Earnings Call Transcript - CUE Q1 2020

Operator, Operator

Greeting and welcome to the Cue Biopharma First Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ashley Robinson, Investor Relations. Thank you. You may now begin.

Ashley Robinson, Investor Relations

Thank you, Doug, and good afternoon, everyone. This is Ashley from LifiSci Advisors, and thank you for joining us on today's investor and analyst update call. Joining me on the call today is 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 Financial and Accounting Officer. Before we begin, I'd 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 Factor section of the company's annual Form 10-K report filed with the SEC on March 12, 2020, and quarterly report on Form 10-Q filed with the SEC on May 7, 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 represent the company's views only as of today, May 19, 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 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'd now like to turn the call over to Cue Biopharma's CEO, Dan Passeri. Dan?

Dan Passeri, CEO

Yeah. Thanks, Ashley, and good afternoon, everyone. Thank you for joining us today for a review of our ongoing progress and first-quarter financial results, which are available in more detail in our Form 10-Q, which was filed with the SEC on May 7. As a reminder, 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, to those of you listening in, you can advance the slides from your computer, and we'll notify you of what slide we're addressing at that time. We will also be available via the email provided on our website for questions that may not be addressed during today's call and you may want to ask subsequently. Beginning with Slide 3, which shows our agenda for today's call, I'll provide a brief overview and update of our pipeline, with an emphasis on our lead program CUE-101. That will be followed by Dr. Ken Pienta, our Acting Chief Medical Officer, who will provide further details on our most recent observations from our ongoing Phase I CUE-101 mono-therapy dose-escalation and expansion study. Following Dr. Pienta's update, Dr. Anish Suri, our President and Chief Scientific Officer, will further describe our continued innovation and additional progress that we've made in advancing our Immuno-STAT and Neo-STAT platforms. He'll underline how our rationally engineered IL-2 based CUE-100 series is differentiated and finally highlight the rest of our expanding pipeline that now includes CUE-102, KRAS, Neo-STAT, as well as the CUE-200 and CUE-300 programs, the latter being in a collaborative partnership with Merck. Our progress with all of these programs demonstrates focused execution towards platform validation, especially through the ongoing Phase I trial with CUE-101 and for the pipeline and platform developments. Following Anish's update, Kerri-Ann Millar, Cue Biopharma's Principal Financial and Accounting Officer, will review our current financial status. And I'll then provide concluding remarks followed by a Q&A session. To begin, I'd like to thank our dedicated employees for their focus and professionalism in diligently working under these challenging and stressful conditions presented by the COVID-19 pandemic. Through their efforts, we have been able to keep our lead drug candidate CUE-101 on track in our first-in-human mono-therapy dose-escalation Phase I trial in HPV positive head and neck cancer. Now moving on to Slide 4, which shows an overview of our core strategic objectives and progress in the first quarter. In summary, our core objectives have been to 1) validate our Immuno-STAT platform through the ongoing generation of data from our CUE-101 clinical dose-escalation study; 2) expand our pipeline by selecting additional epitopes with the CUE-100 series and developing other disease applications including autoimmune diseases, which pertains to the CUE-300 series; and 3) accelerate and enhance our productivity through further development of our Neo-STAT platform. To date, we have dose-escalated through the first four cohorts and continue to generate translational data and corresponding clinical data essential in providing proof of concept of our IL-2 based CUE-100 series of Immuno-STAT. As a reminder, CUE-101 represents the first of what we believe will become a broad set of biologic drug candidates from the CUE-100 series, targeting tumor-associated antigens linked to a variety of cancers. To this point, our near-term goal is to de-risk CUE-101 by demonstrating safety, tolerability, and clinical activity, which will thereby reduce the risk profile associated with the CUE-100 series as well as our follow-on CUE-200 and 300 series of biologics. As a reminder, we have also been developing our Neo-STAT platform to significantly enhance our productivity and provide cost efficiencies to fully exploit the potential de-risking and validation of the Immuno-STAT platform, which we are in the process of generating data to demonstrate that. Importantly, in the ongoing CUE-101 Phase I clinical dose-escalation study, favorable characteristics and drug properties including dose proportional pharmacokinetics, early signs of relevant pharmacodynamics activity, and growing evidence supporting that the drug appears to be clinically active have emerged to date from our first three cohorts. I want to emphasize that we are conducting the dose-escalation study of CUE-101 in a mono-therapy trial in second-line and beyond resistant metastatic HPV positive head and neck cancer patients. In this highly challenging setting, while still quite early in our clinical study of the drug, we have observed data supporting an apparent increase in the levels of HPV reactive effective T cells in the peripheral circulation in several patients. Moreover, we have observed preliminary evidence of single-agent clinical activity of CUE-101. As we continue to build data with the objective of demonstrating single-agent activity in this challenging patient population, it is our hope that we may be able to define a clinical and regulatory path forward for mono-therapy providing benefit to patients who currently have no effective alternative. Taken together, we interpret these highly encouraging albeit early results as evidence supporting the prospects of CUE-101 single-agent activity that needs to be further confirmed in additional patients. We also recently announced the establishment of a clinical collaboration agreement with Merck for a combination study with KEYTRUDA, which is an anti-PD-1 biologic agent, as a first-line therapy in patients with advanced HPV16 positive head and neck cancer, and a planned dose-escalation Phase I study to be called KEYNOTE-A78. This collaboration allows us to expand our patient coverage by moving CUE-101 upstream into the first-line therapy where KEYTRUDA is approved as a standard of care. The rationale for combining CUE-101 with an anti-PD-1 agent is based on our robust preclinical data which demonstrated that our promising mono-therapy activity with CUE-101 was further enhanced when combined with an anti-PD-1 agent. The progress we've made in the clinic to date with CUE-101 along with early emerging mono-therapy data gives us bolstered confidence in moving forward with our current ongoing mono-therapy trial, as well as the planned Phase-I trial in combination with KEYTRUDA, which has the potential of expanding the application of CUE-101 into the frontline therapy setting for recurrent or metastatic HPV16 positive head and neck cancer patients. Additionally, we continue to make solid progress on the development of our pipeline of drug candidates advancing through the modularity of the platform with CUE-102 targeting WT-1 or Wilms' Tumor-1 and CUE-103, which is presently being reviewed with our Asia partner LG Chem. We also have generated supportive preclinical data for our KRAS CUE-100 drug candidate, and Anish will follow Ken's update with a review of the progress made in these various programs, as well as an overview of the core competitive features of our platform to remind everyone and for those of you who are first listening in. Ken will now provide further details regarding the progress of our clinical development for CUE-101, which is our first clinical drug candidate. I'll now turn the call over to Ken. Ken?

