Full Press Release Details
Curis Reports Fourth Quarter and
Year-End 2005 Financial Results
CAMBRIDGE, MA, February 14, 2006 Curis, Inc. (NASDAQ:CRIS), a therapeutic drug development company, today reported its financial results for the
fourth quarter and fiscal year ended December 31, 2005.
quarter of 2005, we reported a net loss of $934,000, or ($0.02) per share, as compared to a net loss of $1,659,000, or ($0.04) per share for the same period in the prior year.
Net revenues for the fourth quarter of 2005 were $2,664,000 as compared to $1,491,000 for the fourth quarter of 2004, an increase of
$1,173,000 or 79%. The increase in net revenues was primarily due to revenues recognized under our two collaborations with Genentech (NYSE: DNA), offset by contra-revenues recorded under our basal cell carcinoma co-development arrangement with
Genentech. Revenues are summarized by type and collaborator in the following table:
| Three Months Ended December 31, | |||||||
| 2005 | 2004 | ||||||
| Gross revenues: | |||||||
| Genentech | $ | 2,153,000 | $ | 273,000 | |||
| Wyeth | 651,000 | 806,000 | |||||
| Procter & Gamble | 279,000 | ||||||
| Spinal Muscular Atrophy Foundation | 530,000 | 412,000 | |||||
| Other | 27,000 | ||||||
| Subtotal | 3,640,000 | 1,491,000 | |||||
| Contra-revenue: | |||||||
| Genentech co-development contra-revenue | (976,000 | ) | |||||
| Net revenues | $ | 2,664,000 | $ | 1,491,000 |
Gross revenues generated under our
ongoing collaborations were $3,640,000 for the fourth quarter of 2005 as compared to $1,491,000 for the same period in the prior year, an increase of $2,149,000 or 144%. We also recorded $976,000 in contra-revenues for the fourth quarter of 2005
related to our equal share of development costs for our basal cell carcinoma product candidate under development with Genentech.
Operating expenses for the fourth quarter of 2005 were $5,328,000 as compared to $4,612,000 for the fourth quarter of
2004, an increase of $716,000 or 16%. The primary changes in our research and development and general and administrative expenses are as follows:
Research and Development. Research and development spending was $3,360,000 for the fourth quarter of 2005 as compared to $3,297,000 for same period
in 2004, an increase of $63,000 or 2%, as spending on our research programs during the fourth quarter of 2005 remained reasonably consistent with that of the prior year period. Our research and development costs by program are as follows:
| Quarter Ended December 31, | ||||||
| 2005 | 2004 | |||||
| Research and Development Program: | ||||||
| Hedgehog Antagonist Cancer | $ | 863,000 | $ | 1,130,000 | ||
| Hedgehog Agonist Nervous System Disorders | 723,000 | 589,000 | ||||
| Hedgehog Agonist Hair Growth | 397,000 | 232,000 | ||||
| Discovery Research SMA | 554,000 | 463,000 | ||||
| Discovery Research Other | 796,000 | 571,000 | ||||
| Stock-Based Compensation | 27,000 | 312,000 | ||||
| Total Research and Development Expense | $ | 3,360,000 | $ | 3,297,000 |
Administrative. General and administrative spending was $1,949,000 for the fourth quarter of 2005 as compared to $1,296,000 for the same period in 2004, an increase of $653,000 or 50%. The increase in general and administrative expenses was
principally due to a gain of $448,000 recorded during the fourth quarter of 2004 from a recovery of notes receivable from former officers of a predecessor company.
Other income for the fourth quarter of 2005 was $1,730,000 as compared to other income of $1,462,000 for the same period in 2004, an
increase of $268,000. Other income in each period was principally due to net gains recorded on payments received from Micromet, a former collaborator, on a note receivable that had been written off in 2003. We recorded $1,500,000 and $1,304,000 as
other income related to these payments for the quarters ended December 31, 2005 and 2004, respectively.
Net loss for the year ended December 31, 2005 was $14,353,000 or ($0.30) per share as compared to $13,904,000 or ($0.33) per share for the year ended December 31, 2004.
