Cue Biopharma Inc (CUE) 2019 Q4 法說會逐字稿

Greetings, and welcome to the Cue Biopharma Fourth Quarter and Fiscal Year 2019 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Ashley Robinson of Investor Relations. Thank you. You may begin.

Thanks, Diego, and good afternoon, everyone. Thank you for joining us on today's investor and analyst update call. Joining me on the call today are Dan Passeri, Cue Biopharma's CEO; Dr. Anish Suri, President and Chief Scientific Officer; Dr. Ken Pienta, Acting Chief Medical Officer; and Kerri-Ann Millar, Vice President of Finance and Principal Accounting and Finance Officer.

Before we begin, I would like to remind you that during today's call, the company will be making forward-looking statements. Various remarks that the company makes during this call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995.

Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's annual Form 10-K report filed with the SEC on March 12, 2020, as well as other filings made by the company to the SEC from time to time, which can be accessed on the EDGAR database at www.sec.gov.

In addition, any forward-looking statements represents the company's views only as of today, March 17, 2020, and should not be relied upon as representing the company's views as of any subsequent date. While the company may elect to update these forward-looking statements at any -- at some future point, the company specifically disclaims any obligation to do so even, if the company's views change. These forward-looking statements should not be relied upon as representing the company's views as of any date subsequent to today.

Please be advised that today's call is being recorded and webcast. I would now like to turn the call over to Cue Biopharma's CEO, Dan Passeri. Dan?

Yes. Thanks, Ashley, and good afternoon, everyone, and thanks for joining us for a review of our progress and recent accomplishments. We hope everyone joining us on the call today is safe and well during these challenging times with the coronavirus situation.

As a reminder, there is a slide deck that accompanies this call, which is directly controlled by those listening, and we will remind you of which slide we're on as we proceed.

The slides we're presenting today as well as a recording of our call, will be available on our website for the next 90 days. Also, the Cue senior management team will be available via e-mail provided on our website for questions not addressed during today's call.

Slide 3 shows our agenda for the call today. I'll first provide an overview and update of our key accomplishments and will be followed by Dr. Ken Pienta, our acting Chief Medical Officer, who will provide additional details and status update on our ongoing Phase I CUE-101 monotherapy dose escalation and expansion study in advanced or metastatic human papillomavirus, or HPV positive head and neck cancer.

Following Dr. Pienta's update, Dr. Anish Suri, our President and Chief Scientific Officer, will further describe the progress of our platform, convey the competitive differentiation of our IL-2 based CUE-100 series and highlight our pipeline, including CUE-102, KRAS, Neo-STAT as well as the CUE-200 and CUE-300 programs, the latter in a collaborative partnership with Merck.

Our progress with all of these programs highlights focused execution towards platform validation, especially through the ongoing Phase I trial with CUE-101. Following Anish's update, Kerri-Ann Millar, Cue Biopharma's Principal Accounting and Financial Officer, will review our current financial status, and I'll then provide concluding remarks followed by a Q&A session.

On Slide 4, we show the current state of our evolving pipeline. Our lead CUE-100 series is designed to selectively deliver an engineered IL-2 directly to tumor-specific T cells, thereby, avoiding systemic activation in IL-2-related toxicities. The modularity of this series allows us to target diverse tumors by utilizing different epitopes as well as distinct HLA alleles to expand global patient reach.

Our lead program within the CUE-100 series is CUE-101. It addresses a significant unmet medical need in human papillomavirus, or HPV-driven epithelial cancers, such as head and neck squamous cell carcinoma. Despite recent gains made by adoptive cell therapies and checkpoint inhibitors, new approaches in this field are needed that are not constrained by the challenges and deficiencies presented by current modalities.

We believe our immuno-STAT platform provides the key advantages of ready-to-use, off-the-shelf biologics for selective and controlled modulation of targeted disease-relevant T cells directly in the patient's own body without the need for ex vivo expansion or manipulation. As previously mentioned, Ken will provide further details regarding the progress of clinical development for this promising program.

In addition to CUE-101, we're developing CUE-102, which incorporates the Wilms' Tumor 1, or WT1 T cell epitope, to target WT1-expressing solid and hematological cancers in patients expressing HLA-A02 or A24, the latter being highly represented in Asian populations. We will define the target of CUE-103 in the near future.

Besides the CUE-100 series, we've also established the CUE-200 series focused on cell surface signaling modules, such as CD80 or 4-1BBL which is in early discovery stages for treating chronic infectious diseases. The application of immuno-STATS in chronic infectious diseases is presently being evaluated by our collaborators at the Albert Einstein College of Medicine.

In addition to these programs, we've made promising progress with our CUE-300 series, focused on modulation of CD4 T cells in autoimmune diseases. As a reminder, this is the focus of our collaboration with Merck, who recently presented data from this important program at the Antigen-Specific Immune Tolerance Drug Development Summit in February of this year.

This presentation may be found on our web under Presentations and Events, located within the Investors and Media section of our website. Anish will elaborate upon these various programs later during the call, but now I'd like to briefly highlight some of our important accomplishments.

