Cue Biopharma(CUE) - 2021 Q4 - Annual Report

PART I Item 1. Business Cue Biopharma is a clinical-stage biopharmaceutical company focused on engineering novel injectable biologics using its Immuno-STAT™ platform to selectively modulate T cells, prioritizing oncology programs and seeking partnerships for non-oncology programs, with no commercial revenue and a need for additional capital - Cue Biopharma is a clinical-stage biopharmaceutical company developing novel injectable biologics via its Immuno-STAT™ platform to selectively engage and modulate targeted T cells[17][485] - The company is currently prioritizing its oncology programs, specifically the IL-2 based CUE-100 series, and is actively seeking third-party support for its non-oncology programs (CUE-200, CUE-300, CUE-400 series)[18][20][486] - As of the report date, the company has not commenced any commercial revenue-generating operations and has limited cash flows, indicating a need for additional capital[19][487] Overview The company is a clinical-stage biopharmaceutical firm utilizing its proprietary Immuno-STAT™ platform to develop injectable biologics for selective T cell modulation, aiming to treat cancer, chronic infectious diseases, and autoimmune conditions while minimizing broad immune activation, with current strategic focus on the CUE-100 oncology series and other programs seeking external support - The Immuno-STAT™ platform is designed to selectively engage and modulate targeted T cells directly within the patient's body, aiming to fight cancer and restore health while avoiding deleterious side effects of broad immune activation[17] - Current strategic priority is on drug product candidates for treating cancer in the CUE-100 series, which utilizes rationally engineered interleukin 2 (IL-2) within the Immuno-STAT framework[18] - Programs outside of oncology (CUE-200, CUE-300, CUE-400 series) are actively seeking third-party support through partnerships, collaborations, or alternative funding structures[18] Our Immuno-STAT Platform Pipeline The company's pipeline prioritizes the IL-2-based CUE-100 series for oncology, with CUE-101 being the most advanced clinical asset in Phase 1b monotherapy and Phase 1 combination trials for HPV-driven head and neck cancer, while other candidates include CUE-102 (targeting WT1) with an IND filing anticipated by Q1 2022, and CUE-103 (targeting KRAS G12V), with the Neo-STAT™ platform being developed for broader targeting flexibility - CUE-101, the most advanced clinical stage asset, is currently in a Phase 1b monotherapy trial and a first-line Phase 1 combination trial with KEYTRUDA® (pembrolizumab) for HPV-driven recurrent/metastatic head and neck cancer (R/M HNSCC)[21][22][23] - CUE-102, targeting Wilm's tumor protein (WT1) over-expressed in over 20 different cancers, is anticipated to have an Investigational New Drug (IND) application filed by the end of the first quarter of 2022[26][68] - The Neo-STAT™ platform is a derivative scaffold designed to provide greater flexibility for targeting multiple tumor epitopes, enhancing production efficiencies, and potentially enabling personalized neo-antigen strategies[28][75] Our Business Strategy The company's core strategy is to become a leader in highly selective biologics for immune modulation, involving advancing the IL-2-based CUE-100 oncology series through clinical trials to demonstrate selective T cell activation and anti-tumor immunity, while also seeking strategic partnerships for its non-oncology programs (CUE-200, CUE-300, CUE-400 series) - Primary objective is to become a leading biopharmaceutical company developing breakthrough, highly selective and differentiated biologics for safe and effective therapeutic immune modulation[32] - Key strategies include advancing the IL-2-based CUE-100 series for oncology to demonstrate selective and tolerable IL-2 delivery to tumor-specific T cells and expanding patient access[32] - Actively seeking strategic partnerships and collaborations or alternative funding structures for programs outside of oncology, including the CUE-200, CUE-300, and CUE-400 series[33] Our Approach The Immuno-STAT platform is designed to mimic the natural immune synapse by combining key T cell activation signals (Signal 1: peptide-MHC complex, Signal 2: co-stimulatory signals like IL-2) into a single, stable molecular scaffold, aiming for selective T cell modulation, avoiding broad immune activation, and built on an Fc backbone for stability and manufacturability - The Immuno-STAT platform's core protein framework combines key T cell activation signals (Signal 1: stabilized peptide-MHC complex, Signal 2: activating co-stimulatory signals like modified IL-2) into a singular molecular scaffold[38][39][41][43] - This design allows for selective delivery of activating signals to tumor-specific T cells, circumventing global immune activation and enabling therapeutic dosing of highly immune-activating signals such as IL-2[39][44] - Immuno-STAT molecules are manufactured using established processes similar to antibody and Fc-fusion molecules, providing modularity and structural stability via an Fc backbone[39][43] The Immuno-STAT: "Immune Responses, on Cue" The Immuno-STAT platform develops biologic drug candidates that selectively modulate antigen-specific T cells by fusing a TCR targeting pMHC complex (Signal 1) with co-stimulatory signaling molecules (Signal 2), mimicking natural immune responses, aiming to overcome challenges of systemic, non-specific immune activation and the complexities of adoptive cell therapies, offering 'off-the-shelf' biologics with targeted action and convenient administration - Immuno-STATs are designed to emulate natural immune synapse signals by fusing a TCR targeting pMHC complex (Signal 1) with co-stimulatory signaling molecules (Signal 2) for targeted T cell modulation[45] - Preliminary clinical data from the CUE-101 Phase 1 trial supports the hypothesis of selective T cell activation with corresponding antitumor activity and clinical benefit[46] - The platform offers advantages over existing immunotherapies by providing 'off-the-shelf' biologics, direct in-patient administration, specific T cell targeting, broad disease target access, standard delivery, and cost-effective production[51] Enhancing the Body's Capacity to Fight Cancer The company believes its IL-2-based CUE-100 series can overcome the limitations of non-specific T cell modulation in cancer by selectively activating and amplifying only cancer-specific immune cells directly within the patient's body, aiming to achieve therapeutically effective dose levels with better tolerability compared to broad immune activation strategies - The IL-2-based CUE-100 series aims to selectively activate and amplify cancer-specific immune cells