Curis, Inc.

Good afternoon and welcome to QRIS's third quarter 2022 business update call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After the company's prepared remarks, call participants will have an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Kyrus's Vice President of Investor Relations and Corporate Communications, Craig West. Please go ahead.

Thank you, and welcome to Kyrus's third quarter 2022 business update call. Before we begin, I would like to encourage everyone to go to the investor section of our website at www.kyrus.com. to find our third quarter 2022 earnings release and related financial tables. I would also like to remind everyone that during the call, we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and actual results may differ materially. For additional details, please see our SEC filings. Joining me on today's call are Jim Denser, President and Chief Executive Officer, Diantha Duvall, Chief Financial Officer, and Bob Martel, Head of R&D. We will also be available for a question and answer period at the end of the call. I'd now like to turn the call over to Jim.

Thanks, Craig. Good afternoon, everyone, and welcome to QRIS's third quarter business update call. Every day, we strive to develop the next generation of first-in-class cancer therapies that that meaningfully improve and extend patients' lives. Earlier today, we announced that based on new data we have received in our Take Aim Leukemia study, we've made the decision to focus the company's resources on accelerating the path of bringing M of Assertive to patients. This focus on M of Assertive and the corresponding deprioritization of our other programs will enable a reduction of approximately 30% of the company's workforce and is expected to extend the company's cash runway into 2025. At this time, I'd like to acknowledge that while we are excited about the heightened focus of IMUFUSRTIB, we understand the impact of deprioritizing our other programs has on our valued colleagues and friends who worked on them. We're grateful for all of their hard work, and we wish them well as they pursue new opportunities. Let me turn now to discuss Emma Vucerte and the development activities going on to drive this important asset forward, starting with our recent accomplishments. During the quarter, we were pleased to announce that the FDA has approved the reopening of enrollment in our Take Aim studies in leukemia and lymphoma. Also in the quarter, we sponsored the first annual symposium on IRAC IV. This event brought together academic and industry experts to discuss the latest groundbreaking research in IRAC4. The event was well attended, informative, and frankly, it was a lot of fun to hear about all the great work going on in this important area of cancer biology. We were honored to make the event possible and to host so many of the brilliant pioneers advancing the science of IRAC4. This coming quarter, We'll be releasing new data in our Take Aim Leukemia Study of Emma Vucertib at the 64th Annual Meeting of the American Society of Hematology in New Orleans. These data will include 11 additional patients treated with monotherapy in our targeted populations, those patients whose disease harbors FLT3 or spliceosome mutations. These 11 new patients bring the total number of patients with targeted mutations to 24. As many of you know, there are currently no drugs approved for relapsed refractory AML or MDS patients post-treatment with HMA. The only published data available for the post-HMA setting are for MDS patients treated with chemotherapy, where an 8% ORR was observed. We're very excited to be developing what we hope will be a game-changing therapy for patients who face such a significant unmet need. As a reminder, emavucirtib is currently being evaluated in three separate clinical studies. First, the Take Aim Leukemia Study, a Phase I-II study with both monotherapy and combination arms for patients with relapsed or refractory acute myeloid leukemia, or AML, and high-risk myelodysplastic syndromes, or MDS. The TAKE-AIM lymphoma study, a Phase I-II combination study with ibrutinib for patients with relapsed or refractory NHL and other hematologic malignancies. And third, the Phase II Lucas study, evaluating emavucirtib in patients with lower-risk MDS. The Take Aim leukemia study is open for enrollment in monotherapy at the 200 milligram dose level. We plan to enroll at least nine more patients at this dose and discuss data from those patients with FDA. Provided we receive the agency's agreement in those discussions, we plan to reopen enrollment in the study's expansion arm as well as in a combination arm investigating emavucirtib with azazitidine or venetoclox. Staying with leukemia and MDS for a moment, we believe that the LUCAS study in lower-risk MDS could have a data readout in the first half of 2023. Recall that the LUCAS study is an investigator-sponsored study led by Dr. Uwe Platzbecker, chairman of EHA's scientific working group on MDS. We're excited to see what Emma Hussertib shows in this study. as spliceosome mutations are among the most prominent mutations in lower-risk MDS. In an exciting new and more recent development, we note that Curis will be presenting at CITSE right here in Boston later this week. This presentation will highlight an investigation of the immune modulation that occurs with IRAC4 inhibition in melanoma brain metastases. This is yet another example of the vibrant level of scientific research going on around IRAC4 and demonstrates that emavucirtib's potential quite possibly extends to solid tumors as well as leukemia and lymphoma. In summary, progress this quarter is highlighted by receiving FDA approval to reopen enrollment in both of the TAKE-AIM studies, convening the first IRAC4 symposium, announcing the release of new clinical data at ASH, and announcing the extension of the company's cash runway an additional year into 2025. It has been an eventful quarter, and we look forward to providing important updates on Emma Vucertib at CITSE, ASH, and at other events in the weeks and months ahead. With that, I'll turn the call over to Diantha to review our financial results for the quarter. Diantha?

