Curis reports net income of $4.8M for first-quarter 2010

Curis, Inc. (NASDAQ: CRIS), a drug development company seeking to develop next generation targeted small molecule drug candidates for cancer treatment, today reported its financial results for the first quarter ended March 31, 2010.

“All of Curis' key development programs have made significant progress since the beginning of 2010”

"All of Curis' key development programs have made significant progress since the beginning of 2010," said Dan Passeri, Curis President and Chief Executive Officer. "We recently completed our Phase I dose escalation study of CUDC-101 and believe that the maximum tolerated dose observed in this study has the potential to provide a good therapeutic window for this drug. We expect to begin a Phase Ib study of CUDC-101 in additional tumor types during the first half of 2010. Additionally, our collaborator Genentech recently provided updates on clinical trials of GDC-0449, a product candidate under our 2003 agreement with the company, including that it expects data from the ongoing Phase II first-line metastatic colorectal cancer study to be available in mid-2010 and that it intends to initiate a Phase II trial of GDC-0449 in operable basal cell carcinoma patients in the second half of 2010. Genentech is currently conducting a pivotal Phase II clinical trial in patients with inoperable locally advanced or metastatic basal cell carcinoma. We believe that the expansion into operable basal cell carcinoma patients could greatly expand the commercial potential of GDC-0449. Also, our collaborator Debiopharm recently initiated a Phase I clinical trial of Debio 0932, an Hsp90 inhibitor that we licensed to Debiopharm in August 2009. Lastly, we made progress with our preclinical pipeline, presenting what we believe to be compelling preclinical data regarding our first-in-class program targeting HDAC, PI3K and mTOR at the 2010 AACR Annual Meeting in April while continuing to work towards selecting a new development candidate from this class of compounds in 2010."

For the first quarter of 2010, Curis reported net income of $4.8 million, or $0.07 per basic share outstanding and $0.06 per fully diluted share outstanding, as compared to net income of $1.1 million or $0.02 per share on both a basic and fully diluted share outstanding basis for the same period in 2009.

Revenues for the first quarter of 2010 were $12.6 million as compared to $6.0 million for the same period in 2009. The increase in revenues from the prior year period was primarily due to the recognition of $8 million in license fee revenue earned by Curis during the first quarter of 2010 upon the achievement of a development objective under the license agreement with Debiopharm. Curis also received settlement proceeds of $4 million from Micromet, a former collaborator, upon resolution of an arbitration claim relating to a 2001 agreement between the companies.

Operating expenses for the first quarter of 2010 were $6.9 million as compared to $5.0 million for the same period in 2009.

• Research and development spending was $2.5 million for the first quarter of 2010 as compared to $2.9 million for the same period in 2009. The decrease is primarily attributable to lower spending on Curis' CUDC-305 (Debio 0932) program as a result of licensing this program to Debiopharm in August 2009, for which all subsequent development costs have been assumed by Debiopharm. Offsetting this decrease, Curis increased spending on other targeted cancer programs.
• General and administrative spending was $4.4 million for the first quarter of 2010 as compared to $2.1 million for the same period in 2009. The increase in general and administrative expenses was primarily due to $1.5 million in non-recurring legal costs associated with the Micromet arbitration proceeding. In addition, Curis recorded a $0.3 million increase in personnel costs, primarily as a result of changes to executive compensation including $0.2 million in discretionary bonus payments to its executive officers. In addition, Curis recorded a $0.4 million increase in stock-based compensation expense, which was primarily the result of $0.3 million in expense associated with the vesting of stock options that contained a performance condition that was achieved during the first quarter of 2010.

Other net expenses of $0.9 million for the first quarter of 2010 represent the change in the fair value of a warrant liability established in connection with our January 2010 registered direct offering as a result of an increase in Curis' stock price from the January 27, 2010 warrant issuance date through March 31, 2010.

As of March 31, 2010, Curis' cash, cash equivalents and marketable securities totaled $48.7 million, and there were 75.6 million shares of common stock outstanding.