Net revenues for fiscal year 2005 were $5,467,000 as compared to $4,953,000 for the prior
year, an increase of $514,000 or 10%. This increase was primarily due to an increase in our gross revenues, offset by contra-revenues recorded under our basal cell carcinoma co-development arrangement with Genentech. 2005 revenues were primarily
derived from our collaborations with Genentech, Wyeth (NYSE: WYE) and the Spinal Muscular Atrophy Foundation. Revenues are summarized by type and collaborator in the following table:
| Year Ended December 31, | |||||||
| 2005 | 2004 | ||||||
| Gross revenues: | |||||||
| Genentech | $ | 6,988,000 | $ | 1,829,000 | |||
| Wyeth | 2,819,000 | 2,523,000 | |||||
| Procter & Gamble | 289,000 | ||||||
| Spinal Muscular Atrophy Foundation | 1,955,000 | 551,000 | |||||
| Other | 90,000 | 50,000 | |||||
| Subtotal | 12,141,000 | 4,953,000 | |||||
| Contra-revenue: | |||||||
| Genentech co-development contra-revenue | (6,674,000 | ) | |||||
| Net revenues | $ | 5,467,000 | $ | 4,953,000 |
Gross revenues generated under our
ongoing collaborations were $12,141,000 for the year ended December 31, 2005 as compared to $4,953,000 for the prior year, an increase of $7,188,000. We also recorded $6,674,000 in contra-revenues for the year ended December 31, 2005
related to our equal share of development costs for our basal cell carcinoma product candidate under development with Genentech.
Operating expenses for the year ended December 31, 2005 were $22,173,000 as compared to $20,577,000 for the prior year, an increase of $1,596,000 or 8%. The primary
changes in our research and development and general and administrative expenses are as follows:
Research and Development. Research and development spending of $14,008,000 increased $1,263,000 or 10%, from prior year spending of $12,745,000
principally due to an increase in spending on our Spinal Muscular Atrophy research program. This program is majority-funded under a sponsored research agreement with the Spinal Muscular Atrophy Foundation. Our research and development costs by
program are as follows:
| Year Ended December 31, | ||||||
| 2005 | 2004 | |||||
| Research and Development Program : | ||||||
| Hedgehog Antagonist Cancer | $ | 3,928,000 | $ | 4,430,000 | ||
| Hedgehog Agonist Nervous System Disorders | 2,912,000 | 2,831,000 | ||||
| Hedgehog Agonist Hair Growth | 1,061,000 | 835,000 | ||||
| Discovery Research SMA | 2,600,000 | 602,000 | ||||
| Discovery Research Other | 3,293,000 | 2,872,000 | ||||
| Stock-Based Compensation | 214,000 | 1,175,000 | ||||
| Total Research and Development Expense | $ | 14,008,000 | $ | 12,745,000 |
Administrative. General and administrative spending of $8,090,000 increased $333,000, or 4%, over prior year spending of $7,757,000. General and administrative costs increases included $292,000 in increased personnel expenses and a $500,000
charge to reserve for an estimated loss on a subleased facility. These amounts were offset by decreases
in legal, consulting and other professional expenses of approximately $581,000 and a decrease in stock-based compensation of $190,000. Lastly, we recorded a
gain of $448,000 recorded during the fourth quarter of 2004 from a recovery of notes receivable from former officers of a predecessor company.
Other income for the year ended December 31, 2005 was $2,353,000 as compared to other income of $1,720,000 for the year ended December 31, 2004, an increase of
$633,000. Other income in each period was principally due to net gains recorded on payments received from Micromet, a former collaborator, relating to a note receivable. We recorded $1,500,000 and $1,304,000 as other income related to these payments
for the quarters ended December 31, 2005 and 2004, respectively. This note had been written off during the fourth quarter of 2003.
As of December 31, 2005, our cash, cash equivalents, marketable securities and investments, were $44,209,000. As of December 31, 2005, there were 48,326,638
shares of common stock outstanding.
Contra-Revenue Accounting
As required under accounting rules outlined in Emerging Issues Task Force
No. 01-9, we recorded contra-revenue for amounts that we paid to Genentech during the three- and twelve-month periods ending December 31, 2005, and for amounts that we owed to Genentech as of December 31, 2005 that will be paid
subsequent to the end of the quarter, for the reimbursement of our equal share of costs incurred by Genentech in connection with the co-development of our basal cell carcinoma product candidate. These contra-revenues offset gross revenues recorded
under our collaborations and research grant. Amounts paid by us to Genentech under the co-development arrangement will be recorded first as contra-revenues to the extent of both cumulative revenues recognized to-date and probable future revenues,
which include any unamortized deferred revenue balances under both of our collaborations with Genentech, and then as expense.
Update on Phase I Basal Cell Carcinoma Clinical Trial. On January 23, 2006, Curis provided an update on our Phase I clinical trial for the treatment of basal cell carcinoma. This Phase I clinical
trial is being conducted by Genentech and Curis, and is expected to be completed in the first half of 2006. The Phase I clinical trial is a double-blind, randomized, placebo-controlled study that is expected to enroll approximately 60 patients with
a single or multiple basal cell carcinoma. The primary objective of the Phase I clinical trial was to obtain data about the safety and tolerability of a four-week regimen of the drug candidate. In addition, Genentech and Curis are evaluating the
clinical activity of the drug candidate, where activity is defined as the complete eradication of the treated basal cell carcinoma lesion and is determined by clinical and microscopic examinations of the lesions.
