10-Q 1 cris-20220331.htm 10-Q cris-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q 
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
Commission File Number: 000-30347
CURIS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-3505116
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
128 Spring Street, Building C - Suite 500, Lexington, Massachusetts 02421
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (617503-6500

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, Par Value $0.01 per shareCRISNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☒
Accelerated filer  
Non-accelerated filer  ☐
Smaller reporting company    
Emerging growth company   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No
As of April 28, 2022, there were 91,645,369 shares of the registrant’s common stock, par value $0.01 per share, outstanding.


CURIS, INC. AND SUBSIDIARIES QUARTERLY REPORT ON FORM 10-Q
Table of Contents
 
  Page
Number
PART I.FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1A.
Item 6.

















2

Cautionary Note Regarding Forward-Looking Statements and Industry Data

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. All statements other than statements of historical fact contained in this report are statements that could be deemed forward-looking statements, including without limitation any statements with respect to the plans, strategies and objectives of management for future operations; statements concerning product research, development and commercialization plans, timelines and anticipated results; statements of expectation or belief; statements with respect to clinical trials and studies; statements with respect to royalties and milestones; statements with respect to the therapeutic potential of drug candidates; expectations of revenue, expenses, earnings or losses from operations, or other financial results; and statements of assumptions underlying any of the foregoing. Without limiting the foregoing, the words “anticipate(s)”, “believe(s)”, “focus(es)”, “could”, “estimate(s)”, “expect(s)”, “intend(s)”, “may”, “plan(s)”, “seek(s)”, “will”, “strategy”, “mission”, “potential”, “should”, “would" and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements may include, but are not limited to, statements about:
the initiation, timing, progress and results of future preclinical studies and clinical trials, and our research and development programs;
our plans to develop and commercialize our drug candidates;
our collaborators’ plans to further develop and commercialize Erivedge;
our ability to establish and maintain collaborations or obtain additional funding;
the timing or likelihood of regulatory filings and approvals;
the implementation of our business model, strategic plans for our business, drug candidates and technology;
our commercialization, marketing and manufacturing capabilities and strategy;
the rate and degree of market acceptance and clinical utility of our products;
our competitive position;
our intellectual property position;
developments and projections relating to our competitors and our industry;
the potential of emavusertib, previously CA-4948; CI-8993; CA-170; fimepinostat; CA-327; and other drug candidates that we in-license, or may elect to in-license, or may acquire in the future;
our ability to successfully resolve the partial clinical holds imposed by the FDA on our TakeAim Leukemia Phase 1/2 trial and our TakeAim Lymphoma Phase 1/2 trial, each of emavusertib, and the likelihood that such partial clinical holds will be lifted;
our estimates of the period in which we anticipate that existing cash and cash equivalents will enable us to fund our current and planned operations;
impacts resulting from the continuing COVID-19 pandemic and responsive actions relating thereto;
our ability to maintain our listing on the Nasdaq Global Market; and
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing.
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. We therefore caution you against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in these forward-looking statements include the factors discussed below under the heading “Risk Factor Summary,” and the risk factors detailed further in Item 1A, "Risk Factors" of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021 and those included under Part II, Item 1A of this Quarterly Report on Form 10-Q.
This report includes statistical and other industry and market data that we obtained from industry publications and research, surveys, and studies conducted by third parties as well as our own estimates. All of the market data used in this report involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. Industry publications and third-party research, surveys, and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Our estimates of the potential market opportunities for our drug candidates include several key assumptions based on our industry
3

knowledge, industry publications, third-party research, and other surveys, which may be based on a small sample size and may fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions.
The forward-looking statements included in this report represent our estimates as of the filing date of this report. We specifically disclaim any obligation to update these forward-looking statements in the future. These forward-looking statements should not be relied upon as representing our estimates or views as of any date subsequent to the date of this report.

4

Risk Factor Summary
Investment in our securities involves risk. You should carefully consider the following summary of what we believe to be the principal risks facing our business, in addition to the risks described more fully in Item 1A, “Risk Factors” of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021, and, if applicable, those included under Part II, Item 1A of this Quarterly Report on Form 10-Q and other information included in this report. The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations.
If any of the following risks occurs, our business, financial condition, and results of operations and future growth prospects could be materially and adversely affected, and the actual outcomes of matters as to which forward-looking statements are made in this report could be materially different from those anticipated in such forward-looking statements.
We have incurred substantial losses, expect to incur substantial losses for the foreseeable future and may never generate significant revenue or achieve or maintain profitability.
We will require substantial additional funding, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our drug development programs or commercialization efforts.
We face risks related to the continuing COVID-19 pandemic, which has delayed and may continue to delay our ability to complete our ongoing clinical trials and the enrollment and initiation of future clinical trials, and may disrupt regulatory activities, cause substantial disruption in the financial markets and economy, or have other adverse effects on our business and operations.
We face substantial competition, and our competitors may discover, develop or commercialize drugs before or more successfully than we do. Furthermore, the amount of royalty revenue we received from sales of Erivedge has been adversely affected by a competing drug, and may be further affected in the future.
We depend heavily on the success of our most advanced drug candidates, including emavusertib (CA-4948), trials of which are currently subject to a partial clinical hold, and CI-8993. If we are unable to initiate or complete the clinical development of, obtain marketing approval for or successfully commercialize our drug candidates, either alone or with a collaborator, or if we experience significant delays in doing so, our business will be materially harmed.
If clinical trials of any drug candidates that we, or any collaborators, may develop fail to satisfactorily demonstrate safety and efficacy to the U.S. Food and Drug Administration, or FDA, and other regulators, we, or any collaborators, may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of these drug candidates.
Adverse events or undesirable side effects caused by, or other unexpected properties of, drug candidates that we develop may be identified during development and could delay or prevent their marketing approval or limit their use.
The FDA placed partial clinical holds on our TakeAim Leukemia Phase 1/2 trial and our TakeAim Lymphoma Phase 1/2 trial after we reported a serious adverse event in the TakeAim Leukemia Phase 1/2 trial. The partial clinical holds could take considerable time and expense to address and there can be no assurance that the FDA will remove the partial clinical holds in a timely manner, or at all, in which case our business and prospects for development and approval of emavusertib would be materially harmed.
We rely on Genentech and Roche for the successful commercialization of Erivedge, and if they do not successfully commercialize Erivedge for advanced basal cell carcinoma, or BCC, our future prospects may be substantially harmed.
We rely in part on third parties to conduct clinical trials of our internally-developed and in-licensed product candidates and for the research, development and commercialization of certain programs, and those third parties may not perform satisfactorily, including by failing to meet deadlines for the completion of such trials, research or testing.
In the event of a default by us or Curis Royalty under the Oberland Purchase Agreement, we could, among other consequences, lose our retained rights to future royalty and royalty related payments on commercial sales of Erivedge, and our ability to enter into future arrangements may be inhibited, all of which could have a material adverse effect on our business, financial condition and stock price.
If we are unable to obtain and maintain sufficient patent protection for our technologies and drugs, or our licensors are not able to obtain and maintain sufficient patent protection for the technologies or drugs that we license from them, or if the scope of the patent protection is not sufficiently broad, our competitors could develop and commercialize drugs
5

similar or identical to ours, and our ability to successfully commercialize our drug candidates may be adversely affected.
If we or our collaborators are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we or they will not be able to commercialize, or will be delayed in commercializing, our drug candidates, and our ability to generate revenue will be materially impaired.

6

PART I—FINANCIAL INFORMATION
Item 1.    UNAUDITED FINANCIAL STATEMENTS

CURIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

March 31, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$18,468 $40,014 
Short-term investments102,185 75,870 
Accounts receivable2,060 3,224 
Prepaid expenses and other current assets3,426 3,267 
Total current assets126,139 122,375 
Long-term investments 23,964 
Property and equipment, net479 505 
Restricted cash, long-term726 726 
Operating lease right-of-use asset4,413 5,749 
Goodwill8,982 8,982 
Total assets$140,739 $162,301 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$4,281 $6,417 
Accrued liabilities4,586 6,339 
Current portion of operating lease liability824 682 
Total current liabilities9,691 13,438 
Long-term operating lease liability2,941 4,358 
Liability related to the sale of future royalties, net52,133 53,798 
Total liabilities64,765 71,594 
Stockholders’ equity:
Common stock, $0.01 par value—227,812,500 shares authorized; 91,645,369 shares issued and outstanding at March 31, 2022; 227,812,500 shares authorized; 91,645,369 shares issued and outstanding at December 31, 2021
916 916 
Additional paid-in capital1,183,943 1,182,225 
Accumulated deficit(1,108,434)(1,092,325)
Accumulated other comprehensive loss(451)(109)
Total stockholders’ equity75,974 90,707 
Total liabilities and stockholders’ equity$140,739 $162,301 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7

CURIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
(Unaudited)

 Three Months Ended
March 31,
 20222021
Revenues, net:
Royalties$2,060 $2,187 
Contra revenue, net(3)2 
Total revenues, net2,057 2,189 
Costs and expenses:
Cost of royalty revenues82 109 
Research and development11,435 6,757 
General and administrative5,673 4,123 
Total costs and expenses17,190 10,989 
Loss from operations(15,133)(8,800)
Other expense:
Interest income80 46 
Imputed interest expense related to the sale of future royalties(1,056)(1,173)
Total other expense(976)(1,127)
Net loss$(16,109)$(9,927)
Net loss per common share (basic and diluted)$(0.18)$(0.11)
Weighted average common shares (basic and diluted)91,645,369 91,507,518 
Net loss$(16,109)$(9,927)
Other comprehensive income:
Unrealized loss on marketable securities(342)(6)
Comprehensive loss$(16,451)$(9,933)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8

CURIS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
(Unaudited)
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders’ Equity
SharesAmount
December 31, 202191,645,369 $916 $1,182,225 $(1,092,325)$(109)$90,707 
Recognition of stock-based compensation— — 1,718 — — 1,718 
Exercise of stock options   — —  
Unrealized gain (loss) on marketable securities— — — — (342)(342)
Net loss— — — (16,109)— (16,109)
March 31, 202291,645,369 $916 $1,183,943 $(1,108,434)$(451)$75,974 

Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders’ Equity
SharesAmount
December 31, 202091,502,461 $915 $1,176,647 $(1,046,889)$(3)$130,670 
Recognition of stock-based compensation— — 1,099 — — 1,099 
Exercise of stock options31,811 1 78 — — 79 
Unrealized gain (loss) on marketable securities— — — — (6)(6)
Net loss— — — (9,927)— (9,927)
March 31, 202191,534,272 $916 $1,177,824 $(1,056,816)$(9)$121,915 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
9

CURIS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months Ended
March 31,
 20222021
Cash flows from operating activities:
Net loss$(16,109)$(9,927)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization36 43 
Non-cash lease expense239 202 
Stock-based compensation expense1,718 1,099 
Non-cash imputed interest expense related to the sale of future royalties(18)(20)
Net amortization of premiums and discounts on marketable securities

380 195 
Changes in operating assets and liabilities:
Accounts receivable1,164 860 
Prepaid expenses and other assets(158)(2,049)
Accounts payable and accrued and other liabilities(3,890)(2,301)
Operating lease liability(177)(1,281)
Total adjustments(706)(3,252)
Net cash used in operating activities(16,815)(13,179)
Cash flows from investing activities:
Purchase of investments(24,972)(9,071)
Sales and maturities of investments21,900 5,000 
Purchase of property and equipment(11) 
Net cash provided by (used in) investing activities(3,083)(4,071)
Cash flows from financing activities:
Proceeds from issuance of common stock under the Company's share-based compensation plan 79 
Payment of liability of future royalties, net of imputed interest(1,648)(1,408)
Net cash provided by (used in) financing activities(1,648)(1,329)
Net decrease in cash and cash equivalents and restricted cash(21,546)(18,579)
Cash and cash equivalents and restricted cash, beginning of period40,740 130,426 
Cash and cash equivalents and restricted cash, end of period$19,194 $111,847 
Supplemental cash flow data:
Issuance costs in accrued expenses and accounts payable$172 $281 
Cash paid for interest$1,074 $1,193 
Decrease in right-of-use assets and operating lease liabilities resulting from lease modification$(1,098)$ 
    
