b) which became automatically effective
on December 9, 2020, and a prospectus supplement
thereunder.
On March 16, 2021, we entered into a Sales Agreement with Cantor
Fitzgerald & Co., or Cantor, and JonesTrading Institutional
Services LLC, or JonesTrading, to sell from time to time up to
$100.0 million of our common stock through an “at the market
offering” program under which Cantor and JonesTrading act as sales
agents. To date, we have not made any sales of common stock
pursuant to the sales agreement. The securities in this transaction
were offered pursuant to an automatic shelf registration statement
of securities on Form S-3ASR (File No. 333-254362) that was filed
with the SEC on March 16, 2021.
Debt Financing
On April 21, 2020, we entered into a promissory note evidencing an
unsecured $0.9 million loan, or the PPP Loan, under the Paycheck
Protection Program, or PPP, of the Coronavirus Aid, Relief, and
Economic Security Act, or the CARES Act. The PPP Loan was made by
Silicon Valley Bank, or SVB, and has a term of 24-months and an
interest rate of 1%. Interest and principal payments have been
deferred to the third quarter of 2021. We may prepay the PPP Loan
at any time without payment of penalty or premium. The promissory
note evidencing the PPP Loan contains customary events of default
relating to, among other things, payment defaults, breach of
representations and warranties or provisions of the promissory
note, and cross-default provisions. The occurrence of an event of
default may result in the repayment of all amounts outstanding,
collection of all amounts we owe, and/or filing suit and obtaining
judgment against us.
Under the terms of the CARES Act and the Paycheck Protection
Program Flexibility Act of 2020, PPP Loan recipients can apply for
and be granted forgiveness for all or a portion of loans granted
under the PPP. We applied for forgiveness in 2020. Such forgiveness
will be determined, subject to limitations, based on the use of
loan proceeds for payroll costs and mortgage interest, rent or
utility costs and the maintenance of employee and compensation
levels. Any forgiveness of the PPP Loan will be made in accordance
with U.S. Small Business Administration, or SBA, requirements and
subject to approval by SVB. We will remain responsible for amounts
due under the promissory note that are not forgiven, together with
interest accrued and unpaid thereon at the rate set forth above.
Interest payable on the PPP Loan may be forgiven only if the SBA
agrees to pay such interest on the forgiven principal amount of the
PPP Loan. There is no assurance that any interest payable on the
PPP Loan will be forgiven in whole or in part. As of March 31,
2021, we have not made any principal or interest payments on the
PPP Loan. As of March 31, 2021, we recorded the full obligation of
the PPP Loan of $0.9 million as short-term debt.
Royalty Interest Purchase Agreement
On March 22, 2019, we and Curis Royalty entered into the Oberland
Purchase Agreement with the Purchasers. We sold to the Purchasers a
portion of our rights to receive royalties from Genentech on
potential net sales of Erivedge.
As upfront consideration for the purchase of the royalty rights, at
closing the Purchasers paid to Curis Royalty $65.0 million less
certain transaction expenses. Curis Royalty will also be entitled
to receive up to approximately $70.7 million in milestone payments
based on sales of Erivedge as follows: (i) $17.2 million if the
Purchasers and Curis Royalty receive aggregate royalty payments
pursuant to the Oberland Purchase Agreement in excess of $18.0
million during the calendar year 2021, subject to certain
exceptions and (ii) $53.5 million if the Purchasers receive
payments pursuant to the Oberland Purchase Agreement in excess of
$117.0 million on or prior to December 31, 2026. For further
discussion please refer to Note 8,
Liability Related to the Sale of Future
Royalties.
Milestone Payments and Monetization of Royalty Rights
We have received aggregate milestone payments totaling $59.0
million under our collaboration with Genentech since 2012. In
addition, we began receiving royalty revenues in 2012 in connection
with Genentech’s sales of Erivedge in the U.S. and Roche’s sales of
Erivedge outside of the U.S. Erivedge royalty revenues received
after December 2012 have been used to repay Curis Royalty’s
outstanding principal and interest under the loans due to
BioPharma-II and HealthCare Royalty. A portion of Erivedge royalty
and royalty-related revenue payments will be paid to the Purchasers
pursuant to the Oberland Purchase Agreement. We also remain
entitled to receive any contingent payments upon achievement of
clinical development objectives and royalty payments related to
sales of Erivedge pursuant to our collaboration agreement with
Genentech and certain contingent payments upon achievement of
contractually specified royalty revenue payment amounts related to
sales of Erivedge pursuant to the Oberland Purchase Agreement. Upon
receipt of any such payments, as well as on royalties received in
any territory other than Australia, we are required to make
payments to certain university licensors totaling 5% of these
amounts. In addition, for royalties that Curis Royalty receives
from Roche’s sales of Erivedge in Australia, we were obligated to
make payments to university licensors of 2% of Roche’s direct net
sales in Australia until the expiration of the patent in April
2019. After April 2019, the amount we are obligated to pay in
Australia decreased to 5% of the royalty payments that Curis
Royalty receives from Genentech.
