Curis(CRIS) - 2023 Q3 - Quarterly Report

FORM 10-Q General Information Provides basic identification details for Curis, Inc.'s Form 10-Q, including trading symbol, exchange, and filer status Registrant Information Details Curis, Inc.'s identification for the Form 10-Q, including trading symbol, exchange, and filer status Registrant Details | Detail | Value | | :--- | :--- | | Trading Symbol | CRIS | | Exchange | Nasdaq Capital Market | | Commission File Number | 000-30347 | | Shares Outstanding (as of Oct 26, 2023) | 5,883,063 | | Filer Status | Non-accelerated filer, Smaller reporting company | Cautionary Note Regarding Forward-Looking Statements and Industry Data Warns against undue reliance on forward-looking statements due to inherent uncertainties and risks, covering future operations and financial results - Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict, and actual results may differ materially[11] - The report includes statistical and industry data from third-party publications and internal estimates, which involve assumptions and limitations, and readers are cautioned not to give undue weight to such data[56] - Forward-looking statements cover areas such as clinical trial initiation, timing, progress, and results; estimates of cash runway; ability to obtain additional financing; collaboration maintenance; drug candidate commercialization plans; regulatory filings and approvals; business model implementation; expense and capital requirement estimates; competitive position; and intellectual property[28] PART I. FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the reported periods Item 1. Unaudited Financial Statements Presents unaudited condensed consolidated financial statements for Q3 2023 and 2022, including balance sheets, income statements, equity, and cash flows Condensed Consolidated Balance Sheets Presents the company's financial position, showing decreased total assets and stockholders' equity due to reduced investments and increased deficit Balance Sheet Summary | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Assets | $89,975 | $108,848 | | Total Liabilities | $60,384 | $62,296 | | Total Stockholders' Equity | $29,591 | $46,552 | | Cash and Cash Equivalents | $24,468 | $19,658 | | Short-term Investments | $44,030 | $65,965 | | Accumulated Deficit | $(1,184,698) | $(1,148,997) | Condensed Consolidated Statements of Operations and Comprehensive Loss Reports net losses for Q3 2023 and 2022, with slight improvement driven by increased interest income and reduced royalty expense Statements of Operations and Comprehensive Loss Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $2,833 | $2,825 | $7,327 | $7,275 | | Total Operating Expenses | $15,201 | $15,431 | $43,460 | $50,075 | | Loss from Operations | $(12,368) | $(12,606) | $(36,133) | $(42,800) | | Total Other Income (Expense) | $187 | $(688) | $432 | $(2,543) | | Net Loss | $(12,181) | $(13,294) | $(35,701) | $(45,343) | | Net Loss Per Common Share (Basic & Diluted) | $(2.13) | $(2.83) | $(6.96) | $(9.82) | | Comprehensive Loss | $(12,080) | $(13,218) | $(35,412) | $(45,713) | Condensed Consolidated Statements of Stockholders' Equity Illustrates changes in equity, including increases in common stock and paid-in capital from offerings and compensation, alongside growing accumulated deficit Stockholders' Equity Summary | Metric (in thousands) | Dec 31, 2022 | Sep 30, 2023 | | :--- | :--- | :--- | | Common Shares | 4,830,464 | 5,885,313 | | Common Stock Amount | $48 | $59 | | Additional Paid-in Capital | $1,195,687 | $1,214,127 | | Accumulated Deficit | $(1,148,997) | $(1,184,698) | | Total Stockholders' Equity | $46,552 | $29,591 | - Issuance of shares in connection with July Registered Direct offering contributed $13,805 thousand to Additional Paid-in Capital during the nine months ended September 30, 2023[40] - Stock-based compensation added $1,395 thousand, $1,424 thousand, and $1,633 thousand to Additional Paid-in Capital for the three months ended March 31, June 30, and September 30, 2023, respectively[40] Condensed Consolidated Statements of Cash Flows Shows a net increase in cash for the nine months ended September 30, 2023, driven by investing and financing activities Cash Flow Summary | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(28,248) | $(42,069) | | Net Cash Provided by Investing Activities | $23,269 | $29,560 | | Net Cash Provided by Financing Activities | $9,698 | $2,255 | | Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash | $4,719 | $(10,254) | | Cash and Cash Equivalents and Restricted Cash, End of Period | $25,012 | $30,486 | - Cash used in operating