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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CURIS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except share and per share data)
1.     Nature of Business
Curis, Inc. is a biotechnology company focused on the development of first-in-class and innovative therapeutics for the treatment of cancer. Throughout these Condensed Consolidated Financial Statements, Curis, Inc. and its wholly owned subsidiaries are collectively referred to as “the Company” or “Curis.”
The Company conducts its research and development programs both internally and through strategic collaborations. The Company’s clinical stage drug candidates include emavusertib, previously CA-4948, an orally available small molecule inhibitor of Interleukin-1 receptor associated kinase 4 (“IRAK4”); CI-8993, a monoclonal antibody designed to antagonize the V-domain Ig suppressor of T cell activation (“VISTA”) signaling pathway; fimepinostat, a small molecule that potently inhibits the activity of histone deacetylase and phosphotidyl-inositol 3 kinase enzymes; and CA-170, a small molecule antagonist of VISTA and PDL1. The Company's pre-clinical development candidates include CA-327, an orally available small molecule antagonist of PDL1 and TIM3.
The Company is party to a collaboration with Genentech Inc. (“Genentech”), a member of the Roche Group, under which Genentech and F. Hoffmann-La Roche Ltd (“Roche”) are commercializing Erivedge® (vismodegib), a first-in-class orally administered small molecule Hedgehog signaling pathway antagonist. Erivedge is approved for the treatment of advanced basal cell carcinoma (“BCC”).
In January 2015, the Company entered into an exclusive collaboration agreement with Aurigene Discovery Technologies Limited (“Aurigene”) for the discovery, development and commercialization of small molecule compounds in the areas of immuno-oncology and precision oncology, which was amended in September 2016 and February 2020.
In addition, the Company is a party to an option and license agreement with ImmuNext. Pursuant to the terms of the option and license agreement, the Company has an option, exercisable for a specified period as set forth in the option and license agreement, to obtain an exclusive license to develop and commercialize certain VISTA antagonizing compounds, including ImmuNext's lead compound, CI-8993, and products containing these compounds in the field of oncology.
The COVID-19 pandemic has had and may continue to have an adverse effect on the Company’s business, financial condition, results of operations, and prospects. With respect to ongoing clinical trials, the anticipated timing of enrollment and the overall timelines of the trials have experienced delays and could be further delayed to the extent the Company experiences further delays in enrollment due to the COVID-19 pandemic. The Company’s ability to collect patient data in a timely fashion may also be impacted. The Company also experienced delays in closing down its clinical trial sites related to its fimepinostat and CA-170 trials due to restrictions on non-essential workers imposed at those sites in response to COVID-19, which delayed the winding down of these trials. In addition, the Company and its collaborators, third-party contract manufacturers, contract research organizations and clinical sites could experience delays or disruptions in supply and release of product candidates and/or procuring items that are essential for its research and development activities, including, for example, raw materials used in the manufacturing of its product candidates, basic medical and laboratory supplies used in its clinical trials or preclinical studies, or animals that are used for preclinical testing, in each case, for which there may be shortages or supply chain disruptions as a result of the continuing pandemic. The Company cannot be certain what the overall impact of the COVID-19 pandemic will be on its business.
The Company is subject to risks common to companies in the biotechnology industry as well as risks that are specific to the Company’s business, including, but not limited to: the Company’s ability to obtain adequate financing to fund its operations; the Company’s ability to advance and expand its research and development programs; the impacts of the COVID-19 pandemic and responsive actions related thereto; the Company’s reliance on Roche and Genentech to successfully commercialize Erivedge in the approved indication of advanced BCC and to progress its clinical development in indications other than BCC; the ability of the Company and its wholly owned subsidiary, Curis Royalty, LLC (“Curis Royalty”) to satisfy the terms of the royalty interest purchase agreement (the “Oberland Purchase Agreement”) with TPC Investments I LP and TPC Investments II LP ("the Purchasers"), each of which is a Delaware limited partnership managed by Oberland Capital Management, LLC, and Lind SA LLC ("the Agent"), a Delaware limited liability company managed by Oberland Capital Management, LLC, as collateral agent for the Purchasers; the Company’s ability to obtain and maintain necessary intellectual property protection; development by the Company’s competitors of new or better technological innovations; the Company’s ability to comply with regulatory requirements; the Company's ability to obtain and maintain applicable regulatory approvals and commercialize any approved product candidates; and the Company’s ability to execute on its overall business strategies.
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The Company’s future operating results will largely depend on the progress of drug candidates currently in its development pipeline and the magnitude of payments that it may receive and make under its current and potential future collaborations. The results of the Company’s operations have varied and will likely continue to vary significantly from year to year and quarter to quarter and depend on a number of factors, including, but not limited to the timing, outcome and cost of the Company’s preclinical studies and clinical trials for its drug candidates.
The Company will require substantial funds to maintain research and development programs and support operations. The Company has incurred net losses and negative cash flows from operations since its inception. As of March 31, 2022, the Company had an accumulated deficit of approximately $1.1 billion, and for the three months ended March 31, 2022, the Company incurred a net loss of $16.1 million and used $16.8 million of cash in operations. The Company expects to continue to generate operating losses in the foreseeable future. The Company anticipates that its $120.7 million of existing cash, cash equivalents and investments at March 31, 2022 will be sufficient to fund operations for at least 12 months from the date of filing this Quarterly Report on Form 10-Q.
The Company’s ability to raise additional funds will depend, among other factors, on financial, economic and market conditions, many of which are outside of its control and it may be unable to raise financing when needed, or on terms favorable to the Company. If necessary funds are not available, the Company will have to delay, reduce the scope of, or eliminate some of its development programs, potentially delaying the time to market for or preventing the marketing of any of its product candidates.
2.     Summary of Significant Accounting Policies
(a)Basis of Presentation and Principles of Consolidation
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These statements, however, are condensed and do not include all disclosures required by accounting principles generally accepted in the U.S. (“GAAP”), for complete financial statements and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (“SEC”), on February 24, 2022.
In the opinion of the management of the Company, the unaudited financial statements contain all adjustments (all of which were considered normal and recurring) necessary for a fair statement of the Company’s financial position at March 31, 2022; the results of operations for the three-month periods ended March 31, 2022 and 2021; stockholders' equity for the three-month periods ended March 31, 2022 and 2021; and the cash flows for the three-month periods ended March 31, 2022 and 2021. The Condensed Consolidated Balance Sheet at December 31, 2021 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.
(b)Use of Estimates and Assumptions
The preparation of the Company’s Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosure of certain assets and liabilities at the balance sheet date. Such estimates include the performance obligations under the Company’s collaboration agreements; the estimated repayment term of the Company’s debt and related short- and long-term classification; the collectability of receivables; the carrying value of property and equipment and goodwill; and the assumptions used in the Company’s valuation of stock-based compensation and the value of certain investments and liabilities. Actual results may differ from such estimates.
These interim results are not necessarily indicative of results to be expected for a full year or subsequent interim periods.
The extent to which COVID-19 has had and may continue to have impacts on the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of the continuing COVID-19 pandemic, the extent to which it has impacted and may continue to impact worldwide macroeconomic conditions including interest rates, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business responses to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of March 31, 2022 and through the date of this report. The Company’s future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
(c) Cash Equivalents, Restricted Cash, and Investments
Cash equivalents consist of highly liquid investments purchased with original maturities of three months or less. All other liquid investments are classified as marketable securities.
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The Company classified $0.7 million of its cash as restricted cash as of both March 31, 2022 and December 31, 2021. This amount represents the security deposit delivered to the landlord of the Company's current Massachusetts headquarters.
The Company's combined cash and cash equivalents and restricted cash balances were $19.2 million and $111.8 million as of March 31, 2022 and March 31, 2021, respectively, as presented on the Company's Condensed Consolidated Statements of Cash Flows.
The Company’s short-term investments are marketable debt securities with original maturities of greater than three months from the date of purchase, but less than twelve months from the balance sheet date, and long-term investments are marketable debt securities with original maturities of greater than twelve months from the balance sheet date. Marketable securities consist of commercial paper, corporate bonds and notes, and/or government obligations. All of the Company’s investments have been designated available-for-sale and are stated at fair value. Unrealized gains and temporary losses on investments are included in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity (deficit). Realized gains and losses, dividends and interest income are included in other income (expense) in the period during which the securities are sold. Any premium or discount arising at purchase is amortized and/or accreted to interest income.
Accrued interest receivable related to the Company's available-for-sale debt securities is presented within investments on the Company's consolidated balance sheets. Any write offs of accrued interest receivable are recorded by reversing interest income, recognizing credit loss expense, or a combination of both. To date, the Company has not written off any accrued interest receivables associated with its marketable securities.
(d)Leases
The Company determines if an arrangement is a lease at contract inception. Operating lease assets represent the Company's right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
As the Company's lease does not provide an implicit interest rate, the Company uses its incremental borrowing rate, which is based on rates that would be incurred to borrow on a collateralized basis over a term equal to the lease payments in a similar economic environment, in determining the present value of lease payments.
Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The lease payment used to determine the operating lease asset may include lease incentives, stated rent increases and was recognized as an operating lease right-of-use asset in the Condensed Consolidated Balance Sheets. The Company's lease agreements may include both lease and non-lease components, which are accounted for as a single lease component when the payments are fixed. Variable payments included in the lease agreement are expensed as incurred.
The Company's operating lease is reflected in operating lease right-of-use asset and operating lease liability in the Condensed Consolidated Balance Sheets. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
(e)Revenue Recognition
The Company’s business strategy includes entering into collaborative license and development agreements with biotechnology and pharmaceutical companies for the development and commercialization of the Company’s drug candidates. The terms of the agreements typically include non-refundable license fees, funding of research and development, payments based upon achievement of clinical development and regulatory objectives, and royalties on product sales.
License Fees and Multiple Element Arrangements
If a license to its intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenues from non-refundable, up-front fees allocated to the license at such time as the license is transferred to the licensee and the licensee is able to use, and benefit from, the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, will adjust the measure of performance and related revenue recognition.
If the Company is involved in a steering committee as part of a multiple element arrangement, the Company assesses whether its involvement constitutes a performance obligation or a right to participate. Steering committee services that are not
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determined to be distinct performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations.
Appropriate methods of measuring progress include output methods and input methods. In determining the appropriate method for measuring progress, the Company considers the nature of service that it promises to transfer to the customer. When the Company decides on a method of measurement, the Company will apply that single method of measuring progress for each performance obligation satisfied over time and will apply that method consistently to similar performance obligations and in similar circumstances.
If the Company cannot reasonably measure its progress toward complete satisfaction of a performance obligation because the Company lacks reliable information that would be required to apply an appropriate method of measuring progress, but it can reasonably estimate when the performance ceases or the remaining obligations become inconsequential and perfunctory, then revenue is not recognized until the Company can reasonably estimate when the performance obligation ceases or becomes inconsequential. Revenue is then recognized over the remaining estimated period of performance.
Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under an arrangement.
Contingent Research Milestone Payments
Accounting Standards Codification ("ASC") 606 constrains the amount of variable consideration included in the transaction price in that either all, or a portion, of an amount of variable consideration should be included in the transaction price. The variable consideration amount should be included only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The assessment of whether variable consideration should be constrained is largely a qualitative one that has two elements: the likelihood of a change in estimate, and the magnitude thereof. Variable consideration is not constrained if the potential reversal of cumulative revenue recognized is not significant, for example.
If the consideration in a contract includes a variable amount, a company will estimate the amount of consideration in exchange for transfer of promised goods or services. The consideration also can vary if a company’s entitlement to the consideration is contingent on the occurrence or nonoccurrence of a future event. The Company considers contingent research milestone payments to fall under the scope of variable consideration, which should be estimated for revenue recognition purposes at the inception of the contract and reassessed ongoing at the end of each reporting period.
The Company assesses whether contingent research milestones should be considered variable consideration that should be constrained and thus not part of the transaction price. This includes an assessment of the probability that all or some of the milestone revenues could be reversed when the uncertainty around whether or not the achievement of each milestone is resolved, and the amount of reversal could be significant.
GAAP provides factors to consider when assessing whether variable consideration should be constrained. All of the factors should be considered, and no factor is determinative. The Company considers all relevant factors.
Reimbursement of Costs
Reimbursement of research and development costs by third-party collaborators is recognized as revenue over time provided the Company has determined that it transfers control (i.e. performs the services) of a service over time and, therefore, satisfies a performance obligation according to the provisions outlined in ASC 606-10-25-27, Revenue Recognition.
Royalty Revenue
The Company recognizes royalty revenues related to Genentech’s and Roche’s sales of Erivedge. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and where the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The Company expects to continue recognizing royalty revenue from Genentech’s sales of Erivedge in the U.S. and in other markets where Genentech and Roche successfully obtain marketing approval, if any (see Note 9, Research and Development Collaborations). However, a portion of potential Erivedge royalties will be paid to the Purchasers pursuant to the Oberland Purchase Agreement (see Note 8, Liability Related to the Sale of Future Royalties).
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Contra Revenue, Net
Contra revenue, net represents shared costs, primarily related to intellectual property, with the Company's collaboration partners, and reserves for potential royalty reductions.
With respect to each of the foregoing areas of revenue recognition, the Company exercises significant judgment in determining whether an arrangement contains multiple elements, and, if so, how much revenue is allocable to each element. In addition, the Company exercises its judgment in determining when its significant obligations have been met under such agreements and the specific time periods over which the Company recognized revenue, such as non-refundable, up-front license fees. To the extent that actual facts and circumstances differ from the Company's initial judgments, its revenue recognition with respect to such transactions would change accordingly and any such change could affect the Company's reported financial results.
Summary
During each of the three months ended March 31, 2022 and 2021, 100% of the Company's total gross revenues were derived from the Company’s collaboration with Genentech.
(f)Segment Reporting
The Company operates in a single reportable segment, which is the research and development of innovative cancer therapies.
(g)New Accounting Pronouncements
The Company considers the applicability and impact of any recent Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). Based on the assessment, the ASUs were determined to be either not applicable or are expected to have minimal impact on the Company's condensed consolidated financial statements.
3.     Fair Value of Financial Instruments
The Company has adopted the provisions of the FASB Codification Topic 820, Fair Value Measurements and Disclosures (“Topic 820”) for its financial assets and liabilities that are re-measured and reported at fair value each reporting period and the non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability. Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. Financial assets and liabilities are categorized within the valuation hierarchy based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:
Level 1Quoted prices in active markets for identical assets or liabilities.
Level 2Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
In accordance with the fair value hierarchy, the following table shows the fair value as of March 31, 2022 and December 31, 2021 of those financial assets and liabilities that are measured at fair value on a recurring basis, according to the valuation techniques the Company used to determine their fair value. No financial assets or liabilities are measured at fair value on a nonrecurring basis at March 31, 2022 and December 31, 2021.
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(in thousands)Quoted Prices in
Active Markets
(Level 1)
Other Observable
Inputs (Level 2)
Unobservable
Inputs (Level 3)
Fair Value
As of March 31, 2022:
Cash equivalents:
Money market funds$2,314 $ $ $2,314 
Short-term investments:
Corporate commercial paper, bonds and notes 102,185  102,185 
Total$2,314 $102,185 $ $104,499 
    

