Cue Biopharma, Inc. (NASDAQ:CUE) Q3 2023 Earnings Conference Call November 9, 2023 4:30 PM ET Company Participants Daniel Passeri - CEO Matteo Levisetti - Chief Medical Officer Anish Suri - President & Chief Scientific Officer Kerri-Ann Millar - CFO Conference Call Participants Reni Benjamin - JMP Securities Ted Tenthoff - Piper Sandler Operator Good afternoon, ladies and gentlemen, and welcome to the Cue Biopharma Third Quarter 2023 Earnings Call. At this time, all lines are in listen-only mode. Following ...

Financing Activities During the nine months ended September 30, 2023 and 2022, we generated cash from financing activities of $7,078,000 and $26,256,000, respectively, a decrease of $19,178,000. Cash from financing activities during the nine months ended September 30, 2023 consisted of cash proceeds from the sale of common stock pursuant to the October 2021 ATM Agreement of $7,605,000 net of sales agent commissions and fees, and cash proceeds from the exercise of stock options of $473,000. Cash from financi ...

Cue Biopharma, Inc. (NASDAQ:CUE) Q2 2023 Earnings Conference Call August 9, 2023 4:30 PM ET Company Participants Dan Passeri - Chief Executive Officer Anish Suri - President & Chief Scientific Officer Matteo Levisetti - Chief Medical Officer Kerri Millar - Chief Financial Officer Conference Call Participants Ted Tenthoff - Piper Sandler Ren Benjamin - JMP Securities Operator Greetings, and welcome to the Cue Biopharma Investor Update Call. At this time, all participants are in a listen-only mode. A question ...

| --- | --- | --- | --- | --- | |-------------------------------------|-------|-----------------------|------------|---------------------| | | | June 30, 2023 \n(in | thousands) | December 31, 2022 | | Laboratory equipment | $ | 5,205 | $ | 5,246 | | Furniture and fixtures | | 81 | | 81 | | Computer and office equipment | | 296 | | 296 | | Leasehold improvements | | 118 | | 118 | | | | 5,699 | | 5,741 | | Less accumulated depreciation | | (4,507 | ) | (4,242 ) | | Net property and equipment | $ | 1,192 | $ ...

Financial Performance - Collaboration revenue for the three months ended March 31, 2023, was $187,000, compared to $1,000 in the same period of 2022[36]. - Total operating expenses for Q1 2023 were $13.567 million, a decrease of 10.98% from $15.238 million in Q1 2022[36]. - The net loss for Q1 2023 was $13.109 million, compared to a net loss of $14.255 million in Q1 2022, reflecting a 8.05% improvement[36]. - The net loss per common share for Q1 2023 was $0.29, compared to $0.44 in Q1 2022[36]. - Cash used in operating activities was $10.8 million, compared to $11.6 million in the prior year, indicating a reduction of approximately 6.4%[39]. - The company reported net cash provided by investing activities of $15.0 million, primarily from the redemption of short-term investments[39]. - Cash and cash equivalents at the end of the period totaled $56.3 million, down from $68.1 million at the end of the previous year[39]. - The total stockholders' equity as of March 31, 2023, was $55,017,000, compared to $65,683,000 as of December 31, 2022[87]. - The company has incurred recurring losses and negative cash flows from operations since inception, highlighting the need for additional capital to finance operations and R&D[91]. Research and Development - Research and development expenses for Q1 2023 were $9.391 million, down from $10.082 million in Q1 2022, indicating a 6.86% reduction[36]. - The company is focused on developing a novel class of injectable biologics aimed at treating various diseases, with ongoing clinical trials[41]. - The company is prioritizing resources on the CUE-100 series in response to current financial market challenges[203]. - Preliminary clinical data for the lead drug candidate, CUE-101, shows promise in treating cancer, with ongoing trials aimed at demonstrating its effectiveness[203]. - The CUE-100 series utilizes engineered IL-2 for selective activation of tumor-specific T cells, potentially addressing a broad range of cancers[203]. - Promising preclinical data has been observed for the potential application of the Immuno-STAT platform in treating autoimmune diseases[203]. - The company is in various stages of clinical and preclinical development for its drug product candidates[203]. Strategic Collaborations - The company entered into a strategic collaboration agreement with Ono Pharmaceutical Co., Ltd., which includes an upfront payment of $3.0 million and potential milestone payments up to approximately $220 million[160][161]. - The Company received a $3.0 million upfront payment from Ono for R&D activities related to CUE-401, with additional reimbursement for costs capped at $2.1 million in the first 18 months[188]. - The Company is eligible to receive up to $400 million in research, development, regulatory, and sales milestones from LG Chem, along with tiered single-digit percentage royalties on net sales[185]. - A strategic collaboration with Ono Pharmaceuticals was established in February 2023 to develop CUE-401 for autoimmune disease treatment through regulatory T cell induction[203]. Stock and Equity - The weighted average common shares outstanding for Q1 2023 were 44,652,353, an increase from 32,636,383 in Q1 2022[36]. - The total number of common stock warrants increased to 9,188,406 as of March 31, 2023, up from 851,969 in 2022, indicating significant growth in potential equity[84]. - Stock options outstanding increased to 7,044,599 as of March 31, 2023, with a weighted average exercise price of $8.66[147]. - The company recognized stock-based compensation expenses of $1,998,000 for the three months ended March 31, 2023[87]. - The company recognized approximately $794,000 in stock-based compensation related to RSU activity for the three months ended March 31, 2022[150]. Debt and Financial Obligations - The company has a loan agreement that requires compliance with certain operating covenants, impacting its financial flexibility[53]. - Total long-term debt as of March 31, 2023, is $7,077,000, with a current portion of $2,963,000[144]. - Interest expense related to the Term Loans for the three months ended March 31, 2023, was $330,417, compared to $21,389 for the same period in 2022[143]. - The Term Loans bear an interest rate of 10.25% as of March 31, 2023, based on the prime rate plus 2.25%[143]. - The company is required to maintain unrestricted cash in accounts at the lender equal to the lesser of all cash or $20,000,000 as part of the Loan Agreement[143]. Operational Highlights - The company has not sold any shares under the October 2021 ATM Agreement during the three months ended March 31, 2023, maintaining proceeds of approximately $23.6 million from previous sales[43]. - The company incurred approximately $1.0 million in stock-based compensation for the three months ended March 31, 2023[39]. - The company recorded approximately $3,000 in amortization expense for its trademark for both the three months ended March 31, 2023, and 2022[96]. - The company recorded short and long-term research and development liabilities of approximately $2,521,000 and $445,000, respectively, as of March 31, 2023[162]. - Total lease payments for the Company amount to $9,479,000, with a present value of lease payments at $8,665,000 after applying a discount of $814,000[171].