directly in the patient's body, addressing the challenge of non-specific T cell modulation[50][51] - This selective targeting is expected to achieve well-tolerated and therapeutically effective dose levels, offering clinical advantages over competing immunotherapy approaches[50][51] IL-2 Therapy Challenges Current IL-2 therapies face challenges due to lack of selectivity and indiscriminate immune activation, leading to poor tolerability and limited therapeutic dosing, while the CUE-100 series Immuno-STATs are engineered with an affinity-attenuated IL-2 variant to selectively deliver IL-2 to tumor-specific T cells, activated only when their TCR is engaged with the Immuno-STAT's pHLA component, thus enabling specific activation and amplification of cancer-relevant T cells - Wild-type IL-2 and its variants indiscriminately engage T cells, leading to poor tolerability and limited therapeutic dosing ranges due to non-selective immune activation[52] - The CUE-100 series Immuno-STATs are engineered with an affinity-attenuated IL-2 variant, designed to selectively act only on tumor-specific T cells whose TCR is engaged to the pHLA component[53] - This concurrent signaling (HLA-epitope/TCR and IL-2 co-stimulatory) enables selective and specific activation and amplification of cancer-relevant T cells[53] CUE-101 CUE-101 is the company's lead product candidate from the CUE-100 series, designed as a fusion protein biologic to target and activate antigen-specific T cells against HPV-driven cancers, incorporating an IL-2 variant and a peptide-MHC complex (HLA-A02:01) with a dominant peptide from the HPV-16 E7 protein, a key driver of tumorigenesis - CUE-101 is a fusion protein biologic from the CUE-100 series, designed to target and activate antigen-specific T cells for HPV-driven cancers[54] - Its design includes an IL-2 variant and a pMHC composed of HLA-A02:01 complexed with a dominant peptide from the HPV-16 E7 protein, a primary driver of tumorigenesis[54] - Extensive in vitro and in vivo preclinical studies with CUE-101 have been published in Clinical Cancer Research[56] CUE-101 Clinical Development CUE-101 is undergoing multiple clinical trials for HPV-driven cancers, including a Phase 1 monotherapy trial for second-line and beyond HPV+R/M HNSCC, a Phase 1 combination trial with KEYTRUDA for first-line HPV+R/M HNSCC, and an investigator-sponsored Phase 1b neoadjuvant trial, addressing a significant unmet medical need with approximately 24,600 new cases of HPV+ head and neck, cervical, and genitoanal cancers annually in the United States - CUE-101 is currently in a Phase 1 monotherapy trial for second-line and beyond HPV+R/M HNSCC and a Phase 1 combination trial with KEYTRUDA for first-line HPV+R/M HNSCC[57] - An investigator-sponsored Phase 1b neoadjuvant trial for locally advanced HPV+ HNSCC patients was initiated in the second half of 2021[57] - HPV+ cancers represent a significant unmet medical need, with approximately 24,600 cases and 9,000 deaths annually in the United States[58] Phase 1 Monotherapy Trial of CUE-101 The Phase 1 monotherapy trial of CUE-101 for HPV+R/M HNSCC completed its dose escalation phase in June 2021, with no maximum tolerated dose identified across seven cohorts, demonstrating a favorable tolerability profile, and the expansion stage is enrolling patients at the 4 mg/kg recommended Phase 2 dose (RP2D), with preliminary results from 14 evaluable patients at RP2D showing one confirmed partial response lasting over 36 weeks and six patients with stable disease for at least 12 weeks, alongside an observed trend of enhanced overall survival - The dose escalation portion of the Phase 1 monotherapy trial for CUE-101 completed in June 2021, treating 38 patients across seven cohorts (0.06mg/kg to 8mg/kg) without identifying a maximum tolerated dose (MTD)[59] - At the recommended Phase 2 dose (RP2D) of 4 mg/kg, 14 evaluable patients showed one confirmed partial response (PR) lasting over 36 weeks and six patients with confirmed stable disease (SD) lasting at least 12 weeks[59] - Preliminary safety data from 45 patients as of January 25, 2022, indicates CUE-101 is well tolerated at RP2D, with common adverse events (fatigue, anemia, decreased lymphocyte counts) consistent with IL-2 administration or CPIs, and no observations of capillary leak syndrome or severe cytokine storm[60][63] Phase 1 Trial of CUE-101 in Combination with KEYTRUDA The Phase 1 combination trial of CUE-101 with KEYTRUDA for first-line R/M HNSCC, initiated in Q4 2020, has shown encouraging early signs of activity, with no dose-limiting toxicities observed across three cohorts, and three out of three patients in cohort two (2 mg/kg) demonstrated reductions in target tumor lesions, with two patients in dose escalation (cohorts two and three) having ongoing, confirmed partial responses - The Phase 1 combination trial of CUE-101 with KEYTRUDA for first-line R/M HNSCC was initiated in Q4 2020, with the first patient dosed in Q1 2021[65] - No dose-limiting toxicities have been observed in the three cohorts to date[65] - Early signs of activity include reductions in target tumor lesions for three out of three patients in cohort two (2 mg/kg) and two ongoing, confirmed partial responses among four patients treated in dose escalation (cohorts two and three)[65] Other Applications of Immuno-STATs to Oncology The Immuno-STAT platform's modularity is being leveraged to develop additional oncology candidates like CUE-102 and CUE-103, and the Neo-STAT platform, to address tumor heterogeneity and escape mechanisms, with Neo-STAT, with its 'empty' MHC pocket, offering flexibility for targeting multiple tumor antigens, neo-antigens, and post-translationally modified antigens, potentially enhancing production efficiency and enabling personalized cancer immunotherapy - The Immuno-STAT platform's modularity and versatility are being leveraged to design and develop additional Immuno-STATs, including CUE-102 and CUE-103, to address tumor heterogeneity and escape mechanisms[67] - The Neo-STAT™ platform, a derivative scaffold with a stable 'peptide-less' MHC pocket, allows for chemical attachment of defined peptides post-manufacturing, offering greater flexibility for targeting multiple tumor epitopes and potentially personalized neo-antigen strategies[67][75] - Significant progress has been made with the Neo-STAT platform, including feasibility proof of concept and experimental data demonstrating activation and expansion of primary human T cells with HLA-A02 Neo-STAT molecules[76] CUE-102 CUE-102, part of the CUE-100 series, utilizes the same framework as CUE-101 but targets the Wilm's tumor protein (WT1), an oncofetal antigen over-expressed in over 20 different cancers, with preclinical data supporting selective WT1-specific T cell