'05 Curis press Releases

Curis Announces Expansion of Relationship with Centocor Research & Development, Inc.

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Dec. 15, 2005--Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced that Centocor has expanded its relationship with Curis. Under the revised agreement, Curis will screen for small molecule agonists that mimic the bioactivity of BMP-7 and activate the bone morphogenetic ("BMP") pathway. At Centocor's request, Curis will also use its proprietary screening assays to further test and validate any newly discovered Centocor BMP-7 protein and peptide variants in support of Centocor's effort to find next generation protein therapeutics. Both efforts represent an expansion of Curis' current relationship with Centocor. Currently, Centocor has licensed the BMP-7 protein and related patent portfolio from Curis and is developing this protein as a therapeutic agent.

Under terms of the agreement, Centocor will fund two FTE's and Curis will fund two FTE's for the screening effort. The screening effort is expected to last fifteen months. Curis will own any small molecule BMP agonist compounds that are discovered as part of this screening; however, Centocor will have an exclusive option to enter into a new collaboration and exclusive license agreement for the development of the small molecules.

"Curis has a significant track record of expanding and extending its relationships with its collaborators. The type of partnerships that we put in place with major pharmaceutical and biotechnology companies allow Curis to gain significant, useful knowledge about clinical trials and to be less reliant on the capital markets," said Daniel R. Passeri, President and Chief Executive Officer of Curis, Inc. "We are pleased by Centocor's continued commitment to this program and we are hopeful that this screening effort could produce a viable lead candidate for use in an eventual clinical trial."

About the Centocor Research and Development Inc., Agreement

Centocor has 45 days after completion of the screening program to notify Curis that it intends to exercise its option to license. If Centocor exercises the option and elects to continue the collaboration with Curis, the Parties will, in good faith, negotiate a collaboration and exclusive license agreement for subsequent development and commercialization of the Curis small molecule agonists on commercially reasonable terms. If the Parties fail to sign an agreement within three months of Centocor's exercise of the Option, then Curis has the right to negotiate a development and commercialization agreement with third parties.

In November 2002, Curis licensed its broad BMP technology portfolio to Ortho Biotech Products on an exclusive, worldwide royalty-bearing basis, for all non-orthopedic and non-dental therapeutic indications.

About Curis, Inc.

Curis, Inc. is a therapeutic drug development company. The Company's technology focus is on regulatory pathways that control repair and regeneration. Curis' product development involves the use of proteins or small molecules to modulate these pathways. Curis has successfully used this technology and product development approach to produce several promising drug product candidates in the fields of cancer (under two collaborations with Genentech, one of which includes a co-development arrangement for a basal cell carcinoma product candidate that is currently in Phase I clinical trials), neurological disorders (under collaboration with Wyeth), hair growth (under collaboration with Procter & Gamble), kidney and other diseases (licensed to Ortho Biotech Products and under development at Centocor, both subsidiaries of Johnson & Johnson), and cardiovascular disease. Curis also possesses robust small molecule drug screening technologies and preclinical scientific expertise that Curis believes it can use to create a sustainable drug candidate pipeline including, for example, its efforts in Spinal Muscular Atrophy (under sponsored research agreement with the Spinal Muscular Atrophy Foundation). For more information, please visit the Curis web site at www.curis.com.

Cautionary Statement: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning the expectation that the BMP screening efforts could produce a viable lead candidate for use in an eventual clinical trial. . Forward-looking statements used in this press release may contain the words "believes", "expects", "anticipates", "plans", "seeks", "estimates" or similar expressions. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that may cause Curis' actual results to be materially different from those indicated by such forward-looking statements. Actual results can be affected by a number of important factors including, among other things: adverse results in Curis' and its strategic collaborators' and licensees' product development programs; delays in enrolling patients for its basal cell carcinoma clinical trial, difficulties or delays in obtaining or maintaining required regulatory approvals for products being developed by Curis and its collaborators and licensees; Curis' ability to obtain or maintain the patent and other proprietary intellectual property protection necessary for the development and commercialization of products based on its technologies; changes in or Curis' inability to execute its business plan; the risk that Curis does not obtain the additional funding required to conduct research and development of its product candidates, fund its co-development obligations under its collaboration with Genentech and execute its business plan; unplanned cash requirements and expenditures; risks relating to Curis' ability to enter into and maintain important strategic collaborations, including its ability to maintain its current collaboration agreements with Genentech, Wyeth and Ortho Biotech Products; the risk that competitors will discover and develop signaling pathway-based or other competing therapeutics faster and more successfully than Curis and its collaborators are able to; and other risk factors identified in Curis' most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and subsequent reports periodically filed with the Securities and Exchange Commission. In addition, any forward-looking statements represent the Company's views only as of today and should not be relied upon as representing its views as of any subsequent date. Curis disclaims any intention or obligation to update any of the forward-looking statements after the date of this press release whether as a result of new information, future events or otherwise.


CONTACT: For Curis, Inc.
Michael P. Gray, 617-503-6632
Chief Financial Officer
or
Megan E. Burling, 617-503-6658
Director, Corporate Communications

SOURCE: Curis, Inc.

Curis Announces Receipt of Extended Funding from Wyeth

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Nov. 21, 2005--Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced that Wyeth has exercised its option under the 2004 agreement to extend funding to continue development of therapeutic applications of the Hedgehog agonist with a primary focus on neurological disorders. By exercising this option, Wyeth has agreed to extend the research term by one year through February 9, 2007 (previously February 9, 2006). Curis expects Wyeth to select a development candidate in the next twelve to eighteen months, and to file an investigational new drug, or IND, application approximately twelve months thereafter.

"We are encouraged by the continued dedication that Wyeth has shown to the Hedgehog agonist program for neurological disorders. The extension of funding for the program serves as a validation of the progress made to date on this program, and we look forward to working with Wyeth to select a development candidate for stroke and other neurological disorders," said Daniel R. Passeri, President and Chief Executive Officer of Curis, Inc. "By meeting with Wyeth scientists on a quarterly basis, Curis is able to learn more about the late preclinical development process, which may prove to be invaluable at a later date when Curis prepares to move its own products from preclinical development into the clinic."