(in thousands)Quoted Prices in
Active Markets
(Level 1)
Other Observable
Inputs (Level 2)
Unobservable
Inputs (Level 3)
Fair Value
As of December 31, 2021:
Cash equivalents:
Money market funds$33,944 $ $ $33,944 
Short-term investments:
Corporate commercial paper, bonds and notes 75,870  75,870 
Long-term investments:
Corporate commercial paper, bonds and notes 23,964  23,964 
Total$33,944 $99,834 $ $133,778 
4.     Investments
The amortized cost, including interest receivable, unrealized gains and losses and fair value of investments available-for-sale as of March 31, 2022 are as follows:
(in thousands)Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Fair Value
Corporate bonds and notes—short-term$102,636 $ $(451)$102,185 
Total investments$102,636 $ $(451)$102,185 
Short-term investments have maturities ranging from one to twelve months with a weighted-average maturity of 0.5 years at March 31, 2022.
The amortized cost, including interest receivable, unrealized gains and losses and fair value of investments available-for-sale as of December 31, 2021 are as follows:
(in thousands)Amortized
Cost
Unrealized
Gain
Unrealized
Loss
Fair Value
Corporate bonds and notes—short-term$75,896 $ $(26)$75,870 
Corporate bonds and notes—long-term24,047  (83)23,964 
Total investments$99,943 $ $(109)$99,834 
Short-term investments have maturities ranging from one to twelve months with a weighted-average maturity of 0.4 years at December 31, 2021. The weighted average maturity of long-term investments was 1.2 years at December 31, 2021.
No credit losses on available-for-sale securities were recognized during the three months ended March 31, 2022 or March 31, 2021. In its evaluation to determine expected credit losses, management considered all available historical and current information, expectations of future economic conditions, the type of security, the credit rating of the security, and the size of the loss position, as well as other relevant information. The Company does not intend to sell, and is unlikely to be required to sell, any of these available-for-sale investments before their effective maturity or market price recovery.
As of March 31, 2022 and December 31, 2021, the Company held no investments that have been in a continuous unrealized loss position for 12 months or longer.
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5.     Accrued Liabilities
Accrued liabilities consisted of the following:
(in thousands)March 31, 2022December 31, 2021
Compensation and related costs$1,681 $3,260 
Chemistry, manufacturing and controls costs1,557 2,232 
Professional and legal fees765 644 
License fees188  
Other395 203 
Total$4,586 $6,339 
6.     Debt
In April 2020, the Company entered into a promissory note evidencing an unsecured $0.9 million loan (the “PPP Loan”) under the Paycheck Protection Program (“PPP”), of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) as administered by the U.S. Small Business Administration (the "SBA"). The PPP Loan was made by Silicon Valley Bank and had a term of 24-months and an interest rate of 1%. Under the terms of the CARES Act and the Paycheck Protection Program Flexibility Act of 2020, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. The Company applied for such forgiveness in 2020 and received notification in June 2021 that the SBA had forgiven the PPP Loan in full, including interest accrued on the PPP Loan. The Company recorded a gain of $0.9 million to Other income (expense), net for extinguishment of the debt during the three months ended June 30, 2021.
7.     Lease
The Company has a single lease for real estate, including laboratory and office space, and certain equipment. The lease at 128 Spring Street in Lexington, Massachusetts commenced on May 1, 2020 which is the date when the property became available for use to the Company. In accordance with the accounting requirements under ASC 842, the lease obligation was not recorded until its commencement.
In January 2022, the Company amended its lease agreement at 128 Spring Street ("Lease Amendment"). The Lease Amendment added approximately 9,340 square feet to the existing space for $30 per square foot, or $0.3 million per year in base rent subject to annual rent increases. Rent for the additional space will be paid on a “gross amount” basis and the Company is not obligated to reimburse the landlord for taxes or operating expenses on the additional space. Payments under the Lease Amendment will commence when we take possession of the space, which is expected in the second quarter of 2022. In addition, the Lease Amendment provides the Company and the landlord each with an option to terminate the lease agreement early. The Company's early termination option becomes effective on the lease commencement date of a new lease for larger premises within the landlord’s commercial real estate portfolio (“New Lease”), and the Company may exercise its early termination option by providing the landlord with written notice of such election to terminate the lease agreement concurrently with the execution of the New Lease. The landlord has the option to terminate the lease agreement early by providing written notice to the Company eighteen months prior to December 31, 2025. We expect the lease to end as of December 31, 2025.
The Lease Amendment constitutes a modification as it reduces the original lease term and increases the scope of the lease (additional space provided under the Lease Amendment), which requires evaluation of the remeasurement of the lease liability and corresponding right-of-use asset. The additional space did not result in a separate contract as the rent increase was determined not to be commensurate with the standalone price for the additional right of use. Accordingly, the Company reassessed the classification of the lease, and concluded it is an operating lease, and remeasured the lease liability on the basis of the reduced lease term as of the effective date of the modification. The discount rate associated with the Company’s right-of-use asset is 9.95%.
The shortened lease term and resulting remeasurement for the modification resulted in a decrease to the lease liability and the right-of-use asset of $1.1 million during the first quarter of 2022. The Company will remeasure the lease liability for the rent payments for the additional space once the premises are available for use by the Company.
As of March 31, 2022, the Company had an operating lease liability of $3.8 million and related right-of-use asset of $4.4 million related to its operating lease. As of December 31, 2021, the Company had an operating lease liability of $5.0 million and related right-of-use asset of $5.7 million related to its operating lease.
The Company recorded lease cost of $0.3 million for the three months ended March 31, 2022 and March 31, 2021.
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The total cash obligation over the approximately six-year term of this lease is $7.7 million. The lease amendment also added approximately 9,340 square feet to the existing space and will increase the Company's future cash commitments for rent payments for the additional space once the premises are available for use to the Company. The Company paid $0.3 million during the three months ended March 31, 2022 and $1.4 million was paid during the three months ended March 31, 2021. The payments during the three months ended March 31, 2021 included a payment of $1.1 million for tenant improvements.
8.     Liability Related to the Sale of Future Royalties
In March 2019, the Company and Curis Royalty entered into the royalty interest purchase agreement (“Oberland Purchase Agreement”) with entities managed by Oberland Capital Management, LLC (the “Purchasers”). The Company sold to the Purchasers a portion of its rights to receive royalties from Genentech on potential net sales of Erivedge. Concurrently with the closing of the Oberland Purchase Agreement, Curis Royalty used a portion of the proceeds to terminate and repay the then existing loan with HealthCare Royalty Partners, III, L.P.
As upfront consideration for the purchase of the royalty rights, at closing the Purchasers paid to Curis Royalty $65.0 million less certain transaction expenses. Curis Royalty will also be entitled to receive up to $53.5 million in milestone payments based on sales of Erivedge if the Purchasers receive payments pursuant to the Oberland Purchase Agreement in excess of $117.0 million on or prior to December 31, 2026.
The Oberland Purchase Agreement provides that after the occurrence of an event of default as defined under the security agreement by Curis Royalty, the Purchasers shall have the option, for a period of 180 days, to require Curis Royalty to repurchase a portion of certain royalty and royalty related payments, excluding a portion of non U.S. royalties retained by Curis Royalty (the “Purchased Receivables”), at a price (the “Put/Call Price”), equal to a percentage, beginning at a low triple digit percentage and increasing over time up to a low mid triple digit percentage of the sum of the upfront purchase price and any portion of the milestone payments paid in a lump sum by the Purchasers, if any, minus certain payments previously received by the Purchasers with respect to the Purchased Receivables. Additionally, Curis Royalty shall have the option at any time to repurchase the Purchased Receivables at the Put/Call Price as of the date of such repurchase. No events of default occurred as of March 31, 2022.
As a result of the obligation to pay future royalties to Oberland, the Company recorded the proceeds from this transaction as a liability on its Consolidated Balance Sheet that will be accounted for using the interest method over the estimated life of the Oberland Purchase Agreement. As a result, the Company imputes interest on the transaction and records imputed interest expense at the estimated interest rate. The Company's estimate of the interest rate under the agreement is based on the amount of royalty payments expected to be received by Oberland over the life of the arrangement. The projected amount of royalty payments expected to be paid to Oberland involves the use of significant estimates and assumptions with respect to the revenue growth rate in the Company's projections of sales of Erivedge. The Company periodically assesses the expected royalty payments to Curis Royalty from Genentech using a combination of historical results and forecasts from market data sources. To the extent such payments are greater or less than its initial estimates or the timing of such payments is materially different than its original estimates, the Company will adjust the amortization of the liability.
The Company determined the fair value of the liability related to the sale of future royalties at the time of the Oberland Purchase Agreement to be $65.0 million, with a current effective annual imputed interest rate of 7.9%. The Company incurred $0.6 million of transaction costs in connection with the agreement. These transaction costs are amortized to imputed interest expense over the estimated term of the Oberland Purchase Agreement. The Company determined that the fair value assessment of the liability related to the sale of future royalties is a Level 3 assessment within the valuation hierarchy.
The following table shows the activity with respect to the liability related to the sale of future royalties during the three months ended March 31, 2022.
(in thousands)
Carrying value of liability related to the sale of future royalties at January 1, 2022$53,798 
Amortization of capitalized issuance costs15 
Imputed interest expense recognized for the three months ending March 31, 2022
1,041 
Less: payments to Oberland Capital, LLC(2,721)
Carrying value of liability related to the sale of future royalties at March 31, 2022
$52,133 
9.     Research and Development Collaborations
 