activation, expansion, and cytotoxic killing, and an IND filing for CUE-102 is anticipated by the end of Q1 2022 - CUE-102 leverages the CUE-101 framework but targets WT1, an oncofetal antigen over-expressed in more than 20 different cancers, including solid tumors and hematologic malignancies[68] - Preclinical data demonstrates ex-vivo expansion of WT1-specific T cells from human donors and in vivo expansion in transgenic mice, along with polyfunctional effector function and cytotoxic killing of target cells[69] - An Investigational New Drug (IND) application for CUE-102 is anticipated to be filed by the end of the first quarter of 2022[68] CUE-103 CUE-103 is a CUE-100 series Immuno-STAT being developed to target the KRAS G12V mutation, a primary tumor driver mutation found in various solid tumor types like colorectal, lung, and pancreatic cancers, with preclinical data demonstrating the feasibility of producing HLA-A11 Immuno-STATs with functional engagement and activity on targeted T cells specific for the G12V mutation, highlighting the platform's modularity - CUE-103 is a CUE-100 series Immuno-STAT targeting the KRAS G12V mutation, associated with many solid tumor types including colorectal carcinoma, lung cancer, and pancreatic cancer[74] - Preclinical data presented at SITC 2020 suggested the feasibility of producing HLA-A11 Immuno-STATs with functional engagement and activity on targeted T cells specific for the G12V mutation[74] - The development of CUE-103 underscores the modularity of the Immuno-STAT platform by extending its application to additional HLA alleles and modifying targeting epitopes[74] Neo-STAT Platform The Neo-STAT™ platform is a next-generation derivative of the CUE-100 series, featuring a 'peptide-less' MHC pocket that allows for covalent attachment of defined peptides post-manufacturing, designed to significantly enhance productivity, increase flexibility for targeting multiple tumor antigens (including neo-antigens and post-translationally modified antigens), and potentially enable personalized neo-antigen strategies in cancer immunotherapy, with feasibility proof-of-concept achieved, demonstrating T cell activation with various epitopes - The Neo-STAT™ platform is a next-generation derivative approach designed to enhance productivity and flexibility by generating a 'peptide-less' MHC pocket within the Immuno-STAT scaffold for post-manufacturing peptide conjugation[75] - This platform has the potential to target multiple tumor antigens, neo-antigens, and post-translationally modified antigens, and could enable personalized neo-antigen strategies in cancer immunotherapy[75] - Significant progress includes feasibility proof of concept, creation of a master cell line, and experimental data demonstrating expansion and activation of primary human T cells with HLA-A02 Neo-STAT molecules deploying different T cell epitopes[76] Application of Immuno-STATs Outside of Oncology: CUE-200, CUE-300 and CUE-400 Beyond oncology, the Immuno-STAT platform has developed three additional biologic series: CUE-200 for chronic infectious diseases (targeting T cell exhaustion), CUE-300 for autoimmune diseases with known autoantigens (incorporating PD-L1 co-modulator), and CUE-400 for autoimmune diseases with diverse/unknown autoantigens (expanding induced regulatory T cells), but due to strategic prioritization on oncology, the company is actively seeking third-party support for these non-oncology programs - The CUE-200 series focuses on cell surface receptors (CD80 and/or 4-1BBL) to address T cell exhaustion in chronic infections[31] - The CUE-300 series for autoimmune diseases incorporates the inhibitory PD-L1 co-modulator for selective inhibition of autoreactive T cells, with data generated through a collaboration with Merck[31][80] - The CUE-400 series, also for autoimmune diseases, represents novel bispecific molecules designed to selectively expand induced regulatory T cells (iTregs), with CUE-401 incorporating IL-2 and TGF-beta[31][82] - Due to strategic focus on oncology, the company is actively seeking third-party support (partnerships, collaborations, or alternative funding) to further develop these non-oncology programs[31][84] Our License Agreement with Einstein The company holds an exclusive worldwide license from Albert Einstein College of Medicine (Einstein License) for patent rights related to its core Immuno-STAT technology platform, which is a royalty-bearing license including milestone payments (up to $1.85 million per product/indication, $5.75 million cumulative sales) and annual maintenance fees, and the company issued 671,572 shares of common stock to Einstein and is obligated to meet specific diligence milestones, all of which have been met as of the report date - The company holds an exclusive worldwide, royalty-bearing license from Albert Einstein College of Medicine for patent rights related to its core technology platform for engineering biologics to control T cell activity[85][86] - Milestone payments can aggregate up to $1.85 million for each Licensed Product and new indication, plus up to $5.75 million for cumulative sales of all Licensed Products, with a $150,000 milestone payment made for CUE-101 IND approval[87] - The company is obligated to meet certain due diligence milestones, including initiating clinical trials and submitting FDA applications, and has met all required milestones as of the report date[93][94] Our Collaboration Agreement with Merck The company entered into an exclusive patent license and research collaboration agreement with Merck in November 2017 to research and develop Immuno-STAT drug product candidates for certain autoimmune disease indications, with Merck providing a $2.5 million upfront payment and the company eligible for up to $371 million in research, development, regulatory, and commercial milestones, plus tiered royalties, and the research collaboration term expired on December 31, 2021, with discussions ongoing for a potential path forward - An exclusive patent license and research collaboration agreement was established with Merck in November 2017 for autoimmune disease indications, with Merck funding further development of selected Immuno-STAT candidates[95] - The company received a $2.5 million upfront payment and is eligible for up to $101 million in R&D milestones, $120 million in regulatory milestones, and $150 million in commercial milestones, in addition to tiered single-digit royalties[98] - The research collaboration term was extended through December 31, 2021, and has since expired, with ongoing discussions with Merck to define a clinical candidate[100] Our Collaboration Agreement with LG Chem The company has a collaboration, license, and option agreement with LG Chem (November 2018) for oncology Immuno-STATs, granting