What happened

Shares of clinical-stage biopharma Curis, Inc. (NASDAQ:CRIS) dropped over 14% this morning after the company released second-quarter 2017 financial results and provided an update on a phase 2 trial. The company's most advanced drug candidate, CUDC-907, did not deliver results that will allow for accelerated approval -- a goal that influenced the phase 2 trial's design in the first place -- in treating diffuse large B-cell lymphoma, or DLBCL, with specific genetic mutations.

Management says it will consider alternative designs for a separate trial that could potentially lead to accelerated approval, but today's news is obviously a setback for Curis and its shareholders. That's doubly true considering that the company's net loss swelled by nearly 50% in the first half of 2017 compared to the year-ago period.

As of 11:32 a.m. EDT, the stock had settled to a 7.8% loss.

A man with his face on his desk while a stock chart on the wall behind him shows losses

Image source: Getty Images.

So what

Curis ended the quarter with $51 million in cash and has a decent level of support from development partners for all but one of its clinical trials. But a company without a product on the market only has so many shots to secure funding. The two most popular options are share offerings (dilution) and debt.

The biopharma has done both in the past year. The number of shares outstanding has increased 11% in the last 12 months, which whittles away shareholder returns. Meanwhile, Curis borrowed $45 million in the first quarter of 2017 and will make payments against the debt using royalty payments from Roche, which swipes away a potential revenue source for the foreseeable future. In other words, the runway is getting shorter, which makes a clinical delay for CUDC-907 all the more unsettling.

Now what

It's no secret that oncology programs face long odds of approval, nor is it a secret what usually happens to clinical-stage biopharmas that fail to deliver a product to the market. Curis still has a healthy number of shots on goal, but it's not the strongest biopharma stock on the market.

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