Curis, Inc. (Nasdaq: CRIS) — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The 10-K was filed March 13, 2023. Curis is a clinical-stage biotechnology company developing cancer therapeutics; it has no internally commercialized products.
Business context and key developments
- Emavusertib, an oral IRAK4 inhibitor, is Curis’s lead clinical candidate. Its TakeAim Leukemia Phase 1/2 trial is testing patients with relapsed or refractory AML and high-risk MDS; a separate Phase 1/2 trial is studying hematologic malignancies including lymphoma.
- After a patient death and serious adverse event, the FDA placed partial clinical holds on both trials in April 2022. The lymphoma hold was lifted in August after agreement on safety monitoring and additional enrollment. Leukemia monotherapy dose-finding enrollment resumed, but the Phase 2a expansion and combination phases remained on hold pending completion of Phase 1a and FDA authorization to proceed.
- In November 2022, Curis reprioritized resources toward emavusertib, reduced resources for other pipeline programs, and announced a workforce reduction of approximately 30%. CI-8993, fimepinostat, CA-170 and other programs were deprioritized.
- Erivedge, marketed by Genentech and Roche, is Curis’s only source of revenue. All 2022 revenue was attributable to Erivedge-related royalties and other collaboration amounts.
Financial performance and liquidity
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Net revenue | $10.2 million | $10.6 million | Down 5% |
| Research and development expense | $43.3 million | $34.9 million | Up 24% |
| General and administrative expense | $19.6 million | $17.3 million | Up 14% |
| Loss from operations | $53.0 million | $42.1 million | Loss increased |
| Net loss | $56.7 million | $45.4 million | Loss increased 25% |
| Net loss per share | $0.61 | $0.50 | Loss per share increased |
| Cash used in operating activities | $54.3 million | $37.6 million | Use increased $16.7 million |
- Revenue consisted of $10.278 million in royalties, less $0.116 million in contra revenue. Erivedge royalty revenue declined from $10.749 million to $10.278 million.
- Higher R&D spending primarily reflected increased employee-related costs, which rose $7.4 million amid increased headcount. The company expects most future R&D spending to support its development programs.
- At December 31, 2022, cash and cash equivalents were $19.7 million and short-term investments were $66.0 million; together these totaled $85.6 million. Restricted cash was an additional $0.6 million. Current assets were $92.1 million and current liabilities were $10.0 million.
- Total assets were $108.8 million, total liabilities $62.3 million, and stockholders’ equity $46.6 million. The balance sheet included a $49.5 million liability related to the sale of future Erivedge royalties and $3.9 million in operating lease liabilities. The filing reports no conventional outstanding loan balance at year-end; the PPP loan was forgiven in 2021.
- Cash, cash equivalents and investments declined from $139.8 million at year-end 2021 to $85.6 million at year-end 2022. Investing activities provided $33.0 million, mainly from investment sales and maturities; financing activities provided $0.9 million.
- Management said existing cash, cash equivalents and investments were expected to fund operations into 2025, based on its current operating plan and assumptions. The filing cautions that actual costs, clinical progress and access to capital could shorten that runway. Curis reported no conditions that, in aggregate, raised substantial doubt about its ability to continue as a going concern within one year after issuance of the statements.
Material changes, outlook and risks
- Oberland dispute: On March 3, 2023, Curis and its royalty subsidiary received a letter alleging defaults under the 2019 Oberland royalty purchase agreement and demanding a cure. Oberland’s purchasers asserted that they may exercise a put requiring repurchase of the purchased receivables; the estimated put/call price was up to $72.5 million as of the filing date. They also reserved other potential claims. Curis disputes the allegations, and the purchasers had not exercised the put option as of filing. An adverse outcome could threaten the royalty stream, liquidity and ability to continue as a going concern. This is a material subsequent event, not a reported 2022 default; the company said no event of default had occurred as of December 31, 2022.
- Under the Oberland agreement, purchasers receive a significant portion of Erivedge-related cash receipts. In 2022, 87% of associated cash receipts reverted to the purchasers. The agreement also encumbers Curis Royalty’s assets and Curis’s equity interest in that subsidiary.
- Management’s near-term priorities are resolving the leukemia trial hold, executing emavusertib trials and obtaining favorable clinical data, and raising additional financing when needed. No quantified revenue or earnings guidance is provided.
- Curis expects substantial losses to continue and does not expect to achieve profitability in the foreseeable future, if ever. Its only current revenue source is Erivedge royalties; the royalty stream depends on Genentech and Roche’s commercialization and may be affected by competition, including sonidegib.
- Potential additional funding sources include equity issuance, partnerships or asset transactions, but availability and terms are uncertain. The company had sold 4.6 million shares under its at-the-market program for $6.3 million gross proceeds; $93.7 million remained available under the program at year-end.
- Curis received a Nasdaq deficiency notice in October 2022 because its share price had remained below $1.00 for 30 consecutive business days. It had until April 19, 2023 to regain compliance, subject to Nasdaq rules.
- Other key risks include clinical safety or efficacy setbacks, trial enrollment and third-party manufacturing dependence, competition, financing and dilution, and reliance on a single customer for all revenue. The filing also noted Curis’s exposure to Silicon Valley Bank was immaterial as of March 13, 2023, excluding FDIC-insured amounts.
Investor facts to verify
- Subsequent updates on the Oberland allegations, cure demand, any exercise of the put option, and potential exposure relative to available liquidity.
- FDA status of the TakeAim Leukemia hold, completion and results of Phase 1a, and any authorization to begin expansion or combination phases.
- Latest cash and investment balances, quarterly cash burn, and whether the stated runway into 2025 remains achievable.
- Erivedge sales and royalty receipts, the share of cash flows allocated to Oberland, and any effects of competing products or royalty-rate reductions.
- Nasdaq listing compliance and the potential effects of future equity issuance on dilution and financing capacity.