Recent Highlights

GDC-0449 (Hedgehog Pathway Inhibitor in Collaboration with Genentech)

-- Genentech completed enrollment of pivotal Phase II clinical trial in advanced basal cell carcinoma, provided updated estimates of completion of three ongoing clinical trials and announced a new clinical trial

In April 2010, Genentech announced that it had completed enrollment in the ongoing pivotal Phase II clinical trial of GDC-0449 in patients with inoperable locally advanced or metastatic basal cell carcinoma, that it expects data in 2011 and that, if such trial was successful, it could file regulatory submissions in this indication in 2011.

Genentech also reported in April that:

• It expects results from ongoing Phase II clinical trials of GDC-0449 in first-line metastatic colorectal in mid-2010 and in advanced ovarian cancer during the second half of 2010.
• It plans to initiate a study in operable basal cell carcinoma patients during the second half of 2010.

GDC-0449 is being developed by Genentech, Inc., a wholly owned member of the Roche Group, under the 2003 collaboration agreement between Genentech and Curis.

-- Chugai to expand GDC-0449 development into Japan market

In February 2010, Curis announced that Chugai Pharmaceutical Co., Ltd. had exercised its right of first refusal for the development and commercialization in Japan of GDC-0449 under an existing agreement with F. Hoffmann-La Roche, Ltd. Curis believes that the combined development efforts of Genentech, Roche and Chugai could provide important opportunities for the development of GDC-0449 in the majority of the significant global pharmaceutical markets.

CUDC-101 (HDAC/EGFR/Her2 Inhibitor)

-- Completed Phase I dose escalation clinical trial

In May 2010, Curis announced that it has completed its Phase I dose escalation trial of CUDC-101 and established the maximum tolerated dose of the drug as 275 milligrams per meter squared. Curis expects that the study's principal investigator will present final trial data at the 22^nd EORTC-NCI-AACR symposium on Molecular Targets and Cancer Therapeutics in Berlin, Germany from November 16-19, 2010.

-- Issued two CUDC-101 preclinical data publications

In March 2010, CUDC-101 preclinical data were published in the Journal of Medicinal Chemistry. Curis published additional CUDC-101 preclinical data in Cancer Research in April 2010.

Debio 0932 (Hsp90 Inhibitor in Collaboration with Debiopharm)

-- Earned $8 million from Debiopharm under Hsp90 License Agreement; Debiopharm Initiated Phase I clinical trial

In February 2010, Debiopharm notified Curis that French regulatory authorities had accepted its clinical trial application for Debio 0932. As a result, Curis earned an $8 million payment from Debiopharm under the parties' August 2009 license agreement, which Curis received in March 2010. In April 2010, Debiopharm initiated its Phase I clinical trial evaluating the safety of Debio 0932. The study will be an open label, multi-center dose escalation trial evaluating the safety and maximum tolerated dose of multiple doses of Debio 0932 in patients suffering from advanced solid tumors or lymphoma. Curis is eligible for additional contingent payments under its agreement with Debiopharm, including a $3 million payment for the treatment of the fifth patient in this trial.

CUR-906 (HDAC, PI3K and mTOR inhibitor)

-- Poster presentation at 2010 AACR annual meeting

On April 20, 2010, Rudi Bao, M.D., Ph.D. and Curis' Senior Director of Oncology, presented a poster entitled, "Antitumor activity of single small molecule agent targeting PI3K/mTOR and HDAC," at the American Association for Cancer Research (AACR) 2010 Annual Meeting. This presentation highlighted preclinical data related to CUR-906, a research compound that is designed to target HDAC, PI3K and mTOR. This presentation is available on Curis' website.

Corporate

-- Raised $16.25 million in registered direct offering

On January 27, 2010, Curis completed a registered direct offering of 6,449,288 units at a purchase price of $2.52 per unit with each unit consisting of (i) one share of common stock and (ii) one warrant to purchase 0.25 of a share of common stock. The warrants are exercisable for a period of five years, at an initial exercise price of $3.55 per share. Curis received net proceeds from the sale of the units, after deducting offering expenses, of approximately $14.9 million.

SOURCE Curis, Inc.