Thank you, Jim. KERAS today has a strong foundation, both operationally and financially, to allow us to concentrate on Ema Vucertib. Development. For the third quarter of 2022, KERAS reported a net loss of $13.3 million, or 14 cents per share, as compared to a net loss of $11.1 million, or 12 cents per share, for the same period in 2021. KERAS reported a net loss of $45.3 million, or 49 cents per share, the nine months ended September 30th, 2022, as compared to a net loss of 31.8 million or 35 cents per share for the same period in 2021. Revenues for the third quarters of 2022 and 2021 were 2.8 million and 3 million respectively. Revenues for the nine months ended September 30th, 2022 and September 30th, 2021 were $7.3 million and $7.5 million, respectively. Operating expenses for the third quarter of 2022 were $15.4 million as compared to $13.1 million for the same period in 2021. Operating expenses for the nine months ended September 30, 2022 were $50.1 million as compared to $37 million for the same period in 2021 and consist of the following. Cost of royalty revenues, which comprise which is comprised of amounts due to third-party university patent licensors in connection with Genentech and Roche's average net sales were 0.1 million for the third quarter of 2022 as compared to 0.2 million for the same period in 2021. Cost of royalty revenues for the nine months ended September 30, 2022 were 0.2 million as compared to 0.4 million for the same period in 2021. Research and development expenses were $10.8 million for the third quarter of 2022, as compared to $8.6 million for the same period in 2021. The increase in research and development expenses for the quarter is primarily attributable to increased personnel and consulting costs, partially offset by decreased manufacturing and clinical development costs. Research and development expenses were $34.6 million for the nine months ended September 30, 2022, as compared to $24.1 million for the same period in 2021. General and administrative expenses were $4.6 million for the third quarter ended September 30, 2022, as compared to $4.3 million for the same period in 2021. The increase in general and administrative expenses was driven primarily by the timing of costs. General and administrative expenses were $15.3 million for the nine months ended September 30, 2022, as compared to $12.5 million for the same period in 2021. For the third quarter of 2022 and 2021, total other expense was $0.7 million and $1 million respectively. Other expense primarily consisted of imputed interest related to the future royalty payments partially offset by interest income. Other expense was $2.5 million for the nine months ended September 30, 2022, as compared to 2.3 million for the same period in 2021. As of September 30, 2022, QRIS's cash, cash equivalents, and investments totaled 98.7 million, and there were approximately 96.4 million shares of common stock outstanding. We are in a strong cash position and expect that our existing cash, cash equivalents, and investments should enable us to maintain our planned operations into 2025. With that, I'd like to open the call for questions. Operator?

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Our first question is from Ed White with HC Wainwright. Please go ahead.

Good afternoon. Thanks for taking my questions. A couple of questions on the headcount reduction. So is the impact going to be felt more on the G&A or the R&D expense line? And should we be seeing the impact starting in the fourth quarter, or is this going to be really a 2023 event for the impact on expenses?

Thanks, Ed. First, thanks for taking the question. So the impact is really across the company. It is both G&A and R&D. Obviously, it starts with Everything that's not directly related to Emma Vucertip. So we are absolutely concentrating all of our resources towards Emma Vucertip and therefore anything that wasn't directly related was something that we could live without. And if we could live without and that extended our cash runway without having to do anything else. I mean, this is the luxury of starting with such a strong balance sheet that we have this flexibility. But with these data in, it becomes increasingly clear that this is a drug and this needs to get to NDA submission with haste. So we're going to dedicate and redouble all of our efforts to make that happen and insulate ourselves from the need to raise money in the meantime. So yeah, broad-based across G&A and R&D, there will be some impact in Q4, but it's really as you look out over the full two-year period that follows that you'll see that cash runway impact.