Financial Data and Key Metrics Changes - The company reported a decrease in research and development expenses to $11.3 million for Q4 2022 from $11.5 million in Q4 2021, attributed to the completion of enrollment in the Phase I monotherapy clinical trial of CUE-101 [66] - General and administrative expenses also decreased to $3.7 million in Q4 2022 from $4.7 million in Q4 2021, primarily due to lower stock-based compensation [66] - The company had approximately $76.3 million in cash, cash equivalents, and marketable securities as of December 31, 2022, compared to $64.4 million as of December 31, 2021, indicating improved liquidity [95] Business Line Data and Key Metrics Changes - CUE-101 demonstrated a greater than 40% overall response rate in combination with pembrolizumab, compared to a historical objective response rate of 19% with pembrolizumab monotherapy [76] - The ongoing CUE-101 trial showed a median overall survival of approximately 12 months for patients with recurrent metastatic HPV-positive head and neck cancer, which is a significant improvement over the historical median survival of eight months [106] Market Data and Key Metrics Changes - The company is actively conducting trials for CUE-102, which targets Wilms Tumor 1 positive tumors, with plans to present data from the dose-escalation trial in the second half of the year [108] - The CUE-401 partnership with Ono Pharmaceuticals is expected to provide significant commercial potential, retaining a 50% interest in the U.S. market [92] Company Strategy and Development Direction - The company aims to leverage its Immuno-STAT platform to develop therapies that can target cancer-specific T cells while minimizing side effects associated with traditional IL-2 therapies [16][82] - The strategic partnership with Ono Pharmaceuticals for CUE-401 is structured to provide capital through program funding while allowing the company to retain a significant upside in the U.S. market [13][68] - The company is focused on expanding its oncology portfolio and exploring partnerships similar to the Ono collaboration to enhance capital access while retaining involvement in potential upside [14][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing clinical trials, highlighting the potential for CUE-101 to stimulate the immune system and improve survival rates for patients with advanced cancer [24][42] - The company is optimistic about the upcoming data from CUE-102 and its potential to address significant unmet medical needs in various cancer indications [28][108] - Management emphasized the importance of maintaining a balance between capital access and retaining upside potential in partnerships, particularly in light of current market conditions [70][130] Other Important Information - The company has received Fast Track designation for CUE-101 in both monotherapy and combination settings, which may expedite the development process [77] - CUE-101 has shown favorable pharmacokinetics with low inter-patient variability, supporting its potential as a therapeutic breakthrough [19][41] Q&A Session Summary Question: What should we expect from CUE-101 in terms of data? - Management indicated that they are still in the patient expansion phase and expect to gather and report promising data by midyear, which will inform their registration strategy [110][111] Question: Are there plans for CUE-102 to initiate dose escalation in combination with checkpoint inhibitors? - Management confirmed that they plan to explore combination therapies with CUE-102, similar to CUE-101, after establishing the monotherapy tolerability profile [103] Question: What factors will influence the decision on which trial to pursue for registration? - Management highlighted the importance of overall response rates, median overall survival, and market size in determining the most attractive registration path [120][130]

WASHINGTON, D.C. 20549 Cue Biopharma, Inc. 02135 (ZipCode) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of the last business day of the registrant's most recently completed second fiscal quarter, was approximately $82.1 million (based on the closing price of the registrant's common stock on June 30, 2022 of $2.49 per share). ...

Financial Data and Key Metrics Changes - The company reported collaboration revenue of approximately $68,000 for Q3 2022, down from $2.4 million in Q3 2021 [35] - Research and development expenses decreased to $7.6 million in Q3 2022 from $11.3 million in Q3 2021, primarily due to reductions in laboratory and drug manufacturing costs [35] - General and administrative expenses also decreased to $3.5 million in Q3 2022 from $4.1 million in Q3 2021, attributed to lower stock-based compensation and consulting fees [35] - The company ended the quarter with approximately $59.1 million in cash and cash equivalents, along with $51.5 million in working capital [36] Business Line Data and Key Metrics Changes - The CUE-101 monotherapy trial demonstrated single-agent antitumor efficacy in recurrent head and neck squamous cell carcinoma, with a median overall survival benefit emerging from the survival follow-up [19] - CUE-101 showed well-behaved pharmacokinetics with low interpatient variability at the recommended Phase II dose of 4 mg/kg, maintaining exposure throughout multiple treatment cycles [20] Market Data and Key Metrics Changes - The company is focused on the HPV-positive head and neck cancer market, where CUE-101 is positioned to provide a significant clinical benefit compared to existing treatments [61] - The combination of CUE-101 with pembrolizumab has shown a 40% objective response rate, which is significantly higher than the 19% response rate observed with pembrolizumab monotherapy [26] Company Strategy and Development Direction - The company aims to leverage the clinical validation of CUE-101 to expand its Immuno-STAT platform, targeting various cancers with a modular approach [33] - The recent IND approval for CUE-102, which targets Wilms Tumor 1, underscores the strategic advantages gained from the derisking accomplished by CUE-101 [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the breakthrough potential of the Immuno-STAT platform, emphasizing the transformative nature of their approach to cancer therapy [38] - The company plans to define a potential registration trial for CUE-101 by mid-next year, based on the strength of emerging data [39] Other Important Information - The company has entered into a securities purchase agreement for $30 million in private investment, which will support the development of its Immuno-STAT platform through 2024 [36] - The CUE-102 trial is actively enrolling patients across 15 sites in the U.S., with plans to present additional data at upcoming medical meetings [32] Q&A Session Summary Question: Can you discuss typical treatments seen post-progression in the combination study? - Management indicated that they are collecting data but cannot provide specifics on subsequent therapies due to the variability across multiple sites [45] Question: Do you have a median duration of response for either the monotherapy or combination study? - Management has not calculated the median duration of response yet, as it is too early for the combination study [46] Question: Can you provide updates on the neoadjuvant study and patient enrollment? - The neoadjuvant study has treated close to 10 patients, with preliminary data showing increases in NK cells and tumor-infiltrating lymphocytes [47] Question: What is the duration of response for the best responding combo patient? - The duration of response in monotherapy is reported as 42 weeks, with indications of increased progression-free survival in the combination therapy [51] Question: How do you envision advancing NeoStat versus swapping in different allelic variants? - The company is pursuing both strategies, leveraging strong confidence in targeting tumor epitopes while optimizing processes for clinical application [52] Question: What is the expected median overall survival for monotherapy in the third line? - A median overall survival of 12 months is anticipated, which