As of January 23, 2006, 29 of the Phase I clinical trial patients had participated in a
dose-escalation segment, in which seven patients were randomized to receive treatment in one of four dose levels. The dose-escalation segment of the Phase I clinical trial was recently completed, and the preliminary data have been reviewed by an
internal Genentech data review board. The preliminary data from the dose-escalation segment suggest that the drug candidate appears likely to be safe, well tolerated, and has shown signs of activity. However, there has
been less clinical activity observed to date than anticipated. Based on these data, the internal data review board recommended that Genentech and Curis
temporarily suspend further enrollment in the second segment of the trial, in which additional patients were to be treated at the highest dose level from the dose escalation segment. The companies will determine whether to re-open enrollment in this
segment based on a secondary administrative analysis that will occur at a later date. The internal data review board also recommended that a third segment of the trial that is evaluating biological activity using a pharmacodynamic endpoint be
enrolled as planned. This third segment, among other things, may shed light on the extent to which the active compound in the drug candidate as formulated is penetrating the patients skin.
Genentech and Curis expect to have final results from the Phase I clinical trial during the
first half of 2006. When the final results are obtained, Genentech and Curis will determine whether this drug candidate should proceed to Phase II clinical trials. Should this drug candidate not progress into Phase II clinical trials, Genentech and
Curis will evaluate various criteria, including the data from the biological activity segment of the trial, and determine the alternatives for the basal cell carcinoma program. Possible scenarios include, but are not limited to the following:
extending the duration of the treatment regimen of the existing drug candidate, developing a new topical formulation of the existing drug candidate, selection of a new drug candidate, negotiation of the return of the compounds to Curis for
Curis further development, or termination of the basal cell carcinoma drug program.
Fourth Quarter 2005 Highlights
year for Curis, with the signing of new collaborations with Procter & Gamble for topical hair growth applications of our Hedgehog agonist technologies and with Genentech to discover and develop compounds for use in the inhibition of an
additional signaling pathway that, like the Hedgehog pathway, has been associated with certain cancers. In addition, Wyeth and Genentech elected to extend their funding of our scientists, and we entered into a separate agreement with Centocor to
search for small molecule agonists of the BMP pathway, Daniel Passeri, Curis President and Chief Executive Officer, stated. We are optimistic that the final review of data from our ongoing Phase I clinical trial for basal cell
carcinoma will bring new insight into the program and the Hedgehog pathway.
The Company will hold a conference call today, February 14, 2006, at 10:00 A.M. EST, to discuss its financial results, the progress of its therapeutic product development programs, and additional corporate activities. Daniel Passeri,
President and Chief Executive Officer of Curis, will host the call.
the live conference call, please call 800-299-0433 from the United States or Canada or 617-801-9712 from other locations, shortly before 10:00 A.M. EST. The conference ID number is 32862507. The conference call can also be accessed on the Curis
website at www.curis.com in the Investor Relations section. Replay will be available approximately two hours after the completion of the call and through 5:00 P.M. EST, Tuesday, February 28, 2006. To access the replay, please call
888-286-8010 from the United States or Canada or 617-801-6888 from other locations and reference the conference ID number 17690961.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three months ended | Year ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2005 (Unaudited) | 2004 (Unaudited) | 2005 (Unaudited) | 2004 (Audited) | |||||||||||||
| Revenues: | ||||||||||||||||
| Research and development contracts | $ | 3,134,326 | $ | 1,117,580 | $ | 10,493,077 | $ | 3,456,612 | ||||||||
| License fees | 505,671 | 372,936 | 1,397,966 | 1,496,003 | ||||||||||||
| Substantive milestones | 250,000 | |||||||||||||||
| Gross revenues | 3,639,997 | 1,490,516 | 12,141,043 | 4,952,615 | ||||||||||||
| Contra-revenues from co-development with Genentech | (976,315 | ) | (6,674,308 | ) | ||||||||||||
| Net revenues | 2,663,682 | 1,490,516 | 5,466,735 | 4,952,615 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 3,360,185 | 3,296,626 | 14,007,842 | 12,745,164 | ||||||||||||
| General and administrative | 1,948,725 | 1,296,283 | 8,089,738 | 7,757,052 | ||||||||||||
| Amortization of intangible assets | 18,768 | 18,768 | 75,072 | 75,071 | ||||||||||||
| Total operating expenses | 5,327,678 | 4,611,677 | 22,172,652 | 20,577,287 | ||||||||||||
| Loss from operations | (2,663,996 | ) | (3,121,161 | ) | (16,705,917 | ) | (15,624,672 | ) | ||||||||
| Total other income, net | 1,729,956 | 1,461,778 | 2,353,263 | 1,720,398 | ||||||||||||
| Net loss | $ | (934,040 | ) | $ | (1,659,383 | ) | $ | (14,352,654 | ) | $ | (13,904,274 | ) | ||||