Okay, thanks, Jim. And then I'm just curious with the VISTA program, will we be seeing more data from 8993? What's going to happen to patients that are currently enrolled, if there are any? And are you looking at this as just halting the program for now? or is this something that you might want to partner or out-license for someone else to bring forward?

Yeah, I think of this as more of a pause, a suspension of activity. We're not enrolling new patients in that study. As you know, we love the VISTA target. I think it's fantastic. But in a world where you've got two programs in the clinic and one of them has clients has really not just proven data that it shows it works consistently from theory to lab to clinic, but you now have a new batch of clinical data that shows you've got an eye to NDA. And then the other program is still in dose escalation. If you can't afford to do both, boy, the decision's clear. You go with the one that's got the proven data. So I love VISTA as a target, but we need to take the effort and the money and the people that are dedicated to that program right now and be laser-focused on MF-USER tip.

Okay, that makes sense. Thanks for taking my questions. Sure, thank you.

The next question is from Sumit Roy with Jones Research. Please go ahead.

Hi, everyone. Congrats on all the progress. A quick one on the expected ASH data from the monotherapy and the combo arm. Could you give us any color on What kind of duration of drug these patients will be? Is it just 28 days or a little longer than that since you just started enrolling?

Yeah, so it's a little longer than that, and it includes data for some patients. As you may remember, we were put on clinical hold last spring, so we had some patients that had just started the study before the FDA halted enrollment of new patients. So we've got the data is related to those patients incrementally. I do think, obviously, it's a significant add to the data set. It's almost doubling the number of patients we've got with the targeted mutation. So I think it's a very meaningful update and really looking forward to talking about the results of how those patients are doing when we get to ASH.

The venetoclax combo arm, that started recently, right?

Well, that started, again, before the FDA hold. So any patients that were started, if you dosed drug for sake of argument, 24 hours before the hold came in, you stayed on drug. The FDA didn't ask us to take people off drug. They just said, don't put more on. So we had already started putting patients on combination therapy. As you can imagine, investigators are really excited about combo therapy and monotherapy with this program. And so anybody that started the study shortly before the FDA told us to stop adding new ones was able to stay on study. and we've got five of those patients that we're going to talk about at ASH.

Great. That's really helpful. And one last question. If you can provide any color, like what are you seeing these new patients are being more spliced as a mutant patient, or are you seeing more FLT3 mutant patients getting enrolled?

Yeah, so I want to be a little cautious about saying too much about the data before we get to ASH. I'd just say that, look, you know, we are really excited about this program. This is the first... new target identified in AML and MDS in years. And not only is it the newest target, but coincidentally, it's the largest target. It looks like every patient or virtually every patient across the spectrum of AML and MDS overexpresses that long isoform of IRAC4. And at least half the population has a very heavy overexpression of that kinase. So we expect that the excitement is going to continue. As long as the data stay consistent, theory to lab to clinic, that if you have lots of IRAC4 long, monotherapy should be sufficient to knock it down and knock it down hard. And if you have a little bit of IRAC4L, it's still a driver of disease. It's simply not the only driver of disease. Those will be the patients that benefit from combo therapy. So we're going to see that As we moved from theory to the lab, the data were really consistent and attractive. Now that we've doubled the data set in our targeted population, have we been able to maintain that level of consistency in the data? And should the excitement be building, not just at the company and among investors, but frankly among physicians and patients? That's what we're eager to talk about when we get to ASH.

Great. Thank you so much for taking the questions.

Again, if you have a question, please press star then 1. The next question is from Lee Watzek with Cantor Fitzgerald. Please go ahead.

Hi. Thank you for taking my question. So quick one on ASH. For the 11 additional enrolled patients, by the time of the presentation, could you give us a sense of how many you'd be able to get a potential efficacy read on? I know it's a little early.

Yeah, so we're going to – thank you, Lee, first for the question. We're going to be talking about efficacy for all 11 patients. So we're going to be looking at an efficacy pool of 24 patients with a targeted mutation. So obviously we consider this a significant and meaningful update. And as I said, we're really excited about doing it. Stay tuned.

Great. Thank you. And just one follow-up. When do you think you'd potentially be able to go back to the FDA with these new patient data and then discuss the next steps for AML?

