Curis(CRIS) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Details the company's unaudited financial statements, management's analysis, market risk, and internal controls Unaudited Financial Statements Curis, Inc. reported Q1 2023 total assets of $94.5 million, a net loss of $11.6 million, and a significant royalty liability dispute Condensed Consolidated Balance Sheets As of March 31, 2023, total assets decreased to $94.5 million from $108.8 million, primarily due to lower short-term investments, with total liabilities also decreasing Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $31,696 | $19,658 | | Short-term investments | $40,063 | $65,965 | | Total Assets | $94,544 | $108,848 | | Liabilities & Equity | | | | Total current liabilities | $8,069 | $10,013 | | Liability related to the sale of future royalties, net | $47,393 | $49,483 | | Total Liabilities | $57,954 | $62,296 | | Total Stockholders' Equity | $36,590 | $46,552 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2023 net revenues increased to $2.3 million, operating expenses decreased, resulting in a reduced net loss of $11.6 million compared to prior year Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenues, net | $2,297 | $2,057 | | Research and development | $9,140 | $11,435 | | General and administrative | $4,760 | $5,673 | | Loss from operations | ($11,627) | ($15,133) | | Net loss | ($11,559) | ($16,109) | | Net loss per share (basic and diluted) | ($0.12) | ($0.18) | Condensed Consolidated Statements of Cash Flows Q1 2023 net cash used in operations improved to $12.2 million, with net cash provided by investing activities at $26.2 million, increasing total cash by $12.0 million Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,199) | ($16,815) | | Net cash provided by (used in) investing activities | $26,243 | ($3,083) | | Net cash provided by (used in) financing activities | ($2,006) | ($1,648) | | Net increase (decrease) in cash | $12,038 | ($21,546) | Notes to Condensed Consolidated Financial Statements Key notes detail the lead drug candidate emavusertib, historical losses, future funding needs, and a material dispute with Oberland Capital over a royalty agreement - The company's lead clinical stage drug candidate is emavusertib, an orally available small molecule inhibitor of IRAK4[31] - As of March 31, 2023, the company had an accumulated deficit of $1.2 billion. Management anticipates that its $71.8 million in cash, cash equivalents, and investments will be sufficient to fund operations for at least 12 months from the filing date[36] - In March 2023, Curis received a letter from Oberland Capital alleging defaults under the royalty purchase agreement. Oberland claims the right to exercise a put option that would require Curis Royalty to repurchase receivables at a price estimated up to $72.5 million. Curis disputes these allegations[72] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses emavusertib development, Q1 2023 financial performance with increased revenue and reduced net loss, and the significant Oberland Capital dispute - The company's lead drug candidate, emavusertib, is being tested in the TakeAim Leukemia and TakeAim Lymphoma trials. The FDA lifted the partial clinical hold on the Lymphoma trial, but a partial hold remains on portions of the Leukemia trial[100][101][102] - Existing cash, cash equivalents, and investments of $71.8 million as of March 31, 2023, are expected to fund operations into 2025[109][150] - A dispute with Oberland Capital Management alleges defaults under the royalty purchase agreement. If Curis is unsuccessful in defending against these claims, it could have a material adverse impact, including on its ability to continue as a going concern[117][143] Results of Operations Comparison (in thousands) | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Revenues, net | $2,297 | $2,057 | 12% | | Research and development | $9,140 | $11,435 | (20)% | | General and administrative | $4,760 | $5,673 | (16)% | | Net loss | ($11,559) | ($16,109) | (28)% | Quantitative and Qualitative Disclosures About Market Risk This section is not required for the current filing - Disclosure for this item is not required[155] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - Based on an evaluation as of March 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[156] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[157] PART II. OTHER INFORMATION Covers updated risk factors, exhibits filed, and official signatures for the report Risk Factors The company faces delisting risk from Nasdaq due to failing to meet the minimum bid price requirement, with a compliance deadline of October 2023 - The company's common stock is at risk of being delisted from the Nasdaq Capital Market for failing to maintain a minimum bid price of $1.00 per share[159] - On October 21, 2022, the company received a deficiency letter from Nasdaq. It has been granted a compliance period until October 16, 2023, to regain compliance[160] - If compliance is not regained, the company may need to implement a reverse stock split, but there is no assurance this will be successful or that other listing requirements will be met[161] Exhibits Lists exhibits filed with the Form 10-Q, including employment agreements, CEO/CFO certifications, and XBRL data - Exhibits filed include an employment agreement for Jonathan Zung, certifications from the CEO and CFO (Rule 13a-14(a) and Section 1350), and various XBRL documents[161] Signatures The report was duly signed and authorized on May 4, 2023, by the President and CEO, and the Chief Financial Officer - The report is signed by James E. Dentzer (President and CEO) and Diantha Duvall (CFO)[165]