Search the web
Welcome, Guest
[Sign Out, My Account]

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
CRIS > SEC Filings for CRIS > Form 10-Q on 9-May-2013All Recent SEC Filings

Show all filings for CURIS INC | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for CURIS INC


Quarterly Report


The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes appearing elsewhere in this report.


We are an oncology-focused company seeking to develop and commercialize next generation targeted drug candidates for cancer treatment. We conduct our research and development programs both internally and through strategic collaborations. Erivedge® is the first and only FDA-approved medicine for the treatment of advanced basal cell carcinoma, and was developed and is being commercialized by Roche and Genentech under a collaboration agreement between Curis and Genentech. We are also leveraging our experience in targeting signaling pathways to develop clinical-stage targeted cancer programs CUDC-427, a small molecule IAP inhibitor, and CUDC-907, a dual PI3K and HDAC inhibitor. Our licensee Debiopharm is progressing the clinical development of HSP90 inhibitor, Debio 0932.


Erivedge® (vismodegib) capsule. Our most advanced program is a Hedgehog pathway inhibitor program under collaboration with Genentech. Pursuant to this collaboration, Genentech and Roche are responsible for clinical development, and Genentech (in the U.S.), Roche (outside the U.S., excluding Japan) and Chugai (in Japan) are responsible for commercialization of Erivedge.

In January 2012, the U.S. Food and Drug Administration, or FDA, approved the Erivedge capsule for treatment of adults with basal cell carcinoma, or BCC, that has spread to other parts of the body or that has come back after surgery or that their healthcare provider decides cannot be treated with surgery or radiation. We refer to this indication as advanced BCC. Erivedge has also been approved for commercialization in Mexico, Israel and South Korea. In April 2013, the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, recommended to the European Commission the conditional approval of Erivedge for the treatment of symptomatic metastatic BCC and locally advanced BCC that is inappropriate for treatment with surgery or radiotherapy. The European Commission, which has the authority to approve medicines for use in the European Union, or EU, generally delivers its final decision within three months of the CHMP recommendation. The decision would be applicable to all 27 EU member states. Conditional approval by the European Commission would make Erivedge the first licensed treatment in Europe for patients with advanced BCC and would result in our earning a $6,000,000 milestone payment from Genentech, for which we would owe 5% of such payment to university licensors.

Roche has indicated that it anticipates potential Australian approval for Erivedge in mid-2013. Roche also filed new drug applications in 2012 and 2013 for marketing registration with health agencies in other territories seeking approval for Erivedge in advanced BCC in addition to Australia, including in Brazil and Russia, among others. Erivedge's FDA approval and Roche's regulatory submissions in other territories are based on positive clinical data from ERIVANCE BCC/SHH4476g, a pivotal phase II study of Erivedge in patients with advanced BCC. We will receive additional milestone payments if Erivedge receives marketing authorization from the Therapeutic Goods Administration, or TGA, the Australian regulatory agency, and we will be obligated to make payments to university licensors that total 5% of each of these milestone payments that we receive.

In addition to the lead indication of advanced BCC, Genentech is also testing Erivedge in a phase II clinical trial to treat less severe forms of BCC. Data from this study are currently expected during the second half of 2013. Third-party investigators are also conducting clinical trials with Erivedge in BCC as well as in several other cancers.

Pursuant to the terms of our collaboration agreement with Genentech, we are entitled to a royalty on net sales of Erivedge that ranges from the mid-to-high single digits, and which escalates within this range with increasing product sales. The royalty rate applicable to Erivedge may be decreased to a low-to-mid single digit royalty in certain specified circumstances, including when a competing product that binds to the same molecular target as Erivedge is approved by the applicable regulatory authority and is being sold in such country by a third party for use in the same indication as Erivedge. In December 2012, through our wholly-owned subsidiary Curis Royalty, we entered into a $30,000,000 debt transaction with BioPharma Secured Debt Fund II Sub, S.à r.l., or BioPharma-II. The debt is secured with certain future royalties of Erivedge. Pursuant to the terms of the credit agreement, Curis Royalty borrowed $30,000,000 at an annual interest rate of 12.25% and upon closing, we transferred to Curis Royalty the right to receive certain royalty and royalty-related payments from the commercial sales of Erivedge under our collaboration agreement with Genentech.