would represent a significant clinical benefit compared to existing treatments [61] Question: What opportunities do you see for CUE-102 now that CUE-101 has derisked the platform? - CUE-102 targets a wide range of cancers, and early activity in the dose escalation phase will serve as a catalyst for further validation and expansion into additional indications [64][65]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including the balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's accounting policies, financial instruments, and significant agreements [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets Data | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $29,726 | $64,371 | | Marketable securities | $29,457 | — | | Total current assets | $61,700 | $68,469 | | Total assets | $76,300 | $83,401 | | Total current liabilities | $10,222 | $12,788 | | Total liabilities | $25,536 | $17,909 | | Total stockholders' equity | $50,764 | $65,492 | [Consolidated Statements of Operations and Other Comprehensive Loss](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Loss) Consolidated Statements of Operations and Other Comprehensive Loss Data | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Collaboration revenue | $68 | $2,395 | $1,094 | $6,687 | | General and administrative expenses | $3,528 | $4,125 | $12,465 | $12,660 | | Research and development expenses | $7,571 | $11,288 | $27,246 | $29,846 | | Total operating expenses | $11,099 | $15,413 | $39,453 | $42,506 | | Net loss | $(10,955) | $(12,993) | $(38,418) | $(35,777) | | Net loss per common share (basic & diluted) | $(0.31) | $(0.41) | $(1.11) | $(1.16) | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Consolidated Statements of Stockholders' Equity Data | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :----------------------------------- | :-------------------------- | :-------------------------- | | Common stock | $35 | $32 | | Additional paid in capital | $286,685 | $262,906 | | Accumulated other comprehensive loss | $(92) | — | | Accumulated deficit | $(235,864) | $(197,446) | | Total stockholders' equity | $50,764 | $65,492 | - Issuance of common stock from ATM offering, net of sales agent commission and fees, contributed **$16,598,000** to additional paid-in capital for the nine months ended **September 30, 2022**[34](index=34&type=chunk) - Stock-based compensation for the nine months ended **September 30, 2022**, was **$7,384,000**[34](index=34&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Data | Cash Flow Activity | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :---------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(31,292) | $(28,192) | | Net cash (used in) provided by investing activities | $(29,609) | $9,108 | | Net cash provided by financing activities | $26,256 | $11,851 | | Net decrease in cash, cash equivalents, and restricted cash | $(34,645) | $(7,233) | | Cash, cash equivalents, and restricted cash at end of period | $29,876 | $67,783 | [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Note 1. Organization and Basis of Presentation](index=10&type=section&id=Note%201.%20Organization%20and%20Basis%20of%20Presentation) The company, incorporated in Delaware in 2014, is a clinical-stage biopharmaceutical company focused on developing novel injectable biologics for cancer, infectious diseases, and autoimmune diseases. It has incurred recurring losses and negative cash flows since inception, with current cash and marketable securities of $59.183 million as of September 30, 2022, believed to be sufficient for the next twelve months, but additional capital will be needed for long-term viability - Cue Biopharma is a clinical-stage biopharmaceutical company developing novel injectable biologics designed to selectively engage and modulate tumor-specific T cells within the body to treat a broad range of cancers, chronic infectious diseases, and autoimmune diseases[40](index=40&type=chunk) - The company has incurred recurring losses and negative cash flows from operations since inception[41](index=41&type=chunk) Cash, Cash Equivalents, and Marketable Securities | Metric | Sep 30, 2022 (in thousands) | | :-------------------------------------- | :-------------------------- | | Cash, cash equivalents, and marketable securities | $59,183 | - Management believes that current cash, cash equivalents, and marketable securities on hand at **September 30, 2022**, are sufficient to fund operations for at least the next **twelve months**, but future viability depends on raising additional capital[41](index=41&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies used in preparing the unaudited consolidated financial statements, including the basis of presentation, consolidation, use of estimates, impact of the COVID-19 pandemic, and policies for cash, marketable securities, property and equipment, revenue recognition, and stock-based compensation - The accompanying unaudited consolidated financial statements have been prepared in accordance with SEC rules and U.S. GAAP, reflecting all necessary adjustments for a fair statement[42](index=42&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, particularly related to collaboration revenue, potential liabilities, stock-based compensation, deferred tax assets, and long-lived assets[49](index=49&type=chunk) - The COVID-19 pandemic may continue to impact the company's business and financial results due to evolving factors like macroeconomic conditions, capital markets access, and supply chain disruptions[50](index=50&type=chunk)[51](index=51&type=chunk) - Cash equivalents are highly liquid investments with maturities of **three months** or less; marketable securities have maturities greater than **ninety days** and less than **one year**, classified as available-for-sale and recorded at fair value[53](index=53&type=chunk)[54](index=54&type=chunk) - Collaboration revenue is recognized under ASC 606, with variable consideration estimated using the 'most likely amount' method, and patent costs are charged to general and administrative expense as incurred[62](index=62&type=chunk)[68](index=68&type=chunk) [Note 3. Fair Value](index=15&type=section&id=Note%203.%20Fair%20Value) This note details the company's fair value measurements for financial assets and liabilities, categorizing them into a three-level hierarchy based on input observability. As of September 30, 2022, cash equivalents and marketable securities were valued using Level 1 and Level 2 inputs, respectively - The fair value hierarchy prioritizes inputs to valuation techniques into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) Fair Value Measurements | Asset | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | Fair Value Level | | :---------------------- | :-------------------------- | :-------------------------- | :--------------- | | Cash equivalents | $23,256 | $52,509 | Level 1 | | Marketable securities | $29,457 | — | Level 2 | | Total | $52,713 | $52,509 | | - The carrying values of accounts receivable, prepaid expenses, other current assets, accounts payable, and accrued expenses approximate their fair value due to their short-term nature[97](index=97&type=chunk) [Note 4. Marketable Securities](index=16&type=section&id=Note%204.%20Marketable%20Securities) As of September 30, 2022, the company held $29.457 million in marketable securities, primarily U.S. Treasury securities, which were not present at December 31, 2021, and recorded an unrealized loss of $92,000 Marketable Securities Summary | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--------------------------- | :-------------------------- | :-------------------------- | | Amortized Cost | $29,550 | — | | Gross Unrealized Gains | — | — | | Gross Unrealized Losses | $(92) | — | | Fair Value | $29,457 | — | - Marketable securities consist of U.S. Treasury securities[98](index=98&type=chunk) [Note 5. Property and Equipment](index=17&type=section&id=Note%205.