Ken Pienta, Acting Chief Medical Officer

Thanks, Dan, and good afternoon, everyone. I'd like to first remind you about the tremendous commitment we have from the participating clinical centers and associates oncology, shown here on Slide 5. Throughout the COVID-19 pandemic, this group of highly respected and dedicated oncologists have remained focused upon screening and enrolling HPV16 positive head and neck cancer patients to participate in our study. Our investigators' enthusiasm for the CUE-101 program reflected that and the fact that today we've been very successful in our pre-screening process to determine eligibility for the trial. Recognizing that current therapies are not or 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 pre-screened by HLA type and confirmatory HPV status to determine eligibility for future CUE-101 therapy. The demonstrated demand of patients for pre-screening underscores the significant unmet medical need in this indication. Next, on Slide 6, we show a high-level summary of the design for our ongoing Phase I trial of CUE-101. As Dan mentioned, we're very pleased with our progress of dosing patients in this trial and are highly encouraged by observations to date. As a reminder, we are enrolling post first-line patients with recurrent or metastatic squamous cell carcinoma driven by HPV, specifically HPV16. 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 US alone. This Phase I trial is to find molecular inclusion criteria to include head and neck cancer patients that are HLA 0201 positive and whose tumors are confirmed to be driven by HPV16. Through these specific inclusion criteria, we are ensuring that only patients with the potential for clinical benefits are enrolled and treated, really a translational precision medicine approach whereby each of our Immuno-STAT drug candidates is intended for patients with a specific molecular fingerprint. This trial is designed to provide insights into safety, mechanistic activity, and potential anti-tumor efficacy. The trial is a standard two-part study with the first Part A designed as a typical three plus three mono-therapy dose-escalation trial; patients receive CUE-101 once every three weeks via IV infusion. However, we've also provided the opportunity to dose up to nine patients in any given cohort where we see evidence of clinical activity or pharmacodynamics effect. This strategy allows us to further explore pharmacokinetics/pharmacodynamics effects, as well as build supporting data for determining the most appropriate dose for the Part B expansion. Based on the safety, pharmacodynamics, and efficacy data from the dose-escalation part, we will secure 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 anti-tumor responses also being followed. The expansion cohort is designed to confirm the safety, biologic activity, and anti-tumor activity at the effective dose in additional patients to provide further support and confidence as we move into the later phases with more patients. To evaluate on-target activity, we're measuring several translational biomarkers including T cell expansion in peripheral blood and measuring cytokine production by antigen-specific T cells. For anti-tumor activity, we're looking for objective responses by resist criteria at six-week intervals or after every two cycles of CUE-101. I'm very pleased to report that after initiating dosing of cohort one in late September last year, we successfully moved forward to cohort two in December and cohort three in March. We've now enrolled three patients in cohort four during the first two weeks of May. Again, to reiterate earlier comments, the fact that we continue on schedule and made such good progress despite the COVID-19 pandemic, which has shut down multiple clinical trials is an important metric of the commitment of our clinical collaborators and the enthusiasm they have for our approach to potentially provide clinical benefit to their patients in need. As a reminder, our preclinical modeling led us to initiate dosing with cohort one at what we believe is a low biologically active dose, and then a biologically and clinically active dose maybe achieved starting cohorts three or four. Shown in Slide 7 are the dosing groups for our patient cohorts. We initiated the trial at 0.06 mg/kg with a threefold expansion up to cohort three, and then a two-fold increase for subsequent cohorts. As noted on this slide, we compared the absolute dose by mass as well as molar content of IL-2 to the approved dose of Proleukin, which is 0.037 mg/kg. Proleukin is the wild-type IL-2 molecule generally known as aldesleukin. In the second cohort on a molar basis, we were already above the approved dose of Proleukin, and by the third cohort, we were approximately four to eight-fold in molar excess. Today, the 12 patients in cohorts one through four have received a total of 31 infusions of CUE-101, three weeks apart with what appears to be an attractive safety profile with limited toxicity. One patient in cohort four at the one mg/kg dose had an infusion reaction that resolved quickly and we observed that this dose is about eight-fold higher in terms of the administered IL-2 than the IL-2 delivered by an approved dose of Proleukin. With this data, we are confident that we can deliver high doses of IL-2 on target safely. We continue to be highly encouraged by our early progress in observations, including early evidence suggesting biologic activity. We have observed preliminary signs of T cell expansion and activation in our initial pharmacokinetics/pharmacodynamics results that we plan on confirming and extending in future analyses coupled with clinical evaluations. Importantly, we have now observed early signs of biologic and clinical activity. In cohort one, a patient inadvertently received five times the prescribed dose of CUE-101 between the doses intended for cohort two and three. This patient demonstrated early signs of T cell expansion as well as tumor regression on scan after receiving this dose but also developed worsening of a pre-existing bullous pemphigoid rash. CUE-101 was discontinued, but the patient remained stable with disease off therapy for several months before eventually progressing. One patient in cohort two demonstrated early signs of T cell expansion and had stable disease at first scan but did not sustain a continued response. Another patient from cohort two has confirmed stable disease with tumor regression of the target lesion. This heavily pretreated patient progressed well on therapy with a checkpoint inhibitor and continues on the study. A patient in cohort three has demonstrated activation and expansion of T cells and remains on study. We note that we are still in the dose-escalation stage of our Phase I trial and continue to monitor the five patients we are treating. We will provide further details as they become available over the course of the study. Based on the totality of these metrics, we will continue to evaluate and report on the emerging data as we prepare to advance to the dose-expansion Part B of the current study. In addition to the ongoing immunotherapy trial of CUE-101 and HPV positive head and neck cancer, we show in Slide 8 our collaboration with Merck to initiate and have submitted to the FDA a concurrent study to evaluate CUE-101 in combination with pembrolizumab or KEYTRUDA as first-line therapy for the same indication in patients who are also HLA 0201 positive. Our intention is to continue moving forward with the mono-therapy trial for second-line or later HPV positive refractory metastatic head and neck cancer patients and expand the cancer patient reach by moving into frontline patients in combination with KEYTRUDA, which is the current standard of care. In this trial referred to as KEYNOTE-A78, we intend to translate our preclinical findings demonstrating highly significant synergistic anti-tumor activity with CUE-101 combined with an anti-PD-1 antibody. These data, along with the CUE-101 mono-therapy activity in the preclinical tumor model, were recently published in a manuscript in Clinical Cancer Research last month. We intend to commence this trial in the second half of this year, once we've confirmed the safety of CUE-101 in the Phase I trial. Furthermore, Slide 8 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. Finally, once we have established clinical proof of concept for CUE-101 in head and neck squamous cell carcinoma, we may opportunistically expand into other HPV driven cancers, for example, cervical and anal cancers. I will now hand the call over to Anish to discuss other advances in our pipeline and platform. Anish?

