Curis, Inc. — Q1 2022 Form 10-Q
Business context and period. Curis is a clinical-stage oncology biotech; its revenue came entirely from royalties on Genentech/Roche sales of Erivedge. This unaudited report covers the three months ended March 31, 2022, compared with Q1 2021.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Net revenue | $2.057 million | $2.189 million | Down 6% |
| Research and development expense | $11.435 million | $6.757 million | Up 69% |
| General and administrative expense | $5.673 million | $4.123 million | Up 38% |
| Operating loss | $15.133 million | $8.800 million | Loss widened |
| Net loss | $16.109 million | $9.927 million | Loss widened 62% |
| Net loss per share | $0.18 | $0.11 | Loss per share widened |
| Cash used in operating activities | $16.815 million | $13.179 million | Use increased |
Royalty revenue was $2.060 million; royalty costs were $0.082 million. R&D growth reflected higher program manufacturing and consulting costs, headcount, and stock compensation. G&A growth was driven primarily by personnel, stock compensation, and insurance. Other expense was $0.976 million, chiefly imputed interest on the royalty sale liability.
At March 31, cash and cash equivalents were $18.468 million and short-term investments were $102.185 million; together, cash, cash equivalents, and investments totaled $120.7 million, excluding $0.7 million restricted cash. Current assets were $126.1 million and current liabilities $9.7 million. Total liabilities were $64.8 million, including a $52.1 million liability for sold future royalties and $3.8 million of operating lease liabilities. The 2020 PPP loan had been fully forgiven in 2021.
Cash and cash equivalents declined by $21.5 million during the quarter, including $16.8 million of operating cash use, $3.1 million of net investing cash use, and $1.6 million of financing cash use, primarily royalty-liability payments. Accumulated deficit was $1.108 billion. No dividend or profitability outlook was provided.
Material changes and business developments
- Revenue declined 6%, which management attributed to lower Erivedge sales. The company recognized no revenue from product sales of its own.
- Spending increased substantially: R&D rose 69% and G&A rose 38%, contributing to a 62% larger net loss.
- In April 2022, after a serious adverse event and a patient death in the TakeAim Leukemia study, the FDA placed partial clinical holds on both the TakeAim Leukemia and TakeAim Lymphoma emavusertib trials. No new patients may be enrolled while the holds remain; eligible existing participants may continue treatment at doses of 300 mg twice daily or lower.
- A January lease amendment shortened the existing lease term, reducing the lease liability and right-of-use asset by about $1.1 million, and added approximately 9,340 square feet. Rent for the additional space was expected to begin when Curis took possession, anticipated in Q2 2022.
Outlook, risks, and unusual items
Management said $120.7 million of cash, cash equivalents, and investments was expected to fund planned operations into 2024; another disclosure states the resources should last at least 12 months from filing. Both are estimates dependent on assumptions, and the filing cautions that cash could be exhausted sooner. Curis expects continued operating losses and says it will need additional capital to fund development; financing may not be available on acceptable terms. If funds are insufficient, it may delay, reduce, or end programs.
Management expects to focus near-term resources on emavusertib, subject to resolving the FDA holds, and CI-8993. The holds create material uncertainty over enrollment, dosing, timing, costs, and the candidate’s development prospects. Other risks include clinical-trial safety and efficacy, COVID-19-related enrollment or supply disruptions, reliance on third parties and Genentech/Roche, dependence on Erivedge royalties, and potential financing needs and dilution.
Under the Oberland agreement, a portion of Erivedge royalties is directed to the purchasers; Curis reported no event of default at quarter-end. The company reported an effective annual imputed interest rate of 7.9% on this liability. Curis also has potential milestone, royalty, and option obligations under its Aurigene and ImmuNext agreements, including a $20 million CI-8993 option exercise fee if it exercises that option.
Key facts for investors to verify
- Subsequent FDA communications, requested safety data, and the status and conditions for lifting the partial holds on both emavusertib trials.
- Actual operating cash burn, investment liquidity, and whether management’s runway estimate into 2024 remains supportable.
- Erivedge sales and royalty trends, the portion paid to Oberland, and the terms and performance thresholds for any Curis milestone payments.
- Future financing plans, including potential use of the available equity facilities and resulting dilution.
- Timing and cost of the expanded leased space, and potential payments under Aurigene and ImmuNext agreements.