(a)Genentech
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In June 2003, the Company licensed its proprietary Hedgehog pathway antagonist technologies to Genentech for human therapeutic use. The primary focus of the collaborative research plan has been to develop molecules that inhibit the Hedgehog pathway for the treatment of various cancers. The collaboration is currently focused on the development of Erivedge, which is being commercialized by Genentech in the U.S. and by Genentech’s parent company, Roche, in several other countries for the treatment of advanced BCC. Pursuant to the agreement, the Company is eligible to receive up to an aggregate of $115.0 million in contingent cash milestone payments, exclusive of royalty payments, in connection with the development of Erivedge or another small molecule Hedgehog pathway inhibitor, assuming the successful achievement by Genentech and Roche of specified clinical development and regulatory objectives. Of this amount, the Company has received $59.0 million in cash milestone payments as of March 31, 2022.
In addition to these payments and pursuant to the collaboration agreement, the Company is entitled to a royalty on net sales of Erivedge that ranges from 5% to 7.5%. The royalty rate applicable to Erivedge may be decreased by 2% on a country-by-country basis in certain specified circumstances.
The Company recognized $2.1 million and $2.2 million in royalty revenue under the Genentech collaboration during the three months ended March 31, 2022 and 2021, respectively. The Company also recorded cost of royalty revenues within the costs and expenses section of its Condensed Consolidated Statements of Operations and Comprehensive Loss of $0.1 million during the three months ended March 31, 2022 and $0.1 million during the three months ended March 31, 2021. Cost of royalty revenues is comprised of amounts due to third-party university patent licensors in connection with Genentech and Roche's Erivedge net sales.
The Company recorded receivables from Genentech under this collaboration for Erivedge royalties earned during the period. The receivable recorded in the Company's current assets section of its Condensed Consolidated Balance Sheets amounted to $2.1 million as of March 31, 2022 and $3.2 million as of December 31, 2021, respectively.
As previously discussed in Note 8, Liability Related to the Sale of Future Royalties, a portion of royalty revenues received from Genentech on net sales of Erivedge will be paid to the Purchasers pursuant to the Oberland Purchase Agreement.
(b)Aurigene
In January 2015, the Company entered into an exclusive collaboration agreement with Aurigene for the discovery, development and commercialization of small molecule compounds in the areas of immuno-oncology and selected precision oncology targets, which was first amended in September 2016. Under the collaboration agreement, Aurigene granted the Company an option to obtain exclusive, royalty-bearing licenses to relevant Aurigene technology to develop, manufacture and commercialize products containing certain of such compounds anywhere in the world, except for India and Russia, which are territories retained by Aurigene. In February 2020, the collaboration agreement was further amended whereby Aurigene received rights to develop and commercialize CA-170 in Asia in addition to its existing rights in India and Russia, and the Company became entitled to receive royalty payments on potential future sales of CA-170 in Asia at percentage rates ranging from the high single digits up to 10% subject to specified reductions.
As of March 31, 2022, the Company has exercised its option to license the following four programs under the collaboration:
1.IRAK4 Program - a precision oncology program of small molecule inhibitors of IRAK4. The development candidate is emavusertib (CA-4948), an orally available small molecule inhibitor of IRAK4.
2.PD1/VISTA Program - an immuno-oncology program of small molecule antagonists of PD1 and VISTA immune checkpoint pathways. The development candidate is CA-170, an orally available small molecule antagonist of VISTA and PDL1.
3.PD1/TIM3 Program - an immuno-oncology program of small molecule antagonists of PD1 and TIM3 immune checkpoint pathways. The development candidate is CA-327, an orally available small molecule antagonist of PDL1 and TIM3.
4.In March 2018, the Company exercised its option to license a fourth program, which is an immuno-oncology program.
For each of the licensed programs (as described above) the Company is obligated to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize at least one product in each of the U.S., specified countries in the European Union and Japan, and Aurigene is obligated to use commercially reasonable efforts to perform its obligations under the development plan for such licensed program in an expeditious manner.
For each of the IRAK4, PD1/VISTA, and PD1/TIM3 programs, and the fourth immuno-oncology program: the Company has remaining unpaid or unwaived payment obligations of $42.5 million per program, related to regulatory approval and commercial sales milestones, plus specified additional payments for approvals for additional indications, if any. The Company is further obligated to pay Aurigene tiered royalties on the Company's and its affiliates' annual net sales of products at
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percentage rates ranging from the high single digits up to 10%, subject to specified reductions. In addition, the Company agreed to make certain payments to Aurigene upon its entry into sublicense agreements on any program(s).
In addition to the collaboration agreement, the Company has entered into a master development and manufacturing agreement with Aurigene for the supply of drug substance and drug product. Under this agreement, the Company incurred less than $0.1 million in research and development expense during the three months ended March 31, 2022 and $0.4 million during the three months ended March 31, 2021. The Company recorded no prepaid expenses and no accrued expenses as of March 31, 2022 associated with this agreement. The Company had no prepaid expenses and no accrued expenses as of December 31, 2021 associated with this agreement.
(c)ImmuNext
The Company has entered into an option and license agreement with ImmuNext (the “ImmuNext Agreement”). Under the terms of the ImmuNext Agreement, the Company agreed to engage in a collaborative effort with ImmuNext, and to conduct a Phase 1 clinical trial of CI-8993. In exchange, ImmuNext granted the Company an exclusive option, exercisable until the earlier of January 2024 or (b) 90 days after database lock for the first Phase 1 trial in which the endpoints are satisfied (the “Option Period”), to obtain an exclusive, worldwide license to develop and commercialize certain VISTA antagonizing compounds and products containing these compounds in the field of oncology.
During the Option Period, the Company is obligated to pay a semi-annual fee of $0.4 million to ImmuNext and will conduct the Phase 1 trial, and ImmuNext will conduct certain agreed upon non-clinical research activities to support the Phase 1 trial. Additionally, the Company will assign to ImmuNext all right, title and interest in and to, inventions made by the Company alone or jointly with ImmuNext in conducting clinical and non-clinical activities under the ImmuNext Agreement and any patent rights covering those inventions. If the option is exercised, ImmuNext will assign to the Company (i) all such inventions that were made solely by the Company and any patent rights covering those inventions that were assigned by the Company to ImmuNext during the Option Period and (ii) a joint ownership interest in all such inventions that were made jointly by the Company and ImmuNext and patent rights covering those inventions that were assigned by the Company to ImmuNext during the Option Period, except for any of those inventions that relates to certain compounds to which ImmuNext has retained exclusive rights. In addition, the Company has agreed to reimburse ImmuNext for certain documented external costs and expenses incurred by ImmuNext in carrying out non-clinical research activities approved by the joint steering committee, up to $0.3 million per calendar year, unless otherwise agreed to by both parties in writing.
If the Company elects to exercise the option, the Company has agreed to pay to ImmuNext an option exercise fee of $20.0 million. ImmuNext will be eligible to receive up to $4.6 million in potential development milestones, up to $84.3 million in potential regulatory approval milestones, and up to $125.0 million in potential sales milestone payments from the Company. ImmuNext is also eligible to receive tiered royalties on annual net sales on a product-by-product and country-by-country basis, at percentage rates ranging from high single digits to low double digits, subject to specified adjustments. In addition, the Company has agreed to pay ImmuNext a low double-digit percentage of sublicense revenue received by the Company or its affiliates.
10.     Common Stock
(a)Charter Amendments
In May 2021, the Company's stockholders approved an increase to the number of authorized shares of its common stock from 151,875,000 shares to 227,812,500 shares. The Company filed an amendment to its certificate of incorporation in May 2021 to effect such increase.
(b)2021 Sales Agreement with Cantor Fitzgerald & Co. and JonesTrading Institutional Services LLC
In March 2021, the Company entered into a sales agreement (the “2021 Sales Agreement”) with Cantor Fitzgerald & Co., or Cantor, and JonesTrading Institutional Services LLC , or JonesTrading, to sell from time to time up to $100.0 million of the Company’s common stock through an “at the market offering” program under which Cantor and JonesTrading act as sales agents. Subject to the terms and conditions of the 2021 Sales Agreement, Cantor and JonesTrading can sell the common stock by any method deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
Pursuant to the terms of the 2021 Sales Agreement, the aggregate compensation payable to each of Cantor and JonesTrading is 3% of the gross proceeds from sales of the common stock sold by Cantor or JonesTrading, as applicable. Each party agreed in the 2021 Sales Agreement to provide indemnification and contribution against certain liabilities, including liabilities under the Securities Act, subject to the terms of the 2021 Sales Agreement. To date, the Company has not made any sales of common stock pursuant to the 2021 Sales Agreement.
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(c)Aspire Capital Fund LLC
In February 2020, the Company entered into a common stock purchase agreement (the “Agreement”) with Aspire Capital Fund, LLC (“Aspire Capital”) for the sale of up to $30.0 million of the Company's common stock. Under the terms of the Agreement, Aspire Capital has committed to purchase such shares of the Company's common stock at the Company’s request, from time to time during a 30-month period at prices based on the market price at the time of each sale, subject to specified terms and limitations.
Aspire Capital made an initial investment of $3.0 million through the purchase of 2,693,965 shares of the Company's common stock. In 2020, Aspire Capital subsequently purchased an additional 4,650,000 shares of the Company's common stock for $5.4 million. In addition, as consideration for Aspire Capital’s obligation under the Agreement, the Company issued 646,551 shares of common stock to Aspire Capital as a commitment fee. As of March 31, 2022 and December 31, 2021, a total of $21.6 million remained available under the Agreement. The Company did not sell shares of common stock under the Agreement during the three months ended March 31, 2022 and March 31, 2021.
Under the terms of the Agreement, the Company has the right to sell up to 150,000 shares of common stock per day to Aspire Capital, which total may be increased by mutual agreement up to an additional 2,000,000 shares per day. The extent to which the Company relies on Aspire Capital as a source of funding will depend on a number of factors, including the prevailing market price of its common stock and the extent to which it is able to secure working capital from other sources.
There are no warrants, derivatives, or other share classes associated with this Agreement. The Company will control the timing and amount of the further sale of its common stock to Aspire Capital. There are no restrictions on future financings and there are no financial covenants, participation rights, rights of first refusal, or penalties in the Agreement. The Company has the right to terminate the Agreement at any time without any additional cost or penalty.
The Company also entered into a Registration Rights Agreement with Aspire Capital in connection with its entry into the Agreement.
11.     Stock Plans and Stock-Based Compensation
As of March 31, 2022, the Company had two shareholder-approved, stock-based compensation plans: (i) the Amended and Restated 2010 Employee Stock Purchase Plan (“ESPP”), adopted by the Board of Directors in April 2017 and approved by shareholders in June 2017, and (ii) the Fourth Amended and Restated 2010 Stock Incentive Plan (“2010 Plan”). New employees are typically issued options as an inducement equity award under Nasdaq Listing Rule 5635(c)(4) outside of the 2010 Plan.
The Fourth Amended and Restated 2010 Stock Incentive Plan
The 2010 Plan permits the granting of incentive and non-qualified stock options and stock awards to employees, officers, directors, and consultants of the Company and its subsidiaries at prices determined by the Company’s Board of Directors. In May 2021, the Company's shareholders approved the Company's Fourth Amended and Restated 2010 Stock Incentive Plan to reserve an additional 11,000,000 shares of common stock for issuance under the 2010 Plan. The Company can issue up to 23,190,000 shares of its common stock pursuant to awards granted under the 2010 Plan. Options become exercisable as determined by the Board of Directors and expire up to ten years from the date of grant. The 2010 Plan uses a “fungible share” concept under which each share of stock subject to awards granted as options and stock appreciation rights (“SARs”), will cause one share per share under the award to be removed from the available share pool, while each share of stock subject to awards granted as restricted stock, restricted stock units, other stock-based awards or performance awards where the price charged for the award is less than 100% of the fair market value of the Company’s common stock will cause 1.3 shares per share under the award to be removed from the available share pool. As of March 31, 2022 the Company has only granted options to purchase shares of the Company’s common stock with an exercise price equal to the closing market price of the Company’s common stock on the Nasdaq Global Market on the grant date. As of March 31, 2022, 9,713,140 shares remained available for grant under the 2010 Plan.
Stock Options
During the three months ended March 31, 2022, the Company’s board of directors granted options to purchase 3,663,800 shares of the Company’s common stock to the officers and employees of the Company, under the 2010 Plan. Shares granted to officers and employees vest as to 25% of the shares underlying the award on the first anniversary of the grant date and as to an additional 6.25% of the shares underlying the award at the end of each subsequent quarter, based upon continued employment over a four year period, and are exercisable at a price equal to the closing price of the Company’s common stock on the Nasdaq Global Market on the grant date.
During the three months ended March 31, 2022, the Company’s board of directors granted options to its non-employee directors to purchase 425,000 shares of common stock under the 2010 Plan, which will vest and become exercisable one year from the grant date. In addition, during the three months ended March 31, 2022 the Company's board of directors issued options
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to newly-hired employees as an inducement equity award under Nasdaq Listing Rule 5635(c)(4) outside of the 2010 Plan to purchase 224,700 shares of common stock. These options will vest as to 25% of the shares underlying the option on the first anniversary of the grant date, and as to an additional 6.25% of the shares underlying the option on each successive three-month period thereafter. All option awards are exercisable at a price equal to the closing price of the Company’s common stock on the Nasdaq Global Market on the grant dates.
A summary of stock option activity under the 2010 Plan and inducement awards are summarized as follows:
Number of
Shares
Weighted
Average
Exercise
Price per
Share
Weighted
Average
Remaining Contractual Life
Aggregate Intrinsic Value
Outstanding, December 31, 202110,363,769 $3.80 7.41
Granted4,313,500 3.21 
Exercised  
Canceled/Forfeited(333,563)8.39 
Outstanding, March 31, 2022
14,343,706 $3.51 7.95$7,333 
Exercisable at March 31, 2022
6,884,853 $3.31 6.76$5,247 
Vested and unvested expected to vest at March 31, 2022
13,445,514 $3.49 7.85$7,193 
The weighted average grant date fair values of the stock options granted during the three months ended March 31, 2022 and 2021 were $2.62 and $9.13, respectively, and were calculated using the following estimated assumptions:
Three Months Ended
March 31,
 20222021
Expected term (years) 5.55.5
Risk free interest rate
1.4-1.7%
0.4-0.7%
Expected Volatility
110%-111%
107 %
Expected DividendsNoneNone
As of March 31, 2022, there was approximately $17.6 million of unrecognized compensation cost related to unvested employee stock option awards outstanding, net of the impact of estimated forfeitures that is expected to be recognized as expense over a weighted average period of 2.75 years. There were no employee stock options exercised during the three months ended March 31, 2022. The intrinsic value of employee stock options exercised during the three months ended March 31, 2021 was $0.3 million.
Restricted Stock Awards
The following table presents a summary of unvested restricted stock awards (“RSAs”) under the 2010 Plan as of March 31, 2022:
Number of
Shares
Weighted
Average
Grant Date Fair Value
Unvested, December 31, 202110,312 $3.45 
Awarded  
Vested(10,312)3.45 
Forfeited  
Unvested, March 31, 2022
 $ 
As of March 31, 2022, there are no outstanding RSAs.
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Amended and Restated 2010 Employee Stock Purchase Plan
The Company has reserved 2,000,000 shares of common stock for issuance under the ESPP. Eligible employees may purchase shares of the Company’s common stock at 85% of the lower closing market price of the common stock at the beginning of the enrollment period or ending date of the purchase period within a two-year enrollment period, as defined. The Company has four six-month purchase periods per each two-year enrollment period. If, within any one of the four purchase periods in an enrollment period, the purchase period ending stock price is lower than the stock price at the beginning of the enrollment period, the two-year enrollment resets at the new lower stock price. This aspect of the plan was amended in 2017. Prior to 2017, the plan included two six-month purchase periods per year with no defined enrollment period. During the three months ended March 31, 2022, no shares were issued under the ESPP. As of March 31, 2022, there were 1,553,530 shares available for future purchase under the ESPP.
ESPP compensation expense for the three months ended March 31, 2022 and 2021 was not material.
Total Stock-Based Compensation Expense
For the three months ended March 31, 2022 and 2021, the Company recorded stock-based compensation expense to the following line items in its costs and expenses section of the Condensed Consolidated Statements of Operations and Comprehensive Loss, including expense related to its ESPP:
 Three Months Ended
March 31,
(in thousands)20222021
Research and development expenses$725 $338 
General and administrative expenses993 761 
Total stock-based compensation expense$1,718 $1,099 
12.     Loss Per Common Share
Basic and diluted loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is the same as basic net loss per common share for the three months ended March 31, 2022 and 2021, because the effect of the potential common stock equivalents would be antidilutive due to the Company’s net loss position for these periods. Antidilutive securities consist of stock options outstanding of 14,343,706 and 9,996,031 as of March 31, 2022 and 2021, respectively.
Item 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with the Condensed Consolidated Financial Statements and the related notes appearing elsewhere in this report. Some of the information contained in this discussion and analysis and set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements, based on current expectations and related to future events and our future financial and operational performance, that involve risks and uncertainties. You should review the discussion above under the heading “Risk Factor Summary,” the risk factors detailed further in Item 1A, "Risk Factors" of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021, and those included under Part II, Item 1A of this Quarterly Report on Form 10-Q, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. As used throughout this report, the terms “the Company,” “we,” “us,” and “our” refer to the business of Curis, Inc. and its wholly owned subsidiaries, except where the context otherwise requires, and the term “Curis” refers to Curis, Inc.
Overview
We are a biotechnology company focused on the development of first-in-class and innovative therapeutics for the treatment of cancer.
We conduct our research and development programs both internally and through strategic collaborations. Our clinical stage drug candidates are:
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Emavusertib, previously CA-4948, an orally available small molecule inhibitor of Interleukin-1 receptor-associated kinase 4, or IRAK4, which is currently undergoing testing in a Phase 1/2 open-label dose escalating clinical trial in patients with relapsed or refractory hematologic malignancies, such as non-Hodgkin lymphomas, or NHL, including those with Myeloid Differentiation Primary Response Protein 88, or MYD88, alterations, also known as the TakeAim Lymphoma study. We reported preliminary clinical data from the study in December 2020. The trial was amended to include a combination study of emavusertib (CA-4948) and ibrutinib, a BTK inhibitor, in patients with NHL for which we enrolled the first patient in February 2021. We expect to provide initial data from the combination study in the first half of 2022.
We are also conducting a separate Phase 1/2 open-label, single arm dose escalating and expansion trial in patients with relapsed or refractory, or R/R, acute myeloid leukemia, or AML, and high risk myelodysplastic syndromes, or MDS, also known as the TakeAim Leukemia study, and announced preliminary clinical data from this study in December 2020. The study was amended in April 2021 to include dose escalation cohorts of emavusertib (CA-4948) in combination with azacitidine or venetoclax. In April 2021, emavusertib (CA-4948) was granted Orphan Drug Designation for the treatment of R/R AML and high risk MDS by the U.S. Food and Drug Administration, or FDA. In June 2021, we reported updated preliminary clinical data from the TakeAim Leukemia study and announced the recommended Phase 2 dose for monotherapy dose expansion. In January 2022, we provided updated preliminary clinical data for patients from the TakeAim Leukemia study.
In April 2022, the FDA placed a partial clinical hold on the Company’s TakeAim Leukemia study and TakeAim Lymphoma study after we reported the death of a patient with R/R AML in the TakeAim Leukemia study. While the partial hold is in place, no new patients will be enrolled in the studies, and current study participants benefiting from treatment may continue to be treated with emavusertib at doses of 300mg BID or lower. With the partial holds, the FDA is requesting additional data from the trials, including data related to the death of a patient with R/R AML who experienced, among several conditions, rhabdomyolysis, which has previously been identified as a dose-limiting toxicity of emavusertib. Additionally, the FDA is requesting safety, efficacy, and other data, including data related to rhabdomyolysis and our determination of the recommended Phase 2 dose for emavusertib and our proposed changes to the protocols for each trial.
CI-8993, a monoclonal antibody designed to antagonize the V-domain Ig suppressor of T cell activation, or VISTA, signaling pathway. In June 2020, we announced that the FDA had cleared our Investigational New Drug, or IND, application for CI-8993. In September 2020, we began enrollment in our Phase 1 trial of CI-8993 in patients with R/R solid tumors. We have an option to license CI-8993 from ImmuNext, Inc., or ImmuNext. In January 2022, we provided initial safety, pharmacokinetic and pharmacodynamic data from the Phase 1 study in patients with R/R solid tumors.
Our pipeline also includes the following:
Fimepinostat, a small molecule that potently inhibits the activity of histone deacetylase, or HDAC, and phosphotidyl-inositol 3 kinase, or PI3K enzymes, which has been granted Orphan Drug Designation and Fast Track Designation for the treatment of diffuse large B-cell lymphoma, or DLBCL, and Orphan Drug Designation for nuclear protein in testis, or NUT, midline carcinoma by the FDA. In 2019, we began enrollment in a Phase 1 combination study with venetoclax in DLBCL patients, including patients with translocations in both MYC and the BCL2 gene, also referred to as double-hit lymphoma, or high-grade B-cell lymphoma, or HGBL. We reported preliminary clinical data from this combination study in December 2019. In March 2020, we announced that although we observed no significant drug-drug interaction in our Phase 1 study of fimepinostat in combination with venetoclax, we did not see an efficacy signal that would warrant continuation of the study. Accordingly, no further patients will be enrolled in this study. We are currently evaluating future studies for fimepinostat.
CA-170, a small molecule antagonist of VISTA and PDL1, for which we announced initial data from a clinical study in patients with mesothelioma, in conjunction with the Society of Immunotherapy of Cancer conference in November 2019. Based on this data, no further patients will be enrolled in the study. We are currently evaluating future studies for CA-170.
CA-327, a small molecule antagonist of PDL1 and TIM3, is a pre-IND stage oncology drug candidate.
We are party to a collaboration agreement with Genentech Inc., or Genentech, a member of the Roche Group, under which F. Hoffmann-La Roche Ltd, or Roche, and Genentech are commercializing Erivedge® (vismodegib), a first-in-class orally administered small molecule Hedgehog signaling pathway antagonist. Erivedge is approved for the treatment of advanced basal cell carcinoma, or BCC.
In January 2015, we entered into an exclusive collaboration agreement focused on immuno-oncology and selected precision oncology targets with Aurigene Discovery Technologies Limited, or Aurigene, which was amended in September 2016 and February 2020. As of March 31, 2022, we have licensed four programs under the Aurigene collaboration:

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1.IRAK4 Program - a precision oncology program of small molecule inhibitors of IRAK4. The development candidate is emavusertib (CA-4948).
2.PD1/VISTA Program - an immuno-oncology program of small molecule antagonists of PD1 and VISTA immune checkpoint pathways. The development candidate is CA-170.
3.PD1/TIM3 Program - an immuno-oncology program of small molecule antagonists of PD1 and TIM3 immune checkpoint pathways. The development candidate is CA-327.
4.In March 2018, we exercised our option to license a fourth program, which is an immuno-oncology program.
In addition, we are party to an option and license agreement with ImmuNext. Pursuant to the terms of the option and license agreement, we have an option, exercisable for a specified period as set forth in the option and license agreement, to obtain an exclusive license to develop and commercialize certain VISTA antagonizing compounds, including ImmuNext's lead compound, CI-8993, and products containing these compounds in the field of oncology.
Based on our clinical development plans for our pipeline, we intend to predominantly focus our available resources on the continued development of emavusertib (CA-4948), in collaboration with Aurigene, assuming that we are able to successfully resolve the current FDA partial clinical hold on trials of emavusertib (CA-4948), and CI-8993, in collaboration with ImmuNext, in the near term.
Liquidity
Since our inception, we have funded our operations primarily through private and public placements of our equity securities, license fees, contingent cash payments, research and development funding from our corporate collaborators, debt financings and the monetization of certain royalty rights. We have never been profitable on an annual basis and have an accumulated deficit of $1.1 billion as of March 31, 2022. For the three months ended March 31, 2022, we incurred a net loss of $16.1 million and used $16.8 million of cash in operations. We expect to continue to generate operating losses in the foreseeable future. We anticipate that our $120.7 million of cash, cash equivalents and investments as of March 31, 2022 should enable us to maintain our planned operations for the next 12 months and into 2024. We have based this assessment on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
We will need to generate significant revenues to achieve profitability, and do not expect to achieve profitability in the foreseeable future, if at all. If sufficient funds are not available, we will have to delay, reduce the scope of, or eliminate some of our research and development programs, including related clinical trials and operating expenses, potentially delaying the time to market for or preventing the marketing of any of our product candidates, which could adversely affect our business prospects and our ability to continue our operations, and would have a negative impact on our financial condition and ability to pursue our business strategies. In addition, we may seek to engage in one or more strategic alternatives, such as a strategic partnership with one or more parties, the licensing, sale or divestiture of some of our assets or proprietary technologies or the sale of our company, but there can be no assurance that we would be able to enter into such a transaction or transactions on a timely basis or on terms favorable to us, or at all.
COVID-19 Pandemic
The continuing COVID-19 pandemic has caused many governments to implement measures to slow the spread of the pandemic through quarantines, strict travel restrictions, heightened border scrutiny, and other measures. The pandemic and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce. While the COVID-19 pandemic has had adverse effects on our business and we expect the pandemic to have an adverse effect on our business, financial conditions and results of operations in the future, we are unable to predict the extent or nature of the future progression of the COVID-19 pandemic or its effects on our business and operations at this time.
We have enrolled, and will seek to enroll, cancer patients in clinical trials at sites located both in the United States and internationally. Many of our clinical trial sites have imposed restrictions as a result of the COVID-19 pandemic, which have had and may continue to have a negative impact on our ability to conduct our clinical trials. We have encountered and may continue to face difficulties recruiting and retaining patients in our ongoing and planned clinical trials to the extent patients are affected by the virus or are fearful of visiting or traveling to our clinical trial sites because of the pandemic. In addition, we do not currently know the duration or to what degree medical facilities, including our clinical trial sites, will continue to be impacted by the pandemic. For example, all of our clinical trial sites for our TakeAim Lymphoma study, which was placed on partial clinical hold in April 2022, are at large academic research hospitals that have imposed restrictions on entry which have in some instances prohibited, and in other instances may potentially prohibit in the future, clinical trial monitors and patients from entering the trial sites. We are actively working with our clinical trial sites to follow FDA guidelines for conducting clinical trials during the COVID-19 pandemic, including performing remote monitoring to the extent possible and arranging for the shipment of medicine directly from the clinical trial site to patients who are enrolled in our trials, if required; however, there is no assurance such arrangements will be successful. As a result, enrollment in our TakeAim Lymphoma study was delayed
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and, if and when the partial clinical hold on the TakeAim Lymphoma study is lifted, may continue to be delayed and patients enrolled in the trial may cease treatment due to the restrictions described above or fear of visiting or inability to visit our trial sites. As a result, enrollment in this trial has been slower than expected and the timeline of this trial has been delayed and may continue to be delayed. In addition, in July 2020, we commenced enrollment in our TakeAim Leukemia study, which was also placed on partial clinical hold in April 2022. Clinical trial sites for this study have also imposed and may continue to impose restrictions similar to those described above. As a result, we may not be able to enroll this trial on our planned timeline if and when the partial clinical hold is lifted, which would cause a further delay in the overall timeline for this trial. Similarly, enrollment in and the overall timeline of our combination study of emavusertib (CA-4948) and ibrutinib, for which we commenced enrollment in February 2021 and which was also placed on partial clinical hold in April 2022, and our Phase 1 clinical trial for CI-8993, for which we commenced enrollment in September 2020, have been delayed and may continue to be delayed due to the factors discussed above. To the extent clinical trial sites are slowed down or closed to enrollment in our ongoing and planned clinical trials, this could also have a material adverse impact on our clinical trial plans and timelines. These restrictions may also impact our ability to collect patient data in a timely fashion. In addition, we do not know whether and to what extent potential exposure to COVID-19 of patients in our clinical trials could impact the efficacy of emavusertib (CA-4948) or CI-8993. The response to the COVID-19 pandemic may redirect resources of regulators in a way that would adversely impact our ability to progress regulatory approvals. In addition, we may face impediments to regulatory meetings and approvals relating to our clinical trials due to measures intended to limit in-person interactions.
We and our collaborators, third-party contract manufacturers, contract research organizations and clinical sites may experience delays or disruptions in supply and release of product candidates and/or procuring items that are essential for our research and development activities, including, for example, raw materials used in the manufacturing of our product candidates, basic medical and laboratory supplies used in our clinical trials or preclinical studies or animals that are used for preclinical testing, in each case, for which there may be shortages or supply chain disruptions as a result of the pandemic. While we believe that we currently have sufficient supply of our product candidates to continue our ongoing clinical trials, shortages and global supply chain disruptions could make it difficult to obtain, or cause us to be delayed in obtaining, some of our product candidates, or materials contained therein, especially when such materials come from facilities located in areas particularly impacted by COVID-19. With shortages of supplies and continuing supply chain disruptions, we may be subject to inflationary costs and experience price increases for goods and services that we rely on. In addition, any disruptions could impact the supply, manufacturing or distribution of Erivedge, and sales of Erivedge may be negatively impacted by a decrease in new prescriptions as a result of a decline in patient medical visits due to the COVID-19 pandemic, which has had and could continue to have a negative impact on the amount and timing of any royalty revenue we may receive from Genentech related to Erivedge. There is no guarantee that the COVID-19 pandemic, or any potential future outbreak, would not impact our supply chain, which could have a material adverse impact on our clinical trial plans and business operations.
We also experienced delays in closing down our clinical trial sites related to our fimepinostat and CA-170 trials due to restrictions on non-essential workers imposed at those sites in response to COVID-19, which delayed the winding down of these trials.
Any negative impact that the COVID-19 pandemic has on the ability of our suppliers to provide materials for our product candidates or on recruiting or retaining patients in our clinical trials could cause costly delays to clinical trial activities, which could adversely affect our ability to obtain regulatory approval for and to commercialize our product candidates, increase our operating expenses, and have a material adverse effect on our financial results. Additionally, the pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds and has also impacted, and may continue to impact, the volatility of our stock price and trading in our stock. Moreover, the pandemic has significantly impacted economies worldwide, which could result in adverse effects on our business and operations. We cannot be certain what the overall impact of the COVID-19 pandemic will be on our business and it has had and may continue to have an adverse effect on our business, financial condition, results of operations, and prospects
Key Drivers
We believe that near term key drivers to our success will include:
Our ability to successfully resolve the partial clinical holds imposed by the FDA on our TakeAim Leukemia and TakeAim Lymphoma trials of emavusertib (CA-4948);
our ability to successfully plan, finance and complete current and planned clinical trials for emavusertib (CA-4948), assuming we are able to successfully resolve the current FDA partial clinical hold on trials of emavusertib (CA-4948), and CI-8993, as well as for such clinical trials to generate favorable data; and
our ability to raise additional financing, when required, to fund operations.
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In the longer term, a key driver to our success will be our ability, and the ability of any current or future collaborator or licensee, to successfully develop and commercialize drug candidates.
Our Collaborations and License Agreements
For information regarding our collaboration and license agreements, refer to Note 9, Research and Development Collaborations, in the accompanying Notes to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q and Note 11, Research and Development Collaborations, in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission, or SEC, on February 24, 2022.
Financial Operations Overview