%20Property%20and%20Equipment) This note details the composition and net value of property and equipment, which decreased from $2.112 million at December 31, 2021, to $1.642 million at September 30, 2022, primarily due to depreciation and a loss on the sale of fixed assets Property and Equipment Details | Asset | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Laboratory equipment | $5,253 | $5,203 | | Furniture and fixtures | $81 | $93 | | Computer and office equipment | $302 | $253 | | Leasehold improvements | $60 | $7 | | Less accumulated depreciation | $(4,054) | $(3,444) | | Net property and equipment | $1,642 | $2,112 | - Depreciation expense for the nine months ended **September 30, 2022**, was approximately **$630,000**[100](index=100&type=chunk) - The company recorded a loss on the sale of fixed assets of **$4,300** during the nine months ended **September 30, 2022**[100](index=100&type=chunk) [Note 6. Loan with Silicon Valley Bank](index=17&type=section&id=Note%206.%20Loan%20with%20Silicon%20Valley%20Bank) The company entered into a $20 million term loan agreement with Silicon Valley Bank on February 15, 2022, drawing $10 million initially. The loan bears a floating interest rate (prime + 2.25% or 5.50%, whichever is greater) and is secured by most company assets, excluding intellectual property - On **February 15, 2022**, the company entered into a Loan and Security Agreement with Silicon Valley Bank for up to **$20,000,000** in term loans, drawing **$10,000,000** on the closing date[101](index=101&type=chunk) - The Term Loans bear interest at a floating rate per annum equal to the greater of (A) the prime rate plus **2.25%** and (B) **5.50%**. At **September 30, 2022**, the interest rate was **8.5%**[101](index=101&type=chunk) - The Term Loans are secured by substantially all of the company's properties, rights, and assets, except for its intellectual property[101](index=101&type=chunk) Interest Expense Related to Term Loans | Metric | Nine Months Ended Sep 30, 2022 (in thousands) | | :----------------------------------- | :-------------------------------------------- | | Interest expense related to Term Loans | $354 | | Interest expense related to accretion of final payment | $76 | [Note 7. Stock-Based Compensation](index=18&type=section&id=Note%207.%20Stock-Based%20Compensation) This note details stock option and restricted stock unit (RSU) activity, including valuation assumptions and compensation expenses. For the nine months ended September 30, 2022, stock-based compensation expense totaled $7.384 million, with $13.856 million in unrecognized expense remaining Stock Option Valuation Assumptions | Assumption | 2022 | 2021 | | :------------------------ | :------------------- | :------------------- | | Risk-free interest rate | 1.53% - 2.92% | 0.61% - 1.31% | | Expected dividend yield | 0% | 0% | | Expected volatility | 92.1% - 95.7% | 97.8% - 100.9% | | Expected life | 5.50 to 6.25 years | 5.50 to 6.25 years | Stock-Based Compensation Expense | Category | Three Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :--------------------------- | :--------------------------------------------- | :-------------------------------------------- | | General and administrative | $1,003 | $3,650 | | Research and development | $1,061 | $3,734 | | Total | $2,064 | $7,384 | - As of **September 30, 2022**, total unrecognized stock-based compensation expense was approximately **$13,856,000**, expected to be recognized over a weighted average remaining period of **2.13 years**[107](index=107&type=chunk) [Note 8. Warrants](index=20&type=section&id=Note%208.%20Warrants) As of September 30, 2022, the company had 789,358 common stock warrants outstanding from a December 2017 issuance, with an exercise price of $9.38 per share, expiring on December 26, 2022. Another tranche of warrants expired in June 2022 Outstanding Warrants | Tranche | Dec 31, 2021 | Sep 30, 2022 | | :------------------------------------ | :----------- | :----------- | | Warrant Issued June 15, 2015- Tranche 1 | 62,611 | 0 | | Warrant Issued December 27, 2017- Tranche 2 | 789,358 | 789,358 | | Total | 851,969 | 789,358 | - The remaining outstanding warrants (Tranche 2) have an exercise price of **$9.38 per share** and expire on **December 26, 2022**[116](index=116&type=chunk) [Note 9. Collaboration Revenue](index=21&type=section&id=Note%209.%20Collaboration%20Revenue) The company recognizes collaboration revenue under ASC 606 from license and R&D services, primarily from agreements with Merck and LG Chem. Revenue decreased significantly in 2022 due to the expiration of the Merck agreement and completion of the research phase with LG Chem - The company recognizes collaboration revenue under ASC 606, typically including promises related to licenses to intellectual property and research and development services[120](index=120&type=chunk) - The research collaboration term under the Merck Collaboration Agreement expired on **December 31, 2021**, and the research phase under the LG Chem collaboration was substantially complete on **March 31, 2022**[129](index=129&type=chunk)[134](index=134&type=chunk) Collaboration Revenue by Partner | Collaboration | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Merck | $0 | $293 | $0 | $1,762 | | LG Chem | $68 | $2,102 | $1,094 | $4,925 | | Total | $68 | $2,395 | $1,094 | $6,687 | - To date, the company has not recognized any development, regulatory or commercial milestones or royalty revenue resulting from any of its collaboration arrangements[122](index=122&type=chunk) [Note 10. Commitments and Contingencies](index=24&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) The company's primary commitments include the Einstein License Agreement, requiring potential milestone payments up to $1.85 million per product/indication and $5.75 million for cumulative sales. There are no accruals for contingent liabilities, and no material legal proceedings are ongoing - The Einstein License Agreement requires the company to make significant payments based upon the achievement of certain milestones[137](index=137&type=chunk) - Aggregate milestone payments under the Einstein License Agreement could reach up to **$1.85 million** for each product/indication and up to **$5.75 million** for cumulative sales of all Licensed Products[137](index=137&type=chunk) - As of **September 30, 2022**, the company was not a party to any legal proceedings or threatened legal proceedings that would have a material adverse effect on its business[141](index=141&type=chunk) [Note 11. Leases](index=24&type=section&id=Note%2011.%20Leases) The company accounts for leases under ASC 842, recording right-of-use assets and corresponding lease liabilities. It terminated its Cambridge office/lab lease in April 2022, recording a $258,000 gain, and relocated its headquarters to new premises in Boston, incurring new lease liabilities - The company accounts for leases under ASC 842, which requires recording a right-of-use asset and a corresponding lease liability for most lease arrangements[142](index=142&type=chunk) - The Laboratory and Office Lease in Cambridge, Massachusetts, was terminated effective **April 30, 2022**, resulting in a gain on right-of-use asset termination of approximately **$258,000** for the nine months ended **September 30, 2022**[150](index=150&type=chunk) - The company relocated its corporate headquarters to 40 Guest Street, Boston, Massachusetts, under a new License Agreement commencing **April 15, 2022**, with a monthly rental rate of **$200,700** for the first year[150](index=150&type=chunk)[151](index=151&type=chunk) Operating Lease Balances | Metric | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Operating lease right-of-use asset | $9,561 | $9,810 | | Current operating lease liability | $3,335 | $4,932 | | Long-term operating lease liability | $6,321 | $5,121 | [Note 12. Subsequent Events](index=27&type=section&id=Note%2012.