Curis Reports Fourth Quarter and Year-End 2004 Financial Results.CAMBRIDGE, Mass. -- Curis, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CRIS), a therapeutic drug development company, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2004. For the fourth quarter of 2004, we reported a net loss of $1,659,000, or ($0.04) per share, as compared to a net loss of $6,936,000, or ($0.17) per share for the same period in the prior year. Revenues for the fourth quarter of 2004 were $1,491,000 as compared to $755,000 for the fourth quarter of 2003, an increase of $736,000 or 97%. The increase in revenues was primarily due to revenues recognized under our collaborations with Wyeth (NYSE NYSE See: New York Stock Exchange : WYE) and the Spinal Muscular Atrophy Spinal Muscular Atrophy (SMA) is a term applied to a number of different disorders, all having in common a genetic cause and the manifestation of weakness due to loss of the motor neurons of the spinal cord and brainstem. Foundation, which were both established during 2004, and also due to an increase in revenues recognized under our collaboration with Genentech (NYSE: DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. ). Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the fourth quarter of 2004 were $4,612,000 as compared to $5,687,000 for the fourth quarter of 2003, a decrease of $1,075,000 or 19%. Within operating expenses, research and development spending was $2,985,000 for the fourth quarter of 2004 as compared to $3,725,000 for same period in 2003, a decrease of $740,000 or 20%. The decrease in research and development expenses was principally due to costs incurred in the fourth quarter of 2003 under a collaboration with ES Cell International that ended in December of 2003. Also within operating expenses, general and administrative spending was $1,294,000 for the fourth quarter of 2004 as compared to $1,522,000 for the same period in 2003, a decrease of $228,000 or 15%. The decrease in general and administrative expenses was principally due to a gain of $448,000 from the settlement of notes receivable from former officers of a predecessor company, which notes had been written down prior to 2004. This decrease was partially offset by an increase in legal and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , including increased legal costs related to our intellectual property and new audit fee costs related to an internal controls audit that is required under the Sarbanes-Oxley Act See SOX. of 2002. Other income for the fourth quarter of 2004 was $1,462,000 as compared to other expense of $2,004,000 for the same period in 2003, an increase of $3,466,000. The increase was principally due to a net gain of $1,304,000 recorded in the fourth quarter of 2004 related to a payment received on a note from Micromet, a former collaborator. The Micromet note had been written off during the fourth quarter of 2003, resulting in an impairment charge of $1,708,000. Net loss for the year ended December 31, 2004 was $13,904,000 or ($0.33) per share as compared to $11,895,000 or ($0.33) per share for the year ended December 31, 2003. Revenues for fiscal year 2004 were $4,953,000 as compared to $11,048,000 for the prior year, a decrease of $6,095,000, or 55%. 2004 revenues were primarily derived from our collaborations with Genentech, Wyeth, and the Spinal Muscular Atrophy Foundation. 2003 revenues were primarily derived from $8,555,000 in previously deferred revenue recognized upon the termination of our product development and target research agreements with Micromet, and from our collaborations with Genentech and ES Cell International. Operating expenses for the year ended December 31, 2004 were $20,577,000 as compared to $20,960,000 for the prior year, a decrease of $383,000, or 2%. The decrease is primarily attributable to offsetting variances within spending. Research and development spending of $11,570,000 decreased $1,165,000, or 9%, from prior year spending of $12,735,000 due to the net effect of changes in spending in our research programs. General and administrative spending of $7,560,000 increased $1,041,000, or 16%, over prior year spending of $6,519,000 primarily due to expenses associated with technology acquisition evaluations, increases in personnel costs and professional service fees, and costs associated with financing-related activities during the first half of 2004. These increases were partially offset by a $448,000 gain relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the settlement of notes receivable from former officers of a predecessor company. In addition, stock-based compensation decreased $259,000 from the prior year. Other income for the year ended December 31, 2004 was $1,720,000 as compared to other expense of $1,711,000 for the year ended December 31, 2003, an increase of $3,431,000. The increase was principally due to the net gain of $1,304,000 related to payment on a note from Micromet that had been written off in 2003, resulting