Curis, Inc. — Q2 2021 Form 10-Q
Business context and period: Biotechnology company developing cancer therapeutics. This unaudited report covers the quarter and six months ended June 30, 2021; comparisons are to the same 2020 periods. Revenue is largely dependent on Erivedge royalties from Genentech/Roche. CA-4948 and CI-8993 are the principal clinical-stage programs.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Net revenue | $2.3 million | $2.4 million | $4.5 million | $5.1 million |
| Research and development expense | $8.8 million | $5.3 million | $15.5 million | $12.8 million |
| General and administrative expense | $4.1 million | $2.4 million | $8.2 million | $6.0 million |
| Operating loss | $10.7 million | $5.4 million | $19.5 million | $13.9 million |
| Net loss | $10.8 million | $6.7 million | $20.8 million | $16.4 million |
| Loss per share, basic and diluted | $0.12 | $0.17 | $0.23 | $0.44 |
- For the six months, operating cash use was $19.8 million, versus $14.1 million in 2020. Investing activities used $32.8 million, principally reflecting net purchases of investments; financing activities used $1.9 million, mainly royalty-liability payments.
- At June 30, cash and cash equivalents were $75.0 million; short- and long-term investments totaled $85.7 million. Management reported $160.7 million in cash, cash equivalents and investments, excluding $0.8 million restricted cash.
- Total assets were $181.2 million and total liabilities $68.7 million. No long-term debt remained after forgiveness of the $0.9 million PPP loan. The balance sheet included a $56.1 million liability for sold future royalties and $5.3 million of operating lease liabilities.
- Accumulated deficit was $1.07 billion; stockholders’ equity was $112.5 million. Shares outstanding were 91.6 million at June 30, 2021.
Material changes versus prior period
- Six-month revenue declined 12%, largely because 2020 included a milestone payment from previously out-licensed technology and 2021 did not. Erivedge royalty revenue was $4.5 million versus $5.0 million; Q2 royalties fell 4% year over year.
- Six-month R&D expense rose 22%, driven by clinical and manufacturing costs, higher headcount and stock compensation. G&A expense rose 37%, mainly due to personnel, stock compensation and professional services.
- Six-month net loss increased 26%, despite a $0.9 million gain from full forgiveness of the PPP loan. Weighted-average shares increased substantially year over year following 2020 equity offerings; per-share loss consequently is not directly comparable.
- Investments increased from $53.4 million at year-end 2020 to $85.7 million, while cash and cash equivalents declined from $129.6 million to $75.0 million.
Outlook, commentary and risks
- Management stated that available cash, cash equivalents and investments were expected to fund planned operations into 2024, while cautioning that assumptions could prove incorrect. The notes also state funds should cover at least 12 months from the filing date.
- Curis expects continued operating losses and higher R&D spending as it advances CA-4948 and CI-8993. Management identified successful clinical execution and the ability to raise financing as key near-term drivers.
- CA-4948 is in Phase 1/2 studies for non-Hodgkin lymphomas, AML and MDS. The company reported preliminary AML/MDS data and a recommended Phase 2 monotherapy dose in June 2021; it expected initial data from the ibrutinib combination study in the first half of 2022. CI-8993 is in a Phase 1 solid-tumor study and remains subject to an option to license from ImmuNext.
- COVID-19-related site restrictions and enrollment delays may affect trial timelines, patient data collection, supply and regulatory progress. Other significant risks include dependence on early-stage clinical outcomes, competition, reliance on Genentech/Roche for Erivedge commercialization, financing needs and the royalty-sale agreement.
- Curis had an unused $100 million at-the-market equity sales agreement and $21.6 million available under its Aspire Capital purchase agreement, both potential sources of capital and dilution. The 2021 ATM had not been used as of the report.
- Erivedge royalty proceeds are shared under the Oberland agreement; further milestone receipts depend on specified royalty thresholds. No event of default under that agreement existed at June 30, 2021.
Key facts for investors to verify
- Whether clinical trial enrollment and data milestones for CA-4948 and CI-8993 are achieved, including impacts from COVID-19.
- Cash burn and runway assumptions, particularly the differing disclosures of “into 2024” and at least 12 months from filing.
- Future Erivedge royalties, which accounted for about 99% of gross revenue in the 2021 periods, and payments owed under the Oberland agreement.
- Potential dilution from ATM, Aspire Capital and equity compensation arrangements, and any further financing needs.
- Underlying operating cost trends: the reported PPP forgiveness gain was a one-time item, not recurring operating revenue.