Curis, Inc. — FY2020 Form 10-K Summary
Business context and reporting period
Curis is a clinical-stage biotechnology company developing cancer therapeutics. This annual report covers the fiscal year ended December 31, 2020; quarterly figures below identify the fourth quarter separately. The company’s principal operating revenue came from royalties on Erivedge, commercialized by Genentech and Roche. Curis reported that Genentech accounted for 98% of 2020 revenue.
Curis’s near-term development priorities were CA-4948, an IRAK4 inhibitor in Phase 1 studies, and CI-8993, an anti-VISTA antibody in a Phase 1a/1b study. Fimepinostat and CA-170 studies were not continuing to enroll after Curis reported insufficient efficacy signals; CA-327 remained pre-IND.
Financial performance and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue, net | $10.8 million | $10.0 million |
| Operating loss | $24.9 million | $24.4 million |
| Net loss | $29.9 million | $32.1 million |
| Net loss per share, basic and diluted | $0.61 | $0.97 |
| Cash used in operating activities | $25.7 million | $26.2 million |
Revenue included $10.7 million of Erivedge royalties, versus $10.4 million in 2019. Research and development expense rose 3% to $23.1 million; general and administrative expense rose 5% to $12.1 million. The net loss narrowed mainly because 2019 included a $3.5 million loss on extinguishment of debt; 2020 included $5.1 million of imputed interest expense on the royalty-sale liability.
In Q4 2020, revenue was $3.0 million, operating loss was $6.3 million, and net loss was $7.5 million, or $0.11 per share. In Q4 2019, revenue was $3.3 million, operating loss was $7.3 million, and net loss was $8.6 million, or $0.26 per share.
At year-end, cash and cash equivalents were $129.6 million and investments were $53.4 million, totaling $183.1 million of cash, cash equivalents and investments; restricted cash was additional. Current assets were $172.8 million and current liabilities $10.1 million. Management estimated existing resources would fund planned operations into 2024, subject to assumptions and development costs. Operating cash outflow was $25.7 million; financing provided $188.8 million, principally from equity offerings. Investing activities used $49.0 million, mainly reflecting purchases of investments.
Curis had $0.9 million of PPP borrowing outstanding at year-end ($0.6 million current and $0.3 million long-term); no debt was outstanding at year-end 2019. The separate liability for sold future Erivedge royalties was $58.2 million. The 2020 public offering raised $169.6 million gross ($159.4 million net); the June registered direct offering raised $17.5 million gross. Shares outstanding increased from 33.2 million at year-end 2019 to 91.5 million at year-end 2020.
Material changes, outlook and key risks
- Curis reported preliminary CA-4948 clinical data in December 2020, began CI-8993 trial enrollment in September, and initiated a CA-4948 AML/MDS Phase 1 study in July. The first patient in a CA-4948/ibrutinib combination trial was enrolled in February 2021, after the reporting year.
- COVID-19 restrictions delayed patient enrollment, trial monitoring and site activities; Curis also cited possible supply-chain disruption and reduced Erivedge prescriptions. The duration and financial impact were uncertain.
- Curis expects continuing operating losses and substantial R&D spending. It may need additional financing; inability to obtain it could force delays, reductions or termination of programs. A $100 million at-the-market equity sales agreement was entered into in March 2021, after year-end; no shares had been sold under it by the filing date. Further equity issuance may dilute shareholders.
- Under the ImmuNext option agreement, exercising the CI-8993 license would require a $20 million option fee, with additional potential milestones and royalties. Aurigene agreements also carry future milestone and royalty obligations.
- The Oberland royalty transaction diverts a portion of Erivedge royalty receipts. A default could allow the secured agent to redirect retained receipts and could trigger a repurchase obligation at a contractual multiple. Curis reported no event of default at December 31, 2020.
- Competition from sonidegib has reduced Erivedge royalty rates in the U.S. by 2 percentage points; further country-specific reductions may apply. The filing also identifies clinical, regulatory, intellectual-property, third-party dependency and Nasdaq-listing risks.
The financial statements received an unqualified audit opinion. The auditor identified valuation of the future-royalty liability as a critical audit matter because the estimate relies on projected Erivedge sales and significant assumptions. Management reported effective internal control over financial reporting; the auditor did not provide an attestation on those controls.
Important facts for investors to verify
- Review updated CA-4948 and CI-8993 trial data, enrollment pace, safety findings and whether COVID-related delays have changed expected timelines.
- Track Erivedge sales, royalty receipts, contractual rate reductions and the allocation of receipts between Curis and Oberland.
- Assess cash burn against the stated runway into 2024, planned clinical spending, the ImmuNext option decision and other contingent obligations.
- Monitor share issuance and dilution, including remaining Aspire Capital availability and any sales under the March 2021 ATM agreement.
- Confirm PPP loan forgiveness or repayment status and monitor compliance with the Oberland agreement’s covenants and default provisions.