1.	Nature of Business

Curis, Inc. is an oncology-focused company developing novel drug candidates for the treatment of human cancers. As used throughout these consolidated financial statements, the term “the Company” refers 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.

The Company conducts its research and development programs both internally and through strategic collaborations. The Company is leveraging its experience in targeting signaling pathways to develop drug candidates including CUDC-907, a dual histone deacetylase, or HDAC and phosphoinositide-3 kinase, or PI3K, inhibitor, and CUDC-427, a small molecule antagonist of the inhibitor of apoptosis, or IAP, proteins. Erivedge®, the first and only approved medicine for the treatment of advanced basal cell carcinoma, or BCC, is being commercialized by F. Hoffmann-La Roche Ltd., or Roche, and Genentech Inc., or Genentech, a member of the Roche Group, under a collaboration agreement between Curis and Genentech.

In August 2009, the Company granted a worldwide, exclusive royalty-bearing license to develop, manufacture, market and sell its HSP90 inhibitor technology, including Debio 0932, to Debiopharm Group, or Debiopharm. Under the agreement, Debiopharm had assumed all future development responsibility for Debio 0932 and has incurred all costs related to the development of products under the agreement.

In August 2012, Debiopharm initiated the HALO, or HSP90 inhibition And Lung cancer Outcomes, phase 1/2 clinical trial of Debio 0932 in combination with various chemotherapy regimens in patients with stage IIIb or IV non-small cell lung cancer, or NSCLC without known epidermal growth factor receptor, or EGFR, mutations. The primary objective of this trial is to analyze the effect of adding Debio 0932 to combination chemotherapy with cisplatin/pemetrexed, cisplatin/ gemcitabine or docetaxel on the rate of progression-free survival at 6 months in first-line or second-line therapy of patients in this trial population.

Debiopharm has recently reviewed available data from all three arms of the ongoing phase 1 portion of the HALO study and has determined that it will not advance to the phase 2 stage of the study. Safety observations were generally consistent with the expected side effects of Debio 0932 and/or the respective chemotherapeutic regimens administered in the trial. No new Debio 0932-related side effects were identified. Debiopharm has informed Curis that it will discontinue the phase 1 portion of this study in November 2014.

Debiopharm has indicated that it plans to return the rights to Debio 0932 to the Company and Curis expects to receive formal notice of termination of the licence agreement from Debiopharm. Curis anticipates that the parties will seek to enter into a transition agreement in the fourth quarter of 2014 regarding the orderly return of the program to Curis. While the Company does not plan to continue further study of Debio 0932 in non-small cell lung cancer, it is exploring the potential to test the molecule in other promising indications, either in company-sponsored or investigator sponsored studies.

The Company operates in a single reportable segment, which is the research and development of innovative cancer therapeutics. The Company expects that any products that are successfully developed and commercialized would be used in the health care industry and would be regulated in the United States by the Food and Drug Administration, or FDA, and in overseas markets by similar regulatory authorities.

The Company is subject to risks common to companies in the biotechnology industry as well as risk factors that are specific to the Company’s business, including, but not limited to: the Company’s reliance on Genentech and Roche to successfully commercialize Erivedge in the approved indication of advanced BCC the Company’s ability to advance and expand its research and development programs; the Company’s ability to obtain adequate financing to fund its operations; the ability of the Company’s wholly owned subsidiary, Curis Royalty, LLC, or Curis Royalty, to satisfy the terms of its loan agreement with BioPharma Secured Debt Fund II Sub, S.à r.l., a Luxembourg limited liability company managed by Pharmakon Advisors, or BioPharma-II; the Company’s ability to obtain and maintain necessary intellectual property protection; development by the Company’s competitors of new or better technological innovations; dependence on key personnel; the Company’s ability to comply with regulatory requirements; and the Company’s ability to execute on its overall business strategies.

The Company’s future operating results will largely depend on the magnitude of payments from its current and potential future corporate collaborators and the progress of drug candidates currently in its development pipeline. The results of the Company’s operations will vary significantly from year to year and quarter to quarter and depend on a number of factors, including, but not limited to: Roche and Genentech’s ability to successfully commercialize Erivedge; the timing, outcome and cost of the Company’s preclinical studies and clinical trials for its drug candidates; and the Company’s ability to successfully enter into one or more material licenses or collaboration agreements for its proprietary drug candidates.

The Company anticipates that existing cash, cash equivalents and investments at September 30, 2014 should enable it to maintain current and planned operations into 2016. The Company’s ability to continue funding its planned operations beyond this period is dependent upon, among other things, the success of its collaborations with Genentech and the Leukemia & Lymphoma Society, or LLS, including its receipt of additional contingent cash payments under these collaborations; its ability to control expenses and its ability to raise additional funds through equity or debt financings, new collaborations or other sources of financing. The Company may not be able to successfully raise additional funds or enter into or continue any corporate collaborations and the timing, amount and likelihood of the Company receiving payments under such collaborations is highly uncertain. If the Company is unable to obtain adequate financing, the Company may be required to reduce or delay spending on its research and/or development programs.