Table of Contents

The loan from BioPharma-II will be repaid by Curis Royalty from the proceeds of the royalty and royalty-related payments that it receives from time to time from Genentech. Curis Royalty will be entitled to receive and distribute to Curis remaining royalty and royalty-related amounts in excess of specified caps, if any, and Curis remains entitled to receive any contingent payments upon achievement of clinical development objectives. As a result, we will continue to record royalty revenue from Genentech but expect the majority, if not all, of such revenues, subject to the specified caps, will be used to pay down the loan received from BioPharma-II. We made our first payment of $532,000 to BioPharma-II in March 2013 upon receipt of the fourth quarter 2012 Erivedge royalties. This amount was less than the interest accrued through the repayment date resulting in $336,000 being added to the outstanding principal. As of March 31, 2013, we owed a total of $30,594,000, gross of issuance costs, to BioPharma-II comprised of principal and accrued interest.

We are also obligated to make payments to university licensors on royalties that we earn in all territories other than Australia in an amount that is equal to 5% of the royalty payments that we receive from Genentech for a period of 10 years from the first commercial sale of Erivedge, which occurred in February 2012. For royalties that we earn from Roche's potential future sales of Erivedge in Australia, we will be obligated to make payments to university licensors in an amount that is equal to 2% of Roche's direct net sales in Australia until April 2019, after which the amount will decrease to 5% of the royalty payments that we receive from Genentech for the remainder of the period ending 10 years from the first commercial sale of Erivedge, or February 2022.

We recognized $664,000 of royalty revenue from Genentech's net sales of Erivedge during the three months ended March 31, 2013 and an aggregate of $2,194,000 in royalty revenues since Erivedge was approved, which was calculated as 5% of Genentech's net sales of Erivedge. As indicated above, we expect to continue to record royalty revenue from Genentech, but such revenues will service the loan received from BioPharma-II, subject to the quarterly caps. We recorded cost of royalty revenues of $33,000 and $210,000, respectively, during these same periods.

Targeted Cancer Drug Candidates

CUDC-427. IAP proteins are a family of functionally and structurally related proteins that promote cancer cell survival by inhibiting programmed cell death, a process also referred to as apoptosis. Using IAP proteins and other anti-apoptotic factors, cancer cells evade cell death in response to a variety of signals, including those provided by anti-cancer agents such as chemotherapy, or naturally occurring inflammatory and immune signals transmitted through members of tumor necrosis factor, or TNF family of factors. Evasion from apoptosis is a fundamental mechanism whereby human cancers develop resistance to standard anti-cancer treatments. IAP inhibitors such as CUDC-427 are designed to counteract the effects of IAP proteins, thus shifting the balance away from cancer cell survival and allowing apoptosis to proceed.

In November 2012, we licensed from Genentech the exclusive, worldwide rights for the manufacture, development and commercialization of a small molecule drug candidate, CUDC-427, that is designed to promote cancer cell death by antagonizing IAP proteins. Under the terms of the license agreement, we have the sole right and responsibility for all research, development, manufacturing and commercialization activities related to CUDC-427. Genentech will be entitled to receive milestone payments upon the first commercial sale of CUDC-427 in certain territories and a tiered low-to-mid single-digit royalty on net sales of CUDC-427, if any.

Prior to our license, Genentech had completed enrollment in a phase I clinical trial of CUDC-427, which was previously named GDC-0917, in which 42 patients received daily oral doses of CUDC-427 for two weeks, followed by a one week rest period until disease progression or study discontinuation for any other reason. Results of this phase I study will be presented at a medical conference in mid-2013. We plan to continue the further clinical development of CUDC-427 and to initiate additional mono- and combination therapy clinical studies in 2013, including a phase II trial using CUDC-427 in combination with the standard chemotherapy regimen of capecitabine to treat breast cancer patients.

CUDC-907. CUDC-907 is an orally bioavailable drug candidate designed and discovered by us to inhibit phosphatidylinositol-3-kinase, or PI3K and histone deacetylase, or HDAC enzymes. In November 2011, we entered into an agreement under which The Leukemia & Lymphoma Society, or LLS, will provide up to $4 million in milestone payments to support our ongoing development of CUDC-907. In January 2013, we treated the first subject in a phase I clinical trial in patients with advanced lymphoma and multiple myeloma and as of May 1, 2013, we completed enrollment in the first dose cohort in which four patients received oral administration of CUDC-907 at a dose level of 30 milligram once daily. This initial cohort was comprised of two advanced multiple myeloma patients and one lymphoma patient, and all received at least two 21-day cycles of CUDC-907 treatment without dose limiting toxicity. Analysis of drug pharmacokinetics or PK and pharmacodynamics or PD from these patients blood samples is currently ongoing. We are actively recruiting patients for enrollment in the second cohort, in which CUDC-907 will be administered at a dose of 60 milligram daily.

