Curis, Inc. — FY2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019; filed March 19, 2020. This is an annual report, not a standalone fourth-quarter filing. Curis is a clinical-stage oncology biotechnology company. Its only marketed-product revenue is royalties from Genentech/Roche’s Erivedge; its own principal candidates remain in early development.
Financial performance and position
| Metric | FY2019 | FY2018 | Change / context |
|---|---|---|---|
| Revenue, net | $10.0 million | $10.4 million | Down 4%; all gross revenue was attributable to Erivedge royalties. Net revenue included a $0.4 million contra-revenue reserve in 2019. |
| Research and development expense | $22.3 million | $24.4 million | Down 9%; direct trial and development costs increased, while employee-related costs fell following headcount reductions. |
| General and administrative expense | $11.6 million | $14.8 million | Down 22%, mainly due to lower personnel and legal costs. |
| Loss from operations | $24.4 million | $29.3 million | Improved year over year. |
| Net loss | $32.1 million | $32.6 million | Nearly unchanged despite lower operating loss, reflecting higher other expense. |
| Net loss per share | $0.97 | $0.98 | Basic and diluted. |
| Cash used in operations | $26.2 million | $30.1 million | Operating cash outflow continued. |
Fourth-quarter 2019 revenue was $3.3 million and net loss was $8.6 million. Quarterly revenue increased through the year, while quarterly net losses varied.
At year-end, Curis reported $15.4 million cash and cash equivalents, $5.1 million short-term investments, and $1.0 million restricted cash. Total assets were $35.1 million; total liabilities were $69.0 million, including a $62.5 million liability for sold future royalty rights. Stockholders’ deficit was $33.9 million and accumulated deficit was $1.017 billion. Debt was fully repaid in March 2019; no debt remained at year-end. The royalty-sale liability is distinct from conventional debt.
Gross margin is not presented as a company-wide measure. Cost of royalty revenue was $0.5 million. Other expense of $7.8 million included a $3.5 million debt-extinguishment loss and $4.1 million of imputed interest on the Oberland royalty transaction; debt interest expense fell to $0.8 million from $3.9 million.
Material changes and financing
- Revenue declined modestly, primarily reflecting a larger reserve for contractual royalty reductions. Reported royalties were approximately flat year over year.
- Curis received $65.0 million gross from Oberland in March 2019 for a portion of future Erivedge royalties. After debt repayment and transaction costs, net proceeds were approximately $27.5 million. Some future royalties are allocated to Oberland, subject to the transaction terms.
- In February 2020, Curis received $3.0 million from an initial Aspire Capital stock purchase; up to a further $27.0 million may be available subject to contractual limits and market conditions. In March 2020, it entered into a $30.0 million at-the-market sales agreement with JonesTrading; no sales had been made under it as of the filing.
- These financing arrangements involve potential share issuance and dilution, and the company cautions that they may not provide sufficient funding.
Pipeline, outlook, and key risks
- CA-4948: In a Phase 1 dose-escalation study for non-Hodgkin lymphomas, with preliminary data reported in December 2019. Curis planned a separate Phase 1 study in AML and MDS for the first half of 2020.
- CI-8993: Curis planned a Phase 1a/1b study in 2020 under an ImmuNext option and license arrangement. The earlier Janssen study had one dose-limiting cytokine-release-syndrome event among 12 patients. The new agreement includes a $20.0 million option exercise fee, plus potential milestones and royalties if Curis exercises the option.
- Fimepinostat: Prior studies showed responses in some MYC-altered DLBCL patients, but the filing describes those results as interim/combined clinical data. In March 2020, Curis said its venetoclax combination study showed no efficacy signal warranting continuation and stopped enrollment; future development was under evaluation.
- CA-170: Curis stopped enrollment in its mesothelioma study after preliminary data and was evaluating future studies. Under a February 2020 amendment, Aurigene agreed to fund and conduct a Phase 2b/3 study in approximately 240 patients with nsNSCLC; Aurigene received expanded Asian rights, while Curis retained U.S., EU, and other rights.
- Management expected year-end available cash and investments to fund planned operations into the second half of 2020, but stated that resources were insufficient to support operations for 12 months from the filing date. Management and the auditor identified substantial doubt about Curis’s ability to continue as a going concern. Further financing is necessary; failure to obtain it could force program delays, reductions, or discontinuation.
- Principal risks include dependence on Erivedge and a single revenue source, early-stage clinical uncertainty, competition and possible royalty reductions from competing BCC drugs, reliance on collaborators and outsourced manufacturing, financing and dilution risk, and potential Nasdaq listing deficiencies. Curis also disclosed possible COVID-19 effects on trial enrollment, supply chains, and operations; the impact was uncertain as of the filing.
The auditor issued an unqualified opinion on the financial statements and concluded internal control over financial reporting was effective as of December 31, 2019. No material legal proceedings were reported.
Important facts for investors to verify
- Current cash runway, subsequent cash usage, and whether Aspire Capital or the JonesTrading ATM has generated meaningful proceeds; assess dilution and any further financing needs.
- Updated clinical data, enrollment, safety, and timelines for CA-4948 and CI-8993, including whether planned studies began and whether the CI-8993 option was exercised.
- Whether CA-170’s Aurigene-funded nsNSCLC trial proceeded, and any new evidence supporting the program after Curis stopped its mesothelioma study.
- Fimepinostat’s next development decision following termination of the venetoclax combination study.
- Erivedge sales, royalty receipts and reductions, the allocation of royalties to Oberland, and the conditions tied to potential Oberland milestone payments and default remedies.
- Any changes to going-concern disclosures, cash balances, Nasdaq listing compliance, and COVID-19-related clinical or supply disruptions.