Core to our strategic execution was the initiation of dosing, in September of 2019, for our first clinical study in patients with our lead program, CUE-101, which is exemplary of our IL-2-based CUE-100 series. This study is the first -- is -- I'm sorry, this study is in post first-line patients with advanced metastatic HPV positive head and neck cancer.

As of today, we're proud to announce that we have fully enrolled cohorts 1 and 2 and have dosed the first 2 patients for cohort 3, with a third patient dosing anticipating in the coming week. To date, CUE-101 has been very well tolerated with several patients having gone through multiple dosing cycles, and again, Ken will provide further details in a moment.

I'm also pleased to share that we recently published a manuscript in a peer-reviewed journal of Clinical Cancer Research, detailing our preclinical research data for CUE-101, underscoring the mechanistic biology, along with supporting in vivo and in vitro analyses, which provides confidence and support for progressing this molecule. For those interested, the article can be found on our website with the URL embedded within the press release announcing the publication, which was dated January 21, 2020.

Before I hand the call over to Ken, I'd like to thank and congratulate our development research teams for reaching these important milestones. In addition, we also anticipate that our preclinical work with CUE-102, and partnership with LG Chem, and our autoimmune collaboration with Merck with the CUE-300 series, will begin to demonstrate the potential breadth and scope of our platform technology across cancers and autoimmune diseases. Ken will now provide further details regarding our ongoing CUE-101 clinical trial. Ken?

Thanks, Dan, and good afternoon, everyone. I'd like to first begin with a commentary on Slide 5 regarding the quality of the 13 participating clinical centers and associated oncologists. We are very honored and humbled to have such a premier group of participating oncologists working with us to assess the potential of CUE-101 for addressing the pressing unmet need of patients suffering from HPV-driven head and neck cancer.

Our investigators' enthusiasm for the CUE-101 concept is reflected in the fact that, to date, we have had over 80 patients participate in our prescreening process to determine their eligibility for the trial. Recognizing that current therapies are not, or are rarely curative, we put into place a system, whereby patients on first-line or second-line therapy for HPV-driven head and neck cancer are prescreened by HLA type and confirmatory HPV status to determine eligibility for future CUE-101 therapy. The demonstrated demand of patients for prescreening underscores the significant unmet medical need in this indication.

Next, on Slide 6, is a high-level summary of the design of our ongoing Phase I trial of CUE-101. As Dan mentioned, we are very pleased with our progress of dosing patients in this trial and are highly encouraged by observations to date. As a reminder, the current trial is a monotherapy dose-escalation study with a translational precision medicine approach, designed to provide insights into safety, mechanistic activity and potential antitumor efficacy.

We are enrolling post first-line patients with recurrent or metastatic head and neck squamous cell carcinoma, driven by HPV, specifically HPV 16. This represents approximately 70% of all head and neck cancers occurring in the oropharyngeal region, accounting for an estimated 13,500 patients annually in the U.S. alone.

This Phase I trial has defined molecular inclusion criteria to include head and neck cancer patients that are HLA-0201 positive, and whose tumors are confirmed to be driven by HPV 16. Through this specific inclusion criteria, we are ensuring that only patients with the potential for clinical benefit are enrolled and treated, really signifying a precision medicine approach, whereby each of our immuno-STAT drug candidates is intended for patients with a specific molecular fingerprint.

Patients receive CUE-101 once every 3 weeks via IV infusion, unless there is a disease progression as evidenced via scan. Patients are scanned once every 6 weeks or every 2 cycles to evaluate tumor status.

The trial is a standard 2-part study with the first Part A designed as a standard 3x3 monotherapy dose escalation. However, we have also provided the opportunity to dose up to 9 patients in any given cohort, where we see evidence of clinical activity or PD effect. This strategy allows us to further explore PK/PD effects as well as build supporting data for determining the most appropriate dose for the Part B expansion.

Based on the escalation phase, safety, PD and efficacy data, we will accrue additional patients at that dose level during the Part B expansion phase to confirm the recommended Phase II dose in a total of 20 patients. Therefore, in summary, both Parts A and B of the trial will evaluate the safety and tolerability of CUE-101, with biologic activity and antitumor responses also being followed.

The expansion cohort is designed to confirm the safety, biologic activity and antitumor activity at the effective dose in additional patients to provide further support and confidence as we move into later phases with more patients.

To evaluate on target activity, we're measuring several translational biomarkers, including T cell expansion in blood and cytokine production by measuring antigen-specific T cells. For antitumor activity, we're looking for objective responses via RECIST criteria at 6-week intervals or after every 2 cycles of CUE-101.

I'm very pleased to report that after initiating dosing of cohort 1 in late September last year, we successfully moved forward and began dosing cohort 2 in December, and have initiated enrollment of cohort 3 over the past week.

I would like to remind you that we started dosing cohort 1 at what, we believe, should be a low biologically active dose based on our preclinical modeling. Based on this modeling, we believe that a clinically active dose may be achieved starting in cohorts 3 or 4. Notably, to date, the 6 patients in cohorts 1 and 2 have received a total of 14 infusions of CUE-101 3 weeks apart, with no evidence of cytokine release syndromes.