About the Wyeth Agreement

In January 2004, Curis entered into a collaboration agreement with Wyeth to continue the development of drug candidates for the treatment of neurological disorders and other potential indications. Wyeth is one of the world's largest research-driven pharmaceutical companies with broad expertise in the development of drugs to treat neurological disorders and other diseases. Under the terms of the collaboration, Wyeth paid Curis an up-front license fee and is obligated to provide two years of research funding and recently extended its funding for an additional year. In addition, if clinical development of any Hedgehog agonist technology-based products is successful, Wyeth is obligated to pay Curis clinical milestone payments and royalties on product sales. Under terms of the updated agreement, Wyeth can terminate the relationship within 60 days of written notice.

CONTACT: For Curis, Inc.
Michael P. Gray, 617-503-6632
Chief Financial Officer
or
Megan E. Burling, 617-503-6658
Director, Corporate Communications

SOURCE: Curis, Inc.

Curis Reports Third Quarter 2005 Results

CAMBRIDGE, Mass., Nov 14, 2005 (BUSINESS WIRE) -- Curis, Inc. (NASDAQ:CRIS), a therapeutic drug development company, today reported its financial results for the three and nine-month periods ended September 30, 2005.

For the third quarter of 2005, we reported a net loss of $3,631,000 or ($0.08) per share as compared to a net loss of $3,906,000 or ($0.09) per share for the prior year period.

Net revenues for the third quarter of 2005 were $1,815,000 as compared to $1,486,000 for the same period of 2004, an increase of $329,000, or 22%. The increase in net revenues was primarily due to an increase in our gross revenues, offset by contra-revenues recorded under our basal cell carcinoma co-development arrangement with Genentech (NYSE: DNA). In addition, as further described below, we recorded an adjustment of $460,000 to reduce revenues recorded under our Genentech Hedgehog antagonist and Wyeth Hedgehog agonist collaborations, respectively. Revenues are summarized by type and collaborator in the following table:

Three Months Ended
September 30,
2005 2004
----------- -----------
Gross revenues:
Genentech $1,773,000 $611,000
Wyeth 585,000 736,000
Procter & Gamble 10,000 -
Spinal Muscular Atrophy Foundation 205,000 139,000
Other 62,000 -
----------- -----------
Subtotal 2,635,000 1,486,000
Contra-revenue:
Genentech co-development contra-revenue (820,000) -
----------- -----------
Net revenues $1,815,000 $1,486,000
=========== ===========

Gross revenues generated under our ongoing collaborations with Genentech and Wyeth (NYSE: WYE) and our grant from the Spinal Muscular Atrophy Foundation were $2,563,000 for the third quarter of 2005 as compared to $1,486,000 for the same period in the prior year, an increase of $1,077,000, or 72%. We also recorded $820,000 in contra-revenues for the third quarter of 2005 related to our equal share of development costs for our basal cell carcinoma product candidate under development with Genentech.

In the quarter ended September 30, 2005, we recorded an adjustment to correct an error in recording the fair value of shares issued in connection with our collaborations with Genentech and Wyeth. The shares issued in the transactions were valued using contractually-agreed upon trailing averages of closing prices. We have determined that we should have valued the shares using the quoted market price on the dates of issuance. As a result of the error, additional paid-in capital was understated and deferred revenues were overstated. The effect of these adjustments was to increase additional paid-in capital by $1,629,000, decrease deferred revenue by $1,169,000 and to reverse $460,000 of license fee revenue to correct for the cumulative overstatement of revenues under these collaborations in the periods from June 2003 through June 30, 2005.

Operating expenses for the third quarter of 2005 were $5,672,000 as compared to $5,445,000 for the third quarter of 2004, an increase of $227,000, or 4%. The primary changes in our research and development and general and administrative expenses were as follows:

Research and development: Research and development expenses were $3,821,000 for the third quarter of 2005 as compared to $3,289,000 for the same period in the prior year, an increase of $532,000, or 16%. This increase was primarily attributable to an increase in spending related to our Spinal Muscular Atrophy, or SMA, program. A majority of our SMA program costs are funded under a grant from the SMA Foundation.

General and administrative: General and administrative expenses were $1,833,000 for the third quarter of 2005 as compared to $2,138,000 for the same period in the prior year, a decrease of $305,000, or 14%. This decrease was primarily due to decreases in legal, consulting and professional service expenses.

For the nine-month period ended September 30, 2005, we reported a net loss of $13,419,000 or ($0.28) per share as compared to a net loss of $12,245,000 or ($0.30) per share for the same period in the prior year.

Net revenues for the nine-months ended September 30, 2005 were $2,803,000 as compared to $3,462,000 for the same period of 2004, a decrease of $659,000, or 19%. Revenues are summarized by type and collaborator in the following table:

Nine Months Ended
September 30,
2005 2004
----------- -----------
Gross revenues:
Genentech $4,835,000 $1,556,000
Wyeth 2,169,000 1,717,000
Procter & Gamble 10,000 -
Spinal Muscular Atrophy Foundation 1,425,000 139,000
Other 62,000 50,000
----------- -----------
Subtotal 8,501,000 3,462,000
Contra-revenue:
Genentech co-development contra-revenue (5,698,000) -
----------- -----------
Net revenues $2,803,000 $3,462,000
=========== ===========

Gross revenues generated under our ongoing collaborations with Genentech and Wyeth and our grant from the SMA Foundation were $8,429,000 for the nine months ended September 30, 2005 as compared to $3,412,000 for the same period in the prior year, an increase of $5,017,000, or 147%. We recorded $5,698,000 in contra-revenues for the nine months ended September 30, 2005 related to our equal share of development costs for our basal cell carcinoma product candidate under development with Genentech.