General. Our future operating results will largely depend on the progress of drug candidates currently in our research and development pipeline. The results of our operations will vary significantly from year to year and quarter to quarter and depend on, among other factors, the cost and outcome of any preclinical development or clinical trials then being conducted. For a discussion of our liquidity and funding requirements, see “Liquidity” and “Liquidity and Capital Resources - Funding Requirements”.
Liability Related to the Sale of Future Royalties. In connection with the termination and repayment in full of our prior loan with HealthCare Royalty Partners, III, L.P., or HealthCare Royalty, we and Curis Royalty entered into the royalty interest purchase agreement, or Oberland Purchase Agreement, with entities managed by Oberland Capital Management, LLC, or the Purchasers. Upon closing of the Oberland Purchase Agreement, Curis Royalty received an upfront purchase price of $65.0 million from the Purchasers, approximately $33.8 million of which was used to pay off the remaining loan principal to HealthCare Royalty, and $3.7 million of which was used to pay transaction costs, including $3.4 million to HealthCare Royalty in accrued and unpaid interest and prepayment fees under the loan, resulting in net proceeds of $27.5 million. Curis Royalty will also be entitled to receive milestone payments of $53.5 million if the Purchasers receive payments pursuant to the Oberland Purchase Agreement in excess of $117.0 million on or prior to December 31, 2026, which milestone payments may each be paid, at the option of the Purchasers, in a lump sum in cash or out of the Purchaser’s portion of future payments under the Oberland Purchase Agreement. For a discussion of the Oberland Purchase Agreement, see “Liquidity and Capital Resources – Royalty Interest Purchase Agreement”.
Revenue. We do not expect to generate any revenues from our direct sale of products for several years, if ever. Substantially all of our revenues to date have been derived from license fees, research and development payments, and other amounts that we have received from our strategic collaborators and licensees, including royalty payments. Since the first quarter of 2012, we have recognized royalty revenues related to Genentech’s sales of Erivedge and we expect to continue to recognize royalty revenue in future quarters from Genentech’s sales of Erivedge in the U.S. and Roche’s sales of Erivedge outside of the U.S. However, a portion of our royalty and royalty-related revenues under our collaboration with Genentech will be paid to the Purchasers, pursuant to the Oberland Purchase Agreement. The Oberland Purchase Agreement will terminate upon the earlier to occur of (i) the date on which Curis Royalty’s rights to receive the Purchased Receivables owed by Genentech under the Genentech collaboration agreement have terminated in their entirety and (ii) the date on which payment in full of the put/call price is received by the Purchasers pursuant to the Purchasers’ exercise of their put option or Curis Royalty’s exercise of its call right. For additional information regarding the terms and termination provisions of this agreement, see Note 8, Liability Related to the Sale of Future Royalties, in the accompanying Notes to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
We could receive additional milestone payments from Genentech, provided that contractually specified development and regulatory objectives are met. Also, we could receive milestone payments from the Purchasers, provided that contractually specified royalty payment amounts are met within applicable time periods. Our only source of revenues and/or cash flows from operations for the foreseeable future will be royalty payments that are contingent upon the continued commercialization of Erivedge under our collaboration with Genentech, and contingent cash payments for the achievement of clinical, development and regulatory objectives, if any, that are met, under our collaboration with Genentech. Our receipt of additional payments under our collaboration with Genentech cannot be assured, nor can we predict the timing of any such payments, as the case may be.
Cost of Royalty Revenues. Cost of royalty revenues consists of all expenses incurred that are associated with royalty revenues that we record as revenues in our Condensed Consolidated Statements of Operations and Comprehensive Loss. These costs currently consist of payments we are obligated to make to university licensors on royalties that Curis Royalty receives from Genentech on net sales of Erivedge for a period of 10 years from the first commercial sale of Erivedge on a country-by-
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country basis. The first commercial sale of Erivedge occurred in February 2012 in the U.S. During the three months ended March 31, 2022, our obligation to one of the licensors expired for sales in the U.S. and expired entirely for the other licensor.
Research and Development. Research and development expense consists of costs incurred to develop our drug candidates. These expenses consist primarily of:
salaries and related expenses for personnel, including stock-based compensation expense;
costs of conducting clinical trials, including amounts paid to clinical centers, clinical research organizations and consultants, among others;
other outside service costs including costs of contract manufacturing;
sublicense payments;
the costs of supplies and reagents;
occupancy and depreciation charges;
certain payments that we make to Aurigene and ImmuNext under our collaboration agreements, including, for example, semi-annual payments, option exercise fees and milestone payments;
payments that we are obligated to make to certain third-party university licensors upon our receipt of payments from Genentech related to the achievement of clinical development and regulatory objectives under our collaboration agreement; and
internal and external costs of complying with the requirements of the FDA or another regulatory authority.
We expense research and development costs as incurred. We are currently incurring research and development costs under our Hedgehog signaling pathway antagonist collaboration with Genentech related to the maintenance of third-party licenses to certain background technologies.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages, primarily due to the increased size and duration of later-stage clinical trials. As a result, we expect that our research and development expenses will increase substantially over the next several years as we conduct our clinical trials of emavusertib (CA-4948) and CI-8993; prepare regulatory filings for our product candidates; continue to develop additional product candidates; and potentially advance our product candidates into later stages of clinical development.
The successful development and commercialization of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. This uncertainty is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of:
our ability to successfully resolve the partial clinical holds imposed by the FDA on our TakeAim Leukemia trial and our TakeAim Lymphoma trial;
our ability to successfully enroll our current and future clinical trials and our ability to initiate future clinical trials, which has been and may continue to be negatively impacted by the continuing COVID-19 pandemic and responsive measures relating thereto;
the scope, quality of data, rate of progress and cost of clinical trials and other research and development activities undertaken by us or our collaborators;
the results of future preclinical studies and clinical trials;
the cost and timing of regulatory approvals and maintaining compliance with regulatory requirements;
the cost and timing of establishing sales, marketing and distribution capabilities;
the cost of establishing clinical and commercial supplies of our drug candidates and any products that we may develop;
the effect of competing technological and market developments; and
the cost and effectiveness of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
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Any changes in the outcome of any of these variables with respect to the development of our product candidates could mean a significant change in the costs and timing associated with the development of these product candidates. For example, if the FDA does not lift the partial clinical holds on our TakeAim Lymphoma trial or TakeAim Leukemia trial, if the FDA or another regulatory authority otherwise delays our clinical trials or requires us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time to complete clinical development of that product candidate. We may never obtain regulatory approval for any of our product candidates. If we do obtain regulatory approval for our product candidates, drug commercialization will take several years and millions of dollars in development costs.
A further discussion of some of the risks and uncertainties associated with completing our research and development programs on schedule, or at all, and some consequences of failing to do so, are set forth under Item 1A, "Risk Factors" of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021 and under Item 1A of Part II of this Quarterly Report on Form 10-Q.
General and Administrative. General and administrative expense consists primarily of salaries, stock-based compensation expense and other related costs for personnel in executive, finance, accounting, business development, legal, information technology, corporate communications and human resource functions. Other costs include facility costs not otherwise included in research and development expense, insurance, and professional fees for legal, patent and accounting services. Patent costs include certain patents covered under collaborations, a portion of which is reimbursed by collaborators and a portion of which is borne by us.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires that we make estimates and assumptions that affect the reported amounts and disclosure of certain assets and liabilities at our balance sheet date. Such estimates and judgments include the carrying value of property and equipment and intangible assets, revenue recognition, the value of certain liabilities, debt classification and stock-based compensation. We base our estimates on historical experience and on various other factors that we believe to be appropriate under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
During the three months ended March 31, 2022, there were no material changes to our critical accounting policies and estimates as reported in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 24, 2022.
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Results of Operations
Three Months Ended March 31, 2022 and March 31, 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:
 For the Three Months Ended
March 31,
Percentage
Increase
(Decrease)
 20222021
 (in thousands) 
Revenues, net:$2,057 $2,189 (6)%
Costs and expenses:
Cost of royalty revenues82 109 (25)%
Research and development11,435 6,757 69 %
General and administrative5,673 4,123 38 %
Other expense, net976 1,127 (13)%
Net loss$(16,109)$(9,927)62 %