Also of note, at the second cohort, the molar equivalent of IL-2 in CUE-101 is calculated to be slightly higher than the molar equivalent of the approved dose of Proleukin, which is the wild-type IL-2 molecule. As of today, 1 patient in cohort 1 and 2 patients in cohort 2 continue to be dosed as well as those that have recently been dosed in cohort 3.

We are highly encouraged by our early progress and observations, including early evidence suggestive of biologic activity, albeit anecdotal and highly preliminary. We are presently on schedule to evaluate the first PK/PD results for cohorts 1 and 2 in early Q2.

In addition to the ongoing monotherapy trial of CUE-101 in HPV positive head and neck cancer, we show on Slide 7 that we are planning to initiate a concurrent study to evaluate CUE-101 in combination with an anti-PD-1 antibody as frontline therapy for the same indication in patients who are HLA-0201 positive.

Our intention is to continue moving forward with the monotherapy trial for post first-line HPV-positive refractory or metastatic head and neck cancer patients, and enhance our patient reach by moving into first-line patients in combination with pembrolizumab or KEYTRUDA, which is the current standard of care.

This combination study enables access to first-line metastatic HPV-positive head and neck cancer patients to potentially enhance therapeutic benefit of anti-PD1 therapies. We intend to commence this trial in Q3 or Q4 once we've confirmed the safety of CUE-101 in the Phase I trial.

Furthermore, Slide 7 also shows that we have the option of evaluating CUE-101 in the neoadjuvant setting in patients newly diagnosed with localized head and neck cancer. And finally, once we have established clinical proof of concept for CUE-101 in head and neck squamous cell carcinoma, we may expand opportunistically into other HPV-driven cancers, for example, cervical cancer.

Before I hand the phone over to Anish, I want to acknowledge that the COVID-19 crisis is straining health systems across the country. Cancer centers are actively prioritizing patients. As an active clinical investigator at Johns Hopkins myself, I am taking part in these discussions as plans evolve dynamically.

I'm also having discussions with our principal investigators across the country daily to determine how each academic center is reacting and evolving plans. To date, we remain on track and anticipate no negative impact.

CUE-101 is currently classified as a Tier 1 important treatment, and our patients are being prioritized for therapy. While this could change as the crisis unfolds, which could potentially slow our accrual, our investigators remain optimistic that CUE-101 patients will remain a priority for accrual and treatment.

In addition, we are also working with our sites to allow more flexibility in seeing patients, with some visits potentially being done by phone to minimize COVID-19 exposure.

I will now hand the call over to Anish to discuss other advances in our pipeline and platform.

Thanks, Ken, and thank you to everyone listening in. I'd like to begin here with Slide 8 to reemphasize the molecular framework of the CUE-100 series. The 2 key signals on the CUE-100 series consist of stabilized peptide HLA molecules to engage tumor-specific T cells and rationally engineered IL-2 molecules that selectively act upon those T cells.

The top-down view of the ribbon diagram of the CUE-100 series, as shown here, provides a good contextual perspective for the spatial engagement by T cells. Two notable modifications to the IL-2 molecule are important for its specificity and selectivity. The first abrogated binding to the IL-2 receptor alpha subunit to minimize effects on Tregs, or regulatory T cells; and the second, reduce binding to the IL-2 receptor beta subunit, such that the IL-2 activity is most evident only when the antigen-specific T cells are docked to the specific peptide HLA complex.

We believe this framework has important ramifications on the ensuing biological T cell response in the patient, that is, it maintains specificity and selectivity, while avoiding the systemic toxicity associated with indiscriminate IL-2-dependent activation of many different cell types.

Slide 9 exemplifies what we believe to be the superior differentiation between our IL-2-based CUE-100 series and other IL-2 modalities. Shown in the slide are different T cell subsets in the broad expression of the IL-2 receptor subunits.

Tregs constitutively express the highest affinity IL-2 receptor, composed of the 3 subunits, alpha, beta and gamma, while most of the T vector cells express the IL-2 receptor beta and gamma subunits. As shown in the left panel, wild-type IL-2, which is an approved drug, is a potent activator of all T cells, this results in not only dose-limiting toxicities, but also enhances expansion of immunosuppressive Tregs that are detrimental to the antitumor immune response.

Moreover, indiscriminate activation of the polyclonal effector T cell repertoire is not desirable since the vast numbers of these T cells have no relevance or specificity for tumor antigens. If, and that is an assumption we have to make, the patients have primed an antitumor T cell repertoire, then they could, perhaps, gain some benefit from this systemic therapy. This is the likely case with the minority of patients that can tolerate IL-2 and exhibit clinical responses.

The middle panel here depicts the not alpha IL-2 variants being developed by a number of pharmaceutical and biotech companies, with the objective of only stimulating effector T cells and not Tregs. However, the challenge here again is that the not alpha IL-2 variants would act indiscriminately upon all effector T cells, wherein the majority of these T cells are not directed towards the tumor. Moreover, we have to make the assumption that the patient must have a pre-primed and expanded antitumor T cell repertoire to gain meaningful benefit.