Anish Suri, President and Chief Scientific Officer

Thanks, Ken, and thank you to everyone listening in. I hope all of you and your families are safe and well during these times. I'd like to remind everyone of the scientific vision that has underscored our focus and efforts from the very start. A vision that was centered on a singular, all-important question which is how does one take advantage of the selectivity and specificity of the immune response while not breaching patient safety. We believe our Immuno-STAT framework, as exemplified by the CUE-100 series, forms a rational solution anchored on sophisticated protein engineering. From an elegant perspective, the best map of the landscape is the landscape itself. To that end, the landscape of T cell modulation and cancer immunotherapy can involve many elements. However, the key fundamental signals for specificity coupled with controlled activation are what ultimately govern the outcome of the immune reaction. These core elements are incorporated into the molecular framework of the CUE-100 series. The two key signals on the 100 series consist of stabilized peptide HLA molecules to engage the tumor-specific T cells via the T cell receptor, thereby locking in the specificity combined with rationally engineered IL-2 molecules that selectively act upon those T cells to control their activation. We believe this control mechanism is an obligatory prerequisite for T cells and cancer immunity. In other words, an absence of the appropriate anti-tumor T cell repertoire means that the application of a T cell modulating approach via a singular cytokine therapy like IL-2 or its variants, or antibodies targeting checkpoint molecules is likely going to be a suboptimal or futile endeavor. From the earliest approval of Proleukin, it has been recognized that IL-2 has been a validated target for T cell activation. The challenge for the broad application of IL-2 has pertained to safety liabilities due to cytokine release, vascular leakage, and indiscriminate activation of immune cells in broad T cell subsets including regulatory T cells, or Treg. We evaluated the incorporation of IL-2 in the CUE-100 series guided by structure-based rational protein engineering solutions. We sought to achieve two key objectives. One was to generate an IL-2 that avoids the safety liabilities and Treg engagement properties of wild-type IL-2. The second modification is the attenuated binding to the IL-2 receptor beta subunit, allowing the IL-2 activity to be biased to those T cells that are docked to the specific peptide HLA complex via the T cell receptors, or TCRs. We believe this engineered biologic framework enables us to maintain specificity and selectivity while avoiding the systemic toxicities associated with the indiscriminate IL-2-dependent activation of many different cell types. As you've heard from Ken, and seen the dose cohorts, the initial clinical data sets appear to support this thesis. Several key points should be emphasized. First, we have a normal biologic scaffold that demonstrates exposure and dose proportionality in line with projections which is highly encouraging. Furthermore, we have not seen major safety liabilities with doses that, in molar content comparison, to IL-2 are significantly higher than the approved dose of Proleukin. For example, at the dose level in the fourth cohort, CUE-101 has approximately eight times the molar content of IL-2 compared to Proleukin. In addition, early pharmacodynamics data seem to suggest that we have activity in engaging and expanding the targeted T cells based on tetramer and ELISpot analysis. These are early data points that will be confirmed and extended as we obtain additional patient samples. But perhaps most encouraging is the composite view from the clinical experience thus far. We designed a novel biologics platform that appears to possess favorable properties pertaining to drug exposure in pharmacodynamics and also appears to be demonstrating mono-therapy clinical activity. As we obtain further supporting data from CUE-101, we are highly enthusiastic about the broad possible applications of the CUE-100 series. The data generated from CUE-101's clinical experience has the potential to de-risk the entire CUE-100 series since the core IL-2 elements coupled to the peptide HLA framework remain constant. Okay, I'd like to now move on to Slide 10 to remind you of the key features that we believe underscore the superior differentiation of the IL-2-based CUE-100 series over other IL-2 modalities that are available. This slide has been presented before as a part of our corporate deck and highlights the fact that the CUE-100 series can selectively deliver IL-2 to the relevant T cells, that is, the tumor-specific T-cells while minimizing the safety liabilities and broad effects on other types of subsets, both the Tregs and the vast majority of the non-tumor reactive T cells that all of us harbor. This is in stark contrast to non-alpha IL-2 variants that minimize the activity in Tregs but still act equitably on all other T cells, the vast majority of which have no relevance to tumor specificity. Furthermore, the core framework of the CUE-100 series can prime and expand T cells from a naive T cell repertoire, as reported in our recent publication in Clinical Cancer Research last month. While the non-alpha IL-2 variants rely upon a pre-existing anti-tumor T cell repertoire that must be present within the patient to derive benefit. The next slide, Slide 11, highlights our immuno-oncology development strategy to exploit the fullest potential of the CUE-100 framework. The present clinical trial with CUE-101 provides us foundational proof of concept in an indication of unmet medical need, and as mentioned previously, CUE-101 is positioned to potentially de-risk the entire 100 series. We have positioned ourselves to maximize success for the CUE-100 series by exploiting the key strength of the Immuno-STAT platform, which is modularity and flexibility that allows us to target different tumor antigens along with distinct HLA alleles for global patient populations. This strategic growth opportunity is exemplified through our ongoing work with CUE-102 and beyond, where we have focused on tumor antigens like Wilms Tumor 1 or WT-1 and KRAS, and we have initiated programs with additional