activities decreased by $13.8 million year-over-year, primarily due to decreased employee-related costs and timing of payments[201] - Financing activities in 2023 were boosted by $13.8 million from the July Registered Direct offering, partially offset by payments related to future royalties[71][201] Notes to Condensed Consolidated Financial Statements Provides essential context and detailed explanations for financial statement figures, covering business, accounting policies, and financial instruments - The financial statements are prepared in accordance with GAAP and reflect a 1-for-20 reverse stock split retroactively applied to all share and per share amounts[47] - Management makes estimates and assumptions affecting reported amounts, including revenue recognition, goodwill, and certain liabilities[219] 1. Nature of Business Curis, Inc. is a biotechnology company developing cancer drug candidates, primarily emavusertib, through R&D and collaborations, with a history of losses - Curis, Inc. is a biotechnology company developing innovative drug candidates to treat cancer, with a primary focus on emavusertib, an IRAK4 inhibitor[45] - The company has collaborations with Genentech (for Erivedge commercialization) and Aurigene (for discovery and development of small molecule compounds)[45] - Curis has incurred $1.2 billion in accumulated deficit as of September 30, 2023, and expects to continue generating operating losses, anticipating existing cash to fund operations into 2025[74] 2. Summary of Significant Accounting Policies Outlines key accounting policies, including basis of presentation, estimates, cash, investments, leases, revenue, and segment reporting, noting a reverse stock split (c) Cash Equivalents, Restricted Cash, and Investments Defines cash equivalents as highly liquid, restricted cash as a security deposit, and short-term investments as available-for-sale marketable debt securities - Cash equivalents are highly liquid investments with original maturities of three months or less[77] - Restricted cash of $0.5 million (Sep 30, 2023) and $0.6 million (Dec 31, 2022) represents a security deposit for the Lexington, Massachusetts headquarters[77] - Short-term investments are marketable debt securities (commercial paper, corporate bonds, government obligations) with maturities between three and twelve months, classified as available-for-sale and stated at fair value[77] (d) Leases Recognizes operating lease assets and liabilities at commencement using the incremental borrowing rate, excluding short-term leases from the balance sheet - Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term[78] - The company uses its incremental borrowing rate to determine the present value of lease payments, as the lease does not provide an implicit interest rate[78] (e) Other Assets Other assets primarily comprise long-term prepayments and deposits - Other assets consist of long-term prepayments and deposits[109] (f) Revenue Recognition Recognizes revenue when performance obligations are met and collectability is assured, with Erivedge royalties largely paid to Purchasers - Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured[51] - Royalty revenues related to Genentech's sales of Erivedge are recognized at the later of when related sales occur or when the performance obligation is satisfied[110] - A substantial portion of potential Erivedge royalties will be paid to the Purchasers pursuant to the Oberland Purchase Agreement[110] (g) Segment Reporting Operates in a single reportable segment focused on research and development of innovative cancer drug candidates - The company operates in a single reportable segment: the research and development of innovative drug candidates for human cancer treatment[220] (h) New Accounting Pronouncements Assesses new ASUs, concluding recently issued pronouncements are either not applicable or have an immaterial impact on financial statements - Recently issued ASUs were either not applicable or expected to have an immaterial impact on the company's Condensed Consolidated Financial Statements[111] 3. Fair Value of Financial Instruments Details fair value measurements of financial assets and liabilities using a three-level hierarchy, primarily Level 1 and 2 inputs Fair Value of Financial Instruments | (in thousands) | Level 1 | Level 2 | Level 3 | Fair Value | | :--- | :--- | :--- | :--- | :--- | | As of September 30, 2023: | | | | | | Money market funds | $18,927 | — | — | $18,927 | | U.S. treasury securities and government agency obligations (Cash equivalents) | — | $1,471 | — | $1,471 | | Corporate debt securities and commercial paper (Short-term