in an impairment charge of $1,708,000. As of December 31, 2004, our cash, cash equivalents, marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and investments, including long-term investments, were $52,121,000. As of December 31, 2004, there were 47,517,413 shares of common stock outstanding. Recent Developments Exercise of basal cell carcinoma basal cell carcinoma n. A slow-growing, locally invasive, but rarely metastasizing neoplasm of the skin derived from basal cells of the epidermis or hair follicles. Also called basal cell epithelioma. co-development option: On February 1, 2005, we announced that we had elected to exercise a co-development option with our collaborator, Genentech, and we will now share in U.S. development costs and future net profits or losses, if any, derived from sales in the U.S. of a therapeutic product candidate for the topical treatment of basal cell carcinoma. We expect that by exercising this co-development and equal cost-sharing option, we will incur approximately $20,000,000 in development expenses through Phase II clinical trials Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II , a portion of which will be booked in the first quarter of 2005. Assuming the acceptance of the Investigational New Drug application by the Food and Drug Administration and the successful advancement of the basal cell carcinoma product candidate through Phase I and Phase II clinical trials, we expect that the Phase II clinical trial will be completed in mid-2007. In exchange for this investment, we believe that we have increased our downstream revenue potential, through our right to a commensurate share in U.S. net profits, if any. This co-development right applies solely to the U.S. marketplace and includes applications for basal cell carcinoma and any additional indications for which this product candidate may be developed. Basal cell carcinoma, a skin cancer, is the most common form of all human cancers with approximately 800,000 to 1,000,000 new cases every year in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . To date, preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. evidence indicates that inhibition of the Hedgehog hedgehog, Old World insectivorous mammal of the family Erinaceidae, related to moles and shrews. The spiny hedgehogs are found in Africa and Eurasia, except SE Asia. They have rounded bodies up to 13 in. pathway in basal cell carcinoma results in the selective and specific death of the tumor tumor: see neoplasm. cells while conferring no harm to adjacent normal cells. Conversion of Elan (Emulated LAN) A virtual LAN in the ATM world. See LANE and virtual LAN. Elan - ["Top-down Programming with Elan", C.H.A. Koster, Ellis Horwood 1987]. Pharma International Limited Note Payable: On January 7, 2005, Elan Pharma International Limited, or EPIL EPIL Electron and Photon Impact Laboratory , notified us of its election to convert the entire balance of an outstanding note payable from us into shares of our common stock. As of January 7, 2005, the outstanding balance, including interest, of the EPIL note payable was $3,306,000. In accordance with the terms of the amended and restated convertible note payable with EPIL, we issued 330,552 shares of our common stock to EPIL based on a conversion rate of $10.00 per share. We have no further obligations under this convertible note payable. Fourth Quarter 2004 Highlights --October: We raised net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $18,800,000 through a registered direct offering of our common stock. --December: Genentech doubled its committed research funding Research funding is a term generally covering any funding for scientific research, in the areas of both "hard" science and technology and social science. The term often connotes funding obtained through a competitive process, in which potential research projects are evaluated and on the systemic Hedgehog antagonist antagonist /an·tag·o·nist/ (an-tag´o-nist) 1. a substance that tends to nullify the action of another, as a drug that binds to a cell receptor without eliciting a biological response, blocking binding of substances that could program during the second year of our collaboration. We believe that this incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. funding demonstrates the importance of the contribution of our scientists to this program's further development. --December: Pursuant to the terms of the collaboration agreement with Wyeth, rights to several Hedgehog agonist agonist /ag·o·nist/ (ag´ah-nist) 1. one involved in a struggle or competition. 2. agonistic muscle. 