alleles besides HLA-A02. These include HLA-A24 and A11, both being dominant in Asia, which was the primary reason for our LG Chem partnership for our first three programs. We have made strong progress with our CUE-102 programs and have generated pilot data demonstrating ex vivo expansion of human T cells, poly-functionality, and the killing of target cells. These data were recently presented at an invited talk at the Frontiers in Cancer Immunotherapy meeting, organized by the New York Academy of Sciences on May 12. We look forward to disclosing these promising data sets at upcoming forums, including the AACR Virtual Conference on June 22, where we will present a poster. Based on the foundational work of our Immuno-STAT platform, we have further developed our next-generation platform referred to as Neo-STAT, which greatly accelerates our scalability in generating new clinical candidates. The Neo-STAT framework specifically enhances the productivity and efficiencies, both from a time and cost perspective, and builds upon versatility to target multiple tumor antigens including post-translational modifications and personalized Neoantigens in the future. The next slide, Slide 12 focuses more on the Neo-STAT platform; a key intellectual leap here was to design a platform enhancement that significantly expanded the reach into diverse tumor antigens. To remind you, the current Immuno-STAT platform incorporates singular primary tumor driver antigens. This is great for examples like the HPV16 E7 protein as in our lead molecule CUE-101, or targets like WT1 or KRAS, where the immune assault on a dominant human driver antigen is likely to provide meaningful clinical benefit. With all of the examples mentioned above, data from cell therapy-based clinical studies utilizing either TCR T cell therapy or TIL-based adoptive cell therapy have demonstrated clinical responses. However, looking into the future, we want to be positioned to capture the vast landscape of available tumor antigens. Tumor sequencing and profiling data emerging in real time are providing us with a continual source of new antigens that can be effectively deployed using our CUE-100 series. The Neo-STAT framework allows us to generate the entire CUE-100 series scaffold without any specific peptide attached to the HLA molecule. This is in stark contrast to the current minister 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. Immuno-STATs are synthesized without a peptide epitope. Instead, the peptide epitope is subsequently attached using sophisticated attachment chemistry, shown in the current figure with examples of three different peptides bound to the Neo-STAT scaffold. This advance allows us to generate the co-generic scaffold for any HLA allele via a single cell line and then use that same product to conjugate it to different tumor antigens, thus expanding our reach. The fact that only a single scaffold needs to be generated will save us significant resources in both time and cost, thereby generating clinical-grade material and providing us essentially with an off-the-shelf biologic to directly target T cells in patients. We have generated early proof of concept data supporting the biological activity of molecules generated via the Neo-STAT platform. In Slide 13, the top panel shows the expansion of CMV-specific T cells from three human donors. The bottom panel shows the expansion of MART-1 specific T cells from an additional three human donors, with MART-1 being a known antigen in melanoma. In each case, the PBMCs from human donors were expanded with Immuno-STATs where the CMV or MART-1 T cell epitope is made as a fusion protein or with Neo-STATs where the respective T cell antigen is chemically conjugated to the scaffold. The expansion of relevant T cells specific to CMV or MART-1 was very comparable. The Immuno-STAT expanded T cells are shown in solid lines, while the Neo-STAT expanded T cells for each specificity are shown in dotted lines. These data provide enormous confidence that the Neo-STAT platform can be developed for future therapeutic applications and will complement and extend the current application of the Immuno-STAT platform. Note that the scaffold of the Neo-STAT described in the current slide is essentially the CUE-100 series without an antigenic peptide, but the same core configuration and valency of IL-2 molecules. Next slide, Slide 14 highlights our pipeline progress. We've made significant progress with CUE-101 in the mono-therapy trial, as discussed by Ken and Dan, and are positioned well for the combination study with pembrolizumab later this year. CUE-102 with WT1 continues to make strong progress. To remind you, this program is being prosecuted with two different HLA alleles, HLA-A02 and HLA-A24, which is a dominant allele in Asian populations. CUE-103 is being developed currently with LG Chem, our Asia partner, and will be disclosed in the near future. As listed here, we have also made meaningful progress with our KRAS programs for the CUE-100 series, and we hope to find an appropriate forum to share those data soon. We continue to extend the application of our platform with the CUE-200 series, wherein we have early datasets with cell surface receptors like CD80 (which is B71 that binds to CD28 in T cells) and 4-1BB Ligand. Finally, as disclosed recently, we continue to make strong progress in autoimmunity in our alliance with Merck using the CUE-300 series, wherein we have successfully generated Immuno-STATs incorporating class two HLA molecules to selectively target reactive CD4 positive T cells in human patients. Selective modulation of an apparent immune response and autoimmune diseases without broad immunosuppression, as is the case with current therapies, is likely to deliver superior clinical benefits to patients. We believe this goal can be achieved with a platform like ours. In conclusion, as I've stated in prior presentations, the Immuno-STAT and by extension the Neo-STAT platform address that fundamental immunological challenge: 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 and supported by data sets may offer a unique solution to patients suffering from cancers, autoimmune diseases, and threats from chronic pathogenic infections. Okay, with that, I'll now turn the call over to Kerri to review our financial results. Kerri.