investments) | — | $13,805 | — | $13,805 | | U.S. treasury securities and government agency obligations (Short-term investments) | — | $30,225 | — | $30,225 | | Total | $18,927 | $45,501 | — | $64,428 | | As of December 31, 2022: | | | | | | Money market funds | $15,215 | — | — | $15,215 | | U.S. treasury securities and government agency obligations (Cash equivalents) | — | $2,998 | — | $2,998 | | Corporate debt securities and commercial paper (Short-term investments) | — | $42,071 | — | $42,071 | | U.S. treasury securities and government agency obligations (Short-term investments) | — | $23,894 | — | $23,894 | | Total | $15,215 | $68,963 | — | $84,178 | 4. Investments Details available-for-sale short-term investments, totaling $65.965 million with a 0.3-year weighted-average maturity as of September 30, 2023 Short-term Investments | (in thousands) | Amortized Cost | Unrealized Gain | Unrealized Loss | Fair Value | | :--- | :--- | :--- | :--- | :--- | | As of September 30, 2023: | | | | | | Corporate debt securities and commercial paper | $42,109 | $2 | $(40) | $42,071 | | U.S. treasury securities and government agency obligations | $24,042 | — | $(148) | $23,894 | | Total investments | $66,151 | $2 | $(188) | $65,965 | | As of December 31, 2022: | | | | | | Corporate debt securities and commercial paper | $13,807 | — | $(2) | $13,805 | | U.S. treasury securities and government agency obligations | $30,142 | $84 | $(1) | $30,225 | | Total investments | $43,949 | $84 | $(3) | $44,030 | - Short-term investments have maturities ranging from one to twelve months, with a weighted-average maturity of 0.3 years at September 30, 2023[85] - No credit losses on available-for-sale securities were recognized during the three and nine months ended September 30, 2023 or 2022[116] 5. Accrued Liabilities Accrued liabilities increased to $7.225 million, driven by higher research and development and headcount-related costs Accrued Liabilities | (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Headcount related costs | $3,157 | $3,152 | | Research and development costs | $3,329 | $1,727 | | Professional and legal fees | $685 | $762 | | Other | $54 | $38 | | Total | $7,225 | $5,679 | 6. Lease Details the single operating lease for real estate, showing consistent costs and decreased liability and right-of-use asset - The company's single lease for real estate in Lexington, Massachusetts, commenced on May 1, 2020, and is expected to end on December 31, 2025[88] Lease Balances | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Operating Lease Liability | $3,100 | $3,900 | | Right-of-Use Asset | $3,400 | $4,400 | Lease Cost | Lease Cost (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Lease Cost | $0.4 | $0.4 | $1.2 | $1.2 | 7. Liability Related to the Sale of Future Royalties Details the Oberland Purchase Agreement for Erivedge royalties, including a dispute that could trigger a $63.0 million repurchase option - Curis sold a portion of its Erivedge royalty rights to Purchasers for $65.0 million upfront, with potential milestone payments of up to $53.5 million[90] - In March 2023, Curis received a letter alleging defaults under the Oberland Purchase Agreement, which could entitle Purchasers to exercise a put option requiring Curis Royalty to repurchase receivables for an estimated $63.0 million[95] - The carrying value of the liability related to the sale of future royalties was $44.8 million as of September 30, 2023, with an effective annual imputed interest rate of 6.1%[94][123] 8. Research and Development Collaborations Outlines key R&D collaborations with Genentech, Aurigene, and ImmuNext, focusing on Erivedge, emavusertib, and unexercised VISTA compound options (a) Genentech Licensed Hedgehog pathway technologies to Genentech, resulting in Erivedge commercialization and 5% to 7.5% royalties on net sales - Curis licensed Hedgehog pathway antagonist technologies to Genentech in 2003, resulting in Erivedge commercialization for advanced BCC[125] - Curis is entitled to royalties on Erivedge net sales ranging from 5% to 7.5%[125] Genentech Collaboration Royalty Revenue | Royalty Revenue (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Genentech Collaboration | $2.7 | $2.8 | $7.2 | $7.4 | (b) Aurigene Collaborates exclusively with Aurigene on small molecule compounds, including emavusertib, with $42.5 million in remaining milestone obligations per program - Curis has an exclusive collaboration with Aurigene for discovery, development, and commercialization of small molecule compounds in immuno-oncology and precision oncology[126] - Four programs have been licensed under the