In contrast, the right panel highlights the CUE-100 series, wherein the IL-2 is selectively focused on the tumor-specific T cells. And because of the rational engineering, the IL-2 component has little to no effect on Tregs or irrelevant non-tumor effector T cells. The co-molecular structure possesses the key signals needed to prime and expand the right T cells, especially in patients where such populations were not optimally expanded.

This allows us to address several key aspects of a desirable antitumor T cell response: one, the ability to focus IL-2 on the T cells that matter; two, enable priming and activation of the desirable T cells; and three, accomplish all of the above while not compromising patient safety.

Slide 10 highlights our immuno-oncology development strategy to exploit the fullest potential of the CUE-100 framework. CUE-101 provides us with the foundational proof-of-concept in an indication of unmet medical need. Furthermore, CUE-101 is positioned to potentially derisk the IL-2-based CUE-100 series.

As noted before, a key strength of the Immuno-STAT platform is modularity and flexibility that allows us to target different tumor antigens, along with distinct HLA alleles for global patient populations. This is evident from our current ongoing work with CUE-102 and beyond, where we have focused on tumor antigens like Wilms' Tumor 1, or WT1, and KRAS, and have initiated programs with additional alleles besides HLA-A02. These include HLA-A24 and A11, both being dominant in Asia, which was the primary impetus for our LG Chem partnership for our first 3 programs.

We have made strong progress with our CUE-102 programs and have generated pilot data demonstrating ex vivo expansion of human T cells. These data were accepted for presentation at the Keystone Advances in Cancer Immunotherapy Meeting in March and at AACR in April. Unfortunately, in light of the current coronavirus situation, both these meetings have been canceled. We will look forward to other avenues and forums to disclose these promising data sets.

We've also evolved the platform called Neo-STAT, which greatly accelerates our scalability in generating new clinical candidates. The Neo-STAT framework specifically increases our productivities and efficiencies, both from a time and cost perspective. Furthermore, the Neo-STAT platform enhances our versatility by allowing us to target multiple tumor antigens, including post translational modifications and personalized neoantigens.

Let me move on to Slide 11 to talk a bit more about the Neo-STAT platform. The key advancement here is the fact that we can generate the entire CUE-100 series scaffold without any specific peptide attached to the HLA molecule. This is in contrast to our current immuno-STAT platform, where each T cell epitope is an integral part of the immuno-STAT, meaning it is incorporated into the molecule as a fusion protein at the time of synthesis.

Neo-STATS are synthesized without a peptide epitope, instead, the peptide epitope is attached subsequently using sophisticated attachment chemistry, as shown in the current figure, via the examples of 3 different peptides bound to the Neo-STAT scaffold.

This advance allows us to generate the core generic scaffold for any HLA allele via a single cell line and then use the same product to conjugate to different tumor antigens to expand our reach. The fact that only a single scaffold needs to be generated will save us significant resources in both time and cost for generation of clinical-grade material.

We've generated early proof-of-concept supporting the biological activity of molecules generated via the Neo-STAT platform, and have disclosed these foundational data during a recent talk at the World Vaccine and Immunotherapy Congress Meeting in December 2019 in San Francisco.

Finally, in my last few minutes, I'd like to share with you the early results of our collaboration with Merck in the development of immuno-STATS for the treatment of autoimmune diseases. Slide 12 depicts the importance of immune homeostasis and how selective modulation via the Immuno-STAT platform may help restore immune balance.

While much of the data we've discussed has been in selective enhancement of antitumor T cells for cancer, the same principle essentially in reverse applies to autoimmune diseases, wherein selective targeting of the pathogenic autoreactive T cells can be accomplished using immunoregulatory signals.

For this program, as shown on Slide 13, we generated Immuno-STATS using the human HLA class II molecule, HLA-DR0401, or DR4, which is associated with type 1 diabetes. The Immuno-STAT molecule, as shown in the left panel, was made with a known epitope of proinsulin, an autoantigen in type 1 diabetes, along with the native PD-1 ligand molecule for selective downregulation of proinsulin reactive T cells. This Immuno-STAT was tested for its ability to reduce expansion of proinsulin specific T cells from 2 different type 1 diabetes donors.

As shown in the graph on the right, the T cells can be expanded with a pathogenic peptide stimulation as represented by the yellow and blue bar graphs. However, in the presence of the Proinsulin Immuno-STAT, this robust expansion is significantly reduced. As a control, an irrelevant GAD65 peptide Immuno-STAT had no effect on T-cell expansion. GAD65 is another autoantigen in type 1 diabetes.

We then examined this relationship in vivo by using HLA-DR4 transgenic mice, which express the same human HLA-DR4 molecule. As shown in the following Slide 14, DR4 transgenic mice can be immunized to generate T cells. In this experiment, they were immunized with a proinsulin peptide and an epitope from hemagglutinin or HA, which is a flu virus protein.