Kerri-Ann Millar, Vice President of Finance and Principal Financial and Accounting Officer

Thank you, Anish. Turning now to Slide 15, I'd like to provide a brief update on our financial results for the first quarter ending March 31, 2020. We finished the quarter with approximately $48.7 million in cash and cash equivalents, $60.6 million in total assets, and working capital of approximately $39.1 million. Revenue generated from our collaboration with Merck and LG Chem in the first quarter of 2020 was $9.9 million compared to $0.4 million for the same period in 2019. For the quarter ended March 31, 2020, research and development expenses were $9.9 million compared to $8.4 million for the same period in 2019. The increase in research and development expenses was primarily due to clinical trial costs related to our ongoing CUE-101 mono-therapy trial that was initiated in the latter part of the third quarter of 2019, as well as manufacturing costs for CUE-101 to support our recently announced combination trial of CUE-101 with Merck's KEYTRUDA. General and administrative expenses were $3.9 million for the quarter ended March 31, 2020, compared to $3.4 million for the same period in 2019. This increase in general and administrative expenses was primarily due to an increase in stock-based compensation expenses and legal and accounting fees incurred in the first quarter of 2020. In April 2020, we extended our cash runway through an at-the-market equity offering sales agreement for aggregate proceeds of $34.3 million, net of commissions paid to Stifel who acted as sales agents. The successful deployment of the ATM facility in April has enabled us to strengthen our cash position to further support the development of our Neo-STAT platform and associated pipeline, including the clinical development of CUE-101 as both mono-therapy and combination therapy. Based on our current forecast, which includes the further build-out of our ongoing clinical studies, our current cash position is estimated to take us into the fourth quarter of 2021. With that, I'll turn the call back over to Dan for closing remarks. Dan.

Dan Passeri, CEO

Yeah. Thanks, Kerri. Since our last call, and despite the challenges we continue to face due to the COVID-19 pandemic, we've made significant progress across our platform and associated programs, as shown here in Slide 16. Having raised additional capital in April and having enrolled and treated patients through cohort three and now into cohort four in our CUE-101 Phase I trial, we're better positioned strategically to continue advancing CUE-101 for determining a recommended Phase II dose as mono-therapy and into a combination trial with KEYTRUDA, as well as further advancing our platform and associated programs. As described above, our lead program CUE-101 is well-positioned to generate a body of data including pharmacodynamics biomarker activity and patient scans that demonstrate biologic and clinical activity. In this patient setting, these data would significantly de-risk and validate our approach, allowing us to further build our pipeline based on the same foundational principles upon which we brought CUE-101 forward. With CUE-101 now being dosed at what could be biologically active and clinically relevant levels, we believe we are well-positioned to establish Cue Biopharma as a differentiated leader in immunotherapy with a potentially disruptive breakthrough therapeutic platform. A couple of our key accomplishments in Q1 include continued and timely enrollment of cohorts one through four in the CUE-101 mono-therapy trial, along with demonstration of favorable safety and tolerability, dose-proportional exposure in line with preclinical projections, and early signs of pharmacodynamics activity in emerging clinical activity. Our guidance for 2020 milestones, as shown on Slide 16, are unchanged from our last call. They include PK and PD results from the Phase 1 CUE-101 clinical trial in the second quarter of 2020, which we've demonstrated that are on track today; clinical responses in Phase I for CUE-101 via resist criteria in the second half of this year, and we are already beginning to see what appears to be emerging data supporting that; initiate a combination trial with KEYTRUDA in first-line, head and neck squamous cell carcinoma patients in the second half of this year, and we're on track with that with the announcement of the consummation of the partnership with KEYTRUDA; initiate and extend IND enabling activities for CUE-102 in the second half of this year, we are on track for that; and select a defined target for CUE-103 in the second quarter of this year, and we are on track for that as discussions with our partner, LG Chem, demonstrate Neo-STAT manufacturability and efficiencies in the second half of 2020. As you heard from Anish, we've made significant progress towards that objective. Finally, identify potential clinical candidates in our autoimmune collaboration with Merck in the second half of this year. With that, I would like to once again thank our employees for their hard work and commitment to advancing our science forward during these challenging times. Finally, I'd like to thank our shareholders and board of directors for continued support, enabling us to advance Cue Biopharma's platforms towards validation in the clinic while also moving our preclinical assets closer to IND enabling studies. We look forward to providing further updates on the validation, growth, and expansion of our pipeline, including our CUE-101 Phase I trial. Most importantly, we are grateful to all who enable us to pursue this noble mission to serve patients in need. I'd like to now open the line for questions. Operator?