collaboration, including the IRAK4 program (emavusertib), PD1/VISTA, PD1/TIM3, and a fourth immuno-oncology program[126] - Curis has remaining unpaid or unwaived payment obligations of $42.5 million per licensed program for regulatory approval and commercial sales milestones[126] (c) ImmuNext Holds an option agreement with ImmuNext for VISTA antagonizing compounds, but will not exercise it, with rights reverting in January 2024 - Curis has an option and license agreement with ImmuNext for VISTA antagonizing compounds, including CI-8993[127] - The company is not planning to exercise its option, and the rights are expected to revert to ImmuNext in January 2024[127] 9. Common Stock Stockholders approved increased authorized common stock, and a July 2023 offering raised $13.8 million, with $93.7 million still available - Stockholders approved an increase in authorized common stock from 11,390,625 shares to 22,781,250 shares in September 2023[101] - In July 2023, Curis issued 920,488 shares of common stock in a registered direct offering at $16.40 per share, generating net proceeds of approximately $13.8 million[102] - No shares were sold under the 2021 Sales Agreement during the three and nine months ended September 30, 2023, with $93.7 million remaining available for sale[101] 10. Stock Plans and Stock-Based Compensation Details stock-based compensation plans, including options, restricted stock awards, and ESPP, with associated unrecognized compensation costs - The company has two stockholder-approved stock-based compensation plans: the Fourth Amended and Restated 2010 Stock Incentive Plan and the Amended and Restated 2010 Employee Stock Purchase Plan, plus Inducement Awards for new employees[129] Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $776 | $505 | $2,059 | $2,084 | | General and administrative expenses | $857 | $819 | $2,393 | $2,924 | | Total stock-based compensation expense | $1,633 | $1,324 | $4,452 | $5,008 | Stock Options Summarizes stock option activity for the nine months ended September 30, 2023, with 840,366 options outstanding and $9.4 million unrecognized cost Stock Option Activity | Stock Option Activity | Number of Shares | Weighted Average Exercise Price per Share | | :--- | :--- | :--- | | Outstanding, Dec 31, 2022 | 683,666 | $64.72 | | Granted (9 months ended Sep 30, 2023) | 273,202 | $14.27 | | Exercised (9 months ended Sep 30, 2023) | (515) | $13.40 | | Canceled/Forfeited (9 months ended Sep 30, 2023) | (115,987) | $66.10 | | Outstanding, Sep 30, 2023 | 840,366 | $48.16 | | Exercisable at Sep 30, 2023 | 434,527 | $62.90 | - As of September 30, 2023, there was approximately $9.4 million of unrecognized compensation cost related to unvested employee stock option awards, expected to be recognized over a weighted average period of 2.65 years[105] Restricted Stock Awards Details Restricted Stock Award activity for the nine months ended September 30, 2023, with 114,500 RSAs outstanding and $1.7 million unrecognized cost RSA Activity | RSA Activity | Number of Shares | Weighted Average Grant Date Fair Value | | :--- | :--- | :--- | | Unvested, Dec 31, 2022 | — | — | | Awarded (9 months ended Sep 30, 2023) | 117,000 | $18.20 | | Forfeited (9 months ended Sep 30, 2023) | (2,500) | — | | Unvested, Sep 30, 2023 | 114,500 | $18.20 | - As of September 30, 2023, there was $1.7 million of unrecognized compensation costs related to RSAs, expected to be recognized over a remaining weighted average period of 1.61 years[154][155] Amended and Restated 2010 Employee Stock Purchase Plan Describes the ESPP, enabling discounted stock purchases, with 19,345 shares issued and 39,403 shares remaining available - The ESPP allows eligible employees to purchase common stock at 85% of the lower closing market price at the beginning or end of a purchase period[156] - During the nine months ended September 30, 2023, 19,345 shares were issued under the ESPP[156] - As of September 30, 2023, 39,403 shares were available for future purchase under the ESPP[156] 11. Loss Per Common Share Explains basic and diluted loss per common share are identical due to net loss, making potential common stock equivalents antidilutive - Diluted net loss per common share is the same as basic net loss per common share due to the company's net loss position, which makes potential common stock equivalents antidilutive[157] Loss Per Common Share | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Loss Per Common Share (Basic & Diluted) | $(2.13) | $(2.83) | $(6.96) | $(9.82) | | Weighted Average Common Shares (Basic & Diluted) | 5,720,789 | 4,689,559 | 5,131,904 | 4,618,518 