Operating expenses were $16,845,000 and $15,966,000 for the nine-month periods ended September 30, 2005 and 2004, respectively. The significant changes in our research and development and general and administrative expenses were as follows:

Research and development: Research and development expenses were $10,648,000 for the nine months ended September 30, 2005 as compared to $9,449,000 for the same period in the prior year, an increase of $1,199,000, or 13%. This increase was primarily attributable to a $1,907,000 increase in spending related to our SMA program, partially offset by a $676,000 decrease in stock-based compensation expense.

General and administrative: General and administrative expenses were $6,141,000 for the nine months ended September 30, 2005 as compared to $6,461,000 for the same period in the prior year, a decrease of $320,000, or 5%. This decrease was primarily due to decreases in legal, consulting and professional service expenses, offset by increases in personnel costs and a $500,000 charge recorded during the second quarter of 2005 related to the estimated loss of subtenant income.

As of September 30, 2005, cash, cash equivalents and marketable securities, were $42,898,000. As of September 30, 2005, there were 48,285,788 shares of common stock outstanding.

Contra-Revenue Accounting

As required under accounting rules outlined in Emerging Issues Task Force No. 01-9, we recorded contra-revenue for amounts that we paid to Genentech during the three- and nine-month periods ending September 30, 2005 and for amounts that we owed to Genentech as of September 30, 2005 that will be paid subsequent to the end of the quarter for the reimbursement of our equal share of costs incurred by Genentech in connection with the co-development of our basal cell carcinoma product candidate. These contra-revenues offset gross revenues recorded under our collaborations and research grant. Amounts paid by us to Genentech under the co-development arrangement will be recorded first as contra-revenue to the extent of both cumulative revenue recognized to date and probable future revenues, which includes any unamortized deferred revenue balances under both of our collaborations with Genentech, and then as expense.

2005 Guidance

We reiterate our 2005 financial guidance provided as part of our second quarter earnings release except that, as a result of a $1,500,000 payment received on a note receivable from a former collaborator in October 2005 and from lower than expected co-development costs under our basal cell carcinoma co-development arrangement with Genentech, we have updated our year-end cash guidance. Assuming that we receive all contractually defined cash payments from Genentech, Wyeth and the SMA Foundation, we now expect to end 2005 with cash, cash equivalents and marketable securities of between $38,000,000 and $41,000,000. We had previously estimated that we would end the year with between $36,000,000 and $39,000,000.

Recent Developments

-- In October 2005, we announced that Genentech had selected a lead clinical candidate, a small molecule antagonist, under our solid tumor program.

-- In October 2005, Genentech exercised its option to extend funding to support Curis personnel performing research services to continue development of therapeutics to treat solid tumor cancers under its June 2003 agreement as amended, extending the research term by six months through June 11, 2006 (the research term previously ended on December 11, 2005). As a result of the extension, Genentech will provide to the Company an additional $1,250,000 of funding for research services performed from December 12, 2005 through June 11, 2006, payable in June 2006.

-- In October 2005, we announced the publication of data in Nature Medicine demonstrating that stimulating the Hedgehog signaling pathway was therapeutically efficacious in preclinical models of both acute and chronic ischemic heart disease. Myocardial ischemia, the interruption of blood flow and oxygen to heart muscle, is the leading cause of heart attacks. In the U.S., approximately 1.1 million individuals experience new or recurrent myocardial infarctions each year and, of these, about 40% eventually develop congestive heart failure, a form of chronic heart disease.

Third Quarter 2005 Highlights

-- In September, we entered into an exclusive worldwide research and development agreement with Procter & Gamble Pharmaceuticals, a division of The Procter & Gamble Company, to evaluate and develop potential treatments for hair growth regulation utilizing Curis' Hedgehog agonist technology. Future efforts may be expanded to address other skin disorders.

-- Also in September, we announced the publication of data reporting on the therapeutic efficacy of one of Curis' proprietary Hedgehog pathway activators in an adult animal model of hair growth. The results of the study show that a topically applied small molecule agonist of the Hedgehog signaling pathway can stimulate the transition of hair follicles from the resting to the growth stage of the hair cycle. These results were published in the Journal of Investigational Dermatology and expanded on those that were presented at the February 2005 Annual Meeting of the American Academy of Dermatology.

-- During the third quarter of 2005, we were issued four U.S. patents including the following:

-- On July 26, 2005, we were issued U.S. patent 6,921,646, entitled "Patched Genes and Uses Related Thereto." The claims of this patent recite a method of screening for compounds that bind to a patched protein. In February 1996, Curis (Ontogeny Incorporated) exclusively licensed this IP from Stanford University.

-- On August 30, 2005, we were issued U.S. patent 6,936,582, entitled "Synergistic Effects of OP/BMP Morphogens and GDNF/NGF Neurotrophic Factors." The claims of this patent recite a method for promoting growth of mammalian peripheral neural cells in vitro, wherein said cells express an OP/BMP-activated serine/threonine kinase receptor and a GDNF- or NGF-activated tyrosine receptor. In November 2002, Curis exclusively licensed this patent and other related patents and patent applications associated with BMP to Ortho Biotech, a subsidiary of Johnson & Johnson.

-- On September 20, 2005, we were issued U.S. patent 6,946,257, entitled "Patched Genes and Uses Related Thereto." The claims of this patent recite methods for identifying agents that decrease hedgehog signal transduction for ameliorating an effect of loss of function of a patched gene in a mammalian cell. In February 1996, Curis (Ontogeny Incorporated) exclusively licensed this IP from Stanford University.

-- On September 27, 2005, we were issued U.S. patent 6,949,505, entitled "Morphogen-Induced Dendritic Growth." The claims of this patent recite a method for the use of a particular OP/BMP morphogen to promote dendrite outgrowth by a neuron. In November 2002, Curis exclusively licensed this patent and other related patents and patent applications to Ortho Biotech, a subsidiary of Johnson & Johnson.