Table of Contents

As of March 31, 2013, we have earned $1,100,000 in milestone payments under our agreement with LLS. Under certain conditions associated with the successful partnering and/or commercialization of CUDC-907 in the specified indications, we may be obligated to make payments, including royalties, to LLS up to a maximum of $10,000,000. This obligation is limited to 2.5 times the amount we receive from LLS, and, as of March 31, 2013, the maximum obligation, assuming that CUDC-907 successfully progresses through future clinical trials, would be $2,750,000. Our scientists are also conducting ongoing preclinical studies of CUDC-907 in solid tumor cancers and we expect to initiate a phase I study in patients with solid tumors during the second half of 2013.

Debio 0932. In August 2009, we granted a worldwide, exclusive royalty-bearing license to develop, manufacture, market and sell our heat shock protein 90, or HSP90, inhibitor technology, including Debio 0932, to Debiopharm. Debiopharm has assumed all future development responsibility for Debio 0932 and Debiopharm or a Debiopharm licensee will incur all future costs related to the development, registration and commercialization of products under the agreement.

In April 2010, Debiopharm initiated a phase I clinical trial to evaluate the safety of Debio 0932 in patients with advanced solid tumors. In 2011, Debiopharm successfully advanced Debio 0932 through the dose escalation portion of this phase I study. The recommended dose for further study was determined by Debiopharm to be 1000 mg daily and Debiopharm advanced Debio 0932 into the phase Ib expansion portion of the study in the beginning of 2012 at this 1000 mg daily dosing level. The primary objectives of the phase Ib portion of the study are to further assess the safety profile, pharmacokinetics and pharmacodynamics of Debio 0932 and to make a preliminary assessment of anti-tumor activity. Debiopharm completed the phase Ib expansion portion of the study, enrolling approximately 30 patients with advanced solid tumors, including patients with advanced non-small cell lung cancer, or NSCLC. Curis anticipates that Debiopharm will present data from this study at a medical meeting during the second half of 2013.

In August 2012, Debiopharm initiated a phase I/II clinical trial of Debio 0932 in combination with chemotherapy regimens in patients with advanced NSCLC, referred to as the HALO trial. This trial is treating patients with stage IIIb or IV non-small cell lung cancer with disease that is characterized as wild-type EGFR. Debio 0932 is administered in in combination with cisplatin/pemetrexed and cisplatin/gemcitabine in treatment-naïve patients, and with docetaxel in previously treated patients. Once a recommended phase II dose of Debio 0932 in combination with each of the 3 chemotherapy regimens described above has been identified, the randomized, double-blind, placebo-controlled phase II portion of this study is expected to then begin where approximately 140 eligible patients will be randomized to receive chemotherapy with either placebo or Debio 0932. The primary objective of the phase II study will be to determine the efficacy of Debio 0932 in combination with chemotherapy. We are eligible for our next milestone payment under our license agreement when Debiopharm treats its fifth patient in a phase II clinical trial, which we expect will commence in 2014.

Lastly, Debiopharm is planning to initiate a phase I study of Debio 0932 in patients with renal cell carcinoma in the second half of 2013.

CUDC-101. CUDC-101 is a drug candidate that is designed to target epidermal growth factor receptor, or EGFR, human epidermal growth factor receptor 2, or HER2, and HDAC. In October 2012, we initiated a phase I clinical trial of an oral formulation of CUDC-101. We subsequently terminated this study as the bioavailability observed in the first cohort of patients was too low to achieve effective drug levels with this formulation. We are currently pursuing the development of alternative formulations that may provide improved oral bioavailability and allow us to progress CUDC-101 towards clinical testing. We currently anticipate that we will be able to determine whether we can create such a formulation during 2013.

We initially developed CUDC-101 as an intravenous formulation of CUDC-101 and we have completed two clinical trials with this formulation, including a phase I dose escalation clinical trial of CUDC-101 in 25 patients with advanced, refractory solid tumors and a phase I expansion trial that tested CUDC-101 in 46 patients with specific tumor types, including breast, gastric, head and neck, NSCLC or liver cancers. In 2011, we began testing an intravenous formulation of CUDC-101 in a phase I clinical trial in patients with locally advanced squamous cell carcinoma of the head and neck in combination with the current standard-of-care of cisplatin, a chemotherapeutic drug, and radiation. In April 2013, we determined that we would discontinue enrolling patients in this study and that the future development of CUDC-101 would be dependent on our ability to successfully develop an oral formulation of CUDC-101. Our decision was based largely on the difficulty in enrolling patients in this indication as well as our desire to direct our available financial resources to the development of CUDC-427 and CUDC-907.