3. compounds previously licensed to Wyeth were reverted to us for use in our hair growth program. We intend to pursue the development of hair growth product candidates using these compounds either internally or through a licensing or collaborative arrangement. Several scientific reports were published or presented by third parties that we believe further support, in preclinical settings, the potential effectiveness of our technologies, including: --Hedgehog antagonist for cancer - A third party scientific report was issued that demonstrated that levels of Hedgehog pathway activity are abnormally high in advanced stages of prostate cancer prostate cancer, cancer originating in the prostate gland. Prostate cancer is the leading malignancy in men in the United States and is second only to lung cancer as a cause of cancer death in men. . This report corroborated cor·rob·o·rate tr.v. cor·rob·o·rat·ed, cor·rob·o·rat·ing, cor·rob·o·rates To strengthen or support with other evidence; make more certain. See Synonyms at confirm. an earlier report that demonstrated similar findings. --Hedgehog agonist for neurological disorders This is a list of major and frequently observed neurological disorders (e.g. Alzheimer's disease), symptoms (e.g.back pain), signs (e.g. aphasia) and syndromes (e.g. Aicardi syndrome). - Several third party scientific reports were published or presented that demonstrated positive results in preclinical models of stroke, Parkinson's disease Parkinson's disease or Parkinsonism, degenerative brain disorder first described by the English surgeon James Parkinson in 1817. When there is no known cause, the disease usually appears after age 40 and is referred to as Parkinson's disease. , and spinal cord injury Spinal Cord Injury Definition Spinal cord injury is damage to the spinal cord that causes loss of sensation and motor control. Description Approximately 10,000 new spinal cord injuries (SCIs) occur each year in the United States. upon treatment with small molecule agonists of the Hedgehog pathway. --Hedgehog agonist for cardiovascular applications - Two new reports documented the potentially beneficial effects of Hedgehog pathway stimulation for increasing blood flow to damaged heart muscle and promoting improved cardiac function following both acute and chronic myocardial ischemia myocardial ischemia, n a loss of oxygen to the heart muscle caused by blockage of the coronary arteries or their branches. myocardial ischemia in preclinical models of heart disease. --BMP-7 for kidney disease Kidney Disease Definition Kidney disease is a general term for any damage that reduces the functioning of the kidney. Kidney disease is also called renal disease. - A report was presented demonstrating that treatment with BMP-7 can reverse the development of blood vessel blood vessel n. An elastic tubular channel, such as an artery, a vein, a sinus, or a capillary, through which the blood circulates. blood vessel(s), n the network of muscular tubes that carry blood. calcification calcification /cal·ci·fi·ca·tion/ (kal?si-fi-ka´shun) the deposit of calcium salts in a tissue. dystrophic calcification in a preclinical model of chronic kidney disease Chronic kidney disease (CKD), also know as chronic renal disease, is a progressive loss of renal function over a period of months or years through five stages. Each stage is a progression through an abnormally low and progressively worse glomerular filtration rate, which is . Daniel Passeri, Curis' President and Chief Executive Officer, stated, "Curis had a great year in 2004 and we are starting 2005 from a position of strength, as evidenced by the increased research and development funding commitment from Genentech, successful reversion reversion: see atavism. of Hedgehog agonist compounds from Wyeth for use in our hair growth program, encouraging scientific developments that support our preclinical programs, and a successful financing, totaling nearly $19,000,000 in net proceeds. These proceeds enabled us to exercise our U.S. co-development option for our basal cell carcinoma product candidate with Genentech. We will now share equally in the U.S. development costs and have increased our downstream revenue potential by sharing in a commensurate portion of any U.S. net profits." Mr. Passeri concluded, "These accomplishments are aligned with and support Curis' business strategy, which is focused on providing the Company with milestone-based revenue potential while retaining programs we feel are more aligned with our internal capabilities and capital resources." The Company will hold a conference call today, February 15, 2005, at 10:00 A.M. EST EST electroshock therapy. EST abbr. electroshock therapy , to discuss its financial results, Curis' recent decision to exercise its co-development option of a topical treatment for basal cell carcinoma under development with Genentech, 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. To access the live conference call, please call 800-706-7748 from the United States or Canada or 617-614-3473 from other locations, shortly before 10:00 A.M. The conference ID number is 18225135. Replay will be available approximately two hours after the completion of the call and through 5:00 P.M. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. , Tuesday, March 1, 2005. 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 75071598.