Daniel Passeri, Curis' President and Chief Executive Officer, stated, "This past quarter we continued to implement our business strategy of collaborating with major pharmaceutical and biotechnology companies and structuring those relationships to include the potential for co-development, so that Curis can grow as a company and benefit from the clinical trial expertise of our collaborators. As part of our agreement with Procter & Gamble for hair growth, we have the option to co-develop the product from IND filing through Phase II clinical trials." Mr. Passeri continued, "We were very pleased that Genentech has selected a lead candidate, a small molecule antagonist of the Hedgehog pathway, in our solid tumor cancer program. In addition, we believe that Genentech's election to extend funding of our scientists serves as further validation of the contribution that our scientists are providing to this program."

We will hold a conference call today, November 14, 2005, at 10:00 A.M. EST, to discuss our financial results, the progress of our therapeutic product development programs, and additional corporate activities. Daniel Passeri will host the call.

To access the live conference call, please call (866) 800-8649 from the United States or Canada or (617) 614-2703 from other locations, shortly before 10:00 A.M. The conference ID number is 69069207. Replay will be available approximately two hours after the completion of the call and through 5:00 P.M. EST, Monday, November 28, 2005. To access the replay, please call (888) 286-8010 from the United States or Canada or (617) 801-6888 from other locations and reference the conference ID number 92603021.

CURIS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
------------ ------------ ------------- -------------
Revenues:
Research and
development
contracts $2,626,072 $1,100,881 $7,358,750 $2,289,033
License fees 8,561 385,345 892,295 1,123,067
Substantive
milestones - - 250,000 50,000
------------ ------------ ------------- -------------
Gross revenues 2,634,633 1,486,226 8,501,045 3,462,100
Contra-
revenues
from co-
development
with
Genentech (819,491) - (5,697,993) -
------------ ------------ ------------- -------------
Net revenues 1,815,142 1,486,226 2,803,052 3,462,100
------------ ------------ ------------- -------------

Operating
expenses:
Research and
development 3,820,650 3,288,472 10,647,659 9,448,534
General and
administrative 1,832,802 2,138,070 6,141,013 6,460,769
Amortization
of
intangible
assets 18,768 18,768 56,304 56,304
------------ ------------ ------------- -------------
Total operating
expenses 5,672,220 5,445,310 16,844,976 15,965,607
------------ ------------ ------------- -------------

Net loss from
operations (3,857,078) (3,959,084) (14,041,924) (12,503,507)
------------ ------------ ------------- -------------

Other income,
net 226,365 53,384 623,308 258,622
------------ ------------ ------------- -------------
Net loss $(3,630,713) $(3,905,700) $(13,418,616) $(12,244,885)
============ ============ ============= =============

Basic and
diluted net
loss per common
share $(0.08) $(0.09) $(0.28) $(0.30)
============ ============ ============= =============
Basic and
diluted
weighted
average common
shares
outstanding 48,178,626 41,620,123 47,998,663 41,398,656
============ ============ ============= =============


CURIS, INC.

CONSOLIDATED BALANCE SHEETS

September December 31,
30, 2004
2005
(unaudited)
------------ ------------
ASSETS

Cash, cash equivalents, marketable
securities and long-term investments $42,898,327 $52,120,643
Long-term investments - restricted 195,998 193,166
Accounts receivable 2,026,140 1,226,460
Property and equipment, net 5,015,497 3,416,620
Intangible assets, net 9,027,818 9,084,122
Other assets 1,544,486 1,593,802
------------ ------------
Total assets $60,708,266 $67,634,813
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $3,592,658 $2,721,906
Debt obligations 2,822,180 1,141,294
Convertible debt 2,556,962 5,710,007
Deferred revenue 9,443,137 8,881,253
Other long-term liabilities 763,800 271,058
------------ ------------
Total liabilities 19,178,737 18,725,518

Total stockholders' equity 41,529,529 48,909,295
------------ ------------

Total liabilities and stockholders' equity $60,708,266 $67,634,813
============ ============

Curis Announces Delay in Filing Form 10-Q for Third Quarter of Fiscal 2005; - Curis Files Form 12b-25 with the SEC -

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Nov. 9, 2005--Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced that the filing of its Quarterly Report on Form 10-Q for the third quarter ended September 30, 2005 will be delayed beyond the Securities and Exchange Commission's filing deadline of November 9, 2005. As a result, Curis is also delaying the announcement of its third quarter 2005 earnings results and related conference call that were originally scheduled for November 9, 2005 and November 10, 2005, respectively. The Company has filed a Form 12b-25 - Notification of Late Filing with the Securities and Exchange Commission in connection with the delay in filing its Quarterly Report on Form 10-Q.

As discussed in the Form 12b-25, the full text of which may be found on the SEC's EDGAR site at www.sec.gov, the Company has recently concluded that it made accounting errors in prior periods because: (1) it prematurely recorded accounts receivable within the assets section of its Balance Sheet as well as an offsetting amount to its deferred revenues within the liabilities section of its Balance Sheet in connection with a collaboration agreement executed in 2003; and (2) it used the contractually negotiated price rather than the closing market price to calculate the value of common shares sold in connection with two of its collaboration agreements. The Company's financial statements to be included in the Quarterly Report on Form 10-Q are not complete because, although the Company has worked diligently to complete its assessment of the materiality of these errors, the Company has not yet determined whether it is required to restate its financial statements for certain prior periods or correct these errors with a cumulative adjustment in the Quarterly Report on Form 10-Q.

The first error occurred when the Company mistakenly treated two $2 million annual maintenance payments payable under its June 2003 Genentech collaboration as Accounts Receivable. The Company has determined that there were contingencies relating to its receipt of each payment and, therefore, these amounts should not have been reflected in its Balance Sheet until the cash payments were received. As a result of the error, the Company's Balance Sheet reflected excess Accounts Receivable in the amount of $4 million in Q3 2003. As the contingencies expired, the receivable balances were paid and the overstatement of Accounts Receivable declined to $2 million in Q2 2004 and to $0 at year-end 2004. By the end of 2004, therefore, this error had corrected itself and the Company's balance sheet was correct with respect to these contingent payments. The Company's Balance Sheet also reflected excess Deferred Revenue during those periods in like amounts. This error had no effect on the Company's Statement of Operations. The errors did not impact cash, cash flow, revenue or income in any period.