LG Chem an exclusive license to develop, manufacture, and commercialize CUE-101 and two additional cancer antigens (WT1 selected) in the LG Chem Territory (Asia/Australia), while the company retains US and global rights, and LG Chem made a $5.0 million upfront payment and a $5.0 million equity investment, with potential for up to $400 million in milestones and tiered single-digit royalties, and the company has earned $6.75 million in milestones to date under this agreement - A collaboration, license, and option agreement with LG Chem (effective November 6, 2018) grants LG Chem exclusive rights to develop, manufacture, and commercialize CUE-101 and two additional cancer antigens (WT1 selected) in the LG Chem Territory (Australia, Japan, Republic of Korea, Singapore, Malaysia, Vietnam, Thailand, Philippines, Indonesia, China, Taiwan)[101][102][108] - LG Chem provided a $5.0 million non-refundable upfront payment and purchased approximately $5.0 million of the company's common stock[103] - The company is eligible to receive additional aggregate payments of approximately $400 million for research, development, regulatory, and commercial milestones, plus tiered single-digit royalties on net sales in the LG Chem Territory, with milestones earned including $2.5 million (CUE-101 IND acceptance), $1.25 million (preclinical candidate selection), and $3.0 million (clinical product candidate confirmation)[103][105] Our Intellectual Property The company's business relies heavily on its intellectual property, including 76 issued patents and numerous pending applications (52 US, 20 PCT, 190 foreign) covering its Immuno-STAT and Neo-STAT platforms, specific biologics, and treatment methods, with these patents set to expire no earlier than 2033-2042, and Cue products protected until at least December 2037, and the company actively protects its IP through patents, trade secrets, and confidentiality agreements, but acknowledges risks of challenges, circumvention, and varying international protection - As of December 31, 2021, the company owned or licensed 76 issued patents, 52 pending U.S. patent applications, 20 pending international PCT applications, and 190 pending foreign patent applications[109] - These intellectual property rights protect the Immuno-STAT platform, Neo-STAT platform, CAR-T and ex-vivo applications, RDI-STAT platform, specific biologic molecules, drug product candidates, and methods of treatment[109] - Granted patents generally have a term of 20 years from their U.S. non-provisional priority filing date, with those specifically covering Cue products expiring no earlier than December 2037, subject to extensions[111] Competition The biopharmaceutical industry is highly competitive, with the company facing rivals from established pharmaceutical and biotechnology firms, academic institutions, and government agencies, and competitors are developing various immunotherapy technologies, including bi-specific antibodies, cell therapies, antibody-drug conjugates, immune checkpoint inhibitors, and modified cytokines, and the company believes its antigen-specific targeting of cytokines, coupled with genetically modified IL-2, provides a competitive advantage, but acknowledges the risk of new products, price competition, and the need to demonstrate superior efficacy, convenience, tolerability, or safety - The company faces significant competition from established and emerging pharmaceutical and biotechnology companies, academic institutions, and governmental agencies[112] - Competitors are developing various immunotherapy technologies, including bi-specific antibodies, cell therapies, antibody-drug conjugates, immune checkpoint inhibitors, and modified cytokines[113] - The company believes its approach of antigen-specific targeting of cytokines, such as IL-2, by engineering proteins with a peptide-MHC targeting moiety coupled to genetically modified cytokines, provides a competitive advantage[113] Government Regulation and Licensure of Products The company's products are subject to extensive government regulation in the United States (FDA) and internationally (e.g., European Union), covering all stages from research and development to commercialization, including stringent requirements for preclinical and clinical testing, manufacturing (GMP), marketing approval (BLA/MAA), post-approval monitoring, and pricing/reimbursement, with various expedited review programs existing but not guaranteeing approval, and compliance with these complex and evolving regulations, including those for orphan drugs, biosimilars, and companion diagnostics, is critical and resource-intensive, with non-compliance leading to significant penalties - Pharmaceutical products, including biologics, are extensively regulated by government authorities in the United States (FDA) and other countries (e.g., European Union) across all stages from research to commercialization[120] - The regulatory process involves preclinical testing (GLP), manufacturing under GMP, IND applications, IRB approval, multi-phase clinical trials (GCP), BLA/MAA submissions, and post-approval compliance, requiring substantial time and financial resources[121] - Expedited review programs (Fast Track, Breakthrough Therapy, Priority Review, Accelerated Approval, Regenerative Advanced Therapy) exist but do not change approval standards or guarantee faster review[161][162][165] Human Capital As of December 31, 2021, the company had 57 full-time and two part-time employees, primarily located in Cambridge, Massachusetts, and emphasizes a workplace culture of respect, collaboration, and integrity, focusing on attracting, developing, and retaining diverse talent through competitive benefits and professional development, and in response to the COVID-19 pandemic, safety protocols such as remote work and travel restrictions were implemented and largely remained in place during 2021 - As of December 31, 2021, the company had 57 full-time and two part-time employees, with most located in Cambridge, Massachusetts[245] - The company is committed to fostering a workplace that encourages respect, collaboration, communication, transparency, and integrity, and focuses on attracting, developing, and retaining diverse talent[246] - During 2020 and 2021, additional safety protocols were implemented due to the COVID-19 pandemic, including remote working standards, non-essential travel pauses, and limits on in-person meetings[247] Status as an Emerging Growth Company The company is classified as an "emerging growth company" (EGC) under the JOBS Act and will retain this status until December 31, 2022, having irrevocably opted out of the extended transition period for new accounting standards but benefiting from other EGC provisions, such as exemptions from auditor attestation for