Curis, Inc. — Q1 2021 Form 10-Q
Business context and reporting period. Curis is a clinical-stage biotechnology company developing cancer therapeutics. This unaudited report covers the three months ended March 31, 2021, compared with the first quarter of 2020. Its principal clinical programs include CA-4948 and CI-8993; Erivedge royalties are its principal current revenue source.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue, net | $2.2 million | $2.7 million |
| Operating loss | $8.8 million | $8.5 million |
| Net loss | $9.9 million | $9.7 million |
| Net loss per share, basic and diluted | $0.11 | $0.28 |
| Cash used in operating activities | $13.2 million | $9.0 million |
- Q1 2021 revenue comprised $2.187 million in royalties and $2,000 in contra revenue; no other revenue was recorded. All gross revenue came from the Genentech collaboration. Curis said the year-over-year revenue decline reflected lower Erivedge royalties and a prior-year milestone payment that did not recur.
- Research and development expense was $6.8 million, down 10%; general and administrative expense was $4.1 million, up 15%. Cost of royalties was $109,000. The filing does not present a gross-margin measure.
- At March 31, cash and cash equivalents were $111.0 million, short-term investments $45.4 million, and long-term investments $11.9 million: $168.4 million combined, excluding $0.8 million restricted cash. Total current assets were $161.9 million and current liabilities $7.0 million.
- Total liabilities were $68.7 million, including a $56.8 million liability for sold future royalties and $0.9 million of current PPP debt. The company had no long-term debt at quarter-end. It paid $2.6 million to Oberland during the quarter under the royalty agreement.
- Cash and cash equivalents plus restricted cash fell $18.6 million during the quarter. Investing activities used $4.1 million and financing activities used $1.3 million. The accumulated deficit was $1.057 billion.
Changes versus the prior comparable period
- Revenue decreased 19%, while net loss increased 2%. Loss per share narrowed from $0.28 to $0.11, while weighted-average shares rose from 34.5 million to 91.5 million, following substantial equity issuance in 2020.
- R&D expense fell by $0.7 million, principally because Q1 2020 included an ImmuNext upfront license fee; lower direct R&D spending was partly offset by higher employee costs.
- G&A expense rose by $0.5 million, driven mainly by professional and consulting costs and stock-based compensation, partly offset by lower legal costs.
- Operating cash use increased by $4.2 million year over year. Management attributed the Q1 2021 cash use to the net loss and working-capital and lease-liability changes, partly offset by noncash expenses.
Outlook, commentary and risks
- Management stated that $168.4 million of cash, cash equivalents and investments was expected to fund planned operations into 2024. Elsewhere, the notes say existing resources should fund operations for at least 12 months from the filing date. These statements use different horizons; management cautioned its estimates rely on assumptions and capital could be exhausted sooner than expected.
- Curis expects continued operating losses and does not expect to achieve profitability in the foreseeable future, if at all. It anticipates R&D expense may increase as it advances CA-4948 and CI-8993. Additional capital may be required; if unavailable, programs could be delayed, reduced or eliminated.
- Curis reported enrolling the first patient in the CA-4948/ibrutinib combination study in February 2021 and expected initial combination data in the second half of 2021. In April 2021, it amended its AML/MDS study to add combinations with azacitidine or venetoclax and received FDA Orphan Drug Designation for CA-4948 in AML and MDS. These are post-quarter developments.
- COVID-19 had delayed or could delay trial enrollment, monitoring, data collection and site closures, and could disrupt supplies, regulatory activity and Erivedge royalties. Curis noted uncertainty about the pandemic’s overall effects.
- Curis entered a $100 million at-the-market equity sales agreement in March 2021; no shares had been sold under it by the filing. The company also reported $21.6 million remaining available under its Aspire Capital agreement. Both arrangements may provide funding but involve potential dilution.
- PPP loan forgiveness was not assured; the full $0.9 million obligation was classified as short-term debt. Curis said there were no events of default under the Oberland agreement at March 31, 2021. No material risk-factor changes were reported, and the filing disclosed no off-balance-sheet arrangements.
Key facts investors should verify
- Reconcile management’s stated runway into 2024 with the note’s “at least 12 months” estimate and review the underlying spending assumptions.
- Track cash burn, future R&D spending and financing activity, including any sales under the $100 million ATM or Aspire Capital facility and related dilution.
- Monitor CA-4948 and CI-8993 enrollment, clinical data, safety and timelines, including the planned second-half 2021 combination-study update.
- Assess Erivedge royalty trends, the amount of royalties redirected under the Oberland agreement, and whether its conditional milestone thresholds are met.
- Confirm the outcome of the PPP forgiveness application and the timing and repayment of any unforgiven balance.