The other errors were caused by the Company's allocation of up-front payments that it received under its June 2003 Genentech collaboration agreement and January 2004 Wyeth collaboration agreement. In both of these collaborations, the Company received contractually specified payments in consideration for granting to each such collaborator an exclusive license to specific technologies and issuing to each such collaborator shares of the Company's common stock. In both cases, the Company initially was required to allocate this aggregate up-front payment for common stock and license fees to the Equity and Deferred Revenue line items in its Balance Sheet. In each case, the Company calculated the value of the common stock using the negotiated price (which was less than the closing market price on the agreement date). Because of this, it allocated too little of the payment to Equity and too much to Deferred Revenue. These errors did have some effect on both the Company's Statement of Operations and its Balance Sheet because, in each case, the Company amortized Deferred Revenue over the life of the agreement to Revenues in its Statement of Operations. Because the amount of Deferred Revenue was too high, the amount recognized as revenue also was too high. These errors did not impact cash or cash flow. As a result of these errors, the Company's Statement of Operations and Balance Sheet:

(in $000s)


2003 2004 Through
June 2005
Statement of Operations:

-- overstated Revenue 124 233 104

Balance Sheet:

-- understated APIC (1,491) (1,629) (1,629)

-- overstated Deferred Revenue 1,367 1,217 1,167

The errors were discovered in connection with an ordinary review of the Company's most recent annual report on Form 10-K for the year ended December 31, 2004 and Quarterly Report on Form 10-Q for the Quarter ended March 31, 2005 by the staff of the Corporation Finance Division of the United States Securities and Exchange Commission. The Company does not believe that the review has identified any other accounting errors. The Company currently is considering whether a restatement is required to correct these errors. Once that conclusion is reached, the Company will be able to file its Form 10-Q, as well as any amendments to previous filings required as a result of that conclusion.

Hedgehog Pathway Activation Promotes Tissue Protection and Repair in Cardiac Ischemia; Preclinical Data Published in Nature Medicine

CAMBRIDGE, Mass., Oct 25, 2005 (BUSINESS WIRE) -- Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced the publication of data showing that stimulating the Hedgehog signaling pathway was therapeutically efficacious in preclinical models of both acute and chronic ischemic heart disease. Myocardial ischemia, the interruption of blood flow and oxygen to heart muscle, is the leading cause of heart attacks. In the U.S., approximately 1.1 million individuals experience new or recurrent myocardial infarctions each year and, of these, about 40% eventually develop congestive heart failure, a form of chronic heart disease. The research for these studies was performed in the laboratory of Dr. Douglas Losordo in the Division of Cardiovascular Research at the St. Elizabeth's Medical Center of Boston, Massachusetts.

The Hedgehog pathway governs major aspects of heart and blood vessel development in the fetus and remains active in the adult for tissue maintenance and repair. When blood flow to the heart is blocked experimentally, which simulates an acute heart attack, the pathway is upregulated. In the reported animal studies, therapeutic activation of the Hedgehog pathway near the zone of ischemic damage in the heart appeared to protect heart cells from death, preserve heart muscle function, improve blood flow, and attract bone-marrow derived progenitor cells from the blood that help build new blood vessels. Activating the Hedgehog pathway appears to result in the coordinated release of various factors that promote these diverse protective and regenerative effects, which potentially could result in more robust and durable efficacy in the clinic than treatment with single factors alone.

"This study adds to the growing body of preclinical data supporting the use of Hedgehog agonists to promote tissue repair post ischemia. Heart disease is one of the leading killers of Americans and although early, this data is encouraging that our novel approach could show significant promise. In keeping with our collaboration strategy, which allows for the development of a broad portfolio of promising assets providing significant value potential, we would plan to partner this program for human studies," said Daniel R. Passeri, President and Chief Executive Officer of Curis, Inc.

Wyeth Pharmaceuticals has licensed rights from Curis for Hedgehog agonist compounds, including small molecule compounds, proteins and polypedtides for systemic treatment of diseases and disorders in humans, which includes systemic treatment of cardiovascular disease. In addition, as part of Curis' collaboration with Wyeth, Curis has retained the right to locally administer Hedgehog agonist compounds for the treatment of cardiovascular disease, including peripheral vascular disease and acute myocardial infarction, or heart attack. Wyeth has a right of first negotiation to obtain an exclusive license to the local cardiovascular applications. If Wyeth declines to exercise its option, or if Curis is unable to reach an agreement with Wyeth on terms within the contractually specified period, Curis is free to seek another collaborator for this program. Preclinical data relating to this program has been derived from studies conducted at Caritas St. Elizabeth's Medical Center in Boston, Massachusetts.

The article entitled, "Sonic hedgehog gene therapy in myocardial ischemia: tissue repair through transient reconstitution of embryonic signaling" will appear in the November issue of Nature Medicine. An Advanced Online Publication of the article is available now at http://www.nature.com/nm/journal/vaop/ncurrent/index.html. The lead author on the paper is Dr. Kengo F. Kusano.

Curis Announces the Receipt of Second Extension of Funding from Genentech

CAMBRIDGE, Mass., Oct 13, 2005 (BUSINESS WIRE) -- Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced that, for the second time this year, Genentech has elected to extend funding of the cancer therapeutic development collaboration that is ongoing between the two companies. An additional $1.25 million will be provided to support Curis personnel dedicated to developing Curis' Hedgehog antagonist technologies for the treatment of solid tumor cancers for the period of December 2005 through June 2006. Genentech had previously supported Curis personnel and additional third party resources managed by Curis scientists. The progress made by the two companies has reduced the need for these third party resources.