| Basic and diluted net loss per common share | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.30 | ) | $ | (0.33 | ) | ||||
| Basic and diluted weighted average common shares outstanding | 48,298,273 | 46,518,431 | 48,074,181 | 42,685,594 |
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2005 (Unaudited) | December 31, 2004 (Audited) | |||||
| ASSETS | ||||||
| Cash, cash equivalents, marketable securities | $ | 44,209,322 | $ | 49,513,962 | ||
| Long-term investments | 2,606,681 | |||||
| Long-term investments restricted | 195,998 | 193,166 | ||||
| Accounts and notes receivable | 1,121,511 | 1,226,460 | ||||
| Property and equipment, net | 5,288,639 | 3,416,620 | ||||
| Intangible assets, net | 9,009,050 | 9,084,122 | ||||
| Other assets | 1,149,734 | 1,593,802 | ||||
| Total assets | $ | 60,974,254 | $ | 67,634,813 | ||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||
| Accounts payable, accrued expenses and other liabilities | $ | 4,763,997 | $ | 2,992,964 | ||
| Debt and capital lease obligations, excluding convertible debt | 3,226,712 | 1,141,294 | ||||
| Convertible debt | 2,605,280 | 5,710,007 | ||||
| Deferred revenue | 9,649,876 | 8,881,253 | ||||
| Total liabilities | 20,245,865 | 18,725,518 | ||||
| Total stockholders equity | 40,728,389 | 48,909,295 | ||||
| Total liabilities and stockholders equity | $ | 60,974,254 | $ | 67,634,813 |
Curis, Inc. is a therapeutic drug development company. The Company s technology focus is on regulatory pathways that control repair and regeneration. Curis
product development involves the use of proteins or small molecules to modulate these pathways. Curis has successfully used this technology and product development approach to produce several promising drug product candidates in the fields of cancer
(under two collaborations with Genentech, one of which includes a co-development arrangement for a basal cell carcinoma product candidate that is currently in a Phase I clinical trials), neurological disorders (under collaboration with Wyeth), hair
growth (under collaboration with Procter & Gamble), kidney and other diseases (licensed to Ortho Biotech Products and under development at Centocor, both subsidiaries of Johnson & Johnson), and cardiovascular disease. Curis also
possesses robust small molecule drug screening technologies and preclinical scientific expertise that Curis believes it can use to create a sustainable drug candidate pipeline including, for example, its Spinal Muscular Atrophy research program
(under sponsored research agreement with the Spinal Muscular Atrophy Foundation). For more information, please visit the Curis web site at www.curis.com.
Cautionary Statement: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995, including statements concerning Curis expected timeline for the completion of its ongoing Phase I clinical trial, its plans to make a decision about whether to advance its Phase I drug candidate into Phase II clinical trials, possible
future development alternatives of the basal cell carcinoma development program if the current drug candidate does not progress into a Phase II clinical trial, and expected payments due from collaborators. Forward-looking statements used in this
press release may contain the words believes , expects , anticipates , plans , seeks , estimates or similar expressions. These forward-looking statements are not guarantees of future
performance and involve risks, uncertainties, assumptions and other factors that may cause Curis actual results to be materially different from those indicated by such forward-looking statements. Actual results can be affected by a number of
important factors including, among other things: adverse results in Curis and its strategic collaborators and licensees product development programs; delays in enrolling patients for its basal cell carcinoma clinical trial,
difficulties or delays in obtaining or maintaining required regulatory approvals for products being developed by Curis and its collaborators and licensees; Curis ability to obtain or maintain the patent and other proprietary intellectual
property protection necessary for the development and commercialization of products based on its technologies; changes in or Curis inability to execute its business plan; the risk that Curis does not obtain the additional funding required to
conduct research and development of its product candidates, fund its co-development obligations under its collaboration with Genentech and execute its business plan; unplanned cash requirements and expenditures; risks relating to Curis ability
to enter into and maintain important strategic collaborations, including its ability to maintain its current collaboration agreements with Genentech, Wyeth, and Procter & Gamble as well as our license agreement with Ortho Biotech Products;
the risk that competitors will discover and develop signaling pathway-based or other competing therapeutics faster and more successfully than Curis and its collaborators are able to; and other risk factors identified in Curis most recent
Annual Report on Form 10-K, Quarterly Report on Form 10-Q and subsequent reports periodically filed with the Securities and Exchange Commission. In addition, any forward-looking statements represent the Company s views only as of today and
should not be relied upon as representing its views as of any subsequent date. Curis disclaims any intention or obligation to update any of the forward-looking statements after the date of this press release whether as a result of new information,