Revenues. Total revenues are summarized as follows:
 For the Three Months Ended
March 31,
Percentage
Increase
(Decrease)
 20222021
 (in thousands) 
Revenues, net:
Royalties$2,060 $2,187 (6)%
Contra revenue, net(3)>(100)%
Total revenues, net$2,057 $2,189 (6)%
Total revenues, net of $2.1 million decreased by 6% for the three months ended March 31, 2022 as compared to the same period in 2021. The decrease is driven by decreased net sales of Erivedge during the current year period as compared to the prior year period.
Cost of Royalty Revenues. Cost of royalty revenues decreased by 25% for the three months ended March 31, 2022 as compared to the same period in 2021, primarily as a result of decreased sales of Erivedge. Cost of royalty revenues is comprised of amounts due to third-party university patent licensors in connection with Genentech and Roche's Erivedge net sales.
Research and Development Expenses. The following table summarizes our research and development expenses incurred during the periods indicated: 
 For the Three Months Ended
March 31,
Percentage
Increase
(Decrease)
 20222021
 (in thousands) 
Direct research and development expenses$5,978 $4,268 40 %
Personnel4,152 1,726 >100 %
Stock-based compensation725 338 >100 %
Facilities, depreciation and other expenses580 425 36 %
Total research and development expenses$11,435 $6,757 69 %