Daniel R. Passeri, Curis' President and Chief Executive Officer, said, "We are very pleased with the progress that Curis and Genentech scientists have made in the Hedgehog solid tumor program. Genentech has selected a lead candidate, a small molecule antagonist of the Hedgehog pathway. We believe that Genentech's continued funding support serves as further validation of the contribution that Curis scientists are providing to the Hedgehog inhibition solid tumor program."

In June 2003, Curis established a collaboration with Genentech for the development of a set of technologies based on inhibition of the Hedgehog signaling pathway, including small molecule Hedgehog pathway antagonists. Genentech's support of Curis personnel and other third-party resources dedicated to the collaboration was due to terminate in December 2005.

Curis and Procter & Gamble Enter into R&D Agreement for Hair Growth Program

CAMBRIDGE, Mass., Sep 19, 2005 (BUSINESS WIRE) -- Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced that the Company has entered into an exclusive worldwide research and development agreement with Procter & Gamble Pharmaceuticals, a division of The Procter & Gamble Company (NYSE: PG), to evaluate and develop potential treatments for hair growth regulation utilizing Curis' Hedgehog agonist technology. Future efforts may be expanded to address other skin disorders. To date, Curis scientists have demonstrated that small molecule Hedgehog agonists can induce hair growth in pre-clinical models.

Under the terms of the agreement, the Company has granted P&G an exclusive, worldwide royalty-bearing license for the non-systemic, dermatological use of Curis' Hedgehog agonist technology, via topical administration. Curis will have an option to co-develop a development candidate through Phase II clinical trials. Curis will retain rights to veterinary applications of the technology. P&G has a first option to negotiate a collaboration for veterinary indications in the field of dermatology. Curis continues to retain rights to certain non-systemic applications of the Hedgehog agonist technology, specifically for local cardiovascular and ex vivo use.

"Procter & Gamble's expertise in pharmaceutical development, combined with their solid track record in creating market-leading hair and skin care products, makes them an excellent choice as a partner for our hair program," said Daniel R. Passeri, President and Chief Executive Officer of Curis, Inc. "This is the second collaboration agreement structured to provide Curis possible co-development opportunities. Collaborating with major pharmaceutical companies to execute clinical programs is one way to build Curis' internal development capabilities to re-apply to our in-house programs."

P&G has agreed to pay Curis a $0.5 million initial payment and up to $2.8 million in preclinical milestones, contingent upon achievement of certain preclinical goals. P&G has agreed to make cash payments to Curis assuming successful completion of certain clinical development and drug approval milestones. If a development candidate derived from the collaboration is successfully commercialized, P&G has agreed to pay a royalty on net product sales. At the time of filing an Investigational New Drug Application (IND) with the U.S. Food and Drug Administration, Curis will have the option to co-develop a product candidate through Phases 1 and 2 of clinical development. If Curis exercises its co-development option it will be entitled to a higher royalty percentage on net product sales of any successfully co-developed products although Curis would forgo two early clinical milestone payments from P&G. Assuming that the collaboration continues for its full term, with at least one product commercialized by P&G worldwide in two indications and developed directly by P&G on a global basis, Curis could receive more than $100 million in milestone payments. Such milestones would be payable whether Curis elected to co-develop a candidate or not.

Curis' Hedgehog agonist program was exclusively licensed to Wyeth Pharmaceuticals in January of 2004. Under the terms of the license agreement, Curis retained the right to develop Hedgehog agonists for topical treatment to stimulate hair growth. The license agreement was subsequently amended to broaden Curis' development rights to include topical applications to treat or prevent skin diseases or disorders and Wyeth has approved a group of Hedgehog agonist compounds for use in Curis' retained programs.

Curis scientists have demonstrated that small molecule Hedgehog agonists can induce hair growth in pre-clinical models. These results were presented in February of 2005 at the annual meeting of the American Academy of Dermatology. In this study, a small molecule Hedgehog agonist, when topically formulated and applied to the skin, triggers the transition of hair follicles from the resting to the growth phase of the hair cycle. The authors of the study conclude that the topical application of a Hedgehog agonist may be effective in treating hair disorders, such as male pattern baldness and female pattern hair loss. In the United States alone, approximately 80 million men and women suffer from hair loss.

"We believe that this collaboration with P&G provides additional validation of Curis' proprietary expertise in the field of signaling pathways," said Passeri.

Hedgehog Agonists Modulate Hair Growth; Preclinical Data Published in The Journal of Investigational Dermatology

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Sept. 1, 2005--Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced the publication of data reporting on the therapeutic efficacy of one of Curis' proprietary Hedgehog pathway activators in an adult animal model of hair growth. The results of the study show that a topically applied small molecule agonist of the Hedgehog signaling pathway can stimulate the transition of hair follicles from the resting to the growth stage of the hair cycle. The Hedgehog agonist induces hair growth and causes no other detectable short or long-term changes in the skin of the animals. This study also demonstrated that the Hedgehog agonist is active in human scalp in vitro as measured by Hedgehog pathway gene expression. The results suggest that topical application of a Hedgehog agonist could be effective in treating hair loss conditions, including male and female pattern hair loss. These results expand on those that were presented at the February 2005 Annual Meeting of the American Academy of Dermatology.

Curis' Hedgehog agonist program was exclusively licensed to Wyeth Pharmaceuticals in January of 2004. Under the terms of the license agreement, Curis retained the right to develop Hedgehog agonists for topical treatment to stimulate hair growth. The license agreement was subsequently amended to broaden Curis' development rights to include topical applications to treat or prevent skin diseases or disorders and Wyeth has approved a group of Hedgehog agonist compounds for use in Curis' retained programs.

"We are encouraged by these preclinical results showing the utility of Hedgehog agonists to stimulate hair growth in an adult animal model. It is our goal to partner this program with another biotechnology company or a larger pharmaceutical company with expertise and skills in dermatological hair growth that complement our own in-house capabilities. Our collaboration strategy allows for the development of a broad portfolio of promising assets providing risk diversification with significant value potential," said Daniel R. Passeri, President and Chief Executive Officer of Curis, Inc.