The left panel shows that T cells to both antigens can be generated after immunization, as measured by interferon gamma ELISpot responses that are indicative of antigen-specific T cells. Black lines show proinsulin-specific T cells, while dotted blue lines show hemagglutinin-specific T cells, or HA.

The same experiment was performed in mice treated with the proinsulin Immuno-STAT, as shown in the right panel. As you can see, the proinsulin Immuno-STAT selectively inhibited the proinsulin specific T cells shown in red, while having no effect on the flu HA-specific T cells.

These results support 2 key conclusions: one, that the immuno-STAT framework can be deployed to selectively dampen autoreactive T cells; and two, that this can be accomplished without compromising protective immunity, as evident with the surrogate HA-specific T cells in this case. Current therapeutic approaches deploy broader immune-suppression for treatment of autoimmune diseases. This tact runs the risk of making the patients susceptible to infections and malignancies.

The world, today, unfortunately, as evident from the current coronavirus infections, is best served wherein individuals and patients are not broadly immunocompromised to address symptoms of chronic autoimmune and inflammatory diseases. To that end, selective modulation via innovative approaches, such as the Immuno-STAT platform, may provide superior benefit.

In conclusion, and as I've stated in prior presentations, the Immuno-STAT, and by extension, the Neo-STAT platform, address a fundamental and important immunological problem, which is how does one maintain selectivity and specificity of a desirable immune response without breaching patient safety or creating toxicities.

We believe our approach built upon rational protein engineering, which is bolstered by supporting data sets, may offer a unique solution to patients suffering from cancers, autoimmune diseases and threats from chronic pathogenic infections. With that, I'll now turn the call over to Kerri to review our financial results. Kerri?

Thank you, Anish. On Slide 15, I'd like to provide our financial results for the fourth quarter and full year ending December 31, 2019. We finished the year with approximately $59.4 million in cash and cash equivalents, $61 million in total assets and working capital of approximately $49.4 million.

During the fourth quarter of 2019, we extended our cash runway with $33.3 million from our at-the-market equity offerings through Stifel, Nicolaus & Company, who acted as sales agent. During 2019, we received approximately $49 million in total net of commissions paid to Stifel from these sales agreements, which has positioned us well to progress our immuno-STAT platform in 2020. Revenue generated from our collaborations with Merck and LG Chem in the fourth quarter of 2019 and 2018 was $1,331,000, respectively.

Research and development expenses were $6.9 million for the quarter ended December 31, 2019, as compared to $7.3 million for the same period in 2018. This decrease in research and development expenses was due, primarily, to a decrease in drug substance manufacturing cost as a full clinical supply for the CUE-101 Phase I monotherapy trial was manufactured during 2018. The decrease in manufacturing costs was offset, in part, by clinical trial expenses incurred during the fourth quarter of 2019.

General and administrative expenses were $3.1 million for the quarter ended December 31, 2019, as compared to $5.3 million for the same period in 2018. This decrease in general and administrative expenses was primarily due to a decrease in stock-based compensation expenses and legal and accounting fees incurred in the fourth quarter of 2019.

Revenue generated from our collaborations with Merck and LG Chem for the full year ended December 31, 2019 and 2018, was approximately $3.5 million and $1.1 million, respectively. Research and development expenses were $27.5 million for the full year ending December 31, 2019, compared with $28.5 million for the full year in 2018. This decrease in research and development expenses is due primarily to a reduction in headcount and operational efficiencies realized during 2019.

General and administrative expenses were $12.7 million for the full year ending December 31, 2019, as compared to $11.3 million for the full year in 2018. This increase in general and administrative expenses was primarily due to an increase in headcount and legal fees related to our patent filings in 2019.

Cue Biopharma continues to be well positioned to support the development of our Immuno-STAT platform and associated pipeline, including the clinical development of CUE-101. Based upon our forecast, which includes further build-out of our ongoing clinical studies, our current cash position is estimated to take us into the second quarter of 2021. I'll now turn the call back over to Dan for closing remarks. Dan?

Yes. Thanks, Kerri. Since our last call, we've made significant progress across the platform and have achieved our stated priority goals and objectives for moving our platform and associated programs forward, as shown in Slide 16.

We are now strategically very well positioned with our lead program, CUE-101, currently in a clinical Phase I dose escalation trial. This program is exemplary of the IL-2-based CUE-100 series, and as such, supporting data from these studies represent potential therapeutic validation for our patients as well as substantial derisking and value inflection for our shareholders.

With CUE-101 now being dosed at what could be biologically active and clinically relevant levels, we believe we are very well positioned to establish Cue Biopharma as a differentiated leader in the immunotherapy space as a potentially disruptive breakthrough therapeutic platform.

Our key accomplishments, as covered during this call, are noted on Slide '16. And I'd now like to provide some guidance on the upcoming 2020 milestones. These include, in the second quarter of this year, we expect to obtain PK/PD results from the early cohorts from the ongoing Phase I CUE-101 clinical trial. Also in the second quarter of this year, we're guiding to select and announce the target for CUE-103.

