Curis, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Curis is a clinical-stage biotechnology company focused on cancer drug development; its lead candidate is emavusertib, an IRAK4 inhibitor. The unaudited results are consolidated and share data reflect a 1-for-20 reverse stock split effective September 28, 2023.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $2.8 million | $2.8 million | $7.3 million | $7.3 million |
| Research and development expense | $10.4 million | $10.8 million | $29.5 million | $34.6 million |
| General and administrative expense | $4.8 million | $4.6 million | $13.8 million | $15.3 million |
| Operating loss | $12.4 million | $12.6 million | $36.1 million | $42.8 million |
| Net loss | $12.2 million | $13.3 million | $35.7 million | $45.3 million |
| Net loss per share, basic and diluted | $2.13 | $2.83 | $6.96 | $9.82 |
Q3 revenue was primarily Erivedge royalties from Genentech/Roche and was broadly unchanged year over year. Nine-month R&D expense declined 15%, mainly due to lower employee costs from reduced headcount; quarterly R&D also included increased clinical costs. Nine-month G&A fell 10%, while Q3 G&A rose 5%, principally from higher professional, legal and consulting costs. Lower royalty-sale expense and higher interest income improved other income versus the prior-year periods.
- Cash and investments: $68.5 million at September 30, 2023, excluding $0.5 million restricted cash; comprising $24.5 million cash and equivalents and $44.0 million short-term investments.
- Cash flow: Operating cash use was $28.2 million for the first nine months, versus $42.1 million in 2022. Investing activities provided $23.3 million; financing activities provided $9.7 million, including $13.8 million net proceeds from the July registered direct offering.
- Balance sheet: Total assets were $90.0 million, current liabilities $13.7 million, total liabilities $60.4 million and stockholders’ equity $29.6 million. The $44.8 million liability related to sold future royalties is the principal financing-related liability disclosed; the filing does not report conventional borrowings as a separate debt balance.
Material changes, outlook and risks
- Management says existing cash, cash equivalents and investments should fund operations into 2025; the financial statement note separately says they should fund operations for at least 12 months from the filing date. The estimate depends on assumptions and funding needs could accelerate. Curis expects continuing losses and does not expect near-term profitability.
- Curis is prioritizing emavusertib and expects most future R&D spending to support its development. FDA partial clinical holds on the TakeAim Lymphoma and TakeAim Leukemia trials were lifted in August 2022 and July 2023, respectively, after a serious adverse event prompted the holds. Further safety events, enrollment delays or unfavorable trial results remain risks.
- In March 2023, Oberland-related parties alleged defaults under the royalty purchase agreement and asserted potential rights to require repurchase of purchased receivables. Curis disputes the allegations; the purchasers had not exercised the put option as of September 30. The estimated put/call price was up to $63.0 million. An adverse outcome could materially harm the company and its ability to continue as a going concern.
- Curis raised $13.8 million net in a July registered direct offering; $93.7 million remained available under its at-the-market sales agreement at quarter-end. Further equity issuance could dilute shareholders. The company also disclosed potential Aurigene milestone obligations of $42.5 million per each of four licensed programs, plus possible additional-indication payments; none were accrued at quarter-end.
- Curis does not expect to exercise its ImmuNext option for VISTA antagonizing compounds; the rights were expected to revert to ImmuNext in January 2024. It also disclosed Nasdaq listing and reverse-split-related liquidity risks, although Nasdaq notified Curis on October 13, 2023 that it had regained compliance with the minimum bid-price requirement.
Key facts investors should verify
- Whether emavusertib trials deliver adequate safety, enrollment and efficacy results, and whether FDA restrictions or requirements change.
- The company’s actual cash runway versus its “into 2025” estimate, including spending, financing availability and any strategic alternatives.
- Developments in the Oberland dispute, including any exercise of the put option, litigation or change in the estimated potential payment.
- Erivedge royalty trends and the portion of royalties paid to Oberland, as well as any milestone receipts or obligations.
- Future share issuance, stock dilution and Nasdaq listing compliance following the reverse split.