Since our inception, we have funded our operations primarily through license fees, contingent cash payments, research and development funding from our corporate collaborators, the private and public placement of our equity securities, debt financings and the monetization of certain royalty rights. We have never been profitable on an annual basis and have an accumulated deficit of $753,467,000 as of March 31, 2013. We expect that we will incur significant operating losses for the next several years as we seek to advance our research and development programs. Although Genentech and Roche have

Table of Contents

received FDA approval to market Erivedge in the U.S., Mexico, Israel and South Korea and Roche also received a positive CHMP opinion recommending approval of Erivedge in Europe, the level of future sales and the amount of resulting royalty revenue payable to us are both highly uncertain. In addition, in December 2012 we entered into a $30,000,000 debt financing that is secured by Erivedge royalty revenues and for which up to $4,000,000, $8,000,000 and $12,000,000 of our royalty revenues in 2013, 2014 and 2015 are required to be applied to debt repayments. For years after 2015, all royalty revenues that we receive will be applied to debt repayment until the debt is fully repaid. We currently estimate that the debt will be repaid by early 2017, but the actual timing of repayment will be dependent on the amount of royalty revenues that we earn on sales of Erivedge.

We will need to generate significant revenues to achieve profitability and do not expect to achieve profitability in the foreseeable future, if at all. As a result of uncertainty in the amounts of future Erivedge royalty revenue and the period that will be required to repay the royalty-secured debt obligation, the timing of potential milestone payments under our agreements with Genentech, Debiopharm and LLS and the variability in our operating expenses, we expect that our financial results in the future will be variable. We anticipate that existing capital resources as of March 31, 2013 should enable us to maintain current and planned operations into mid-2015. Our ability to continue funding our planned operations into and beyond mid-2015 is dependent on future contingent payments that we may receive from Genentech, Debiopharm, or LLS upon the achievement of development and regulatory approval objectives, our ability to manage our expenses and our ability to raise additional funds through additional corporate collaborations, equity or debt financings, or from other sources of financing.

We believe that near term key drivers to our success will include:

• Genentech's ability to successfully scale up the commercialization of Erivedge in advanced BCC in the U.S. and in other currently approved territories;

• Genentech's and/or Roche's receipt of approval to commercialize Erivedge in advanced BCC in Europe and other territories including in Australia as well as its ability to successfully launch and commercialize Erivedge in these markets;

• positive results in Genentech's ongoing phase II clinical trial in patients with operable BCC;

• our ability to successfully plan, finance and complete current and planned clinical trials for CUDC-427 and CUDC-907 and advance these drug candidates into phase II clinical testing;

• our ability to advance preclinical efforts to develop an oral formulation of CUDC-101 and to advance this candidate into phase I clinical development;

• Debiopharm's ability to advance Debio 0932 into later stages of clinical development; and

• our ability to successfully enter into one or more material licenses or collaboration agreements for our proprietary drug candidates.

In the longer term, a key driver to our success will be our ability, and the ability of any current or future collaborator or licensee, to successfully commercialize drugs other than Erivedge based upon our proprietary technologies.

Collaboration Agreements

We are currently a party to a collaboration with Genentech relating to our Hedgehog pathway inhibitor technologies, a license agreement with Debiopharm relating to our Hsp90 inhibitor technology and an agreement with LLS related to CUDC-907. Our past and current collaborations have generally provided for research, development and commercialization programs to be wholly or majority-funded by our collaborators and provide us with the opportunity to receive additional contingent cash milestone payments if specified development and regulatory approval objectives are achieved, as well as royalty payments upon the successful commercialization of any products based upon the collaborations. We are currently not receiving any funding for our research activities and we do not expect to receive such funding in the future from Genentech, Debiopharm or LLS under our current agreements with these parties. Under our collaboration with Genentech, we currently expect to incur only costs related to the maintenance of licenses, including sublicense payments due upon milestone payments and any royalties we receive, as well as patent-related expenses. As a result of our licensing agreements with various universities, we are also obligated to make payments to these university licensors when we receive certain payments from Genentech. As of March 31, 2013, we have incurred aggregate expenses over the term of this collaboration of $2,960,000 in connection with royalties and other cash payments from Genentech for research, development and regulatory objectives achieved related to such university licensing agreements. In addition, during 2012 we were obligated to issue 200,000 shares of our common stock to two university licensors upon FDA approval of Erivedge that represented $964,000 in expense. As we receive additional milestone payments from Genentech upon European or Australian approval of Erivedge, if achieved, we would be obligated to

Table of Contents

pay additional sublicense fees to these licensors, as well as fees related to any royalties received from the sale of Erivedge. We do not expect to incur any material costs in the foreseeable future related to our Hsp90 technologies under development by Debiopharm.

