Via Facsimile and U.S. Mail
Mail Stop 6010
June 7, 2005
Mr. Michael P. Gray
Vice President of Finance and
Chief Financial Officer
Curis, Inc.
61 Moulton Street
Cambridge, MA 02138
Re: Curis, Inc.
Form 10-K for Fiscal Year Ended December 31, 2004
Form 10-Q for Quarter Ended March 31, 2005
File No. 000-30347
Dear Mr. Gray:
We have reviewed your filings and have the following
comments.
We have limited our review of the above referenced filings to only
those issues addressed. In our comments, we ask you to provide us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the fiscal year ended December 31, 2004
Item 7. Management Discussion and Analysis of Financial Condition
and Results of Operations
Contractual Obligations, page 41
1. We note from your disclosures in Note 11(b) of your
consolidated
financial statements that you are obligated to pay license fees,
royalties and milestones. Please assess whether these payments
meet
the criteria as a purchase obligation and, if these payments
should
be shown in the contractual obligations table pursuant to Item
303(a)(5) of Regulation S-K, tell us why you have neither included
them in the table nor in a discussion in the liquidity and capital
resource section of the MD&A. Please refer to Financial Reporting
Release 72, section IV.
Consolidated Financial Statements
Notes to Consolidated Financial Statements
(11) Commitments
(b) License Agreements, page 79
2. Please tell us how recording an accrual for scientific and
clinical milestones over the period that the work required to meet
the milestone is completed is consistent with SFAS 5. It would
appear that management`s best estimate of the accrual should be
recorded at the point and time the milestone is probable and
estimable. If the milestone relates to FDA approval, please tell
us
how management is able to determine that the milestone is
probable.
Form 10-Q for the Quarter Ended March 31, 2005
Notes to Condensed Consolidated Financial Statements
3. Genentech Collaboration Accounting
3. We have the following comments related to your collaboration
arrangement with Genentech:
* Please tell us why you believe EITF 01-09 is the appropriate
literature to account for the amount reimbursable to Genentech for
research and development costs incurred by Genentech.
* Please clarify to us why the excess of costs incurred over the
cumulative revenues recognized is first charged against deferred
revenue. It is not clear why incurring costs above the cumulative
revenue recognized is the completion of the earning process.
* Please tell us your consideration of EITF 99-19 and EITF 00-21
in
regards to the arrangement with Genentech. In addressing EITF 99-
19,
please provide to us your analysis of each criteria within EITF
99-
19, who the primary obligor is in this arrangement and who the
customer is in the arrangement. In addressing EITF 00-21, please
provide to us your evaluation of the separate units of accounting
at
inception and at the point that each item in the arrangement is
delivered.
* * * *
Please provide us a supplemental letter with detailed
explanations keyed to our comments within 10 business days of the
date of this letter or tell us when you will provide us with a
response. Please file your letter on EDGAR under the form type
label
CORRESP.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Joseph Roesler, Staff Accountant, at (202)
551-
3628 or Mary Mast, Senior Accountant, at (202) 551-3613 if you
have
questions regarding the comments. In this regard, do not hesitate
to
contact me, at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief
Accountant
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Mr. Michael P. Gray
Curis, Inc.
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