Curis: Speculative Targeted Oncology Story With 3 Readouts In 2019

Summary

The stock has lost more than 80% of its value in the past three years. In 2019 so far it’s risen by more than 110%.

I provide a brief overview of the company and recap management’s recent presentation at Cowen.

Targeted oncology/precision medicine has been a hot theme over the past few years and Curis has three high risk/high reward shots on goal.

We could see a steady run-up to the first readout (mid-year) from the dose escalation study for first-in-class IRAK4 inhibitor CA-4948.

Below I detail reasons for cautious optimism. The stock is a speculative buy (limit weighting to an appropriate level). Risk averse investors will be better served to wait on the sidelines for data to confirm first.

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Shares of tiny biotech firm Curis ( CRIS ) have been a disappointment lately, losing more than 80% of their value over the past three years. So far in 2019, the stock has risen by more than 110% as it appears buyers are stepping in and optimism is certainly returning to this small cap name.

I’m looking forward to digging into this one, as management’s recent presentation at Cowen & Company Healthcare Conference highlighted multiple data readouts we can look forward to in later this year.

Chart

Figure 1: CRIS daily advanced chart (Source: Finviz)

Figure 2: CRIS 15-minute chart (Source: Finviz)

When looking at charts, clarity often comes from taking a look at distinct time frames in order to determine important technical levels to get a feel for what’s going on. In the first chart (daily advanced), we can see selling pressure accelerate in the second half of 2018. However, 2019 has been a polar opposite as strength and accumulation have returned to the stock. In the second chart (15-minute), we can see a second breakout taking place with a quick 45% plus move taking place in the space of a couple days (bodes well for near to medium term in my opinion). Overview

At the recent Cowen Presentation, President and CEO James Dentzer started by reviewing the evolution of Curis from 2014 to 2017. I was only aware of the company due its role in developing Erivedge (commercialized by Roche). However, since then they’ve focused on building a pipeline of first-in-class products (¨doing what no one else can do or has done¨ and ¨hitting unhittable targets¨). All of these programs are high risk/high reward with blockbuster potential, but I find it refreshing that management doesn’t try to play down the risk involved.

Figure 3: Pipeline (Source: corporate presentation )

In order to focus on maximizing value for current assets and conserving cash, the company has consolidated certain internal resources (contracted discovery research engine) and reduced net cash burn by 28% (to $8 million per quarter).

The company’s future will be decided by whether they’ve chosen the right targets, designing the right drugs and studying them in the right patients.

Lead program is their anti-MYC drug fimepinostat being studied in MYC-altered DLBCL (100,000 patients diagnosed per year, roughly a third are MYC altered). Current standard of care is Rituxan + chemotherapy- stem cell transplant and/or CAR-T have been approved as well but aren’t competitors in the space the company is going for (patients with poorest prognosis double-hit and double-expressor lymphoma). Fimepinostat has two components, HDAC and PI3K, where the former inhibits transcription of MYC and latter is decreasing protein that gets past HDAC. Therefore, management’s hypothesis is that a potent, dose-dependent impact on MYC occurs. MYC has been a target for more than 30 years or so, but according to management no one has had the kind of data they do. Figure 4: Fimepinostat prior clinical results give reason for cautious optimism (Source: corporate presentation )

Prior data showed 23% ORR and duration of response of 13.6 months (duration much better than chemo, ORR is comparable). However, if you look at individual types highlighted the company is getting responses and in some cases complete responses that last over a year in these patients with the poorest prognosis. If you look at the subset of patients who were treated for at least six weeks (caveat for "data mining," though in this case makes some sense due to mechanism of action taking that much time to have an impact) the delayed benefit is apparent. Thus management’s current combination strategy makes sense, as they are seeking another drug to help patients get to that six-week mark where fimepinostat can have the greatest effect (in other words keep patients stable long enough for MYC drug to work). The company ultimately chose venetoclax as the ideal combination agent (has already been tested in DLBCL, know it’s safe, know the ideal dosing regimen, know it works with 18% ORR as monotherapy). Importantly, venetoclax works more quickly and preclinical data shows substantial synergy (¨1+1 equals 2 and may equal 3¨). Figure 5: Dose escalation design for combination trial (Source: corporate presentation )

The real unknown and risk here is if the drugs are safe and well tolerated together (absence of preclinical issues does not necessarily read through to trial data). Dose Level 1 in the current study used the full dose of venetoclax and half dose of fimepinostat (then full doses for both at Dose Level 2, then Dose Level 3 doubling venetoclax dose if needed for expanding safety window). Trial is using 3+3 design (low number of patients) and again a goal is make sure there’s no drug-drug interaction (management and KOLs are excited about potential implications if positive).

As for first-in-class IRAK4 inhibitor CA-4948 (compares to ibrutinib stating that it turns off the hot water while CA-4948 turns off the cold), combining them would be an intriguing idea but first need to see monotherapy efficacy. In regards to other IRAK4 molecules in the clinic (from Pfizer (NYSE: PFE ), Roche ( OTCQX:RHHBY ), AstraZeneca (NYSE: AZN ), etc), they’d all been going after inflammation but then publications came out showing validity in oncology indications. The good news is competition is not in the clinic yet but the bad news is that they are gearing up to do so (Curis has a slight time advantage). Preclinical data looked great and note that MYD88 alterations are prevalent in 29% of ABC-DLBCL. Data in whole blood from healthy volunteers showed target engagement in dose-dependent fashion. Figure 6: Initial data for CA-4948 bodes well for what we could see at higher doses (Source: corporate presentation )

Data in first two patients treated at lowest dose (50 mg per day, for context management wasn´t expecting any efficacy until 400mg) showed drop in IL-6 production when drug spikes, and when half life kicks in (drug level decreases) production recovers (seeing exactly what they wanted to see). It will be interesting to see data for higher doses (now enrolling dose level 4 and on track to get to dose level 5 and have data by mid-year or July¨ish¨). It sounds like they might even be a bit ahead of schedule.

As for CA-170 the company’s combined VISTA PD-L1 inhibitor, last year’s data in PD-1 patients divided into three groups (PD1 approved tumor type and naive to treatment, not approved tumor type and naive, and all tumor types/receive checkpoint therapy prior). Efficacy curve was underwhelming (again I appreciate management’s honesty) and thus meant it won´t go head to head with treatments like Keytruda and Opdivo. As for targeting VISTA, this thesis remains unproven and the company needs to show it can hit it in patients and test in the right indications. The company chose mesothelioma as more than 90% of patients express VISTA (don’t need to use paired diagnostic) and nothing works in this indication (not checkpoint inhibitors) and chemo sets the hurdle quite low. The indication has a quick regulatory path if the drug works. The ongoing trial has high dose and low dose cohorts as data in patients previously tested showed some responded better at higher dose and some at lower dose (a number of hypothesis at work here, sounds to me like best to be skeptical until we see the data). As this is the only anti-VISTA program in the clinic, it would be a big deal if data hits, but again the CEO stated this is a high risk program. Select Recent Developments

On May 24 the company announced the retirement of Chief Medical Officer Dr. David Tuck, who left to return to academic clinical research. On the other hand, Robert Martell, M.D., Ph.D., was appointed Head of Research and Development (served prior as CMO of Tesaro where he aided with development of PARP inhibitor Zejula and also as CMO of MethylGene where he worked on BLA registration filing team for EGFR inhibitor Erbitux). His extensive clinical development experience should come in handy for this small company.

At the end of May the company announced a 1 for 5 reverse stock split , effectively reducing the number of […]

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