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of financial performance, strategic focus on emavusertib, clinical trials, collaborations, and financial challenges, including revenue and expense trends - The company's lead clinical stage drug candidate is emavusertib, an IRAK4 inhibitor, currently undergoing Phase 1/2 trials (TakeAim Leukemia and TakeAim Lymphoma)[159] - Curis has never been profitable on an annual basis, with an accumulated deficit of $1.2 billion as of September 30, 2023, and expects continued operating losses[160] - Existing cash, cash equivalents, and investments of $68.5 million as of September 30, 2023, are expected to fund operations into 2025, but substantial additional capital will be required[160][204] Overview Reiterates Curis's mission to develop cancer drug candidates, focusing on emavusertib trials, collaborations, funding history, and accumulated deficit - Curis is developing and commercializing innovative drug candidates to treat cancer, with emavusertib as its lead clinical stage drug candidate[159] - Emavusertib is in Phase 1/2 trials (TakeAim Leukemia and TakeAim Lymphoma), with partial clinical holds lifted in August 2022 and July 2023, respectively[159] - The company has funded operations through equity placements, license fees, and collaboration funding, but has an accumulated deficit of $1.2 billion as of September 30, 2023[160] Key Drivers Identifies successful emavusertib clinical trials, favorable data, and additional financing as key near-term drivers, with long-term commercialization as the ultimate goal - Near-term key drivers include the ability to focus on and successfully execute clinical trials for emavusertib and generate favorable data[140][163] - The ability to raise additional financing when required is a critical near-term driver[163] - Longer-term success depends on the ability to successfully develop and commercialize drug candidates, either alone or with collaborators[140] Our Collaborations and License Agreements Refers to Note 8 for detailed information on the company's essential collaboration and license agreements supporting R&D programs - Information regarding collaboration and license agreements is detailed in Note 8 to the Condensed Consolidated Financial Statements[141] Financial Operations Overview Discusses financial results, highlighting collaboration and royalty revenues (Erivedge royalties mostly to Purchasers), and anticipated increases in R&D expenses - Substantially all revenues to date have been derived from license fees, R&D payments, and royalties from strategic collaborators, primarily Genentech's sales of Erivedge[144] - A significant portion of Erivedge royalty revenues will be paid to Purchasers under the Oberland Purchase Agreement[144] - Research and development expenses are expected to increase substantially over the next several years due to clinical trials for emavusertib and potential new product candidates[146] Revenue Current revenues are from license fees, R&D payments, and Erivedge royalties, with a significant portion paid to Purchasers, and no direct product sales expected soon - Curis does not expect to generate revenues from direct product sales for several years[144] - Revenues are primarily derived from license fees, R&D payments, and royalties from Genentech's Erivedge sales[144] - A significant portion of Erivedge royalties is paid to the Purchasers pursuant to the Oberland Purchase Agreement[144] Research and Development R&D expenses, including clinical trials, are expected to rise significantly as emavusertib progresses, with product development success highly uncertain - R&D expense consists primarily of costs for clinical trials, sublicense payments, and collaboration milestone payments[145] - R&D expenses are expected to increase substantially over the next several years as emavusertib advances and new product candidates are developed[146] - The successful development and commercialization of product candidates is highly uncertain, with costs and timing dependent on numerous factors including clinical trial enrollment, regulatory approvals, and manufacturing[146][147] General and Administrative G&A expenses primarily cover salaries for executive, finance, legal, and HR personnel, plus facility costs, insurance, and professional fees - G&A expense primarily consists of salaries and related expenses for executive, finance, accounting, business development, legal, information technology, corporate communications, and human resource functions[170] - Other G&A costs include facility costs, insurance, and professional fees for legal, patent, and accounting services[170] Critical Accounting