internal controls and reduced executive compensation disclosure, and is also a "smaller reporting company," which provides similar reduced disclosure obligations - The company is an "emerging growth company" (EGC) as defined by the JOBS Act and will remain so until December 31, 2022[248][448] - It has irrevocably elected to opt out of the extended transition period for complying with new or revised financial accounting standards[250][449] - As an EGC, the company benefits from reduced disclosure obligations, including exemption from auditor attestation requirements for internal control over financial reporting and reduced executive compensation disclosure[250][448] Item 1A. Risk Factors The company faces significant risks inherent to a clinical-stage biopharmaceutical company, including a history of operating losses and no commercial revenue, substantial dependence on the success of its limited clinical-stage drug candidates, and challenges in securing additional financing, with operational risks including the impact of the COVID-19 pandemic, potential adverse events in clinical trials, intense competition, reliance on third-party CROs and CMOs, and the need to protect intellectual property, and extensive government regulation, healthcare reform, and compliance with various laws (e.g., anti-kickback, HIPAA) also posing substantial risks to its business, financial condition, and future profitability - The company is a clinical-stage biopharmaceutical company with no history of commercial revenue, a history of operating losses (accumulated deficit of approximately $197.4 million as of December 31, 2021), and may never achieve profitability[253][254] - The business is substantially dependent on the success of its drug product candidates, with only CUE-101 currently in clinical trials, and significant additional R&D and clinical testing are required for regulatory approval and commercialization[260][261] - Key risks include potential adverse events or toxicities in clinical trials, significant competition from other biopharmaceutical companies, reliance on third parties for clinical trials and manufacturing, and the inability to protect intellectual property[272][300][311][323] - The company is subject to extensive government regulation, including the lengthy and unpredictable marketing approval process, potential competition from biosimilars, and compliance with healthcare fraud and abuse laws, which could lead to substantial penalties[351][364][394] - Future losses and negative cash flow are anticipated, requiring additional financing which may dilute stockholders, restrict operations, or encumber assets, and the company's loan agreement with Silicon Valley Bank imposes covenants and restrictions[436][437][438][439][444][445] Item 1B. Unresolved Staff Comments This section indicates that there are no unresolved staff comments from the SEC regarding the company's previous filings Item 2. Properties The company's principal office and laboratory facilities are located in Cambridge, Massachusetts, encompassing approximately 19,900 square feet, with the lease for this space extended in October 2021 to March 2024, with monthly rental rates increasing from $375,000 to $388,000, and additionally, the company leases three procedure and holding rooms for approximately $61,000 per month until June 2022 - The company's principal office and laboratory space in Cambridge, Massachusetts, covers approximately 19,900 square feet[476] - The lease term for the principal space was extended in October 2021 from June 2022 to March 2024[476] - Monthly rental rates for the principal space are $375,000 until June 2022, increasing to $388,000 for the remainder of the term, and additional laboratory space costs approximately $61,000 per month until June 2022[476] Item 3. Legal Proceedings The company is not currently involved in any pending legal proceedings that are expected to have a material adverse effect on its business or financial condition, but it may, however, encounter various claims and legal actions in the ordinary course of business - The company is not currently a party to any pending legal proceedings that are believed to have a material adverse effect on its business or financial conditions[477] - The company may be subject to various claims and legal actions arising in the ordinary course of business from time to time[477] Item 4. Mine Safety Disclosures This item is not applicable to the company PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock has been listed on the Nasdaq Capital Market under the symbol "CUE" since January 2, 2018, with approximately 51 registered holders as of March 7, 2022, and the company has never paid cash dividends and does not anticipate doing so in the foreseeable future, intending to reinvest earnings into the business, with dividend payments currently restricted by the terms of its Loan Agreement - The company's common stock has been listed on the Nasdaq Capital Market under the symbol "CUE" since January 2, 2018[480] - As of March 7, 2022, there were approximately 51 registered holders of the company's common stock[481] - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future, planning to reinvest all earnings into the business, and its ability to pay dividends is currently restricted by the Loan Agreement[482][460] Item 6. [Reserved.] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of the company's financial condition and operational results, highlighting its status as a clinical-stage biopharmaceutical company focused on oncology, with ongoing R&D and clinical trials, detailing the impact of the COVID-19 pandemic on operations and supply chain, outlining critical accounting policies, and discussing significant collaboration agreements with Merck and LG Chem, with the company reporting an increase in collaboration revenue but also higher operating expenses, resulting in a net loss, and liquidity primarily from equity offerings and collaboration payments, with existing cash expected to fund operations for the next 12 months, though additional capital will be needed - The company is a clinical-stage biopharmaceutical company prioritizing oncology programs (CUE-100 series) and seeking third-party support for non-oncology programs[485][486] - The COVID-19 pandemic caused supply chain disruptions and delayed CUE-102 GMP manufacturing, impacting its IND filing date[489] - Collaboration revenue increased significantly in 2021, primarily due to cost sharing and a $3.0 million milestone from the LG Chem Collaboration Agreement[542] Consolidated Statements of Operations and Comprehensive Loss (Years Ended December 31) | Metric | 2021 (USD) | 2020 (USD) | |:---|:---|:---| | Collaboration revenue | $14,941,370 | $3,154,325 | | General and administrative expenses | $17,306,678 | $14,651,205 | | Research and development expenses | $41,346,765 | $33,545,705 | | Total operating expenses | $58,653,443 | $48,196,910 | | Loss from operations | $(43,712,073) | $(45,042,585) | | Interest income, net | $45,898 | $463,914 | | Provision for income taxes | $(495,000) | $(206,250) | | Net loss | $(44,161,175) | $(44,784,921) | | Comprehensive loss | $(44,168,306) | $(44,767,469) | | Net loss per common share – basic and diluted | $(1.41) | $(1.56) | | Weighted average common shares outstanding – basic and diluted | 31,285,418 | 28,688,625 | - The company's cash, cash equivalents, and marketable securities totaled approximately $64.4 million at December 31, 2021, down from $84.9 million at December 31, 2020, and management believes existing cash resources are sufficient for at least the next 12 months, but additional capital will be needed for future operations[553][573][574] Overview Cue Biopharma is a clinical-stage biopharmaceutical company focused on developing injectable biologics using its Immuno-STAT™ platform to selectively modulate T cells for cancer, chronic infectious diseases, and autoimmune disorders, with the company prioritizing its CUE-100 oncology series and actively seeking partnerships for its non-oncology programs, and it has not yet generated commercial revenue and requires additional capital for growth - The company is a clinical-stage biopharmaceutical company engineering novel injectable biologics to selectively engage and modulate targeted T cells using its Immuno-STAT™ platform[485] - Current strategic focus is on drug product candidates for treating cancer in the CUE-100 series, while actively seeking third-party support for non-oncology programs (CUE-200, CUE-300, CUE-400 series)[486] - The company has not yet commenced commercial revenue-generating operations, has limited cash flows, and will need additional capital to fund its growth and ongoing business[487] The COVID-19 Pandemic The COVID-19 pandemic led the company to implement precautionary measures like remote work and travel restrictions, and while these actions have not significantly impacted productivity, the company experienced supply chain disruptions for lab supplies, and notably, the manufacturing of GMP material for the CUE-102 drug candidate was delayed by approximately six weeks due to the Defense Production Act, pushing its IND filing from Q4 2021 to Q1 2022 - The company implemented precautionary measures due to COVID-19, including remote working standards and travel restrictions, which have not significantly impacted productivity or operations[488] - Supply chain disruptions for lab supplies used in preclinical research have been experienced[489] - Manufacture of GMP material for the CUE-102 drug product candidate was delayed by approximately six weeks due to the Defense Production Act, shifting its anticipated IND filing from Q4 2021 to Q1 2022[489] Plan of Operation As a development-stage company, the majority of its activities are dedicated to research and development, with the plan to maximize the value of Immuno-STAT drug candidates through R&D, early-stage clinical development, and strategic partnerships for later clinical stages, alongside robust patent protection - As a development-stage company, the majority of business activities are devoted to furthering research and development[492] - The company intends to maximize the value of its Immuno-STAT drug product candidates by focusing on research, testing, optimization, pilot studies, early-stage clinical development, and potentially partnering for later clinical stages[490] - A fundamental part of the corporate development strategy is to establish strategic partnerships with leading pharmaceutical or biotechnology organizations[493] Critical Accounting Policies and Significant Judgments and Estimates The preparation of financial statements requires management to make significant estimates and assumptions, particularly in revenue recognition (ASC 606), research and development costs, stock-based compensation, and income taxes (ASC 740), with these estimates, based on historical experience and forecasts, affecting reported asset/liability amounts and revenue/expense recognition, and no material changes to critical accounting policies occurred in 2021 - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions affecting reported amounts of assets, liabilities, revenue, and expenses[494] - Critical accounting policies include revenue recognition (ASC 606), research and development costs, stock-based compensation, and income taxes (ASC 740)[495][496][499][503][509] - There were no material changes to the company's critical accounting policies and estimates as of December 31, 2021[495] Significant Contracts and Agreements Related to Research and Development Activities The company has significant R&D agreements, including an exclusive license with Albert Einstein College of Medicine for its core technology, requiring milestone payments and annual fees, and collaboration agreements with Merck (for autoimmune diseases) and LG Chem (for oncology) involve upfront payments, potential milestones, and royalties, with the Merck agreement's research term expiring in December 2021, while the LG Chem agreement has yielded several milestone payments and ongoing cost-sharing - The Einstein License Agreement grants the company exclusive worldwide rights to its core technology platform, requiring significant milestone payments and annual maintenance fees[514][515] - The Merck Collaboration Agreement, for autoimmune disease programs, provided a $2.5 million upfront payment and potential milestones up to $371 million, and its research term expired on December 31, 2021[521][523][526] - The LG Chem Collaboration Agreement, for oncology Immuno-STATs in Asian markets, included a $5.8 million upfront payment and $5.0 million equity investment, with potential milestones up to $400 million, and the company recognized approximately $12.8 million in revenue from this agreement in 2021[528][530][533] Results of Operations For the years ended December 31, 2021 and 2020, the company reported a net loss of approximately $44.16 million and $44.78 million, respectively, with collaboration revenue significantly increasing to $14.94 million in 2021 from $3.15 million in 2020, driven by the LG Chem agreement, and operating expenses also rose, with general and administrative expenses increasing to $17.31 million and research and development expenses to $41.35 million in 2021, primarily due to higher compensation, professional fees, and lab costs, and interest income decreased substantially due to marketable securities maturing Consolidated Statements of Operations and Comprehensive Loss (Years Ended December 31) | Metric | 2021 (USD) | 2020 (USD) | |:---|:---|:---|\n| Collaboration revenue | $14,941,370 | $3,154,325 | | General and administrative expenses | $17,306,678 | $14,651,205 | | Research and development expenses | $41,346,765 | $33,545,705 | | Total operating expenses | $58,653,443 | $48,196,910 | | Loss from operations | $(43,712,073) | $(45,042,585) | | Interest income, net | $45,898 | $463,914 | | Provision for income taxes | $(495,000) | $(206,250) | | Net loss | $(44,161,175) | $(44,784,921) | | Comprehensive loss | $(44,168,306) | $(44,767,469) | | Net loss per common share – basic and diluted | $(1.41) | $(1.56) | | Weighted average common shares outstanding – basic and diluted | 31,285,418 | 28,688,625 | - Collaboration revenue increased by approximately $11.787 million in 2021, primarily due to cost sharing and a $3.0 million milestone from the LG Chem Collaboration Agreement[542] - General and administrative expenses increased by approximately $2.656 million in 2021, mainly due to higher stock-based compensation, professional fees, and employee/board compensation[543] - Research and development expenses increased by approximately $7.801 million in 2021, driven by higher laboratory and drug substance manufacturing costs, employee/advisory board compensation, and other professional fees[546] Liquidity and Capital Resources The company's liquidity is primarily supported by equity offerings, collaboration agreements, and a loan from Silicon Valley Bank, and as of December 31, 2021, unrestricted cash, cash equivalents, and marketable securities totaled approximately $64.4 million, a decrease from $84.9 million in 2020, and while these resources are estimated to fund operations for the next 12 months, significant additional capital will be required for ongoing R&D, clinical trials, and potential commercialization, and the company actively uses ATM equity offerings and recently secured a $10.0 million term loan with an option for an additional $10.0 million - The company's working capital is financed through private and public equity offerings, 'at-the-market' (ATM) equity sales, cash from Merck and LG Chem collaboration agreements, and a loan from Silicon Valley Bank (SVB)[553] Cash, Cash Equivalents, and Restricted Cash (Years Ended December 31) | Metric | 2021 (USD) | 2020 (USD) | |:---|:---|:---|\n| Net cash used in operating activities | $(38,837,166) | $(32,494,034) | | Net cash provided by investing activities | $9,108,511 | $4,455,874 | | Net cash provided by financing activities | $19,233,322 | $58,614,263 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(10,495,333) | $30,576,103 | | Cash, cash equivalents, and restricted cash at end of year | $64,520,800 | $75,016,133 | - As of December 31, 2021, unrestricted cash, cash equivalents, and marketable securities totaled approximately $64.4 million, which is estimated to fund operating requirements for at least the next 12 months[553][573] - The company will need to raise additional capital or incur indebtedness to continue funding future operations, with funding requirements dependent on R&D progress, clinical trials, regulatory approvals, and commercialization efforts[574] Principal Commitments The company's principal commitments include multi-year operating leases for its Cambridge, Massachusetts office and laboratory spaces, which were amended to extend terms and adjust rental rates, and as of December 31, 2021, future minimum lease payments totaled approximately $10.69 million, and additionally, the company has a manufacturing agreement with Catalent Pharma Solutions, LLC, with approximately $1.255 million owed as of December 31, 2021, and ongoing milestone-based commitments under the Einstein License Agreement - The company has multi-year, noncancelable operating lease agreements for its Cambridge, Massachusetts office and laboratory space, with the Laboratory and Office Lease extended to March 14, 2024[584][769] Future Minimum Lease Payments (as of December 31, 2021) | Year | Amount (USD) | |:---|:---|\n| 2022 | $4,931,675 | | 2023 | $4,754,796 | | 2024 | $1,004,739 | | Total lease payments | $10,691,210 | | Less: present value discount | $(638,358) | | Present value of lease payments | $10,052,853 | - As of December 31, 2021, the company owed Catalent Pharma Solutions, LLC approximately $1.255 million for contracted manufacturing services related to CUE-102 materials[586] - Commitments under the Einstein License Agreement are based on the attainment of future milestones, with aggregate milestone payments potentially reaching up to $1.85 million per Licensed Product/new indication and $5.75 million for cumulative sales[762] Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk Item 8. Financial Statements and Supplementary Data. This section refers to the company's financial statements and related notes, which are presented starting on page F-1 (document page 91) of this Annual Report on Form 10-K - The company's financial statements and related notes are included starting on page F-1 of this Annual Report on Form 10-K[589] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. The company reports that there have been no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in and disagreements with accountants on accounting and financial disclosure[590] Item 9A. Controls and Procedures. As of December 31, 2021, management, with the participation of its principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective, and management also assessed and concluded that its internal control over financial reporting was effective based on the COSO framework, and the annual report does not include an auditor attestation report due to the company's status as an emerging growth company - As of December 31, 2021, the company's management, including its principal executive and financial officers, concluded that its disclosure controls and procedures were effective[592] - Management assessed and concluded that the company's internal control over financial reporting was effective as of December 31, 2021, based on the COSO Internal Control Integrated Framework (2013)[593] - This annual report does not include an attestation report from the registered public accounting firm regarding internal control over financial reporting, due to the company's status as an emerging growth company[594] Item 9B. Other Information. This item is not applicable and contains no additional information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. This item is not applicable to the company PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required for this item, pertaining to directors, executive officers, and corporate governance, is incorporated by reference from the company's definitive proxy statement on Schedule 14A, to be filed within 120 days after the fiscal year ended December 