In the second half, we expect to evaluate clinical responses in our ongoing Phase I CUE-101 trial via RECIST criteria. We expect to initiate a trial with the PD-1 inhibitor, pembrolizumab, in frontline HPV positive head and neck squamous cell carcinoma. And also in the second half, we're planning to initiate and extend IND-enabling activities for CUE-102.

We expect to generate data supporting the premise of our Neo-STAT platform for enhancing productivities and efficiencies as well as support manufacturability. And we expect to develop data sets to identify potential clinical candidates from our CUE-300 series, as Anish just reviewed, for treating autoimmune diseases in collaboration with Merck.

With that, I'd like to thank our employees for their hard work and commitment to advancing our platform forward and bringing our first drug to patients in need. I'd also like to thank our shareholders and our -- your continued support in helping us realize Cue Biopharma's potential. We look forward to providing further updates as we continue to advance our programs, and thank you for your continued support. I'd now like to open the line open -- to questions. Operator?

(Operator Instructions) Our first question comes from Stephen Willey with Stifel.

Congrats on all the progress. Just a quick question regarding some of the PD data that we might be seeing next quarter. I know that you talked about proportion of antigen-specific, CD8+ T cells as being one of the key biomarkers, and presumably, you'll be counting those as a function of post-treatment biopsies.

I guess, with the understanding that the confidence intervals around these counts are obviously subject to inherent heterogeneity of sampling. But just curious as to what proportion of antigen-specific CD8s you would like to see in these post-treatment biopsies?

I know, in some of the preclinical data that was recently published, that you mentioned, I think there was an observation that you saw more than 50% of tumor infiltrate as being characterized as such. So just kind of curious if you can maybe give us maybe a lower bound of what you're hoping to see in the PD data?

Yes, Steve, thanks for your question. This is Anish, and I'll take that on. As you well noted, the fact that one can see expansion of antigen-specific T cells is mechanistic proof that the platform and the molecule is doing what it's intended to do.

What has been not formally established and set in stone are hard quantitative numbers. However, what we do know from experience in immunotherapy, both from cancer-related and infections immunity related, is to look at the qualitative aspects, which is what is the phenotype of the tumor-specific T cell repertoire? Are they expressing effector molecules and cytokines? Are they positive for cytolytic granules?

All of those, in the preclinical setting, which you referred to in the recent paper, Steve, is what we sought to confirm and demonstrate. In that situation with the TC-1 tumor model, we did indeed see a robust infiltrate in the tumor in high percentages, as you noted.

But I think more, to us, would be to qualify the presence of the T cells in patient samples, but importantly, to make sure that they are qualitatively of the effect of phenotype that we would desire, including these sorts of markers, interferon gamma, TNF alpha, positive for some of the cytolytic granule markers, indicative that they have all the right bearings of a potent tumor killer T cell.

Okay. So it will be the counts in the context of functionality?

Exactly. We'll take both into account, exactly right.

Okay. Maybe just a question for Dan. I know that you've been exclusive with Merck on the AI front for a while now. And I think that period of exclusivity is perhaps now over. I guess, I'd be interested in just whether or not you expect AI to kind of become a focal point of BD activity here going forward?

And maybe you can kind of speak to some of, perhaps, the initial conversations you had around the enthusiasm for being able to selectively dampen autoreactive T cells without the broad-based immunosuppression that Anish referenced in his opening statements.

Sure. I appreciate the question, and it's an important question for our business model. We're focusing our resources, principally, in the immuno-oncology space presently. So obviously, having AI as a potential monetizable class of assets is important as we go forward.

As you characterized it, Merck had -- they -- well, let me be explicitly definitive here: Merck has an exclusive license to 2 indications. They have disclosed in their recent presentation, one of those indications is type 1 diabetes. We're not able to disclose the other indication presently.

They were early on when this was basically a thought experiment, and their capital helped us establish the data set that showed the potential of this platform for addressing autoimmune disease. So we had agreed when we entered the relationship for a 2-year forbearance that we would not communicate any of the data sets publicly or to potential additional partners.

That forbearance period is now expired. So we are free to talk to other companies. And those discussions have recently been engaged upon, and we're having quite a bit of interest looking at that platform as well as what we're doing in the immuno-oncology space. So it is important to our overall growth as a company to have a class of assets that we could view as a partnerable group, while we focus on our core strength, which is protein engineering in the IO sector.

Our next question comes from Boris Peaker with Cowen and Company.

My first question is on just the CUE-101 dose-ranging studies. Now normally in oncology, a traditional approach is to ramp up to maximum tolerated dose and then just dose expand at that level further. I'm just curious, in this particular scenario with IL-2 being the active component, what is the dose-ranging strategy? How far do you want to dose and the thoughts on the dose expansion?

Yes, this is Ken. Thanks for the question. What we're -- what we believe is, because of our delivery method of our attenuated IL-2, we don't necessarily expect to see IL-2 type toxicity. And we are actually -- we may not see a dose-limiting tox, which is why we've built in using a Bayesian approach to be able to, as we see PD effects at various dose levels, expand those dose levels up to 9 patients so that we can better understand if we're not seeing toxicity, what is the dose that we should pick to move forward in the expansion phase.