Policies and Estimates No material changes to critical accounting policies and estimates occurred during the nine months ended September 30, 2023 - No material changes occurred to critical accounting policies and estimates during the nine months ended September 30, 2023, as reported in the 2022 Annual Report on Form 10-K[192] Results of Operations Compares Q3 2023 and 2022 financial results, noting consistent revenues, decreased R&D, mixed G&A, and increased other income Results of Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $2,833 | $2,825 | $7,327 | $7,275 | | Cost of royalties | $60 | $62 | $158 | $186 | | Research and development | $10,380 | $10,813 | $29,532 | $34,571 | | General and administrative | $4,761 | $4,556 | $13,770 | $15,318 | | Other income (expense) | $187 | $(688) | $432 | $(2,543) | | Net loss | $(12,181) | $(13,294) | $(35,701) | $(45,343) | Revenues, net Net revenues remained consistent for both the three and nine months ended September 30, 2023, compared to prior year periods - Net revenues remained consistent for the three and nine months ended September 30, 2023, compared to the same periods in 2022[193] Cost of Royalties Cost of royalties, paid to university licensors for Erivedge sales, was immaterial and slightly decreased for the reported periods - Cost of royalties comprises amounts due to third-party university patent licensors in connection with Genentech and Roche's Erivedge net sales[149] Cost of Royalties | Cost of Royalties (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Cost of royalties | $60 | $62 | $158 | $186 | Research and Development Expenses R&D expenses decreased by 4% (three months) and 15% (nine months) due to lower employee costs, partially offset by increased clinical costs R&D Expenses | R&D Expenses (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Direct research and development costs | $6,388 | $4,976 | $17,094 | $16,719 | | Employee related costs | $3,549 | $5,279 | $10,840 | $15,900 | | Facility related costs | $443 | $558 | $1,598 | $1,952 | | Total research and development expenses | $10,380 | $10,813 | $29,532 | $34,571 | - The decrease in R&D expenses was primarily attributable to lower employee-related costs due to a reduction in headcount[173][193] General and Administrative Expenses G&A expenses increased 5% (three months) due to professional fees but decreased 10% (nine months) due to lower employee costs G&A Expenses | G&A Expenses (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Employee related costs | $2,294 | $2,356 | $6,876 | $8,182 | | Professional, legal, and consulting services | $1,444 | $1,178 | $4,053 | $4,091 | | Facility related costs | $774 | $703 | $2,024 | $1,922 | | Insurance costs | $249 | $319 | $817 | $1,123 | | Total general and administrative expenses | $4,761 | $4,556 | $13,770 | $15,318 | - The three-month increase was primarily attributable to higher professional, legal, and consulting services costs[195] - The nine-month decrease was primarily attributable to lower employee-related costs due to a reduction in headcount[195] Other Income and Expense Other income and expense increased due to higher interest income, partially offset by decreased non-cash expense from royalty sales - Other income and expense increased for the three and nine months ended September 30, 2023, primarily due to increased interest income[176][196] - The increase was partially offset by a decrease in the non-cash expense related to the sale of future royalties[176][196] Liquidity and Capital Resources Curis's $68.5 million liquidity is projected into 2025, but significant additional capital is needed for R&D and to mitigate Oberland dispute risks - As of September 30, 2023, principal sources of liquidity included cash, cash equivalents, and investments totaling $68.5 million[197] - The company has incurred significant losses since inception, with an accumulated deficit of $1.2 billion as of September 30, 2023[202] - Existing capital is believed to be sufficient to fund operations into 2025, but substantial additional capital will be required for future R&D and operating goals[204] Equity Offerings July 2023 registered direct offering raised $13.8 million, with $93.7 million still available under the 2021 Sales Agreement - In July 2023, Curis sold 920,488 shares in a registered direct offering for net proceeds of approximately $13.8 million[178] - No shares were sold under the 2021 Sales Agreement during the three and nine months ended September 30, 2023, with $93.7 million remaining available for sale[198] Royalty Interest Purchase Agreement Details the Oberland Purchase Agreement for Erivedge