Cue Biopharma, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The filing was signed March 21, 2023. Cue is a clinical-stage biopharmaceutical company with no product sales or FDA-approved products; reported revenue came from collaborations. The filing describes annual results, not separate fourth-quarter results.
Business context and development
Cue is developing its Immuno-STAT platform to selectively modulate T cells. Management prioritized oncology programs CUE-101 and CUE-102, while seeking partners or other funding to advance several other programs.
- CUE-101: Phase 1 monotherapy and pembrolizumab-combination studies for recurrent/metastatic HPV-positive head and neck cancer. The company reported preliminary activity and tolerability, and received FDA Fast Track designation in October 2022.
- CUE-102: Phase 1 dose-escalation study initiated for WT-1-positive cancers; management expected dose escalation to complete in mid-2023.
- Other programs: Mostly preclinical or dependent on third-party support. The Merck collaboration ended in December 2022; the LG Chem oncology collaboration remained in place, with its research phase substantially complete by March 2022.
Financial results and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Collaboration revenue | $1.25 million | $14.94 million |
| Research and development expense | $38.58 million | $41.35 million |
| General and administrative expense | $16.17 million | $17.31 million |
| Operating loss | $53.22 million | $43.71 million |
| Net loss | $53.01 million | $44.16 million |
| Net loss per share, basic and diluted | $1.49 | $1.41 |
| Net cash used in operating activities | $41.81 million | $38.84 million |
Gross margin is not meaningfully presented because the company had no product sales. The decline in collaboration revenue largely reflected the end of Merck-funded research and completion of much of the LG Chem research phase. Lower operating expenses did not offset the revenue decline, and the net loss widened.
- Year-end liquidity: $51.61 million cash and cash equivalents and $24.67 million marketable securities, totaling approximately $76.29 million. Current assets were $77.19 million; total liabilities were $25.60 million.
- Cash flows: Investing activities used $24.61 million, mainly for purchases of marketable securities. Financing activities provided $53.66 million, including equity financing, ATM sales and a $10 million term loan. Cash, cash equivalents and restricted cash decreased $12.76 million.
- Debt: $10 million borrowed from Silicon Valley Bank (SVB) in February 2022. The loan bears a floating rate; it was 9.75% at year-end. Principal repayment was scheduled to begin in 2023, with outstanding amounts due December 2025. The loan is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
- Funding and dilution: A November 2022 private placement generated approximately $30 million gross proceeds before fees and expenses. The company also sold shares through its ATM program. Year-end common shares outstanding were 43.04 million, versus 32.20 million a year earlier; warrants and pre-funded warrants create additional potential dilution.
Changes, outlook and material risks
- Management said year-end cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months from the financial statements’ issuance date, while emphasizing the need for additional capital thereafter. The estimate depends on assumptions and may prove wrong.
- In February 2023, after year-end, Cue announced an Ono collaboration for CUE-401: Ono provides an upfront payment and funds research through an option period; potential later payments include development and commercial milestones of up to approximately $220 million plus royalties. This is not guaranteed revenue, and the agreement’s subsequent-event disclosure describes Cue retaining a 50% U.S. co-development and co-commercialization right if Ono exercises its option.
- SVB was closed on March 10, 2023. The filing says approximately 20% of Cue’s cash and cash equivalents were in SVB deposit accounts; its loans and accounts transferred to Silicon Valley Bridge Bank under existing terms. Most cash, cash equivalents and marketable securities were held in custodial accounts at U.S. Bank, with SVB Asset Management as advisor. The filing notes liquidity-access risk associated with bank failures.
- Key risks include continued losses and financing needs; early-stage, limited clinical evidence; clinical, regulatory, manufacturing and enrollment uncertainty; reliance on third parties; competition; intellectual-property protection; and restrictions under the loan agreement. The company also disclosed potential dilution from future equity issuance and outstanding warrants.
- The auditor issued an unqualified opinion on the financial statements and identified evaluation of the company’s ability to continue as a going concern as a critical audit matter. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022. No material pending legal proceedings were reported.
Most important facts for investors to verify
- Current cash runway and burn rate against the stated 12-month funding expectation, including subsequent financing, spending and collaboration receipts.
- Whether reported CUE-101 responses and survival observations persist with larger samples and longer follow-up; these are early, non-randomized clinical findings, not proof of efficacy.
- Clinical progress and data for CUE-102, and whether the company can fund or secure partners for programs outside its priorities.
- Loan balance, interest rate, collateral and covenants, including any changes following SVB’s receivership.
- Fully diluted share count and the potential effect of outstanding warrants, pre-funded warrants, equity plans and further capital raises.
- Actual terms, milestones, option exercise and economics of the Ono and LG Chem arrangements, rather than headline potential payments.