%20Subsequent%20Events) On November 14, 2022, the company entered into a private placement agreement to issue 7,656,966 shares of common stock and 1,531,440 pre-funded warrants, along with accompanying warrants for up to 9,188,406 additional shares, expecting to raise approximately $30 million in gross proceeds - On **November 14, 2022**, the company entered into securities purchase agreements for a private placement of **7,656,966** shares of common stock and **1,531,440** pre-funded warrants, with accompanying warrants for up to **9,188,406** additional shares[157](index=157&type=chunk) - The private placement is expected to generate aggregate gross proceeds of approximately **$30 million**[220](index=220&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting its strategic focus on oncology programs, clinical trial progress, the impact of the COVID-19 pandemic, and liquidity management, including recent financing activities and future funding requirements [Overview](index=28&type=section&id=Overview) The company is a clinical-stage biopharmaceutical company developing Immuno-STAT™ T cell engager biologics, prioritizing its CUE-100 series for oncology. It aims to selectively modulate tumor-specific T cells to treat cancer while seeking third-party support for non-oncology programs. The company has no commercial revenue and requires additional capital - The company is a clinical-stage biopharmaceutical company developing a novel class of T cell engager biologics, Immuno-STAT™ (Selective Targeting and Alteration of T Cells) platform[160](index=160&type=chunk) - The company is currently prioritizing and strategically focusing on drug product candidates for treating cancer in its CUE-100 series, which exploits rationally engineered interleukin 2 (IL-2)[160](index=160&type=chunk) - The company is actively seeking third-party support through partnerships or alternative funding structures to further develop its programs outside of oncology (CUE-200, CUE-300, and CUE-400 series)[160](index=160&type=chunk) - The company has not yet commenced any commercial revenue-generating operations, has limited cash flows from operations, and will need to access additional capital[160](index=160&type=chunk) [Our Pipeline of Immuno-STAT T Cell Engagers](index=28&type=section&id=Our%20Pipeline%20of%20Immuno-STAT%20T%20Cell%20Engagers) The company is making significant progress with its IL-2-based CUE-100 series for oncology, with CUE-101 showing anti-tumor activity and favorable tolerability in Phase 1 monotherapy and combination trials for HPV+ HNSCC. CUE-102, targeting WT1, has initiated a Phase 1 trial, and new platforms like Neo-STAT™ and RDI-STAT are being developed to expand targeting capabilities - CUE-101, the most advanced clinical stage asset, is currently being dosed in a Phase 1b monotherapy trial for HPV-driven R/M HNSCC and a Phase 1 combination trial with KEYTRUDA®[163](index=163&type=chunk) - CUE-101 as a monotherapy demonstrated a confirmed partial response lasting over **42 weeks** and seven patients with durable stable disease, with an observed increased trend in median overall patient survival approaching greater than **12 months** (**13.3 months**)[163](index=163&type=chunk) - CUE-101 received Fast Track Designation for the treatment of R/M HPV+ HNSCC as a monotherapy and in combination with KEYTRUDA[165](index=165&type=chunk) - In combination with KEYTRUDA, CUE-101 showed an initial overall response rate (ORR) of **40%** in **10** evaluable patients at the RP2D, with two confirmed ongoing PRs and two unconfirmed PRs (later confirmed)[165](index=165&type=chunk) - CUE-102, targeting Wilms' tumor-1 protein (WT1), received IND acceptance in **April 2022** and has initiated a Phase 1 monotherapy dose-escalation trial for WT1-positive recurrent/metastatic gastric, pancreatic, ovarian, and colorectal cancers[169](index=169&type=chunk) - The company is developing Neo-STAT™ (peptide-less HLA molecules for flexible targeting) and RDI-STAT (targeting moiety on Fc fragment to redirect anti-viral T cells to tumors) to address cancer heterogeneity and immune escape mechanisms[169](index=169&type=chunk) [The COVID-19 Pandemic](index=31&type=section&id=The%20COVID-19%20Pandemic) The COVID-19 pandemic has caused supply chain disruptions for lab supplies and delays with contract research organizations (CROs), including a six-week delay in CUE-102 GMP material manufacturing, which pushed back its IND filing - The COVID-19 pandemic has caused supply chain disruptions for lab supplies and delays with contract research organizations (CROs)[170](index=170&type=chunk) - The manufacture of CUE-102 drug product candidate GMP material was delayed by approximately **six weeks** due to the Defense Production Act, impacting its IND filing date[170](index=170&type=chunk) [Plan of Operation](index=31&type=section&id=Plan%20of%20Operation) The company is in the development phase, focusing on R&D to advance its Immuno-STAT platform and drug candidates. Its strategy includes early-stage clinical development, extensive patent protection, and seeking strategic partnerships for later-stage development and commercialization - The majority of the company's business activities are devoted to furthering research and development of its Immuno-STAT platform[172](index=172&type=chunk) - A fundamental part of the corporate development strategy is to establish strategic partnerships with pharmaceutical or biotechnology organizations for more extensive, later stages of clinical development[172](index=172&type=chunk) [Critical Accounting Estimates and Significant Judgments](index=32&type=section&id=Critical%20Accounting%20Estimates%20and%20Significant%20Judgments) The company's financial statements rely on estimates and assumptions, particularly for collaboration revenue, potential liabilities, stock-based compensation, deferred tax assets, and long-lived assets. No material changes to these critical accounting policies occurred during the reported period - The preparation of financial statements requires making estimates and assumptions that affect reported amounts, including collaboration revenue, potential liabilities, stock-based compensation, deferred tax assets, and long-lived assets[173](index=173&type=chunk) - There were no material changes to the company's critical accounting policies and estimates during the **three** and **nine months** ended **September 30, 2022**[174](index=174&type=chunk) [Recent Accounting Pronouncements and Adopted Standards](index=32&type=section&id=Recent%20Accounting%20Pronouncements%20and%20Adopted%20Standards) This section refers to Note 2 of the consolidated financial statements for a discussion of recent accounting pronouncements - A discussion of recent accounting pronouncements is included in Note 2 to the consolidated financial statements[175](index=175&type=chunk) [Significant Contracts and Agreements Related to Research and Development Activities](index=32&type=section&id=Significant%20Contracts%20and%20Agreements%20Related%20to%20Research%20and%20Development%20Activities) The company maintains key agreements, including the Einstein License Agreement for its core technology platform and collaboration agreements with Merck and LG Chem. The Merck agreement expired in 2021, while the LG Chem agreement continues for oncology development in Asia, having generated significant upfront and milestone payments [Einstein License Agreement](index=32&type=section&id=Einstein%20License%20Agreement) The company holds an exclusive worldwide license from Albert Einstein College of Medicine for patent rights related to its core technology platform. It is required to pay royalties, annual maintenance fees, and milestone payments, and was in compliance with its obligations as of September 30, 2022 - The company holds an exclusive worldwide license from Albert Einstein College of Medicine for certain patent rights relating to its core technology platform[176](index=176&type=chunk)[177](index=177&type=chunk) - Obligations under the license include paying royalties, escalating annual maintenance fees, and significant milestone payments upon achievement of certain events[177](index=177&type=chunk) - As of **September 30, 2022**, the company was in compliance with its obligations under the Einstein License[178](index=178&type=chunk) Einstein License Agreement Fees | Period | 2022 (in thousands) | 2021 (in thousands) | | :---------------------------- | :------------------ | :------------------ | | Three months ended Sep 30 | $0 | $80 | | Nine months ended Sep 30 | $0 | $257 | [Collaboration Agreement with Merck](index=33&type=section&id=Collaboration%20Agreement%20with%20Merck) The collaboration agreement with Merck for autoimmune disease indications expired on December 31, 2021. The company received a $2.5 million upfront payment and recognized collaboration revenue from this agreement in prior periods, but none in 2022, as it is now prioritizing oncology programs - The research collaboration term under the Merck Collaboration Agreement for autoimmune disease indications expired on **December 31, 2021**[182](index=182&type=chunk) - Merck paid the company a **$2.5 million** nonrefundable up-front payment[184](index=184&type=chunk) Merck Collaboration Revenue | Period | 2022 (in thousands) | 2021 (in thousands) | | :---------------------------- | :------------------ | :------------------ | | Three months ended Sep 30 | $0 | $293 | | Nine months ended Sep 30 | $0 | $1,762 | [Collaboration Agreement with LG Chem](index=33&type=section&id=Collaboration%20Agreement%20with%20LG%20Chem) The collaboration with LG Chem focuses on oncology Immuno-STATs, granting LG Chem exclusive development and commercialization rights in certain Asian countries. The company received a $5.8 million upfront payment, a $5 million equity investment, and $6.75 million in milestone payments to date. The research phase was substantially complete by March 31, 2022, leading to a decrease in recognized revenue in 2022 - The LG Chem Collaboration Agreement grants LG Chem an exclusive license to develop, manufacture, and commercialize Immuno-STATs focused in oncology in certain Asian countries[186](index=186&type=chunk) - The company received a **$5.8 million** non-refundable upfront payment and a **$5.0 million** equity investment from LG Chem[187](index=187&type=chunk) - The company is eligible to receive up to an additional **$400.0 million** in research, development, regulatory, and commercial milestones, plus tiered single-digit percentage royalties on net sales[187](index=187&type=chunk) - Milestone payments earned to date total **$6.75 million**[134](index=134&type=chunk) LG Chem Collaboration Revenue | Period | 2022 (in thousands) | 2021 (in thousands) | | :---------------------------- | :------------------ | :------------------ | | Three months ended Sep 30 | $68 | $2,102 | | Nine months ended Sep 30 | $1,094 | $4,925 | - The majority of the research phase of the collaboration agreement was substantially complete on **March 31, 2022**[188](index=188&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) The company has not generated commercial revenue, relying on collaboration revenue which significantly decreased in 2022 due to the expiration of the Merck agreement and completion of the LG Chem research phase. Operating expenses, including general & administrative and R&D, also saw reductions - The company has not generated commercial revenue from product sales, with collaboration revenue being its primary source[191](index=191&type=chunk) - Collaboration revenue decreased by approximately **$2,327,000** for the **three months** and **$5,593,000** for the **nine months** ended **September 30, 2022**, compared to the prior year[198](index=198&type=chunk) - The decrease in collaboration revenue is attributed to the expiration of the Merck Collaboration Agreement and the completion of the research phase under the LG Chem collaboration[198](index=198&type=chunk) [Collaboration Revenue](index=35&type=section&id=Collaboration%20Revenue_Results) Collaboration revenue for the three months ended September 30, 2022, was $68,000, a significant decrease from $2,395,000 in the prior year, and for the nine months, it was $1,094,000, down from $6,687,000. This decline is attributed to the expiration of the Merck agreement and the completion of the LG Chem research phase Collaboration Revenue Summary | Period | 2022 (in thousands) | 2021 (in thousands) | Change (2022 vs 2021) (in thousands) | | :---------------------------- | :------------------ | :------------------ | :----------------------------------- | | Three months ended Sep 30 | $68 | $2,395 | $(2,327) | | Nine months ended Sep 30 | $1,094 | $6,687 | $(5,593) | - The decrease was due to the expiration of the research collaboration term under the Merck Collaboration Agreement and the completion of the research phase under the LG Chem collaboration[198](index=198&type=chunk) [General and Administrative](index=36&type=section&id=General%20and%20Administrative_Results) General and administrative expenses decreased by $597,000 for the three months and $195,000 for the nine months ended September 30, 2022, compared to the prior year, mainly due to lower stock-based compensation, professional/consulting fees, and rent General and Administrative Summary | Period | 2022 (in thousands) | 2021 (in thousands) | Change (2022 vs 2021) (in thousands) | | :---------------------------- | :------------------ | :------------------ | :----------------------------------- | | Three months ended Sep 30 | $3,528 | $4,125 | $(597) | | Nine months ended Sep 30 | $12,465 | $12,660 | $(195) | - The decrease for the **three months** was primarily due to lower stock-based compensation, professional and consulting fees, rent expense, and overhead[199](index=199&type=chunk) - The decrease for the **nine months** was primarily due to lower professional and consulting and legal expenses[201](index=201&type=chunk) [Research and Development](index=36&type=section&id=Research%20and%20Development_Results) Research and development expenses decreased by $3.717 million for the three months and $2.600 million for the nine months ended September 30, 2022, compared to the prior year. This reduction was mainly driven by lower laboratory and drug substance manufacturing costs, stock-based compensation, and licensing fees, partially offset by increased clinical trial fees for CUE-101 and CUE-102 Research and Development Summary | Period | 2022 (in thousands) | 2021 (in thousands) | Change (2022 vs 2021) (in thousands) | | :---------------------------- | :------------------ | :------------------ | :----------------------------------- | | Three months ended Sep 30 | $7,571 | $11,288 | $(3,717) | | Nine months ended Sep 30 | $27,246 | $29,846 | $(2,600) | - The decrease was primarily due to lower laboratory and drug substance manufacturing costs, stock-based compensation, other professional fees, and licensing fees[203](index=203&type=chunk)[205](index=205&type=chunk) - The nine-month decrease was offset by increased clinical trial fees related to CUE-101 and CUE-102 trials[205](index=205&type=chunk) [Gain on Right-of-use Asset Termination](index=37&type=section&id=Gain%20on%20Right-of-use%20Asset%20Termination) The company recognized a gain of $258,000 on right-of-use asset termination for the nine months ended September 30, 2022, due to the termination of its Cambridge office and laboratory lease. No such gain was recorded in the prior year Gain on Right-of-use Asset Termination Summary | Period | 2022 (in thousands) | 2021 (in thousands) | Change (2022 vs 2021) (in thousands) | | :---------------------------- | :------------------ | :------------------ | :----------------------------------- | | Three months ended Sep 30 | $0 | $0 | $0 | | Nine months ended Sep 30 | $258 | $0 | $258 | - The gain resulted from the termination of the operating lease agreement for the laboratory and office space in Cambridge, Massachusetts, effective **April 30, 2022**[208](index=208&type=chunk) [Interest Income, net](index=37&type=section&id=Interest%20Income%2C%20net) Interest income significantly increased to $200,000 for the three months and $296,000 for the nine months ended September 30, 2022, compared to $25,000 and $42,000 respectively in 2021, primarily due to higher interest yields on cash and cash equivalents Interest Income, net Summary | Period | 2022 (in thousands) | 2021 (in thousands) | Change (2022 vs 2021) (in thousands) | | :---------------------------- | :------------------ | :------------------ | :----------------------------------- | | Three months ended Sep 30 | $200 | $25 | $175 | | Nine months ended Sep 30 | $296 | $42 | $254 | - The increase was primarily due to higher interest yields on the company's cash and cash equivalents[209](index=209&type=chunk) [Interest Expense, net](index=37&type=section&id=Interest%20Expense%2C%20net) Interest expense increased to $124,000 for the three months and $355,000 for the nine months ended September 30, 2022, from zero in the prior year. This rise is mainly due to interest payments on the Silicon Valley Bank term loan and amortization of debt issuance costs, partially offset by amortization/accretion on investments Interest Expense, net Summary | Period | 2022 (in thousands) | 2021 (in thousands) | Change (2022 vs 2021) (in thousands) | | :---------------------------- | :------------------ | :------------------ | :----------------------------------- | | Three months ended Sep 30 | $124 | $0 | $124 | | Nine months ended Sep 30 | $355 | $0 | $355 | - The increase was primarily due to cash paid for interest expense related to borrowings under the Loan Agreement with Silicon Valley Bank and amortization of deferred issuance costs[210](index=210&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from equity offerings, collaboration agreements, and a term loan. As of September 30, 2022, it had $59.183 million in cash, cash equivalents, and marketable securities, expected to fund operations for at least the next 12 months. However, significant additional capital will be required for future R&D and commercialization efforts. A private placement in November 2022 is expected to raise $30 million - The company has financed its working capital requirements primarily through private and public offerings of equity securities, cash from collaboration agreements, and borrowings under the Loan Agreement[211](index=211&type=chunk) Cash, Cash Equivalents, and Marketable Securities | Metric | Sep 30, 2022 (in thousands) | | :-------------------------------------- | :-------------------------- | | Cash, cash equivalents, and marketable securities | $59,183 | - Existing cash, cash equivalents, and marketable securities as of **September 30, 2022**, are expected to fund operating requirements for at least the next **12 months**, but additional capital will be needed for future operations[230](index=230&type=chunk)[231](index=231&type=chunk) - On **November 14, 2022**, the company entered into a private placement expected to receive aggregate gross proceeds of approximately **$30 million**[220](index=220&type=chunk) [Cash Flows](index=39&type=section&id=Cash%20Flows) For the nine months ended September 30, 2022, net cash used in operating activities increased to $31.292 million, investing activities used $29.609 million (compared to providing $9.108 million in 2021), and financing activities provided $26.256 million, leading to a net decrease in cash of $34.645 million Cash Flow Activities Summary | Cash Flow Activity | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :---------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Operating activities | $(31,292) | $(28,192) | | Investing activities | $(29,609) | $9,108 | | Financing activities | $26,256 | $11,851 | | Net decrease in cash | $(34,645) | $(7,233) | [Operating Activities](index=39&type=section&id=Operating%20Activities) Cash used in operating activities increased to $31.292 million for the nine months ended September 30, 2022, primarily due to a net loss of $38.418 million and decreases in various liabilities, partially offset by non-cash adjustments like stock-based compensation and depreciation - Net cash used in operating activities was **$31,292,000** for the nine months ended **September 30, 2022**[224](index=224&type=chunk) - Cash used was primarily due to a net loss of **$38,418,000** and decreases in accrued expenses, research and development contract liability, accounts payable, and operating lease liability[224](index=224&type=chunk) - Partially offset by increases in stock-based compensation (**$7,384,000**) and depreciation and amortization (**$719,000**)[224](index=224&type=chunk) [Investing Activities](index=39&type=section&id=Investing%20Activities) Investing activities used $29.609 million in cash for the nine months ended September 30, 2022, a significant shift from providing $9.108 million in 2021. This change was mainly driven by the purchase of $29.5 million in short-term marketable securities - Net cash used in investing activities was **$29,609,000** for the nine months ended **September 30, 2022**, compared to **$9,108,000** provided in the prior year[225](index=225&type=chunk) - The decrease of **$38,717,000** in cash from investing activities was primarily due to the purchase of **$29,500,000** in short-term investments in marketable securities[225](index=225&type=chunk) [Financing Activities](index=39&type=section&id=Financing%20Activities) Financing activities provided $26.256 million in cash for the nine months ended September 30, 2022, an increase from $11.851 million in 2021. This was primarily due to $16.598 million from ATM equity offerings and $10 million from term loan borrowings - Net cash provided by financing activities was **$26,256,000** for the nine months ended **September 30, 2022**, an increase of **$14,405,000** from the prior year[226](index=226&type=chunk) - Cash from financing activities included **$16,598,000** from the sale of common stock via ATM offering and **$10,000,000** from borrowings under the Loan Agreement[226](index=226&type=chunk) [Funding Requirements](index=39&type=section&id=Funding%20Requirements) The company anticipates increased expenses for R&D, clinical trials, regulatory approvals, and public company operations. It has prioritized oncology programs and taken steps to reduce costs. While existing cash is expected to last 12 months, significant additional capital will be needed, potentially through equity offerings, debt, or partnerships, with risks of dilution or asset relinquishment - The company expects expenses to increase due to ongoing R&D, clinical trials, regulatory approvals, and operating as a public company[227](index=227&type=chunk)[228](index=228&type=chunk) - The company has prioritized its oncology programs (CUE-100 series) and is actively seeking third-party support for non-oncology programs (CUE-200, CUE-300, CUE-400 series)[229](index=229&type=chunk) - Existing cash, cash equivalents, and marketable securities as of **September 30, 2022**, are expected to fund operating requirements for at least the next **12 months**[230](index=230&type=chunk) - Additional capital will be needed, potentially through public or private equity offerings, debt financings, collaborations, or grants, which could lead to ownership dilution or relinquishing valuable rights[231](index=231&type=chunk)[234](index=234&type=chunk) [Principal Commitments](index=41&type=section&id=Principal%20Commitments) There were no material changes to the company's contractual obligations and commitments during the three and nine months ended September 30, 2022, other than entering into a new headquarters lease - No material changes to contractual obligations and commitments occurred during the **three** and **nine months** ended **September 30, 2022**, other than entering into a new headquarters lease[236](index=236&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=42&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide the information required by this Item 3[238](index=238&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=42&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022. They acknowledge inherent limitations in control systems and reported no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of **September 30, 2022**[239](index=239&type=chunk) - Management acknowledges that control systems have inherent limitations and can provide only reasonable, not absolute, assurance that objectives will be met[240](index=240&type=chunk) - There were no changes in internal control over financial reporting during the **three