Financial Operations Overview

General. Our future operating results will largely depend on the magnitude of payments from our current and potential future corporate collaborators and the progress of drug candidates currently in our research and development pipeline. The results of our operations will vary significantly from year to year and quarter to quarter and depend on, among other factors, the timing of our entry into new collaborations, if any, the timing of the receipt of payments, if any, from new or existing collaborators and the cost and outcome of any preclinical development or clinical trials then being conducted. We anticipate that existing capital resources as of March 31, 2013 should enable us to maintain current and planned operations into mid-2015.

A discussion of certain risks and uncertainties that could affect our liquidity, capital requirements and ability to raise additional funds is set forth under "Part II, Item 1A-Risk Factors."

Debt. In December 2012, through our wholly-owned subsidiary Curis Royalty, we entered into a $30,000,000 debt transaction with BioPharma-II. The debt is secured with certain future royalties of Erivedge®. Pursuant to the terms of the credit agreement, Curis Royalty borrowed $30,000,000 at an annual interest rate of 12.25% and upon closing, we transferred to Curis Royalty the right to receive certain royalty and royalty-related payments from the commercial sales of Erivedge under Curis' collaboration agreement with Genentech.

The royalty and royalty-related payments that Curis Royalty will be entitled to receive under the collaboration agreement with Genentech will be the source of funds to repay principal of and interest on the loan. The final maturity date of the loan will be the earlier of the date when principal is paid in full and the termination of Curis Royalty's right to receive royalties under the collaboration agreement with Genentech. Curis Royalty remains entitled to receive any royalty payments related to sales of Erivedge following repayment of the loan. The loan is secured by a security interest granted by Curis Royalty in its rights to receive royalty and other royalty-related payments under the collaboration agreement with Genentech. The loan constitutes an obligation of Curis Royalty and is non-recourse to Curis.

Per the terms of the credit agreement, neither Curis nor Curis Royalty guaranteed any level of future royalty or royalty-related payments or the value of such payments as collateral to the loan. However, in certain circumstances, the obligations of Curis Royalty under the credit agreement to repay the loan may be accelerated in accordance with the provisions of the credit agreement. If any of such conditions were to occur, Curis Royalty may not have sufficient funds to pay the accelerated obligation and BioPharma-II could foreclose on the secured royalty and royalty-related payment stream. In such an event, we might lose our right to royalty and royalty-related payments not transferred to BioPharma-II, including those we would otherwise be entitled to receive if, or when, Curis Royalty satisfied its obligations to BioPharma-II under the credit agreement.

Revenue. We do not expect to generate any revenues from our direct sale of products for several years, if ever. Substantially all of our revenues to date have been derived from license fees, research and development payments, and other amounts that we have received from our strategic collaborators and licensees, including royalty payments. Since the first quarter of 2012, we have recognized royalty revenues related to Genentech's sales of Erivedge in the U.S. We expect to continue to recognize royalty revenue in future quarters from Genentech's sales of Erivedge in the U.S. and in other markets where Genentech and Roche successfully obtain marketing approval, if any. However, future royalty payments will service the outstanding debt and accrued interest to BioPharma-II, up to the quarterly caps for 2013, 2014 and 2015, and until the debt is fully repaid thereafter. We currently estimate that the debt will be repaid in early 2017.

We could receive additional milestone payments from Genentech, Debiopharm, and LLS, provided the respective programs meet contractually-specified development and regulatory objectives. Roche recently received a positive recommendation from CHMP for the European marketing authorization of Erivedge for advanced BCC and an approval decision from the European Commission is expected within the coming months. Erivedge is also currently being reviewed for potential marketing approval by health authorities in several additional territories, including in Australia, Brazil and Russia. We are eligible to receive additional milestone revenue should Erivedge receive approval by European and/or Australian health authorities, and we are also eligible to receive royalties on net sales of Erivedge in all territories where Erivedge is sold.

Our only source of revenues and/or cash flows from operations for the foreseeable future will be up-front license payments and funded research and development that we may receive under new collaboration agreements, if any, contingent cash payments for the achievement of clinical development and regulatory objectives, if any are met, under new collaborations or our existing collaborations with Genentech, Debiopharm, and LLS and royalty payments that are contingent upon the successful commercialization of any products based upon these collaborations. Our ability to enter into new collaborations and our receipt of additional payments under our existing collaborations with Genentech, Debiopharm, and LLS cannot be assured, nor can we predict the timing of any such arrangements or payments, as the case may be.

. . .

  Add CRIS to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for CRIS - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now

Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.