The article entitled, "Modulation of hair growth with small molecule agonists of the hedgehog signaling pathway" will appear in the October issue of The Journal of Investigational Dermatology. An online version of the article is available now at http://www.blackwell-synergy.com/toc/jid/0/0. Authors of the paper include Rudolph D. Paladini, Jacqueline Saleh, Changgeng Qian, Guang-Xin Xu, and Lee L. Rubin, all of Curis, Inc.

Curis Announces Dosing of First Patient in Phase I Clinical Trial for Basal Cell Carcinoma

CAMBRIDGE, Mass., Jun 08, 2005 (BUSINESS WIRE) -- Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced that the first patient in the basal cell carcinoma (BCC) Phase I trial has been dosed. This Phase I clinical trial is being conducted by Genentech (NYSE: DNA) and Curis. This drug candidate, a topical antagonist of the Hedgehog signaling pathway, was discovered by Curis and is being co-developed through a collaboration between Genentech and Curis. The Phase I study is a double-blind, randomized, placebo-controlled study that will enroll approximately 66 subjects with a single or multiple basal cell carcinoma. The study will be conducted at approximately ten investigational sites in the United States. The primary outcomes measured in this trial will be the safety and tolerability of a multi-dose regimen of the Hedgehog antagonist.

"The start of this Phase I trial is the first step toward evaluating whether this drug candidate may provide an alternative to surgical treatment for skin cancer, the most common form of all human cancers, which affects nearly a million people in the U.S. alone each year. This trial also represents a significant corporate milestone for Curis as it is the first of what we expect will be several upcoming clinical trials over the next two years. We're excited about the combination of Genentech's well-documented expertise in oncology and the encouraging preclinical results we have seen for this Hedgehog antagonist. We expect to be able to report results of this Phase I clinical trial in 2006," said Daniel R. Passeri, President and Chief Executive Officer of Curis, Inc.

About the Genentech Curis Collaboration

In June 2003, Curis established a collaboration with Genentech for the continued development of Hedgehog pathway inhibitors. The focus of the collaboration is to identify lead clinical candidates for topical and systemic treatment of solid tumors. Numerous preclinical reports have linked abnormal activation of the Hedgehog pathway to the growth of several solid tumors, including basal cell carcinoma, medulloblastoma, pancreatic cancer, small cell lung cancer, prostate cancer, and others.

In March 2004, a lead clinical candidate was selected for the topical treatment of basal cell carcinoma. Under the terms of the collaboration, Curis retained a co-development option under which Curis may fund up to an equal share of the development costs and share in a commensurate portion of future net operating profits and losses, if any, of clinical candidates that are topical formulations of compounds intended to treat basal cell carcinoma. In January 2005, Curis elected to exercise this co-development option. Curis' co-development right applies solely to the U.S. marketplace and includes applications for basal cell carcinoma and any other indications for which a topically administered clinical candidate may be developed.

New Report Suggests Hedgehog Pathway Stimulation Improves Wound Healing in Diabetic Wound Model

CAMBRIDGE, Mass.--(BUSINESS WIRE)--May 9, 2005--Curis, Inc. (NASDAQ: CRIS), a therapeutic drug development company, today announced that a new report has documented the beneficial effects of Hedgehog pathway stimulation for accelerated wound closure in an animal model of diabetes-impaired wound healing. Poorly healing wounds, in part due to impaired circulation, are often a major complication of diabetes, which afflicts an estimated 18 million Americans. Diabetic wounds can lead to severe complications if left untreated. For example, more than 60% of non-traumatic lower-limb amputations in the United States occur among people with diabetes.

The new study was presented at the 66th Annual Meeting of the Society for Investigative Dermatology held May 4-7, 2005 in St. Louis, Missouri. The research for this study was performed in the laboratory of Dr. Douglas Losordo in the Division of Cardiovascular Research at the St. Elizabeth's Medical Center of Boston, Massachusetts. The authors observed that part of the wound healing response to stimulating the Hedgehog signaling pathway involved increasing blood flow within the wound, and they concluded that a topically applied Hedgehog drug therapy may have significant therapeutic potential for enhanced wound healing in patients with impaired microcirculation such as diabetic foot ulcers.

The Hedgehog agonist program was exclusively licensed to Wyeth Pharmaceuticals in February 2004. Under the terms of the license agreement, Curis retained the right to develop Hedgehog agonists for topical treatment to stimulate hair growth. The license agreement was subsequently amended to broaden Curis' development rights to include topical applications to treat or prevent skin diseases or disorders. In both instances, Wyeth must approve any compound that Curis will develop under its retained development rights. In December 2004, Wyeth approved a group of Hedgehog agonist compounds for use in Curis' retained programs. We are currently using these Hedgehog agonists in our hair growth program and this new report suggests that they may be useful for development in a wound healing program as well.

Bristling With Promise
Startup Curis is developing a class of drugs that could halt hair loss -- and treat cancer

If you're fighting a receding hair line, the options are probably all too familiar. There are comb-overs, hair potions, and more drastic transplants. Then there's Propecia, which may actually work -- if you can get past the warnings about sexual dysfunction. But with such treatments, the result may be little more than peach fuzz, and the hairs fall out when you stop using the drugs, says David H. McDaniel, director of the Institute for Anti-Aging Research in Virginia Beach, Va.
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It's no wonder combined U.S. sales of the leading branded hair-growth tonics and drugs amount to less than $1 billion a year, despite the fact that about 40 million men in the U.S. alone are losing their hair. "People thought they'd go from Kojak to Chia Pet," says McDaniel. "But the results have been underwhelming."

