CUE - Cue Biopharma: Not Exactly Sinking The Money Ball Yet

2024-01-09 05:05:30 ET

Summary

• Cue Biopharma is a biotech focused on developing immunogenic peptides to fight specific diseases, particularly cancers.
• CUE's most advanced project, CUE-101, has shown favorable early results in a phase 1 trial for recurrent or metastatic head and neck cancer.
• The company has cash concerns and a long time to incubate, making it a risky investment at this stage.

Topline Summary

Cue Biopharma ( CUE ) is a biotech focused on the development of immunogenic peptides designed to trigger the body's immune cells to fight specific diseases, most prominently cancers. While they have interesting early data, cash concerns and a long time to incubate make this an equity that I don't think quite reaches the risk/benefit ratio I'd be comfortable with. But it's definitely worth putting in your pipeline of immunotherapy plays to watch. Let's find out why.

Pipeline Overview

CUE-101

By far the most advanced project in the CUE pipeline is CUE-101, an immunotherapy candidate designed to help cells identify and attack HPV E7, a protein that is a hallmark of HPV-driven cancers. The first shot on deck for CUE-101 is in recurrent or metastatic head and neck cancer, where CUE has an ongoing phase 1 trial.

An interim readout was presented at last year's ASCO Annual Meeting , including early findings from 2 patient groups. Patients with 1 or more prior lines of platinum chemotherapy or checkpoint inhibitor received CUE-101 monotherapy. Patients with previously untreated, PD-L1-positive disease were given CUE-101 plus pembrolizumab.

No maximally tolerated dose was identified, and a recommended phase 2 dose was selected for both the monotherapy and combination arms. CUE highlighted favorable tolerability of CUE-101, as well as favorable pharmacokinetics and pharmacodynamics. Of the 19 patients receiving monotherapy at the recommended phase 2 dose who were evaluable, 1 had a partial response, and median overall survival was 24.4 months.

Meanwhile, 5 of 12 evaluable patients in the combination arm had a response to therapy. This tracks favorably with the findings from KEYNOTE-048 , which showed a response rate of 23% of pembrolizumab alone in patients with PD-L1 CPS 20% or higher. Obviously, you can't make a good comparison here for a variety of reasons, but it's a favorable early signal.

A more recent update at SITC 2023 revised the response rate to 47% in the first-line setting with this combination, including data from 17 evaluable patients. The monotherapy cohort added more patients, as well, with median OS being revised to 20.8 months, which tracks favorably with studies like KEYNOTE-040 which showed a median OS of 8.4 months for pembrolizumab in a similar setting.

The company guided that these findings illustrate a few potential paths forward for registrational trials, and they have submitted a request to the FDA to gain feedback and clarity on the next steps for clinical development. CUE also highlighted that these findings have allowed for slightly loosened reins in developing other molecules since the entire platform they're building (based primarily on interleukin-2 signaling) is modular and able to have the target of interest hot swapped.

CUE-102

The first such "hot swap" of antigens is with CUE-102, which uses the same platform as CUE-101 but now targeting Wilms' Tumor 1 (WT1), a marker of poor prognosis in various cancers. CUE provided a first look at the safety and efficacy of CUE-102 at SITC 2023 in a poster presentation.

Once again, no dose-limiting toxicities were identified during dose escalation. Moreover, 2 patients in the study have experienced tumor reduction, though it is very early days for any kind of efficacy analysis.

Financial Overview

Per their Q3 2023 SEC filing , CUE held $57.5 million in total current assets, most of which ($54.7 million) were held in cash and equivalents. Their total operating expenses reached $13.5 million. With collaboration revenues and income factored in, the net loss for the quarter was $11.0 million.

Given this net loss, and assuming it holds steady, CUE has approximately 4 to 5 more quarters of operational runway before they run out of cash.

Strengths and Risks

I neglected to highlight that CUE has a fair number of programs based on their CUE-100 platform in preclinical development targeting various antigens of interest. These will be worth watching but aren't worth dwelling on at the moment, in my opinion.

Two thoughts come to mind immediately in taking a look at CUE. First, their platform is a very interesting science project, taking this modular antigen-based targeting approach and fusing it to an attempt at a generalized ramping of the immune system to improve recognition and (hopefully) antitumor activity. CUE-101 has shown some signs of life. I wouldn't get ahead of myself just yet in getting too excited, but these are favorable early signals.

Second, we're already facing cash challenges, and this is a company still in phase 1. It's little wonder why the market isn't really giving them much attention, since the risk of dilution or other unfavorable cash raise proposals is high. They do have an ongoing collaboration with ONO Pharmaceuticals that provides a small, regular infusion of cash, but that is definitely not enough to offset the mounting costs they face.

That collaboration, working toward development of preclinical molecule I did not discuss above (CUE-401), could bear fruit and bring a bigger influx of funds, but I'm not one for counting on partnerships and M&A to bail out a risky investment.

Bottom-Line Summary

CUE is very much worth paying attention to. However, with their near-term cash issues needing to be addressed, it's difficult to imagine them being able to raise funds from a position of strength. At a market cap of around $120 million, there is still downside risk, though it is limited. And the potential for a big catalyst to vault the valuation is real. However, I don't think the time is right for this one to make me seriously consider a buy. I think it's worth a watch and wait.

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