Cue Biopharma, Inc. — Q1 2021 Form 10-Q
Business context and reporting period. Cue Biopharma is a clinical-stage biopharmaceutical company developing Immuno-STAT biologics. This unaudited report covers the three months ended March 31, 2021; financial amounts below are in U.S. dollars, in thousands unless stated otherwise. The company has no product-sales revenue and remains dependent on collaboration revenue and external financing.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Collaboration revenue | $1,553 | $900; up 73% |
| Research and development expense | $9,816 | $9,906; down 1% |
| General and administrative expense | $4,255 | $3,989; up 7% |
| Total operating expenses | $14,071 | $13,895; up 1% |
| Operating loss | $(12,518) | $(12,995) |
| Net loss | $(12,505) | $(12,818) |
| Net loss per share, basic and diluted | $(0.41) | $(0.48) |
| Cash used in operating activities | $(11,795) | $(10,944) |
| Cash, cash equivalents and restricted cash at period end | $73,407 | $23,582 |
Revenue consisted of $765 from Merck and $788 from LG Chem. No development, regulatory, commercial milestone or royalty revenue had been recognized to date. The filing does not present a gross margin measure. Interest income fell to $13 from $177.
At March 31, cash and cash equivalents were $73,257, with no marketable securities remaining. Current assets were $77,405 and current liabilities $16,633. Total liabilities were $19,052, including operating lease liabilities and research and development contract liabilities; the filing reports no conventional debt balance. Total stockholders’ equity was $69,669. Operating lease liabilities totaled $6,074, and future minimum lease payments were $6,313 before discounting.
Changes, outlook and material developments
- Net loss narrowed by about 2% year over year, while collaboration revenue increased. Operating expenses were broadly stable; lower R&D costs were offset by higher G&A costs.
- Operating cash use increased by $851 year over year, primarily attributed to increased deposits for laboratory and drug-substance manufacturing costs. The quarter-end cash decrease was $1,609, partly offset by redemption of $10,000 of short-term investments and $919 of proceeds from stock-option exercises.
- Management said quarter-end cash and cash equivalents were expected to fund operations for at least the next 12 months from issuance of the financial statements. The company expects expenses to rise with ongoing and planned research and clinical development and says it will need additional capital in the future. This runway estimate depends on assumptions that could prove wrong.
- CUE-101 was in Phase 1 monotherapy and combination studies for HPV-driven recurrent/metastatic head and neck cancer; the first patient in the KEYTRUDA combination study was dosed in Q1. Management reported a favorable tolerability profile and early activity, including one confirmed partial response and several confirmed stable diseases, but these are early clinical findings.
- A CUE-101 neoadjuvant study was planned for the second half of 2021. CUE-102’s IND filing expectation shifted from Q4 2021 to Q1 2022 after a contract manufacturer reported an approximately six-week CMC manufacturing delay related to Defense Production Act prioritization.
- LG Chem’s option to select an additional oncology Immuno-STAT for a worldwide license expired on April 30, 2021. The company retained rights to develop and commercialize the relevant assets outside the existing Asian territory.
- Subsequent to quarter end, the company sold 907,700 shares through its June 2020 ATM for approximately $10.4 million net of commissions, excluding estimated transaction expenses. By May 3, 2021, cumulative sales under that ATM were 2,099,700 shares for approximately $32.7 million net of commissions. This financing is dilutive.
- COVID-19 had not, in management’s view, significantly affected productivity or operations to date, but further impacts remained uncertain. The company reported no material legal proceedings, no accrued contingent liabilities, and no material changes in contractual obligations during the quarter. Disclosure controls were concluded effective as of March 31, 2021.
Important facts for investors to verify
- Whether the reported clinical signals for CUE-101 are confirmed in larger studies, and whether safety, efficacy and trial timing support further development.
- Whether CUE-102 manufacturing and its revised Q1 2022 IND target remain on schedule.
- Cash burn, actual operating runway and future financing needs; the stated runway is a management estimate, not a guarantee.
- ATM issuance, resulting dilution and remaining capacity under the $40 million program; reconcile the filing’s quarter-end share count of 30,499,803 with 31,412,841 shares reported outstanding as of May 3.
- Collaboration performance and economics, including the timing and constraints on recognizing deferred contract liabilities and the consequences of LG Chem’s option expiry.
- Potential effects of clinical, regulatory, manufacturing, partner-dependence and COVID-19 risks on development plans and liquidity.