royalties, including a dispute that could trigger a $63.0 million repurchase option - Curis sold a portion of its Erivedge royalty rights to Purchasers for $65.0 million upfront under the Oberland Purchase Agreement[200] - In March 2023, alleged defaults under the agreement could trigger a put option, requiring Curis Royalty to repurchase receivables for an estimated $63.0 million[200] - Curis disputes these allegations, but an unsuccessful defense could have a material adverse impact, including on its ability to continue as a going concern[200] Milestone Payments and Monetization of Royalty Rights Receives Erivedge royalties (mostly to Purchasers) and contingent milestone payments, with 5% due to university licensors - Curis receives royalty revenues from Genentech's Erivedge sales, but a substantial portion is paid to Purchasers under the Oberland Purchase Agreement[200] - The company is entitled to additional milestone payments from Genentech and under the Oberland Purchase Agreement upon achievement of contractually specified objectives[167][200] - Upon receipt of royalties and contingent payments, Curis is required to make payments totaling 5% to certain university licensors[200] Cash Flows from Operating Activities Cash used in operating activities decreased by $13.8 million for the nine months ended September 30, 2023, primarily due to lower employee-related costs and payment timing Net Cash Used in Operating Activities | Cash Used in Operating Activities (in millions) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $28.2 | $42.1 | | Change | $(13.8) (Decrease) | | - The decrease in cash used in operating activities was due to decreased employee-related costs and timing of payments[201] Cash Flows from Investing Activities Cash provided by investing activities totaled $23.3 million, primarily from net investment activity (purchases, sales, maturities) Net Cash Provided by Investing Activities | Cash Provided by Investing Activities (in millions) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Cash Provided by Investing Activities | $23.3 | $29.6 | - Cash provided by investing activities was primarily due to net investment activity from purchases and sales or maturities of investments[180] Cash Flows from Financing Activities Cash from financing activities increased to $9.7 million, driven by the July Registered Direct offering, partially offset by royalty payments Net Cash Provided by Financing Activities | Cash Provided by Financing Activities (in millions) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Cash Provided by Financing Activities | $9.7 | $2.3 | - The increase in 2023 was primarily due to proceeds from the July Registered Direct offering, partially offset by payments related to the royalty interest for the Oberland Purchase Agreement[201] Funding Requirements Curis requires substantial additional capital for R&D and operations, with existing cash projected into 2025, but faces risks if funding is not secured - Curis will require substantial additional capital to fund its research and development programs and planned operating goals, including emavusertib and licensed development candidates[202] - Existing cash, cash equivalents, and investments of $68.5 million as of September 30, 2023, are believed to be sufficient to fund operations into 2025, but this assessment is based on assumptions that may prove wrong[204] - Failure to obtain sufficient funding could force delays, reductions, or elimination of R&D programs, adversely affecting business prospects and potentially leading to dissolution or bankruptcy[204] New Accounting Pronouncements Refers to Note 2h for details on new accounting pronouncements and their expected impact on financial statements - Detailed information regarding recently issued accounting pronouncements and their expected impact is provided in Note 2h of the Condensed Consolidated Financial Statements[205] Contractual Obligations No material changes to contractual obligations have occurred since the 2022 Annual Report on Form 10-K - No material changes to contractual obligations have occurred since the Annual Report on Form 10-K for the year ended December 31, 2022[209] Item 3. Quantitative and Qualitative Disclosures About Market Risk Quantitative and qualitative disclosures about market risk are not required for the company - Quantitative and qualitative disclosures about market risk are not required[184] PART II. OTHER INFORMATION Presents other information including risk factors, controls and procedures, and a list of exhibits Item 1A. Risk Factors Updates risk factors, highlighting substantial losses, clinical