A tiny biotech company named Curis Inc. (CRIS ) believes it has a promising alternative. It's an experimental drug based on a cellular mechanism with a bristly moniker: the Hedgehog signaling pathway. Named after the furry-looking mutant fruit flies in which it was first discovered, the pathway is a complex network of proteins that cells use to communicate. Scientists have discovered that these specific cellular signals can also serve as a molecular switch. Flip it in one direction, and you can wake up sleeping hair follicles. Tweak it in another way, and you might conceivably halt tumor growth in certain types of cancers, temper neuron destruction in the brain, and alter a variety of other disease progressions.

So far, the results have only been observed in animal experiments -- and everyone agrees that lab critters rarely respond exactly like humans. Still, the data are so promising that some of the world's top biotech and pharma companies have cut deals with Curis. In April, Genentech Inc. (DNA ), which has licensing agreements with Curis, said it hopes to start human trials of a skin-cancer drug this year. Curis is also working with Wyeth Pharmaceuticals (WYE ) on a stroke treatment.

HEALTHY SIGNALS
These two partners alone could shell out more than $300 million in licensing payments over the next five or six years, providing a much-needed infusion for Curis, which has been unprofitable ever since it was born out of the merger of three cash-starved biotechs in 2000. And CEO Daniel R. Passeri says that by the end of this year he expects to sign up a partner to help with human clinical trials for a Hedgehog-related treatment for baldness.

Like the mammal, the Hedgehog signaling pathway is especially frisky when it's young. In embryos, this biochemical chain reaction operates at full force, controlling the formation of certain organs. In adults, Hedgehog is less active, but it kicks back into high gear periodically to help the body recover from injuries. That power intrigues Lee L. Rubin, Curis' chief scientific officer. "The idea is that maybe in adults you can reactivate the pathway to regenerate tissues," he explains.

Hedgehog is one of many cell-signaling pathways that scientists are scrutinizing. And Curis hopes it will work wonders on thinning pates of both males and females. When you see a lustrous head of hair, chances are it's at least partly due to healthy Hedgehog signaling, which prompts the body's multitalented stem cells to proliferate around follicles, initiating hair growth. By activating Hedgehog, Curis' drug targets hair growth at its root, so to speak. That could make the drug more effective than current treatments, which mainly aim to increase the size of shrunken hair follicles or to fight certain hormones involved in hair loss.

Curis' decision to farm out some of its hair-loss research costs -- and hence share the potential payoff -- was painful. The company had planned to retain 100% rights to the baldness market, hoping to pour proceeds from any gold rush back into research on life-saving drugs. But after several companies' painkillers got pulled from the market because of safety concerns, Passeri came to a sobering realization. "Any quality-of-life drug is going to be looked at very carefully" by the U.S. Food & Drug Administration, he says. "The FDA is likely to require big safety studies -- broader than we can subsidize ourselves." Having lost $13.9 million on just $5 million in sales in 2004, Curis now sees partnerships as its most viable route.

PATCHED AND SMOOTHENED
Sharing the baldness market will help Curis conserve the cash it needs to foster its other promising drugs. Its scientists are especially optimistic about their partnership with Genentech to develop a topical treatment for basal cell carcinoma. About 1 million new cases of this form of skin cancer are diagnosed yearly, making it the most common human cancer. Surgery is effective, but it can leave unsightly scars. When a topical drug co-developed by Curis and Genentech was applied directly to samples of cancerous animal skin, the tumors disappeared and the surrounding healthy skin remained intact.

The key to the cancer treatment is not to turn the Hedgehog signaling pathway on, as Curis is doing for hair loss, but rather to turn it off. In basal cell carcinoma, the pathway goes haywire, upsetting a whole menagerie of quaintly named proteins. Normally, the Hedgehog gene makes a protein that binds to another protein called Patched, found on the outer surface of cells. Patched is supposed to repress a cancer-causing protein called Smoothened. But in basal cell carci- noma, Patched malfunctions, Smoothened runs wild, and tumors form and grow.

Curis scientists figured out how to block the abnormal Hedgehog signal with a substance that has the same effect as a chemical originally discovered in the 1950s by Idaho sheepherders. When their sheep ate corn lilies containing the chemical, their lambs were born with just one eye. Scientists later discovered that the substance, which they dubbed cyclopamine, was causing defects by interrupting the Hedgehog signal. Now they believe they can harness the chemical's disruptive power and direct it straight at tumors, potentially yielding entirely new ways of treating many different cancers. "Over the last two years, Hedgehog has been implicated in pancreatic, prostate, and some forms of lung cancer," says Fred de Sauvage, senior director of molecular biology at Genentech, which plans to work with Curis to find other potential uses of Hedgehog inhibitors.

Hedgehog's multifaceted role in the body might also be its undoing. Because the pathway seems useful in some diseases when it's shut off and in others when it's turned on, forcing it in one direction might bring on dangerous side effects.

Wyeth is looking into that prospect as it works with Curis on a drug designed to activate the Hedgehog pathway in the brain after stroke. The researchers believe that Hedgehog will decrease damage, and they hope it will mobilize stem cells to make new neurons. But when they look at the growing body of research that shows Hedgehog playing a role in some cancers, they wonder about turning the pathway on after stroke. "We have to make sure we're not causing tumors," says Menelas N. Pangalos, vice-president of neuroscience discovery at Wyeth. Curis' Rubin says he believes the risk will be tempered by the fact that the stroke drug would only be given to patients once. But no one will know for certain if any of Curis' therapies are safe until they are tested in humans.

That uncertainty may explain why investors are keeping their distance. Curis' stock has dropped from $5 a share in January to $3.40. That frustrates Passeri. And he's sometimes embarrassed by the notion that baldness could be Curis' ticket to the biotech big leagues. "Scientifically, it's not what we're most excited by," says Passeri -- who himself is blessed with naturally thick hair. "But from a business standpoint, it has huge potential." If all the bald pates in the world help Curis fund cancer research, the potential beneficiaries will surely outnumber all the sheep, fruit flies, mice, and humans that have contributed to the Hedgehog discovery.

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