Cash Flows
Cash flows for operations have primarily been used for salaries and
wages for our employees, facility and facility-related costs for
our office and laboratory, fees paid in connection with preclinical
and clinical studies, laboratory supplies, consulting fees and
legal fees. We expect that costs associated with clinical studies
will increase in future periods.
Net cash used in operating activities of $13.2 million during the
three months ended March 31, 2021 was primarily the result of our
net loss for the period of $9.9 million, offset by non-cash charges
consisting of stock-based compensation, non-cash lease expense,
depreciation, and non-cash imputed interest totaling $1.5 million.
Accounts payable, accrued expenses and operating lease liability
decreased by $3.6 and prepaid expenses and other assets increased
by $2.1 million. These changes increased cash utilization. Accounts
receivable decreased $0.9 million and reduced cash utilization
.
Net cash used in operating activities of $9.0 million during the
three months ended March 31, 2020 was primarily the result of our
net loss for the period of $9.7 million, offset by non-cash charges
consisting of stock-based compensation,
amortization of debt issuance costs, non-cash lease expense,
depreciation, and non-cash imputed interest totaling $1.1 million.
Operating lease liability decreased by $0.2 million. Accounts
payable and accrued and other liabilities decreased $0.7 million,
and accounts receivable decreased $0.7 million related to a
decrease in Erivedge royalties. Prepaid expenses and other assets
increased by $0.2 million.
We expect to continue to use cash in operations as we seek to
advance our drug candidates and our programs under our
collaboration agreements with Aurigene and ImmuNext. In addition,
in the future we may owe royalties and other contingent payments to
our licensors based on the achievement of developmental milestones,
product sales and other specified objectives.
Investing activities used cash of $4.1 million and provided cash of
$4.8 million for the three months ended March 31, 2021 and 2020,
respectively, resulting primarily from net investment activity from
purchases and sales or maturities of investments for the respective
periods.
Financing activities used cash of $1.3 million for the three months
ended March 31, 2021, primarily due to the payment of our liability
under the Oberland Purchase Agreement.
Financing activities provided cash of $1.3 million for the three
months ended March 31, 2020, as a result of the proceeds from the
issuance of shares to Aspire Capital offset by the payment of our
liability under the Oberland Purchase Agreement.
We have historically derived a portion of our operating cash flow
from our receipt of milestone payments under collaboration
agreements with third parties. However, we cannot predict whether
we will receive additional milestone payments under existing or
future collaborations.
Funding Requirements
We have incurred significant losses since our inception. As of
March 31, 2021, we had an accumulated deficit of approximately $1.1
billion. We will require substantial funds to continue our research
and development programs and to fulfill our planned operating
goals. Our planned operating and capital requirements currently
include the support of our current and future research and
development activities for CA-4948 and CI-8993 as well as
development candidates we have and continue to license under our
collaborations with Aurigene and ImmuNext. We will require
substantial additional capital to fund the further development of
these programs, as well as to fund our general and administrative
costs and expenses. Moreover, our agreements with collaborators
impose significant potential financial obligations on us. For
example, under our collaboration, license and option agreement with
Aurigene, we are required to make milestone, royalty and option fee
payments for discovery, research and preclinical development
programs that will be performed by Aurigene, which impose
significant potential financial obligations on us. In addition, if
we choose to exercise our option under the option and license
agreement with ImmuNext, or the ImmuNext Agreement, we will be
required to make milestone, royalty, and option fee payments in
connection with the development of CI-8993.
Based upon our current operating plan, we believe that our existing
cash, cash equivalents and investments of $168.4 million as of
March 31, 2021, should enable us to fund our operating expenses and
capital expenditure requirements into 2024. We have based this
assessment on assumptions that may prove to be wrong, and we could
exhaust our available capital resources sooner than we expect. We
will need to raise additional capital or incur indebtedness to
continue to fund our operations in the future. Our ability to raise
additional funds will depend on financial, economic and market
conditions, many of which are outside of our control, and we may be
unable to raise financing when needed, or on terms favorable to us.
If necessary funds are not available, we may have to delay, reduce
the scope of, or eliminate some of our development programs,
potentially delaying the time to market for, or preventing the
marketing of, any of our product candidates, which could adversely
affect our business prospects, and we may be unable to continue our
operations.
