Curis Reports Third Quarter Fiscal 2000 Results

Business Wire, Nov 14, 2000

Attention Business and Science Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Nov. 14, 2000

Curis, Inc. (NASDAQ:CRIS) today reported the results of its operations for the three- and nine-month periods ended September 30, 2000. These results include combined results of the three companies merged into Curis as described below.

On July 31, 2000, Creative BioMolecules, Inc. (formerly Nasdaq:CBMI), Ontogeny, Inc., and Reprogenesis, Inc., merged with and into Curis, Inc. On that date, Curis, as the surviving company of the merger, assumed the rights and obligations of Creative, Ontogeny and Reprogenesis. Immediately after the merger, Curis was owned approximately 43 percent by the former stockholders of Creative, 38 percent by the former stockholders of Ontogeny and 19 percent by the former stockholders of Reprogenesis. Consequently, for accounting purposes, Curis is deemed to be the successor to Creative, and the historical financial statements of Creative have become the historical financial statements of Curis.

Excluding one-time costs and expenses, amortization of intangibles and stock-based compensation, total net loss for the three months ended September 30, 2000 would have been $7,675,000, or $.36 per share. Financial results for the three-month period ended September 30, 2000 included a number of significant, non-recurring, non-cash charges and other merger-related cash expenses incurred in connection with the merger and the formation of Curis on July 31, 2000. These include costs and expenses as follows: a one-time non-cash charge of $294,800,000 resulting from the allocated portion of the purchase price of Ontogeny and Reprogenesis identified under the accounting rules as in-process research and development; stock-based compensation of $9,356,000; amortization of intangible assets of $8,529,000; severance paid to former executive officers and former employees of $1,955,000; and a loss on the disposition of assets of $554,000.

Operating expenses for the third quarter of 2000 include all costs incurred by Curis for the period from August 1, 2000 to September 30, 2000 and all costs incurred by Creative BioMolecules for the month of July, 2000. Excluding the one-time costs and expenses, amortization of intangibles and stock-based compensation, total operating expenses for the three months ended September 30, 2000 would have been $8,142,000.

Curis' cash and investment balance on September 30, 2000 was $44,169,000, which included restricted securities of $4,989,000. The Company had 26,015,824 shares outstanding on September 30, 2000.

Primarily as a result of merger-related expenses, Curis reported a net loss of $322,869,000 or $15.19 per share, for the three-month period ended September 30, 2000, compared with a net loss of $2,995,000, or $0.28 per share, for the three-month period ended September 30, 1999. Per share amounts are on both a basic and diluted basis.

Total revenues for the three-month period ended September 30, 2000 were $66,000 as compared to $824,000 for the same period in 1999. The decrease in revenues was primarily the result of the termination of a research agreement with Biogen, Inc. in 1999, which was partially offset by revenues earned under a National Institute of Standards and Technology (NIST) grant received in November 1999.

Total operating expenses for the three-month period ended September 30, 2000 were $323,336,000, as compared to $4,138,000 for the same period in 1999..

"The fiscal quarter ended September 30, 2000 was the first for Curis following shareholder approval of the merger of Creative BioMolecules, Ontogeny, and Reprogenesis," said Doros Platika, M.D., president and chief executive officer of Curis. "It has been a busy and exciting start to a new company that is building a leadership presence in regenerative medicine.

"The quarter was marked by several research findings based upon the core developmental biology and functional genomics technologies driving the discovery of innovative therapies at Curis," said Dr. Platika. "These included a demonstration that treatment with the Sonic Hedgehog protein restored nerve function to normal in pre-clinical models of diabetic neuropathy. Additional findings showed that the Hedgehog pathway is activated following injury to peripheral nerves in pre-clinical models and plays a key role in the nerve recovery process. These studies represent critical components in our program leading up to the introduction of a Hedgehog-based therapy into clinical testing.

"Earlier in the quarter, research published in Nature (Vol. 406, 31 August 2000) demonstrated that Curis' approach to treating basal cell carcinoma is based on fundamental genetic differences between cancer cells and normal cells," said Dr. Platika. "Our compound, CUR-61414, inhibits the biological process that leads to the uncontrolled growth seen in basal cell and certain other cancers. We expect to file an Investigational New Drug (IND) application to begin human clinical testing with this compound next year.