Operator, Operator

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Boris Peaker with Cowen. Please proceed with your question.

Boris Peaker, Analyst

Congratulations on the progress you guys are making in this environment.

Dan Passeri, CEO

Thank you, really appreciate it, Boris.

Boris Peaker, Analyst

So my first question is about the study design, which allows you to expand doses out to nine patients. I'm just curious if you've expanded any or if you plan to expand any doses based on the initial activity that you're observing.

Dan Passeri, CEO

Sure. Ken, would you take that?

Ken Pienta, Acting Chief Medical Officer

Yeah, thanks for the question, Boris. So yes, we're planning to expand based on our Bayesian approach. We have not yet started to expand because we've been focusing on escalation since we have not reached the dose-limiting toxicity. We've made the conscious decision to continue to dose escalate before expanding at any given dose level, but we're constantly evaluating that. So the short answer is we have not started to expand any of the lower cohorts as yet.

Boris Peaker, Analyst

Got you. And my second question in terms of the dose-escalation. Your plan has seven cohorts right now, kind of estimated, or I guess, per protocol. I'm just curious, at some point, if you get to the seventh cohort and the drug is still tolerated, is there thoughts of going higher? Or how do you kind of think about the highest dose level worth testing and the dose range you consider you have an agonist versus most of the time we're used to thinking of antagonist?

Ken Pienta, Acting Chief Medical Officer

Yeah, that's a great question, and that's why we really built in this Bayesian approach to evaluate both the clinical responses as well as the pharmacodynamics biomarkers. We fully expect that by dose seven, we're going to see those types of biologic and clinical markers that would allow us, even if we haven't seen toxicity, to expand out at these lower cohorts. I'm seriously doubtful we'll have to go higher than dose seven, but we're prepared to. The reason we built this Bayesian approach over the three by three design was because we were concerned that we would not see a dose-limiting toxicity and we want to be able to select a rational dose for the Part B dose expansion. So as long as we're observing pharmacodynamics and clinical effects, we are likely to use our expansion of these lower cohorts to identify a Phase II, what we think is the recommended Phase II dose without necessarily having to go higher.

Boris Peaker, Analyst

Great, thank you very much for taking my questions.

Ken Pienta, Acting Chief Medical Officer

Thank you.

Dan Passeri, CEO

Thanks, Boris.

Operator, Operator

Next question comes from the line of Stephen Willey with Stifel. Please proceed with your question.

Stephen Willey, Analyst

Good afternoon. Thanks for taking the question and congrats on all the progress and the incremental information on some of the early cohorts. Maybe a couple of questions for Ken. You mentioned an infusion reaction happening, I think it was maybe cohort three.

Ken Pienta, Acting Chief Medical Officer

That was cohort four.

Stephen Willey, Analyst

So cohort four, can you maybe just talk about the severity of the adverse event that was observed there? Do you think you might have to pre-medicate as you move higher?

Ken Pienta, Acting Chief Medical Officer

Yeah, so it was a serious adverse event, but one that resolved rapidly over the space of an hour. Essentially, the patient did get some ibuprofen. At this point, we don't plan on pre-medicating at the next dose level and have no indication right now that we would have to do that. This was not a sustained event that would lead us to change our approach at this point.

Stephen Willey, Analyst

Okay, that’s helpful. Just curious, when in the time course of treatment are you evaluating T cell expansion and activation in these patients? How soon after administration?

Ken Pienta, Acting Chief Medical Officer

So we are looking at – we look at the – I'm not quite sure I understood the question. I'm sorry.

Anish Suri, President and Chief Scientific Officer

Right, so maybe I can comment on that. This is Anish, Stephen. So the first – as you will remember, the cycle is a three-week cycle. The drug is given, and the first analysis is after the first couple of weeks, then at each of the cycles before the drug is given. We are able to look at the T cells. There is a couple of weeks time lag between the dose of the drug and the time we get the blood for the analysis. Again, as Ken pointed out, these are early time points. We need to build this out with additional time points and additional doses and additional patients. These are early signals that we started to measure at this point.

Stephen Willey, Analyst

Okay. Then you mentioned that you're continuing to treat five patients. I think I heard, so it sounds like that might be the one cohort two patient that's had a confirmed stable disease. Can you maybe just kind of directionally point as to where those other patients are in terms of cohorts?

Anish Suri, President and Chief Scientific Officer

Sure. So we have one patient from cohort two, we have another patient from cohort three, and then the three patients from cohort four.

