Curis, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021; comparative periods ended September 30, 2020. Curis is a clinical-stage biotechnology company developing cancer therapeutics. Its principal clinical-stage programs are CA-4948 and CI-8993; Erivedge royalties are its main revenue source.
Financial performance and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue, net | $3.0 | $2.7 | $7.5 | $7.8 |
| Operating loss | $10.0 | $4.7 | $29.5 | $18.6 |
| Net loss | $11.1 | $6.0 | $31.8 | $22.4 |
| Net loss per share, basic and diluted | $0.12 | $0.11 | $0.35 | $0.52 |
| Operating cash used | Not provided for quarter | Not provided for quarter | $29.4 | $20.0 |
- Q3 royalty revenue was $3.1 million, up 12% year over year; nine-month royalties were $7.6 million, down 1%. Nearly all revenue came from the Genentech collaboration. No material profit margin was reported; Curis remained loss-making.
- Research and development expense rose 83% in Q3 to $8.6 million and 38% for the nine-month period to $24.1 million, mainly reflecting higher clinical, manufacturing, personnel and stock-compensation costs. General and administrative expense increased 66% in Q3 to $4.3 million and 46% year to date to $12.5 million.
- At September 30, cash and cash equivalents were $53.0 million, short- and long-term investments totaled $96.8 million, and restricted cash was $0.7 million. Cash, cash equivalents and investments totaled $149.8 million, compared with approximately $183.1 million at December 31, 2020.
- Current assets were $135.0 million and current liabilities $9.5 million. The company reported no outstanding debt at quarter-end after the $0.9 million PPP loan was forgiven. It had a $55.2 million liability related to the sale of future royalties and $5.2 million in operating lease liabilities.
- Cash used in investing activities was $44.4 million, largely reflecting net purchases of investments; financing activities used $2.9 million, primarily for payments under the royalty agreement. Cash and restricted cash at period-end were $53.7 million.
Changes, outlook and risks
- Year-to-date net loss widened 42%, as higher R&D and G&A spending more than offset royalty revenue. The prior-year period included a $0.2 million milestone payment from an out-licensed technology that did not recur.
- Management said the $149.8 million in cash, cash equivalents and investments was expected to fund planned operations into 2024, based on assumptions that could prove wrong. A separate note in the filing says existing resources are expected to fund operations for at least 12 months from filing; investors should clarify this differing runway language. Curis expects continuing losses and may need additional financing.
- Management expects R&D spending to increase as it advances CA-4948 and CI-8993. Curis expected initial data from the CA-4948/ibrutinib combination study in the first half of 2022. The filing provides no financial earnings guidance.
- COVID-19-related site restrictions, slower trial enrollment, monitoring limitations and potential supply-chain disruptions could delay clinical programs and affect royalty receipts. The filing also highlights clinical, regulatory, financing, competition, intellectual-property and collaborator-dependence risks.
- The Oberland agreement diverts a portion of Erivedge royalties. Curis may receive up to $17.2 million if specified royalty-payment thresholds are met in 2021 and up to $53.5 million if another threshold is met by December 31, 2026; these payments are contingent, not assured. No event of default was reported at September 30, 2021.
- Curis had not used its $100 million at-the-market offering agreement as of the filing and had $21.6 million remaining available under its Aspire Capital agreement. Any equity issuance could dilute shareholders.
Important facts for investors to verify
- Whether the stated cash runway into 2024 remains management’s current expectation and how it reconciles with the separate “at least 12 months from filing” disclosure.
- Enrollment, trial timing and clinical data for CA-4948 and CI-8993, including the anticipated CA-4948 combination-study update.
- Future Erivedge sales and royalty trends, the portion payable to Oberland, and whether the contingent Oberland milestones are achieved.
- Cash burn, planned R&D spending, access to additional capital and potential dilution from available equity financing arrangements.
- The impact of COVID-19 and other operational or regulatory delays on clinical development and funding needs.