CURIS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended Year ended
December 31, December 31,
2004 2003 2004 2003
------------ ------------ ------------- -------------
Revenues $1,490,516 $755,095 $4,952,615 $11,048,233
------------ ------------ ------------- -------------
Operating expenses:
Research and
development 2,985,091 3,725,200 11,569,749 12,735,157
General and
administrative 1,294,451 1,522,387 7,560,422 6,518,904
Stock-based
compensation 313,366 420,663 1,372,045 1,631,098
Amortization of
intangible assets 18,768 18,768 75,071 75,079
------------ ------------ ------------- -------------
Total operating
expenses 4,611,676 5,687,018 20,577,287 20,960,238
------------ ------------ ------------- -------------
Loss from
operations (3,121,160) (4,931,923) (15,624,672) (9,912,005)
Total other income
(expense), net 1,461,777 (2,003,649) 1,720,398 (1,711,247)
------------ ------------ ------------- -------------
Net loss (1,659,383) (6,935,572) (13,904,274) (11,623,252)
Accretion on
Series A
Convertible
Exchangeable
Preferred Stock --- --- --- (271,306)
------------ ------------ ------------- -------------
Net loss
applicable to
common
stockholders $(1,659,383) $(6,935,572) $(13,904,274) $(11,894,558)
============ ============ ============= =============
Basic and
diluted net
loss per common
share $(0.04) $(0.17) $(0.33) $(0.33)
============ ============ ============= =============
Weighted average
common shares
for basic and
diluted net
loss
computation 46,518,431 40,426,650 42,685,594 36,015,610
============ ============ ============= =============
CURIS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, December 31,
2004 2003
ASSETS
Cash, cash equivalents, marketable
securities and long-term investments $ 52,120,643 $ 37,537,993
Long-term investments - restricted 193,166 190,661
Accounts and notes receivable 1,226,460 4,397,806
Property and equipment, net 3,416,620 2,500,703
Intangible assets, net 9,084,122 9,159,193
Other assets 1,593,802 1,950,134
------------ ------------
Total assets $ 67,634,813 $ 55,736,490
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses and
other liabilities $ 2,992,964 $ 2,884,643
Debt and capital lease obligations,
excluding convertible debt 1,141,294 322,884
Convertible debt 5,710,007 5,333,733
Deferred revenue 8,881,253 8,330,017
------------ ------------
Total liabilities 18,725,518 16,871,277
Total stockholders' equity 48,909,295 38,865,213
------------ ------------
Total liabilities and stockholders'
equity $ 67,634,813 $ 55,736,490
============ ============
About Curis, Inc. Curis, Inc. is a therapeutic drug development company. Curis' technology focus is on regulatory signaling pathways that control repair and regeneration. Curis' product development programs involve using proteins, small molecules and other approaches to modulate To insert a data signal into a carrier wave or direct current. See modulation. these pathways. Curis has successfully used this technology and product development strategy to produce several promising product candidates in the fields of cancer, kidney disease, neurological disorders, cardiovascular disease Cardiovascular disease Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease and hair growth regulation. Curis is based in Cambridge, Massachusetts This article is about the city of Cambridge in Massachusetts. For the English university town, see Cambridge, England. For other places, see Cambridge (disambiguation). Cambridge, Massachusetts is a city in the Greater Boston area of Massachusetts, United States. . For more information, please visit the Curis web site at www.curis.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements concerning Curis' expectations regarding the potential outcome of its business strategies, its plans with respect to its hair growth and other product development programs and the potential effectiveness of its technologies under development. 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; 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, Ortho Biotech Products and Wyeth; the risk that competitors will discover and develop signaling pathway-based therapeutics faster and more successfully than Curis and its collaborators are able to; and other risk factors identified in Curis' Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the Quarter ended September 30, 2004 and other 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, future events or otherwise. |
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