Stephen Willey, Analyst

Okay. Lastly, do you feel you have enough information at this point based on where you are in the dose escalation to initiate the PD-1 combo dose escalation in parallel? Or do you want to push those a little bit higher before you start that?

Anish Suri, President and Chief Scientific Officer

Well, we really want to push the doses a little higher before we get that going. We want to be sure that we have enough information in the mono-therapy arm to pick a dose because we would like to select a dose that's high enough that we can see early effects in the combo. So we offset the combo to start in the second half of this year rather than right away. We suggested that we would start at a minimum of cohort three with the combo, but it may be that we could even go higher. So in our submission to the FDA, we said at least that we would put in cohort three, but we also have the option of changing that.

Stephen Willey, Analyst

That's really helpful. Appreciate the answers and congrats again.

Anish Suri, President and Chief Scientific Officer

Thanks, Steve.

Ken Pienta, Acting Chief Medical Officer

Thank you, Steve.

Operator, Operator

Our next question comes from the line of Mark Breidenbach with Oppenheimer. Please proceed with your question.

Mark Breidenbach, Analyst

Good afternoon, guys, and congrats on the forward progress with dose-escalation and especially on the early signs of tumor regression in some of the patients. For the patients who have shown early indications of tumor regression, have they all progressed on prior PD-1 therapy or were any of them only previously treated with chemotherapy?

Ken Pienta, Acting Chief Medical Officer

Yes, Mark. Thanks for the question. This is Ken. All the patients have been heavily pretreated, including checkpoint inhibitors, so they've all progressed on checkpoint.

Mark Breidenbach, Analyst

Can you comment, is there a protocol mandated PD-1 washout period? Can you just give us some color on the interval between the last PD-1 and the start of CUE-101 for these patients?

Ken Pienta, Acting Chief Medical Officer

So that's a really great question, and there is no mandated washout period per se. All we're requiring is that patients are progressing. Each patient has a different length of time that they've been off PD-1 checkpoint therapy. In general, that's at least two to four months off from their last dose.

Mark Breidenbach, Analyst

Okay, that's helpful. Maybe a quick one for Dan. I'm just wondering if we can expect more fleshed out PK/PD data to make an appearance at a medical meeting in the second quarter or are you thinking this will be delivered by a press release once you have enough follow-up on these patients?

Dan Passeri, CEO

Sure. I'll answer that sort of as an overview and I'll ask Anish to elaborate, but look, we're going to be opportunistic about it. We're not going to hold on to data waiting for a conference unless we already have it lined up and the timing aligns. And we won't put out a press release unless we think it substantively warrants that type of a release. So our intention is to compile data as we've been doing. Obviously, we're using the quarterly calls as a venue. We also have investor conferences that we have the opportunity to update on an intermittent basis. So in this sort of COVID-19 new normal that we're dealing with, we'll use virtual venues where applicable or webpage and press releases as appropriate. I don't know if you want to elaborate?

Anish Suri, President and Chief Scientific Officer

So I think that's right, Mark. We are getting acquainted with the new normal. As I mentioned, even with WT1, we had that at AACR, that's not going to happen in June, but we will certainly look for appropriate forums where we can thoughtfully compile the data and share those at meetings. And of course, later in the year, we've got opportunities with SITC and such, but we'll look at ones before that too.

Mark Breidenbach, Analyst

Okay, and just a quick follow-up on the AACR presentation on, I guess, CUE-102. Are we going to see any data in that presentation that might give us more of an indication on which types of tumors you initially intend to focus clinical development on for CUE-102?

Anish Suri, President and Chief Scientific Officer

So the AACR presentation on WT1 is focused on characterization of the molecules and the early data that we've seen with primary human T cells and the downstream effect or responses, which are very encouraging. As for the indications, this is something that Ken and the team are focusing on as a core priority this year to align and define. In contrast to HPV driven head and neck cancer, where E7 stratifies nicely, WT1 has a spectrum of hematological and solid cancers. There are a few of them that stand out. The team is continuing to flesh that out, and we'll be able to share those thoughts in the latter half of this year.

Mark Breidenbach, Analyst

Understood. Thanks for taking the questions.

Anish Suri, President and Chief Scientific Officer

Thank you, Mark.

Dan Passeri, CEO

Thank you.

Operator, Operator

Our next question comes from the line of Madhu Kumar with Robert W. Baird. Please proceed with your question.

Madhu Kumar, Analyst

Hey everyone, thanks for taking our questions. So I think our first one is kind of maybe scientific and philosophical for Ken and Anish. How long do you think it practically takes to educate T cells we have activated against HPV E7 from CUE-101?

Anish Suri, President and Chief Scientific Officer

That's an excellent point, which is the kinetics of the evolution of a T cell response as a function of the pre-existing repertoire. The point you brought up is very important. It depends on what the baseline composition is. If you haven't sensitized and you're going from a naïve virgin repertoire, the time to effect is going to be longer than if you're expanding from a pre-primed repertoire. Our study showed nuances in intensity and presence depending on whether you had a pre-primed repertoire or not. My bias as an immunologist is that the first signals we’ve seen from the patients after the first few doses are likely from ones present in the periphery. There may be patients that may need more time on the drug to exhibit similar peripheral signals, and we must keep an open mind because the effector site is still an open question.

Madhu Kumar, Analyst

Also following from that question, to think about the kind of molar equivalences – have you done that kind of exposure equivalent, given that your drug is much more persistent than Proleukin in circulation?

