Curis, Inc. 10-Q Summary
Business context and reporting period. Curis is a clinical-stage biotechnology company focused on cancer therapeutics. This unaudited Form 10-Q covers the quarter and nine months ended September 30, 2022, with comparisons to the corresponding 2021 periods. Erivedge royalties from Genentech and Roche were the company’s principal revenue source; substantially all gross revenue came from that collaboration.
Key financial metrics
Amounts below are in millions, except per-share data.
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| 2022 net revenue | $2.825 | $7.275 |
| 2021 net revenue | $3.039 | $7.514 |
| 2022 research and development expense | $10.813 | $34.571 |
| 2022 general and administrative expense | $4.556 | $15.318 |
| 2022 operating loss | $(12.606) | $(42.800) |
| 2022 net loss | $(13.294) | $(45.343) |
| 2022 diluted loss per share | $(0.14) | $(0.49) |
- Cash flow: Cash used in operating activities was $42.069 million for the first nine months of 2022, versus $29.448 million in 2021. Investing activities provided $29.560 million, mainly from investment maturities and sales; financing activities provided $2.255 million.
- Liquidity: At September 30, 2022, cash and cash equivalents were $29.851 million and short-term investments were $68.838 million, totaling $98.689 million. Current assets were $105.717 million and current liabilities were $13.742 million.
- Debt and obligations: The $0.9 million PPP loan was fully forgiven in 2021. The balance sheet included a $50.269 million liability related to sold future Erivedge royalties and $4.201 million of operating lease liabilities. No default under the Oberland royalty agreement had occurred at September 30, 2022.
- Margins: The filing does not provide a clear gross or operating margin percentage; the company reported an operating loss.
Material changes versus the prior comparable periods
- Third-quarter revenue declined 7% and nine-month revenue declined 3%, primarily due to lower Erivedge net sales.
- Research and development expense rose 26% for the quarter and 43% for the nine months, driven largely by personnel costs and, for the nine months, higher consulting, manufacturing and clinical development costs.
- Net loss increased 20% for the quarter and 43% for the nine months. Operating cash use also increased year over year.
- Curis issued 4,583,695 shares under its at-the-market offering during the nine months, raising $6.3 million gross (approximately $5.7 million net). Shares outstanding were 96,398,360 at September 30, compared with 91,645,369 at December 31, 2021.
Outlook, management commentary and risks
- Management stated that $98.7 million of cash, cash equivalents and investments at September 30 should fund planned operations for at least 12 months from filing. Following a November 9, 2022 announcement to concentrate resources on emavusertib and reduce other programs, management expected the runway to extend into 2025. These estimates depend on assumptions that could prove incorrect.
- The November 9 plan deprioritized CI-8993, fimepinostat and CA-170, and included an approximately 30% workforce reduction. Curis expected about $1.2 million of separation costs.
- The FDA had lifted the partial hold on the TakeAim Lymphoma trial and allowed additional enrollment in the monotherapy dose-finding phase of TakeAim Leukemia. The hold remained on the leukemia trial’s Phase 2a monotherapy expansion and Phase 1b combination phases pending completion of Phase 1a and FDA approval to proceed. Safety, regulatory and enrollment delays remain material risks.
- Curis expects continued operating losses and will require substantial funding to advance development. Erivedge royalties are exposed to sales trends and competition; a substantial portion of royalty receipts is payable to Oberland. Additional financing may be unavailable or dilutive.
- On October 21, 2022, Nasdaq notified Curis that its share price had been below the $1.00 minimum bid requirement for 30 consecutive business days. The company had until April 19, 2023 to regain compliance, subject to Nasdaq rules.
- Potential milestone and royalty obligations to collaboration partners, including Aurigene and ImmuNext, could add costs if development, approval or commercial milestones are reached. COVID-19-related trial, supply and site disruptions were also identified as risks.
Important facts for investors to verify
- Progress toward resolving the remaining FDA clinical hold and the timing and safety findings from emavusertib trials.
- Whether the workforce and program reductions achieve the stated cash runway into 2025, including the effect of the expected separation costs.
- Erivedge sales and royalty receipts, payments to Oberland, and the terms and status of the royalty-sale obligation.
- Future operating cash use, financing needs, ATM share issuance and resulting dilution.
- Nasdaq bid-price compliance and any effect on the company’s ability to raise capital.