So we've sort of built in 2 approaches. One is the standard 3x3. Can we see a dose-limiting toxicity? And we're prepared to go up to 8 or 9 cohorts if we need to. But we are also thinking we might not see that, and we don't want to sort of dose indefinitely. So that's why we've built in these extra patients that we can use to study at various lower dose levels. Does that make sense?

Got you. Okay. I guess, an extension of that question, maybe my second and the last question is, for the data update that we anticipate for CUE-101, the dose-ranging study later this year, what should we be expecting in terms of efficacy?

Well, this is Ken. Thanks again for that question. That's obviously the big question. And we're hoping that we're going to see clinical activity in the form that meets RECIST criteria as well as, when we see that activity, to see matching PD effects.

Our next question comes from Mark Breidenbach with Oppenheimer & Co.

I hope everyone is staying healthy. Dan, maybe I'll start with a quick 1 for you, possibly for Ken as well. First of all, is it safe to assume that the initial PK/PD and biomarker data will be kind of delivered via a press release and conference call given the absence of medical meetings?

And I'm curious if within that biomarker data, you'll be specifically looking for any signs of T cell anergy and/or exhaustion that we might get a hint of whether or not that's going on in that initial readout?

Sure. So I'll take the first shot at this and welcome Anish or Ken, if they want to add anything to it. So regarding the forum, or means by which we'll communicate, you are correct. In lieu of the conferences being postponed or canceled, we would likely communicate that via our own internal mechanisms, which would be potentially a press release, conference call, we would certainly put it on our web. So we'll be prudent on when we can -- when we gather that data and how best to disseminate the information.

Regarding the issue of looking at the phenotype of the T cell, I think that's part and parcel of what we're going to be evaluating. As Anish stated, we'll be looking at various markers of cytolytic capability, but also their characteristic as to whether they're an anergy or not.

Okay. All right, that's helpful. And maybe a quick follow-up for Anish. Looking at the architecture of CUE-301, I'm wondering if you can just walk us through the challenges unique to building a class II MHC into an Immuno-STAT. Is manufacturing very different from one of your CUE-100 series products? And does the Neo-STAT platform extend to the MHC class II products? Is there compatibility there?

Yes. Thanks, Mark. Great question, actually, on the very basic mechanistic and platform-centric activities. So just so everybody's on the same page and, Mark, I just want to make sure people appreciate that CUE-100 series is based off HLA class I, which mostly focuses on CD8. And while, as Mark referred to, the work that we've done with Merck focuses on HLA class II, which allows us to now target and drug selectively CD4 T cells in autoimmune diseases.

As we've known from historically, class I has been easier to work with compared to class II HLAs. Hence, last year when we had made the announcement that we had some early proof-of-concept molecules using HLA class II, this was a significant leap forward in the field.

So the class II design follows a very similar concept, Mark, in terms of protein engineering and expression, which is, again, built off in this iteration of, again, a 2-plasmid system in mammalian CHO cell expression. We continue to refine the core framework and looking at other optionalities there, and that's an active part of our collaboration with Merck.

In terms of the way the peptide is latched in, it's -- there's no beta 2M here. So it's latched in directly to the HLA class II beta chain. The peptide lens are different than HLA class I. So we spent a lot of time looking at the engineering components as well as the spatial organization to come up with this first prototype, in which you're seeing the activity.

Moving on to the Neo-STAT side of things. We again made a lot of progress with the Neo-STAT scaffold. With HLA class I using the core CUE-100 base series, which deploys IL-2 as well as the class I HLA, and the future, thinking as we continue to learn more about the Neo-STAT, is to deploy that and understand the applications with class II.

That experiment so far has been a thought experiment, but the intentions in the future are, again, to build off our protein engineering expertise to explore that in the future at some point as well. That allows us then to modulate both at the level of CD4s across autoimmune diseases, but also bringing back some of those nuances for cancer immunotherapy and infectious diseases as well.

Our next question comes from Ren Benjamin with JMP Securities.

Congrats on all the progress. I guess, just to maybe start off with the combination study in frontline, can you talk -- can you give us some thoughts on how that trial will be designed? How many patients are you thinking about? Just a straight combo or are there various sequences of the administration of the drugs that you're thinking about? And on top of that, have you thought about a potential combination with chemo or radiation, especially in a setting like head and neck?

Yes, thanks for that question, obviously. This is Ken. So the trial as we've initially designed it is a 3 -- starting out as a 3x3 dose escalation. We intend to likely start with our third dose level and then ramp up to make sure we have safety, and then we'll do a classic expansion. So we're really actually looking -- only looking for a total of 20 patients in the initial -- 20 patients at the given dose level once we reach it, as we start -- as we do that first trial.

And then we aren't thinking yet about changing sequencing. We're giving the 2 drugs together. And then, basically, we have thought about and have talked about, of course, adding -- doing a further trial down the way with chemo as more data is learned about (technical difficulty) pembro with chemo. And -- but we haven't put that on our sort of list yet because we want to see what we're going to get from the combo study, but we're clearly thinking about it.