Anish Suri, President and Chief Scientific Officer

We need to get more exposure data. These early points, Madhu, we are able to put that in perspective. We are encouraged to see that the early exposure looks in line with what was projected, but Proleukin exposure is very different than ours. That factor needs further clarification as we receive additional exposure data.

Ken Pienta, Acting Chief Medical Officer

We also recognize these doses are based on a single dose of Proleukin and that much of its toxicity is due to the multiple doses needed for effective exposure.

Madhu Kumar, Analyst

Great, thank you for taking my questions.

Operator, Operator

Our next question comes from the line of Reni Benjamin with JMP Securities. Please proceed with your question.

Reni Benjamin, Analyst

Hey, good afternoon, guys. Thanks for taking my questions. That's on the progress. Maybe just starting off with a question for Ken. If I look at cohorts like one through three, nine patients, if I heard you right, there were two stable diseases and two patients with T cell expansions or activations. If that's right, I'm curious why wouldn't the two patients with T cell expansions also be the ones getting stable disease? Just your thoughts on that, and what's the longest stable disease that you've recorded to date?

Ken Pienta, Acting Chief Medical Officer

Some of these patients are rapidly progressing. The fact that we've seen anything at all at these low doses is pretty tantalizing to me personally, and to all of us. We've started to see some tumor effects and early expansion activation, but that has not been enough to overcome patients with exponentially growing tumors. At the low doses, we just haven't been able to see a sustained response, even in the patients showing some biologic activity. If you look at our longest stable disease patient, we have one who's gone through cycle five. To confirm a response, we have to get to at least cycle four and we've had two patients that have made it through to cycle five dosing.

Reni Benjamin, Analyst

I know it's early days, but are there any negative selection metrics or biomarkers that may be starting to pop out? Perhaps something like T cell exhaustion markers that you might be able to utilize moving forward, or do you feel that once we start moving into less heavily pretreated patients, the repertoire is going to be healthy enough that it won't be an issue for patient selection?

Ken Pienta, Acting Chief Medical Officer

That's a great question. We don't have enough data yet on exhaustion. We're looking into evaluating those biomarkers to understand who is not responding. I do think moving into earlier groups, which we are with the combo study, will allow for better response. We’ll have a little more time with those patients for effect.

Anish Suri, President and Chief Scientific Officer

To add on to what Ken said, I think one of the parameters of immune fitness in terms of looking at the repertoire will come into play. As we gather more data, we can address this. The relationship between pharmacodynamics metrics and clinical response, including absolute numbers, is key to our understanding. However, we must be cautious because ultimately, what's crucial is the infiltrate at a tumor lesion site and local resistance mechanisms.

Reni Benjamin, Analyst

Got it. One last question. I want to leave Dan out of this discussion here, but you've got a really nice significant cash position now. I can think about it in two ways: One, it could result in an acceleration of the pipeline and things we were expecting might take a year or two, coming in a bit earlier, or at this stage in the game, there are enough rate-limiting steps like manufacturing where no matter how much cash you throw at it, it won't necessarily speed up the timelines. How should we think about the use of cash and acceleration of the pipeline?

Dan Passeri, CEO

It's an important question, Reni. A lot of companies think that by just hiring more people, they can increase output. Scale requires rigor, and that's what we've been putting in play, laying the foundation over the past year plus. As we continue to generate data, such as what you've heard today, but on a going forward basis with more patients, our intention is to expand out with CUE-101, advance 102, and leverage Neo-STAT for a more productive, cost-efficient avenue. It's a hybrid between what you articulated. We're not going to increase our burn rate haphazardly, but with generating de-risking validating data, we can justify increased expenditure on other assets that benefit from that de-risking.

Reni Benjamin, Analyst

Great, thanks for taking the questions and congrats again on the progress.

Dan Passeri, CEO

Thanks, Reni. Really appreciate it.

Operator, Operator

Good afternoon. Thanks for squeezing me in. Going back to the interesting line of discussion about the T cells possibly needing to be in the periphery for you to have time to work. Do you measure that?

Anish Suri, President and Chief Scientific Officer

Whenever these analysis are done, they're always compared to the baseline from before the dose. You have a sense of what that snapshot looks like. That's how you'll quantify it to judge if you've induced the right kind of repertoire.

Tom Shrader, Analyst

But can you back extrapolate into how to have a chance at an anti-tumor response given the thought?

Anish Suri, President and Chief Scientific Officer

Those metrics can be assessed in animals in an experimental setting, but in humans, the numbers vary greatly due to different levels of sensitization and fitness. This can be conducted on an individual basis, but it's hard to frame it for a broader group.

Tom Shrader, Analyst

Are the patients you treated all over the place in their prior PD-1 response, and is there anything interesting to think about between what they got out of PD-1 and your approach?

Anish Suri, President and Chief Scientific Officer

Almost all of them are prior checkpoint failures. If you don’t have the right effector repertoire, the application of a checkpoint becomes less relevant. A PD-1 blockade without the repertoire doesn't perform well.

Ken Pienta, Acting Chief Medical Officer

That's correct. None of the patients had a sustained checkpoint response before going on the study.

Tom Shrader, Analyst

Okay, thanks.

Dan Passeri, CEO

Thank you very much. I also want to thank everyone for your time and attention and for your interest in support of Cue Biopharma. We look forward to giving you continual updates as they become available, and most importantly, we hope everyone stays safe and healthy during these challenging times. So thank you very much and take care, everyone.

Operator, Operator

Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.