Cue Biopharma, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Financial figures are unaudited; dollar amounts below are in millions unless stated otherwise.
Business context
Cue Biopharma is a clinical-stage biopharmaceutical company with no commercial product revenue. It is developing injectable biologics intended to modulate T cells. Management is prioritizing oncology programs in its IL-2-based CUE-100 series and seeking partners or other funding arrangements for CUE-200, CUE-300 and CUE-400 programs.
Financial performance and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $0.026 | $2.739 | $1.026 | $4.291 |
| General and administrative expense | $3.782 | $4.280 | $8.938 | $8.535 |
| Research and development expense | $9.592 | $8.762 | $19.675 | $18.577 |
| Operating loss | $13.090 | $10.303 | $27.329 | $22.821 |
| Net loss | $13.208 | $10.279 | $27.463 | $22.784 |
| Basic and diluted loss per share | $0.37 | $0.33 | $0.81 | $0.74 |
Revenue is entirely collaboration-related; the filing reports no product sales. Gross margin is therefore not meaningful for this development-stage business. Q2 collaboration revenue fell about 99% year over year, and six-month revenue fell about 76%, primarily because the Merck research term ended in 2021 and LG Chem research activity was substantially completed by March 2022. Net loss increased about 28% for the quarter and 21% for the six-month period. R&D spending rose, including clinical costs for CUE-101 and initiation of the CUE-102 trial.
| Balance sheet / cash flow item | June 30, 2022 | December 31, 2021 or prior-period comparison |
|---|---|---|
| Cash and cash equivalents | $66.126 | $64.371 |
| Total current assets | $69.004 | $68.468 |
| Total current liabilities | $8.323 | $12.788 |
| Total assets | $84.749 | $83.401 |
| Long-term debt, net | $9.913 | None reported |
| Stockholders’ equity | $59.756 | $65.492 |
| Six-month operating cash used | $24.421 | $21.565 in 2021 |
| Six-month financing cash provided | $26.265 | $11.500 in 2021 |
Cash, cash equivalents and restricted cash totaled $66.276 at June 30, 2022. Cash increased by $1.755 during the first half, as $26.265 of financing inflows—principally $16.598 net from ATM share sales and $10.000 of term-loan proceeds—exceeded operating cash use and investing outflows. Management said cash on hand was expected to fund operations for at least 12 months from issuance of the financial statements, while cautioning that estimates depend on assumptions and additional capital will be needed to fund future operations. No product margins or operating profitability were reported.
Material changes, outlook and risks
- Funding and dilution: The company issued 3.117 million shares through its ATM program in the first half for $16.598 million net; shares outstanding rose from 32.202 million at year-end 2021 to 35.382 million at June 30, 2022. The October 2021 ATM program authorizes up to $80 million in gross proceeds; $23.6 million net had been raised under it since inception as of June 30.
- Debt: Cue borrowed $10 million from Silicon Valley Bank in February 2022. The loan is secured by substantially all company assets, excluding intellectual property (which is subject to a negative pledge), bears a floating rate that was 7.0% at June 30, and has interest-only payments through June 2023. Principal amortization follows; a further $10 million tranche is contingent on specified requirements. Debt covenants include a minimum cash-maintenance requirement. A 5% final payment fee and prepayment premiums also apply.
- Clinical and development update: Management reported completion of enrollment in the CUE-101 monotherapy expansion at the 4 mg/kg recommended Phase 2 dose. Of 19 evaluable patients at that dose, it reported one confirmed partial response lasting more than 36 weeks and seven patients with durable stable disease. In the CUE-101 plus KEYTRUDA dose-escalation trial, two of eight patients with post-dose scans had confirmed ongoing partial responses and two had durable stable disease. These are company-reported early clinical observations, not evidence of established efficacy.
- CUE-102: The FDA accepted its IND in April 2022, and Cue initiated a Phase 1 monotherapy dose-escalation trial. The filing describes CUE-102 as an early-stage candidate.
- Operating focus and costs: Management is directing resources toward oncology, seeking external support for non-oncology programs, and reported steps to reduce office/lab footprint and restructure R&D functions. It expects R&D costs to rise as trials advance and cites inflation, supply-chain disruption and labor shortages as possible cost pressures.
- Facilities and unusual item: Cue relocated its headquarters to Boston in April and terminated its prior Cambridge lease, recognizing a $0.258 million gain. It recorded a new headquarters lease asset and liability of about $9.056 million; additional laboratory space is due to commence in December 2022.
- Key risks: The business has recurring losses and negative operating cash flow, depends on additional financing and successful clinical development, and has no approved or commercialized products. Clinical outcomes, regulatory decisions, trial enrollment, third-party manufacturing, collaboration prospects, intellectual-property protection and COVID-19-related disruptions could affect plans and liquidity. Merck and LG Chem agreements include exclusivity restrictions. No material legal proceedings or material subsequent events were reported.
Most important facts for investors to verify
- Whether cash and cash equivalents, current burn rate and management’s stated 12-month runway remain adequate as clinical spending and operating costs evolve.
- The terms, covenant compliance, interest-rate exposure and repayment obligations of the SVB loan, including conditions for accessing the additional tranche.
- Remaining ATM capacity, subsequent share issuance and the resulting dilution to existing shareholders.
- Updated patient counts, follow-up, response durability, safety and trial status for CUE-101 monotherapy and combination studies; assess the small, early-stage datasets in context.
- Progress, costs and regulatory milestones for CUE-102, and whether partnerships or other funding are secured for non-oncology programs.
- Collaboration revenue and obligations following the Merck research-term expiration and completion of the LG Chem research phase.