Yeah, it's a great question. So, you know, let's step back in time just as a reminder. When the FDA put us on hold in the spring, they had three fundamental questions. The first one was there was a patient who died, and they wanted to make sure that that wasn't an issue with the drug or the study in any way. And then second, they knew that we had an early signal. It was rare, but a signal in CPK elevation and rhabdo. They wanted to make sure that wasn't a problem in the index patient, in the patient death, or in any other patient. Make sure that they didn't need to change our protocol in any way. Are we identifying and managing CPK elevation and rhabdo appropriately? And then third, they asked us about dose, Project Optimus. which dose is the right dose to take in the recommended phase two. So we were able, over the course of the summer, and we said this in the beginning, and I'm glad, of course, to be able to say now that it worked out that way, the FDA was going to get comfortable, as we were, as they learned more about the patient death, that this is a patient with a relapsed refractory AML who had a life expectation of 2.3 months in the literature. That patient died in month nine. Our view would be that patient, the question shouldn't be, why did the patient die? The question should be, how did that patient get to month nine? And the answer is, of course, the drug. The patient eventually did progress, and the FDA, of course, got comfortable with that as they reviewed more data. The second question was on CPK elevation and rhabdo. We do know it is rare to see it in our study, but we do see it. We do know that our drug can exacerbate a CPK elevation in some patients. We do know that there are confounding factors, and we were able to identify them in the data with FDA. If you're on a statin, if you're on a fibrate, if you're a heavy exerciser, you will see CPK elevation, but we know exactly what to look for. The protocol has really good language for identifying it, training the patients, doing blood draws to see if there is a CPK elevation, and the procedures were in the protocol for managing effectively. And we didn't have any patients have renal complication, which was obviously terrific. The FDA reviewed all of our procedures and all of our data and, of course, got comfortable with that as well. It was the last question on dose. and this is really getting to answer your question directly, that the FDA was able to focus on the most and would involve most of the discussion. In the context of Project Optimus, where the FDA wants to know and be involved in which dose moves forward in drug studies, emavucirtib represents an ideal drug for that purpose. We studied and cleared for safety purposes 200 milligrams, 300 milligrams, and 400 milligrams, and all three dose levels got responses. That's the perfect place for FDA to want to sink their teeth in. Now, we came back suggesting that between 300 and 400, there was no efficacy increase, but there was a risk that there might be some off-target effect. We were saturating the target at 300, so it didn't make sense. to go to 400. 300 was better between those two. Between 200 and 300, we feel as though when we run our exposure analyses, there's a higher probability of getting a response at 300 milligrams, and therefore 300 is better than 200. And the FDA said, okay, we appreciate that logic. That makes sense. We'd just like to see a few more patients at that lowest dose level to make sure we agree. And so the negotiation with FDA was all about how many more patients do you need to be able to see to help us decide is 200 or 300 the appropriate recommended phase two dose. And we agreed on the number nine. So we're going to spend the next, you know, this quarter, of course, now that we're open for enrollment, the blocking and tackling is in process of getting all of our sites open. And then, of course, we're going to quickly move into enrolling those nine additional patients. And my hope would be that, you know, sometime early to mid next year, we've got those patients on study. We can run the analyses on them, build the briefing book, and have that discussion with FDA. And one of two outcomes is going to happen. Either the data is going to come back exactly the way we thought and the way the early data suggested, and 300's our dose and FDA will agree, or frankly, we're wrong. And when we put nine more patients on at 200 milligrams, we get a bunch of CRs at 200 milligrams, in which case, you know what, the FDA turned out to be right, or at least the question turned out to be valid. and we will then move forward with 200 milligrams as our dose. But we should know that sometime by mid-next year would be my guess. It was a really long answer, but I wanted to make sure to address it thoroughly. Did that help?

No. Thank you. Yes. Appreciate that very much. Thank you.

Okay. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to the company's President and Chief Executive Officer, James Denser, for any closing remarks.

Excellent. Thank you, Operator. And thank you, everyone, for joining today's call. And as always, thank you to the patients and families participating in our clinical trials, to our team at Curus for their hard work and commitment, and to our partners at Origen, Immunext, and the NCI for their ongoing help and support. We look forward to updating you again soon. Thanks, Gary.

Thank you. The conference is now concluded. Thank you again for your participation. You may now disconnect.