trial failures, competition, Oberland Agreement risks, Nasdaq listing, and reverse stock split challenges - Investment in the company's securities involves risk, and readers should carefully consider the principal risks facing the business[30] - The company has incurred substantial losses and expects to continue doing so, potentially never achieving profitability[58] - Important factors that could cause actual results to differ materially from forward-looking statements include those discussed in the risk factor summary and detailed in this Item 1A[11] Risk Factor Summary Outlines principal risks: substantial losses, clinical trial failures, competition, Oberland Purchase Agreement risks, personnel challenges, and patent protection needs - The company faces risks of substantial losses and may never achieve profitability[58] - Clinical trials of drug candidates may fail to demonstrate safety and efficacy, leading to delays or inability to complete development[14] - A default under the Oberland Purchase Agreement could result in loss of royalty rights or a requirement to repurchase receivables at a significant price (up to $63.0 million as of Sep 30, 2023)[16][34] Updates to Risk Factors Updates specific risks concerning Nasdaq listing, potential emavusertib clinical trial delays, and the impact of the recent reverse stock split on liquidity - This information updates and supplements risk factors discussed in previous SEC filings (2022 10-K, Q1 2023 10-Q, Q2 2023 10-Q)[186] Risks Related to Nasdaq Listing Despite regaining Nasdaq compliance, potential stock price decline risks delisting, decreasing liquidity, reducing institutional interest, and harming the business - The company regained compliance with Nasdaq's minimum bid price requirement on October 13, 2023[188] - Failure to meet Nasdaq's continued listing requirements could lead to delisting, decreasing liquidity, reducing institutional investor interest, and increasing stock volatility[208] Risks Related to Clinical Trials Delays or inability to complete emavusertib clinical trials, including enrollment issues or future holds, could materially harm the business - Any delay or inability to continue or complete clinical trials of emavusertib could materially adversely affect the business, prospects, financial condition, and operations[236] - Delays in enrolling patients or completing trials could lead to additional costs, slow product development, and impair the ability to obtain FDA approval and generate revenue[237] - The company cannot assure that future safety events or clinical holds will not occur, similar to those experienced with the TakeAim Leukemia and TakeAim Lymphoma trials[237] Risks Related to Reverse Stock Split The 1-for-20 reverse stock split may decrease liquidity, increase 'odd lots,' and fail to attract institutional investors, not improving marketability - The September 2023 1-for-20 reverse stock split may decrease the liquidity of common stock due to a reduced number of outstanding shares and potentially fewer market makers[234] - The reverse stock split may increase the number of 'odd lots' (less than 100 shares), which can be more difficult and costly to sell[234] - The resulting per-share trading price may fail to attract institutional investors or satisfy their investing guidelines, thus not achieving the desired marketability improvement[235] Item 4. Controls and Procedures Details the evaluation of disclosure controls and procedures and reports on changes in internal control over financial reporting Evaluation of Disclosure Controls & Procedures Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023 - As of September 30, 2023, disclosure controls and procedures were evaluated and concluded to be effective at the reasonable assurance level[185] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the three months ended September 30, 2023 - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2023[185] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including the Restated Certificate of Incorporation and various certifications - Exhibits include the Restated Certificate of Incorporation of Curis, Inc., as amended, and various certifications (CEO, CFO, XBRL documents)[230][239] Signatures Contains the official signatures of the registrant's authorized officers, certifying the filing of the Quarterly Report on Form 10-Q Signatures Contains official signatures of authorized officers, certifying the filing of the Quarterly Report on Form 10-Q - The report is signed by James E. Dentzer, President and Chief Executive Officer, and Diantha Duvall, Chief Financial Officer, on November 2, 2023[241]