months** ended **September 30, 2022**, that materially affected or are reasonably likely to materially affect internal control over financial reporting[241](index=241&type=chunk) [Disclosure Controls and Procedures](index=42&type=section&id=Disclosure%20Controls%20and%20Procedures) The company's disclosure controls and procedures were evaluated and deemed effective as of September 30, 2022, ensuring timely and accurate reporting of information required by the Exchange Act - Disclosure controls and procedures are designed to ensure that information required to be disclosed in SEC reports is recorded, processed, summarized, and reported within specified time periods[239](index=239&type=chunk) - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of **September 30, 2022**[239](index=239&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=42&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Management recognizes that control systems have inherent limitations, providing only reasonable assurance against errors or fraud, as they can be circumvented by individual acts, collusion, or management override - Management does not expect that disclosure controls or internal control over financial reporting will prevent or detect all errors and all fraud[240](index=240&type=chunk) - A control system can provide only reasonable, not absolute, assurance, and can be circumvented by individual acts, collusion, or management override[240](index=240&type=chunk) [Changes in Internal Control over Financial Reporting](index=42&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No changes in internal control over financial reporting occurred during the three months ended September 30, 2022, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting - There were no changes in internal control over financial reporting during the **three months** ended **September 30, 2022**, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[241](index=241&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=43&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently a party to any material legal proceedings - The company is not currently a party to any material legal proceedings[242](index=242&type=chunk) [ITEM 1A. RISK FACTORS](index=43&type=section&id=ITEM%201A.%20RISK%20FACTORS) Investors should carefully consider the risks outlined in this report and the company's 2021 Annual Report, as these factors could materially affect the business, financial condition, results of operations, and future growth prospects - Investment in the company's securities involves risk, and investors should carefully consider the summary of principal risks in this report and the risk factors detailed in Item 1A of the **2021** Annual Report[11](index=11&type=chunk)[243](index=243&type=chunk) - If any of the risks occur, the company's business, financial condition, results of operations, and future growth prospects could be materially and adversely affected[12](index=12&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=43&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered sales of equity securities or use of proceeds to report for this period - No unregistered sales of equity securities and use of proceeds to report[244](index=244&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=43&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities to report for this period - No defaults upon senior securities to report[245](index=245&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=43&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Mine Safety Disclosures are not applicable[246](index=246&type=chunk) [ITEM 5. OTHER INFORMATION](index=43&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information to report for this period - No other information to report[247](index=247&type=chunk) [ITEM 6. EXHIBITS](index=44&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including termination agreements, rider to license agreement, certifications, and XBRL documents - Exhibits include a Termination of License Agreement, a Rider to License Agreement, Certifications (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350), and Inline eXtensible Business Reporting Language (XBRL) documents[249](index=249&type=chunk)

Financial Data and Key Metrics Changes - The company reported collaboration revenue of approximately $26,000 for Q2 2022, a significant decrease from $2.7 million in Q2 2021 [39] - Research and development expenses increased to $9.6 million in Q2 2022 from $8.8 million in Q2 2021, primarily due to higher laboratory and drug substance manufacturing costs [39] - General and administrative expenses decreased to $3.8 million in Q2 2022 from $4.3 million in Q2 2021, attributed to lower stock-based compensation and consulting fees [40] - The company ended the quarter with approximately $66.1 million in cash and cash equivalents, with working capital of approximately $60.7 million [40] Business Line Data and Key Metrics Changes - The company is focused on the CUE-100 series, with CUE-101 and CUE-102 as lead candidates, showing promising clinical activity and tolerability [18][44] - CUE-101 demonstrated clinical efficacy as a monotherapy in late-stage cancer patients, with a clinical benefit rate of approximately 40% [24] - The ongoing trials for CUE-101 and CUE-102 are expected to provide significant data for future registration studies [44] Market Data and Key Metrics Changes - The company is targeting HPV-driven cancers with CUE-101, which has shown promising results in head and neck cancer patients [14][20] - CUE-102, targeting Wilms Tumor 1, has received IND acceptance and is expected to initiate trials at a higher starting dose than CUE-101, indicating strategic advantages [17][32] Company Strategy and Development Direction - The company aims to validate and derisk the IL-2 based CUE-100 series through ongoing clinical trials, positioning itself for greater value creation for shareholders [35][44] - The development of Neo-STAT is expected to enhance production efficiencies and flexibility in personalized cancer immunotherapy [36][37] - The company is also exploring strategic partnerships to further develop its pipeline beyond oncology, including autoimmune disease treatments [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical activity of CUE-101 and its potential for registration trials, highlighting the importance of ongoing data collection [41][44] - The company anticipates several important milestones throughout the coming year, including potential registration paths for CUE-101 and CUE-102 [45][46] Other Important Information - The company has streamlined its operational footprint to focus on strategic clinical development amid constrained capital market conditions [34] - The modularity of the Immuno-STAT platform is seen as a key advantage in developing a rich repository of therapeutic molecules targeting various cancers [18] Q&A Session Summary Question: What is the median duration of treatment for CUE-101? - The median therapy duration is two cycles, similar to second-line checkpoint inhibitors [50] Question: Can you discuss post-study therapy for patients after discontinuation of CUE-101? - Data on follow-up therapies is still being collected, but some patients are doing well off all therapies [51] Question: What is the eligibility criteria for WT1 antigen positivity in CUE-102? - The eligibility requires at least 1% of tumor cells to express WT1, assessed through IHC [52] Question: Can you elaborate on the biomarker data generated, particularly regarding HPV-DNA? - The company is observing a decrease in circulating HPV-DNA, which may correlate with tumor stabilization and potential pathologic complete response [55][58] Question: Are there any mechanisms of resistance being investigated for CUE-101? - The company is still gathering data on resistance mechanisms and is considering combinations with cytotoxic therapies to enhance durability [64] Question: What is the status of the neo-adjuvant study? - The neo-adjuvant study is progressing well, with initial patient recruitment and plans for biopsy analysis [67]