Cue Biopharma, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. The company is a clinical-stage biopharmaceutical developer with no commercial product revenue; reported revenue comes from collaborations. Figures below are in U.S. dollars, generally millions unless stated otherwise.
Financial highlights
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $2.739 | $1.075 | $4.291 | $1.975 |
| Research and development expense | $8.762 | $8.119 | $18.577 | $18.025 |
| General and administrative expense | $4.280 | $3.898 | $8.535 | $7.887 |
| Operating loss | $(10.303) | $(10.942) | $(22.821) | $(23.937) |
| Net loss | $(10.279) | $(10.833) | $(22.784) | $(23.651) |
| Basic and diluted loss per share | $(0.33) | $(0.38) | $(0.74) | $(0.86) |
| Cash used in operating activities | — | — | $(21.565) | $(17.808) |
Revenue increased year over year, principally from work under the LG Chem and Merck collaborations. Operating expenses also rose, but the increase in collaboration revenue contributed to a smaller operating loss and net loss. The company reported no product-sales revenue; a conventional product gross margin is therefore not presented.
- Liquidity: Cash and cash equivalents were $73.920 million at June 30, 2021, versus $74.866 million at December 31, 2020. Current assets were $79.677 million and current liabilities $16.673 million. Marketable securities fell from $10.003 million to zero after redemption.
- Cash flows: Operating activities used $21.565 million in the first half. Investing activities provided $9.119 million, mainly from redemption of short-term investments; financing activities provided $11.500 million, including $10.357 million net ATM proceeds.
- Debt and obligations: The filing reports no borrowings or debt balance. Total liabilities were $16.762 million, including operating lease liabilities and research and development contract liabilities. Remaining lease payments were $5.028 million, with a $4.874 million lease liability recorded.
- Equity and dilution: Stockholders’ equity was $72.910 million. The company sold 907,700 shares through its ATM in Q2 for approximately $10.4 million net; shares outstanding were 31,470,216 at June 30 and 31,508,341 as of August 2, 2021.
Business developments and material changes
- CUE-101 was in Phase 1 monotherapy testing for HPV-driven recurrent/metastatic head and neck cancer and in a Phase 1 combination trial with KEYTRUDA. The company reported a confirmed partial response and multiple confirmed stable-disease cases in the monotherapy dose-escalation study, and selected 4 mg/kg as the recommended Phase 2 dose for expansion. These are company-reported interim findings, not proof of efficacy.
- In Q2, the first cohort of the CUE-101/KEYTRUDA combination trial was completed and enrollment began in the second cohort.
- The company planned to initiate a neoadjuvant CUE-101 study in the second half of 2021. It expected to file a CUE-102 IND in the first half of 2022; the expected filing had moved from Q4 2021 after a manufacturing delay.
- LG Chem’s option under the global license arrangement expired April 30, 2021. In June, the parties allowed the selection period for a second additional cancer antigen to expire without selecting one. Cue retains rights outside LG Chem’s territory.
- Q2 revenue was $2.035 million from LG Chem and $0.704 million from Merck. For the first half, the corresponding amounts were $2.823 million and $1.469 million.
Outlook, risks and unusual items
- Management said June 30 cash and cash equivalents were expected to fund operations for at least 12 months from issuance of the financial statements. The company also said it would need additional capital to fund future operations and development; runway depends on assumptions that may prove incorrect.
- Management expected research and development and general and administrative expenses to rise as clinical and development activities expand. The company is dependent on financing, collaboration arrangements, and successful development of candidates; additional equity financing could dilute shareholders.
- The contract manufacturer reported that the CUE-102 cGMP batch was delayed by approximately six weeks due to Defense Production Act priorities for COVID-19-related products. The company attributed the revised expected CUE-102 IND timing to this delay.
- COVID-19 effects remained uncertain. The company said precautionary measures had not significantly affected productivity or operations to date, but further disruption could delay development work.
- Collaboration milestone and royalty income is contingent on future development, regulatory and commercial events. The company reported no milestone or royalty revenue to date apart from disclosed earned milestone payments accounted for through collaboration arrangements.
- No material legal proceedings, accrued contingent liabilities, off-balance-sheet arrangements, or material changes to contractual commitments were reported. Disclosure controls were assessed as effective at quarter-end.
Most important facts for investors to verify
- Whether the cash runway estimate remains valid as clinical, manufacturing, and operating spending develops, and when additional financing may be needed.
- Updated CUE-101 monotherapy and combination-trial results, patient enrollment, safety, and whether interim responses are durable.
- Whether CUE-102 manufacturing and the expected first-half 2022 IND filing remain on schedule.
- How the LG Chem option expiration and lack of a second antigen selection affect collaboration scope, future revenue, and development priorities.
- Future ATM issuance, share-count growth, and remaining capacity under the June 2020 ATM agreement.
- The filing’s subsequent-events note states “To be completed”; verify whether any relevant subsequent events were disclosed elsewhere or in later filings.