Got it. And then, I guess, just a broader question. Just given your platform in combating and addressing T cell anergy, and I guess, there have been recent articles as well suggesting that infectious diseases, such as corona, may, in fact, impact T cell anergy. I want to just get your thoughts on the potential to build out a pipeline beyond oncology and autoimmune, either by yourselves or with potential partners. Have you guys looked into that at all? And kind of what your thoughts are regarding this platform and infectious disease?

Yes. Thanks, Ren. This is Anish. It's a great question. It's something we have thought about. There is a direct potential application for the platform for chronic infectious diseases as you've referred to. In fact, a lot of our early pilot experiments, prototyping, the molecules themselves utilize known virus epitopes, including ones from CMV, and some of this data is a part of the recent paper that we just published.

Dan mentioned earlier that we continue to work in chronic infectious diseases in collaboration with investigators at the Albert Einstein College of Medicine. As you specifically look at cases for T cell exhaustion or reversal of T cell anergy, including possibly some early data that is evident from the current COVID-19 situation, we think we have an opportunity here.

We've had focused and deliberate discussions internally. We've had some early discussions with some external partners as well, and this is a core part of the strategy to make sure that a potential of a disruptive platform like this is just not limited to our current capacity. But in future, we're able to really deploy this in a meaningful manner for patients, for benefit across diseases, particularly on the infectious side.

Our next question comes from Madhu Kumar with Baird.

So starting with a question for Ken. You mentioned that there were observations that were highly encouraging from the 101 dose escalation to date. Are there any specific observations you can kind of point to as being particularly encouraging?

Yes, thanks for the question. At this point, everything I'm observing, of course, is anecdotal and preliminary. But what I can say is that, as an oncologist and what my investigators are also seeing is that we're really pleased that patients remain on trial and are being actively dosed even at some of these lower doses. And that suggests to us -- that's very intriguing to say the least. And that's all I'd like to say at this point, but I really am -- we all are encouraged by what we're seeing.

Okay. And also, just actually, what has been the first-line therapy for patients in the trial to date? Has it been PD-1 blockade, something else or a mix of the two?

So thanks for the question. What I can tell you is that all of the patients to date have received both platinum-based chemotherapy as well as checkpoint. So they've received both.

Okay. Great. And then 1 last question. On the cash runway to 2Q '21, what level of clinical development for 101 and other programs does that runway assume?

Yes. So I'll take a shot at that and ask Kerri to elaborate if it needs elaboration. So Madhu, the current forecast is based on our ongoing activities in terms of 101 monotherapy dose escalation as well as the potential for expansion cohort, we up to the 9 patients, and it includes the combination study.

And it also incorporates the existing partnerships that we have in terms of both immuno-oncology with LG Chem, which is our partner for Asia on 101 through 102 and 103, and includes, let's just say the base level of activity we have now in autoimmune. If that's moving towards the potential of a candidate being selected that would go internally within Merck. So for autoimmune to expand, that would either increase our burn rate or it would require an additional partnership.

Okay. And I'll squeeze 1 last 1 in. Thinking about the 101 program and kind of other HLA alleles, what signal would it take for you to go to LG Chem to work on building a 101 molecule that uses a HLA allele type that's not [A2/A1].

Sure. Anish, do you want to?

So Madhu, that's a key focus of the CUE-102 program where with WT1, we are prosecuting on A02 as well as on A24, which is the dominant -- one of the dominant alleles in Asia. And there's -- the optionality and opportunity of going for targeting 101, which is the HPV specificity on other HLA alleles is still very much on the table. And I think as the recent data starts to emerge from the clinic, that's a discussion that is very much live and is an area of focus for our partnership.

Next question comes from Tom Shrader with BTIG.

This is Kaveri for Tom. I just have a couple. For CUE-301, what type of type 1 diabetes patient population do you think your approach will be most relevant to?

Yes, Kaveri, this is Anish. So as we think about the specificities, these are obviously in early stages, where the repertoire is relatively still narrow or even seropositive at-risk individuals where you can track these cells and selectively modulate.

This specificity, in particular, has been tracked in both at-risk and T1D patients. And we believe that is a sweet window in terms of, if you think about strategies for disease, intervention of disease, interception before frank late stages of hypoglycemia. That may be a significant opportunity in the patient population.

That's helpful. And for CUE-101, curious to know what are the other indications where you could expand that program?

So thanks for that question. The most obvious is cervical cancer, but it's really any HPV-driven cancer, for example, anal cancer and penis cancer are both -- tend to be HPV driven. So really, we could have -- it should work in any HPV-driven cancer, and again, the other 3 big ones are cervical, anal, penile.

Thank you. That concludes the question-and-answer session. I'll turn it back to Dan Passeri for closing remarks. Thank you.

Okay. Thank you, Diego. We want to thank everyone for your attention on the call today and particularly in lieu of all of the activity and focus on the coronavirus situation. So really appreciate your attention, and please stay safe and look forward to providing you with additional updates during the quarter -- upcoming quarter. Thank you very much.

Thanks. This concludes today's conference. All parties may disconnect. Have a great evening.