Furthermore, there are a number of factors that may affect our
future capital requirements and further accelerate our need for
additional working capital, many of which are outside our control,
including the following:
•unanticipated
costs in our research and development programs;
•the
timing and cost of obtaining regulatory approvals for our drug
candidates and maintaining compliance with regulatory
requirements;
•payments
due to licensors, including Aurigene and ImmuNext if we exercise
our option under the ImmuNext Agreement, for patent rights and
technology used in our drug development programs;
•the
costs of commercialization activities for any of our drug
candidates that receive marketing approval, to the extent such
costs are our responsibility, including the costs and timing of
establishing drug sales, marketing, distribution and manufacturing
capabilities;
•unplanned
costs to prepare, file, prosecute, defend and enforce patent claims
and other patent-related costs, including litigation costs and
technology license fees;
•unexpected
losses in our cash investments or an inability to otherwise
liquidate our cash investments due to unfavorable conditions in the
capital markets; and
•impacts
resulting from the COVID-19 pandemic and responsive actions
relating thereto.
To become and remain profitable, we, either alone or with
collaborators, must develop and eventually commercialize one or
more drug candidates with significant market potential. This will
require us to be successful in a range of challenging activities,
including completing preclinical testing and clinical trials of our
drug candidates, obtaining marketing approval for these drug
candidates, manufacturing, marketing and selling those drugs for
which we may obtain marketing approval and satisfying any post
marketing requirements. We may never succeed in these activities
and, even if we do, may never generate revenues that are
significant or large enough to achieve profitability. Other than
Erivedge, which is being commercialized by Genentech and Roche, our
most advanced drug candidates are currently only in early clinical
testing.
For the foreseeable future, we will need to spend significant
capital in an effort to develop and commercialize products and we
expect to incur substantial operating losses. Our failure to become
and remain profitable would, among other things, depress the market
price of our common stock and could impair our ability to raise
capital, expand our business, diversify our research and
development programs or continue our operations.
New Accounting Pronouncements
For detailed information regarding recently issued accounting
pronouncements and the expected impact on our Condensed
Consolidated Financial Statements, see Note 2g,
New Accounting Pronouncements,
in the accompanying Notes to Condensed Consolidated Financial
Statements included in Item 1 of Part I of this Form
10-Q.
Contractual Obligations
There have been no material changes to our contractual obligations
set forth under the heading “Management’s Discussion and Analysis
of Financial Condition and Results of Operations — Contractual
Obligations” in our Annual Report on Form 10-K for the year
ended December 31, 2020.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of March 31,
2021.
Item 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Not required.
Item 4. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls &
Procedures
Our management, with the participation of our chief executive
officer and chief financial officer, evaluated the effectiveness of
our disclosure controls and procedures as of March 31, 2021. The
term “disclosure controls and procedures,” as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) means controls and
other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the SEC’s rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the company’s management,
including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required
disclosure. Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost benefit
relationship of possible controls and procedures. Based on the
evaluation of our disclosure controls and procedures as of March
31, 2021, our chief executive officer and chief financial officer
concluded that, as of such date, our disclosure controls and
procedures were effective at the reasonable assurance
level.
Changes in Internal Control Over Financial Reporting
No change in our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
occurred during the three months ended March 31, 2021 that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1A. RISK FACTORS
There have been no material changes in our risk factors from those
previously disclosed in Item 1A., “Risk Factors” of Part I of our
Annual Report on Form 10-K for the year ended December 31, 2020,
which was filed with the SEC on March 16, 2021.
Item 6. Exhibits
|
|
|
|
|
|
Exhibit
Number |
Description |
10.1 |
|
31.1 * |
|
31.2 * |
|
32.1 * |
|
32.2 * |
|
|
|
101.INS * |
InLine XBRL Instance Document |
|
|
101.SCH * |
InLine XBRL Taxonomy Extension Schema Document |
|
|
101.CAL * |
InLine XBRL Taxonomy Extension Calculation Linkbase
Document |
|
|
101.DEF * |
InLine XBRL Taxonomy Extension Definition Linkbase
Document |
|
|
101.LAB * |
InLine XBRL Taxonomy Extension Label Linkbase Document |
|
|
101.PRE * |
InLine XBRL Taxonomy Extension Presentation Linkbase
Document |
|
|
104 |
Cover Page Interactive Data File |
|
|
|
|
* Filed herewith
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly
authorized.
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|
|
CURIS, INC. |
|
|
|
|
Dated: |
May 12, 2021 |
By: |
/S/ JAMES E. DENTZER |
|
|
|
James E. Dentzer |
|
|
|
President and Chief Executive Officer |
|
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
|
CURIS, INC. |
|
|
|
|
|
|
By: |
/S/ WILLIAM STEINKRAUSS |
|
|
|
William Steinkrauss |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial and Accounting Officer) |
Curis (NASDAQ:CRIS)
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