Research and development expenses were $11.4 million for the three months ended March 31, 2022 as compared to $6.8 million in the same period in 2021, an increase of approximately $4.7 million, or 69%. Direct research and development expenses increased by $1.7 million for the three months ended March 31, 2022 as compared to the same period in 2021. The increase in direct research and development expenses for the quarter is primarily attributable to increased manufacturing costs for our programs and increased consulting services. Additionally, personnel related costs increased by $2.4 million and stock compensation increased by $0.4 million, primarily as a result of additional headcount.
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We expect that a majority of our research and development expenses for the foreseeable future will be incurred in connection with our efforts to advance our programs, including clinical and preclinical development costs, manufacturing, option exercise fees, and potential milestone payments upon achievement of certain milestones.
General and Administrative Expenses. General and administrative expenses are summarized as follows:
 For the Three Months Ended
March 31,
Percentage
Increase
(Decrease)
 20222021
 (in thousands) 
Personnel$1,840 $1,178 56 %
Stock-based compensation993 761 30 %
Legal services958 865 11 %
Professional and consulting services852 757 13 %
Insurance costs406 154 >100 %
Facilities and depreciation166 146 14 %
Other general and administrative expenses458 262 75 %
Total general and administrative expenses$5,673 $4,123 38 %
General and administrative expenses were $5.7 million for the three months ended March 31, 2022, as compared to $4.1 million in the same period in 2021, an increase of $1.6 million, or 38%. The increase in general administrative expense was driven primarily by higher costs for personnel, stock-based compensation, and insurance costs during the three months ended March 31, 2022.
Other Expense. Other expense decreased by $0.2 million, or 13% for the three months ended March 31, 2022 as compared to the same period in 2021 primarily due to decreased imputed interest expense related to future royalty payments.
Liquidity and Capital Resources
We have financed our operations primarily through private and public placements of our equity securities, license fees, contingent cash payments and research and development funding from our corporate collaborators, debt financings, and the monetization of certain royalty rights. See “Funding Requirements” and Note 1 to the Condensed Consolidated Financial Statements appearing in this Quarterly Report on Form 10-Q for a further discussion of our liquidity.
At March 31, 2022, our principal sources of liquidity consisted of cash, cash equivalents and investments of $120.7 million, excluding our restricted cash of $0.7 million. Our cash and cash equivalents are highly liquid investments with a maturity of three months or less at date of purchase. Our short and long-term investments primarily include commercial paper and securities. We maintain cash balances with financial institutions in excess of insured limits.
Common Stock Purchase Agreement
In February 2020, we entered into a common stock purchase agreement, or the Agreement, with Aspire Capital Fund, LLC, or Aspire Capital, for the sale of up to $30.0 million of our common stock. Under the terms of the Agreement, Aspire Capital has committed to purchase such shares of our common stock at our request, from time to time during a 30-month period at prices based on the market price at the time of each sale, subject to specified terms and limitations.
Aspire Capital made an initial investment of $3.0 million through the purchase of 2,693,965 shares of our common stock. In 2020, Aspire Capital subsequently purchased an additional 4,650,000 shares of our common stock for $5.4 million. In addition, as consideration for Aspire Capital’s obligation under the Agreement, we issued 646,551 shares of common stock to Aspire Capital as a commitment fee. We also entered into a registration rights agreement with Aspire Capital in connection with our entry into the Agreement in which we agreed to file with the SEC one or more registration statements, as necessary, and to the extent permissible and subject to certain exceptions, to register under the Securities Act, the sale of the shares of our common stock that have been and may be issued to Aspire Capital under the Agreement. As of March 31, 2022 and December 31, 2021, a total of $21.6 million remained available under the Agreement. We did not sell shares of common stock under the Agreement during the three months ended March 31, 2022 and March 31, 2021.
Under the terms of the Agreement, we have the right to sell up to 150,000 shares of common stock per day to Aspire Capital, which total may be increased by mutual agreement up to an additional 2,000,000 shares per day. The extent to which
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we rely on Aspire Capital as a source of funding will depend on a number of factors, including the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources.
Pursuant to the Agreement, we will control the timing and amount of the further sale of our common stock to Aspire Capital. We plan to use the proceeds for general corporate purposes, including research and development, clinical trial activity and working capital. There are no restrictions on future financings and there are no financial covenants, participation rights, rights of first refusal, or penalties in the Agreement. We have the right to terminate the Agreement at any time without any additional cost or penalty.
Equity Offerings
In March 2021, we entered into a Sales Agreement with Cantor Fitzgerald & Co., or Cantor, and JonesTrading to sell from time to time up to $100.0 million of our common stock through an “at the market offering” program under which Cantor and JonesTrading act as sales agents. To date, we have not made any sales of common stock pursuant to the sales agreement. Any sales under the Sales Agreement will be made pursuant to our shelf registration statement on Form S-3 (File No 333-254362), which became effective on April 14, 2022.
Debt Financing
In April 2020, we entered into a promissory note evidencing an unsecured $0.9 million loan, or the PPP Loan, under the Paycheck Protection Program, or PPP, of the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act as administered by the U.S. Small Business Administration, or the SBA. The PPP Loan was made by Silicon Valley Bank and had a term of 24-months and an interest rate of 1%. Under the terms of the CARES Act and the Paycheck Protection Program Flexibility Act of 2020, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. We applied for such forgiveness in 2020 and received notification in June 2021 that the SBA had forgiven the PPP Loan in full, including interest accrued on the PPP Loan.
Royalty Interest Purchase Agreement
In March 2019, we and Curis Royalty entered into the Oberland Purchase Agreement with the Purchasers. We sold to the Purchasers a portion of our rights to receive royalties from Genentech on potential net sales of Erivedge.
As upfront consideration for the purchase of the royalty rights, at closing the Purchasers paid to Curis Royalty $65.0 million less certain transaction expenses. Curis Royalty will also be entitled to receive $53.5 million if the Purchasers receive payments pursuant to the Oberland Purchase Agreement in excess of $117.0 million on or prior to December 31, 2026. For further discussion please refer to Note 8, Liability Related to the Sale of Future Royalties, in the accompanying Notes to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Milestone Payments and Monetization of Royalty Rights
We have received aggregate milestone payments totaling $59.0 million under our collaboration with Genentech since 2012. In addition, we began receiving royalty revenues in 2012 in connection with Genentech’s sales of Erivedge in the U.S. and Roche’s sales of Erivedge outside of the U.S. Erivedge royalty revenues received after December 2012 have been used to repay Curis Royalty’s outstanding principal and interest under the loans due to BioPharma-II and HealthCare Royalty. A portion of Erivedge royalty and royalty-related revenue payments will be paid to the Purchasers pursuant to the Oberland Purchase Agreement. We also remain entitled to receive any contingent payments upon achievement of clinical development objectives and royalty payments related to sales of Erivedge pursuant to our collaboration agreement with Genentech and certain contingent payments upon achievement of contractually specified royalty revenue payment amounts related to sales of Erivedge pursuant to the Oberland Purchase Agreement. Upon receipt of any such payments, as well as on royalties received, we are required to make payments to certain university licensors. During the three months ended March 31, 2022, our obligation to one of the licensors expired for sales in the U.S. and expired entirely for the other licensor.
Cash Flows
Cash flows for operations have primarily been used for salaries and wages for our employees, facility and facility-related costs for our office and laboratory, fees paid in connection with preclinical and clinical studies, laboratory supplies, consulting fees and legal fees. We expect that costs associated with clinical studies will increase in future periods.
Net cash used in operating activities of $16.8 million during the three months ended March 31, 2022 was primarily the result of our net loss for the period of $16.1 million, offset by non-cash charges consisting of stock-based compensation, non-cash lease expense, depreciation, amortization of premiums and discounts on marketable securities, and non-cash imputed interest totaling $2.4 million. Accounts payable, accrued expenses and operating lease liability decreased by $4.1 million and prepaid expenses and other assets increased by $0.2 million. These changes increased cash utilization. Accounts receivable decreased $1.2 million and reduced cash utilization.
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Net cash used in operating activities of $13.2 million during the three months ended March 31, 2021 was primarily the result of our net loss for the period of $9.9 million, offset by non-cash charges consisting of stock-based compensation, amortization of debt issuance costs, non-cash lease expense, depreciation, and non-cash imputed interest totaling $1.5 million. Accounts payable and accrued and other liabilities decreased by $3.6 million and prepaid expenses and other assets increased by $2.0 million. These changes increased cash utilization. Accounts receivable decreased by $0.9 million and reduced cash utilization.
We expect to continue to use cash in operations as we seek to advance our drug candidates and our programs under our collaboration agreements with Aurigene and ImmuNext. In addition, in the future we may owe royalties and other contingent payments to our licensors based on the achievement of developmental milestones, product sales and other specified objectives.
Investing activities used cash of $3.1 million and $4.1 million for the three months ended March 31, 2022 and 2021, respectively, resulting primarily from net investment activity from purchases and sales or maturities of investments for the respective periods.
Financing activities used cash of $1.6 million and $1.3 million for the three months ended March 31, 2022 and March 31, 2021, respectively, primarily due to the payment of our liability under the Oberland Purchase Agreement.
We have historically derived a portion of our operating cash flow from our receipt of milestone payments under collaboration agreements with third parties. However, we cannot predict whether we will receive additional milestone payments under existing or future collaborations.
Funding Requirements
We have incurred significant losses since our inception. As of March 31, 2022, we had an accumulated deficit of approximately $1.1 billion. We will require substantial funds to continue our research and development programs and to fulfill our planned operating goals. Our planned operating and capital requirements currently include the support of our current and future research and development activities for emavusertib (CA-4948) and CI-8993 as well as development candidates we have and continue to license under our collaborations with Aurigene and ImmuNext. We will require substantial additional capital to fund the further development of these programs, as well as to fund our general and administrative costs and expenses. Moreover, our agreements with collaborators impose significant potential financial obligations on us. For example, under our collaboration, license and option agreement with Aurigene, we are required to make milestone, royalty and option fee payments for discovery, research and preclinical development programs that will be performed by Aurigene, which impose significant potential financial obligations on us. In addition, if we choose to exercise our option under the option and license agreement with ImmuNext, or the ImmuNext Agreement, we will be required to make milestone, royalty, and option fee payments in connection with the development of CI-8993.
Based upon our current operating plan, we believe that our existing cash, cash equivalents and investments of $120.7 million as of March 31, 2022, should enable us to fund our operating expenses and capital expenditure requirements into 2024. We have based this assessment on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. We will need to raise additional capital or incur indebtedness to continue to fund our operations in the future. Our ability to raise additional funds will depend on financial, economic and market conditions, many of which are outside of our control, and we may be unable to raise financing when needed, or on terms favorable to us. If necessary funds are not available, we may have to delay, reduce the scope of, or eliminate some of our development programs, potentially delaying the time to market for, or preventing the marketing of, any of our product candidates, which could adversely affect our business prospects, and we may be unable to continue our operations.
Furthermore, there are a number of factors that may affect our future capital requirements and further accelerate our need for additional working capital, many of which are outside our control, including the following:
unanticipated costs in our research and development programs, such as costs relating to our efforts to resolve the partial clinical holds imposed by the FDA on our TakeAim Lymphoma trial and TakeAim Leukemia trial;
the timing and cost of obtaining regulatory approvals for our drug candidates and maintaining compliance with regulatory requirements;
payments due to licensors, including Aurigene and ImmuNext if we exercise our option under the ImmuNext Agreement, for patent rights and technology used in our drug development programs;
the costs of commercialization activities for any of our drug candidates that receive marketing approval, to the extent such costs are our responsibility, including the costs and timing of establishing drug sales, marketing, distribution and manufacturing capabilities;
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unplanned costs to prepare, file, prosecute, defend and enforce patent claims and other patent-related costs, including litigation costs and technology license fees;
unexpected losses in our cash investments or an inability to otherwise liquidate our cash investments due to unfavorable conditions in the capital markets; and
impacts resulting from the continuing COVID-19 pandemic and responsive actions relating thereto.
To become and remain profitable, we, either alone or with collaborators, must develop and eventually commercialize one or more drug candidates with significant market potential. This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our drug candidates, obtaining marketing approval for these drug candidates, manufacturing, marketing and selling those drugs for which we may obtain marketing approval and satisfying any post marketing requirements. We may never succeed in these activities and, even if we do, may never generate revenues that are significant or large enough to achieve profitability. Other than Erivedge, which is being commercialized by Genentech and Roche, our most advanced drug candidates are currently only in early clinical testing.
For the foreseeable future, we will need to spend significant capital in an effort to develop and commercialize products and we expect to incur substantial operating losses. Our failure to become and remain profitable would, among other things, depress the market price of our common stock and could impair our ability to raise capital, expand our business, diversify our research and development programs or continue our operations.
New Accounting Pronouncements
For detailed information regarding recently issued accounting pronouncements and the expected impact on our Condensed Consolidated Financial Statements, see Note 2g, New Accounting Pronouncements, in the accompanying Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Form 10-Q.
Contractual Obligations
In January 2022 we entered into an amendment to our lease agreement for laboratory and office space in Lexington, Massachusetts, or the Lease Amendment. The Lease Amendment shortened the remaining lease term and reduced our future minimum lease payments and related obligations by $1.1 million. The Lease Amendment also added approximately 9,340 square feet to the existing space and will increase our future cash commitments for rent payments for the additional space once the premises are available for use by us. For further information on the Lease Amendment, refer to Note 7, Leases, in the accompanying Notes to the Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Other than the foregoing, there have been no material changes to our contractual obligations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the information set forth under the heading “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Item 4.    CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls & Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2022, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
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Changes in Internal Control Over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION 
Item 1A.    RISK FACTORS
The following information updates, and should be read in conjunction with, the risk factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, or the 2021 10-K, which was filed with the SEC on February 24, 2022. Any of the risk factors contained in this Quarterly Report on Form 10-Q and the 2021 10-K could materially affect our business, financial condition or future results, and such risk factors may not be the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
The FDA has placed partial clinical holds on our TakeAim Leukemia Phase 1/2 trial and our TakeAim Lymphoma Phase 1/2 trial, after we reported a death of a patient with relapsed/refractory acute myeloid leukemia in the TakeAim Leukemia Phase 1/2 trial. The partial clinical holds could take considerable time and expense to address and there can be no assurance that the FDA will remove the partial clinical holds in a timely manner, or at all, in which case our business and prospects for development and approval of emavusertib would be materially harmed.
In April 2022, following our report of a serious adverse event, the FDA placed partial clinical holds on our TakeAim Leukemia Phase 1/2 trial investigating emavusertib (CA-4948) in patients with relapsed or refractory, or R/R, acute myeloid leukemia, or AML, or high-risk myelodysplastic syndromes, or MDS, and our TakeAim Lymphoma Phase 1/2 trial investigating emavusertib in patients with B-cell malignancies. While the partial holds are in place, no new patients may be enrolled in either trial, and only current trial participants benefitting from treatment may continue to be treated with emavusertib at doses of 300mg BID or lower. With the partial holds, the FDA is requesting additional data from the trials, including data related to the death of a patient with R/R AML who experienced, among several conditions, rhabdomyolysis, which has previously been identified as a dose-limiting toxicity of emavusertib. Additionally, the FDA is requesting safety, efficacy, and other data, including data related to rhabdomyolysis and our determination of the Recommended Phase 2 Dose for emavusertib and our proposed changes to the protocols for each trial.
It may require considerable time and expense to respond to these and other requests of the FDA, and if we are delayed in submitting our response or if our response is not satisfactory to the FDA, the partial clinical holds may not be lifted in a timely manner, or at all. We cannot assess the likely timing for us to complete the clinical hold review process with the FDA, or for the partial clinical holds to be removed. It is possible that we will be unable to fully address the FDA’s concerns and as a result the partial clinical holds may never be fully lifted, in which case we would be unable to resume testing of emavusertib in either or both trials. Even if we are able to address the FDA’s concerns, the FDA may make subsequent additional requests that we would need to fulfill prior to the lifting of the partial clinical holds, which could include making material changes to our trial protocols or proposed dosing regimen. Such changes could impose considerable costs and further delay the conduct of these trials and reporting of results from our trials. Furthermore, if the FDA requires us to use a dose lower than 300 mg of emavusertib in our trials, which we had identified as the Recommended Phase 2 Dose, the trials may not demonstrate sufficient efficacy to warrant further development of emavusertib.
Even if we are able to resolve these partial clinical holds, we may observe new safety events or have efficacy concerns in the trials, which may lead to future clinical holds, or necessitate additional or amended clinical trials, any of which could have a material adverse effect on our business, operations and prospects. In addition, we may not be able to obtain institutional review board committee or data safety monitoring board approvals for these trials as a result of the partial clinical holds or any related risks, even if the partial clinical holds are ultimately lifted, which could further delay our ability to open new trial sites and enroll patients into the clinical trials. Any delay in enrolling patients or our inability to resume, continue or complete our clinical trials of emavusertib, as a result of the partial clinical holds or otherwise, will delay or may cause us to terminate our clinical development plans for emavusertib, may require us to incur additional clinical development costs, may slow down our product candidate development and approval process, and could impair our ability to ultimately obtain FDA approval for emavusertib and commence product sales and generate revenue, any of which could materially adversely affect our business, prospects, financial condition and operations. In addition, any material adverse impact on our business, financial condition, prospects or operations related to the emavusertib partial clinical hold could also materially adversely affect our ability to advance our other product candidates.

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Item 6.    Exhibits
Exhibit
Number
Description
10.1
31.1 *
31.2 *
32.1 *
32.2 *
101.INS *InLine XBRL Instance Document
101.SCH *InLine XBRL Taxonomy Extension Schema Document
101.CAL *InLine XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *InLine XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *InLine XBRL Taxonomy Extension Label Linkbase Document
101.PRE *InLine XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File

* Filed herewith
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
CURIS, INC.
Dated:May 5, 2022By:/S/ JAMES E. DENTZER
James E. Dentzer
President and Chief Executive Officer
(Principal Executive Officer)
CURIS, INC.
By:/S/ WILLIAM STEINKRAUSS
William Steinkrauss
Chief Financial Officer and Chief Administrative Officer
(Principal Financial and Accounting Officer)
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