Curis, Inc. — Q1 2024 Form 10-Q
Business context and period: Biotechnology company developing emavusertib, an IRAK4 inhibitor, with clinical programs in leukemia and lymphoma and an AML combination study. It also receives royalties from Genentech/Roche’s Erivedge sales. This unaudited report covers the three months ended March 31, 2024; comparisons are with Q1 2023 unless noted.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 / prior date |
|---|---|---|
| Revenue | $2.086 million | $2.297 million; down 9% |
| Research and development expense | $9.617 million | $9.140 million; up 5% |
| General and administrative expense | $4.891 million | $4.760 million; up 3% |
| Operating loss | $12.469 million | $11.627 million |
| Net loss | $11.876 million | $11.559 million |
| Net loss per share, basic and diluted | $2.05 | $2.39 |
| Cash used in operating activities | $13.232 million | $12.199 million |
Cash, cash equivalents and short-term investments totaled $40.7 million at March 31, 2024, excluding $0.5 million of restricted cash. Cash and cash equivalents were $30.0 million, versus $26.7 million at December 31, 2023; short-term investments were $10.8 million, versus $29.7 million. Investing activities provided $18.9 million, largely from investment sales and maturities; financing activities used $2.4 million, primarily for Oberland payments. The company reported total assets of $62.0 million, total liabilities of $52.6 million, and stockholders’ equity of $9.5 million.
The balance sheet includes a $40.1 million liability related to the sale of future royalties, as well as operating lease liabilities of approximately $2.5 million. The filing does not report conventional funded debt. No company-wide gross margin figure is presented; royalty cost was $47,000.
Changes, outlook and risks
- Revenue fell with lower Erivedge net sales. R&D expense rose mainly because of higher employee-related costs; operating cash use increased by $1.0 million, attributed to higher R&D costs and payment timing.
- Management says the $40.7 million in cash, cash equivalents and investments is expected to fund operating expenses and capital expenditures into 2025, but also states those resources are not expected to fund operations beyond 12 months from the filing date. The financial statements conclude that substantial doubt exists about the company’s ability to continue as a going concern within one year after issuance.
- Curis expects continued operating losses and needs additional capital. It plans to pursue equity financing, collaborations, or other strategic transactions; the outcome and terms are uncertain. Without funding, it may have to delay, reduce, or stop emavusertib development. The company did not provide specific financial guidance.
- In March 2023, Oberland-related parties alleged defaults under the royalty purchase agreement; Curis disputes the allegations. No put option had been exercised and no further communication had been received since the letter. The estimated put/call price was $50.9 million at March 31, 2024; an adverse outcome could materially affect the company and its ability to continue as a going concern.
- A February 2024 at-the-market sales agreement makes up to $100.0 million of shares available for sale; Curis sold no shares under it during Q1. Potential dilution and access to financing remain relevant risks.
- Emavusertib is being studied in Phase 1/2 leukemia and lymphoma trials and a Phase 1 AML triplet study. Development, enrollment, regulatory, financing, competition, collaboration, and intellectual-property risks could affect timing and outcomes.
Important facts for investors to verify
- Whether Curis obtains financing or a strategic transaction, and how long available funds actually support operations.
- Clinical-trial progress, enrollment, safety and efficacy data for emavusertib, and the resulting development costs.
- Any further action by Oberland, the status of the disputed alleged defaults, and potential exposure relative to the reported $50.9 million put/call price.
- Erivedge sales and royalties, including the portion paid to Oberland and any changes in royalty receipts.
- Use of the ATM offering, potential share dilution, and progress toward resolving the going-concern uncertainty.