31, 2021 - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement on Schedule 14A[600] - The proxy statement is to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021[600] Item 11. Executive Compensation The information required for this item, concerning executive compensation, is incorporated by reference from the company's definitive proxy statement on Schedule 14A, which will be filed within 120 days after the fiscal year ended December 31, 2021 - Information regarding executive compensation is incorporated by reference from the definitive proxy statement on Schedule 14A[601] - The proxy statement is to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021[601] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters. The information required for this item, covering security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the company's definitive proxy statement on Schedule 14A, to be filed within 120 days after the fiscal year ended December 31, 2021 - Information regarding security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the definitive proxy statement on Schedule 14A[602] - The proxy statement is to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021[602] Item 13. Certain Relationships and Related Transactions, and Director Independence The information required for this item, concerning certain relationships and related transactions, and director independence, is incorporated by reference from the company's definitive proxy statement on Schedule 14A, to be filed within 120 days after the fiscal year ended December 31, 2021 - Information regarding certain relationships and related transactions, and director independence, is incorporated by reference from the definitive proxy statement on Schedule 14A[603] - The proxy statement is to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021[603] Item 14. Principal Accountant Fees and Services The information required for this item, detailing principal accountant fees and services, is incorporated by reference from the company's definitive proxy statement on Schedule 14A, to be filed within 120 days after the fiscal year ended December 31, 2021 - Information regarding principal accountant fees and services is incorporated by reference from the definitive proxy statement on Schedule 14A[604] - The proxy statement is to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021[604] PART IV Item 15. Exhibits, Financial Statements and Schedules This section lists the documents filed as part of the report, including the financial statements and supplementary data (starting on page F-1), and a comprehensive list of exhibits, which include various corporate documents, agreements (e.g., license, collaboration, employment), and certifications, with some portions subject to confidential treatment or omission - The report includes financial statements and supplementary data, which are incorporated by reference from Item 8 and begin on page F-1 (document page 91)[787] - A comprehensive list of exhibits is filed as part of this Annual Report on Form 10-K, detailing various corporate and contractual documents[788] - Exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, specimen stock certificates, warrants, registration rights agreements, collaboration agreements (Merck, LG Chem), employment agreements, and certifications[788][790][794] Item 16. Form 10-K Summary This item is not applicable to the company Financial Statements Reports of Independent Registered Public Accounting Firm RSM US LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements of Cue Biopharma, Inc. for the years ended December 31, 2021 and 2020, with the audit conducted in accordance with PCAOB standards, confirming that the financial statements present fairly, in all material respects, the company's financial position and results of operations in conformity with U.S. GAAP, and the firm has served as the company's auditor since 2018 - RSM US LLP issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2021 and 2020[610] - The financial statements present fairly, in all material respects, the financial position and results of operations in conformity with U.S. GAAP[610] - The audit was conducted in accordance with PCAOB standards, but an audit of internal control over financial reporting was not performed as the company is not required to have one[612] Consolidated Balance Sheets The consolidated balance sheets show the company's financial position as of December 31, 2021, and 2020, with total assets decreasing from $99.53 million in 2020 to $83.40 million in 2021, primarily due to a reduction in cash, cash equivalents, and marketable securities, and total liabilities also decreased from $20.62 million to $17.91 million, while total stockholders' equity decreased from $78.91 million to $65.49 million, largely influenced by the accumulated deficit Consolidated Balance Sheets (as of December 31) | ASSETS | 2021 (USD) | 2020 (USD) | |:---|:---|:---|\n| Cash and cash equivalents | $64,370,800 | $74,866,133 | | Marketable securities | — | $10,002,550 | | Accounts receivable | $3,142,527 | $1,417,482 | | Prepaid expenses and other current assets | $954,792 | $1,241,239 | | Total current assets | $68,468,119 | $87,527,404 | | Property and equipment, net | $2,111,949 | $2,108,024 | | Operating lease right-of-use assets | $9,809,876 | $6,774,229 | | Deposits | $2,720,991 | $2,572,476 | | Restricted cash | $150,000 | $150,000 | | Other long term assets | $140,000 | $401,667 | | Total assets | $83,400,935 | $99,533,800 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $2,590,701 | $2,070,303 | | Accrued expenses | $4,619,963 | $2,787,211 | | Research and development contract liability, current portion | $645,345 | $6,681,025 | | Operating lease liabilities, current portion | $4,931,675 | $4,777,427 | | Total current liabilities | $12,787,684 | $16,315,966 | | Research and development contract liability, net of current portion | — | $1,937,575 | | Operating lease liabilities, net of current portion | $5,121,179 | $2,368,787 | | Total liabilities | $17,908,863 | $20,622,328 | | Stockholders' equity: | | | | Common stock | $32,202 | $30,351 | | Additional paid-in capital | $262,906,084 | $232,159,029 | | Accumulated other comprehensive income | — | $7,131 | | Accumulated deficit | $(197,446,214) | $(153,285,039) | | Total stockholders' equity | $65,492,072 | $78,911,472 | | Total liabilities and stockholders' equity | $83,400,935 | $99,533,800 | - Total assets decreased from $99.53 million in 2020 to $83.40 million in 2021, primarily driven by a reduction in cash and marketable securities[617] - The accumulated deficit increased from $(153.29) million in 2020 to $(197.45) million in 2021, reflecting ongoing operating losses[617] [Consolidated Statements of Operat