CUE - NASDAQ

Good day, and welcome to the Cue Biopharma Second Quarter 2024 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to our Chief Executive Officer, Mr. Dan Passeri. Please go ahead, sir.

Thank you, and good afternoon, everyone. As a reminder, this presentation and discussion is being recorded and will be available on our website for the next 30 days. Also, please be aware that the slides accompanying today's update may be advanced directly by those listening in and we will notify you on what slide we're on throughout the presentation. Joining me on today's call is Dr. Anish Suri, our President and Chief Scientific Officer; and Dr. Matteo Levisetti, our Chief Medical Officer. Shown here on Slide 2, this presentation and overview may contain some forward-looking statements, and any forward-looking statements made during this call represents the company's views only as of today, August 19, 2024. I'd like to begin the call by providing you with some context pertaining to our recent announcement focused upon near-term developments with our autoimmune programs and associated corporate restructuring. I'll begin with a brief synopsis of the objectives underlying these measures. And just to underscore, we carefully assessed our strategic positioning and evaluated various options for optimizing probabilities of success within the challenges and constraints of the current capital market conditions. The measures recently implemented aim to reduce our capital requirements, while also achieving enhanced productivity through what we consider to be basically a balanced business model focusing upon accessing capital and additional resources through a series of anticipated strategic partnerships. Furthermore, we've taken measures for our clinical data to further mature to enhance competitive positioning, particularly relating to patient survival data, enabling near-term cost savings and delaying the launch of a capital-intensive trial towards registration. This path provides a higher probability of success as more mature data should bolster the veracity of our mechanistic advantages for establishing the potential of a new standard of care for cancer patients. As shown in Slide number 3, we believe we've developed a breakthrough proprietary therapeutic approach to establish a new standard of care for treating both cancer and autoimmune diseases by restoring immune balance to the patient's immune system. As Matteo will elaborate upon shortly, our data from the ongoing CUE-101 Phase 1(b) trial clearly demonstrates evidence of substantial prolongation of survival in patients treated with CUE-101, monotherapy in the second line plus setting, and emerging data from the combination trial in front line with KEYTRUDA, that's pembrolizumab, that also appears to be following a similar pattern as what we saw with the monotherapy trial. We believe this data to be quite remarkable underscoring what we believe to be the true competitive positioning of our approach. As such, it's our intention with the measures taken to enable clinical data to further develop and mature in support of our foundational platform that we believe can induce effective and long-lasting anti-tumor activity or can be harnessed to rebalance the aberrant immune responses to address autoimmune disease. We've also made significant progress with our lead autoimmune disease program, CUE-401, being developed in collaboration with our partner, Ono Pharmaceutical, to address multiple autoimmune and inflammatory diseases, such as rheumatoid arthritis, graft-versus-host disease, lupus, inflammatory bowel disease, psoriasis, multiple sclerosis, amongst others, representing large, multi-billion dollar market potential addressing significant unmet medical need. Through this partnership, we've made impressive progress to date in moving towards selection of a lead candidate, which we anticipate in the first quarter of the coming year. Our collaboration with Ono has been highly productive and supportive, resulting in a growing body of promising data demonstrating the ability of CUE-401 to generate and expand regulatory T cells or Tregs fostering disease control in several disease models tested to date. As a reminder, Cue Biopharma has retained an option to a 50% U.S. co-development co-marketing right to CUE-401. Turning to 501, this program continues to advance and progress forward with the potential of eliminating autoreactive B cells with a highly selective and well-tolerated biologic. This program has the promise of addressing multiple B cell mediated autoimmune diseases, such as lupus, myasthenia gravis, Sjogren's disease, and myositis, amongst others, representing significant unmet medical needs with large multi-billion dollar market potential. Furthermore, the same mechanism of action that we would be seeing in B cell ablation for autoimmune disease may be deployed to address B cell malignancies, such as B cell lymphoma. We're presently assessing strategic partnering alternatives for furthering the development of this promising program, and look forward to providing updates as they become available. We have positioned ourselves with a growing portfolio of highly promising drug candidates in both oncology and autoimmune disease, all of which represent significant market opportunities addressing major unmet medical needs. We believe we've de-risked and validated our therapeutics platform with the existing data sets from our CUE-101 and CUE-102 programs, and have established foundational preclinical data pertaining to our autoimmune programs with potential to rebalance the patient's immune system to restore health. We've implemented a cash-efficient business model enabling a reduction of capital requirements with an emphasis on validating near-term partnering structures. I'm going to now turn the call over to Anish, who will describe the core attributes and advantages of our approach for treating autoimmune disease, as well as provide some additional context on our underlying platform developments for both oncology and autoimmune disease. After Anish, Matteo will provide further updates on the CUE-101 and -CUE-102 clinical trials and highlight the importance of the maturing data sets with particular attention to the survival metrics that are emerging. I'll then return for a brief summary before opening the call up to questions. Anish?

Thanks, Dan, and good afternoon to all listening in on today's call. I'll start by briefly summarizing our platform and the significant potential of our approach for restoring immune balance for treating cancers and autoimmune diseases. As described previously, the Immuno-STAT platform enables selective modulation of disease relevant immune cells, while avoiding broad perturbations of the immune system. This approach allows us to maximize efficacy, while preserving patient safety. As Dan indicated previously, and as summarized on Slide 3, we have now clinically validated Immuno-STAT’s via the CUE-100 series that selectively and safely delivers the potent cytokine IL-2, along with a TCR-activating signal, to preferentially activate tumor-specific T-cells while sparing all other irrelevant T-cells. This selective stimulation allows for the generation of a therapeutic index for IL-2, which has eluded many others trying to develop IL-2-based cancer therapies. In over 120 patients dosed, we have demonstrated a remarkable increase in efficacy with favorable tolerability. Matteo will provide further details on the latest clinical data that continue to demonstrate impressive benefit for patients being treated with CUE-101 and CUE-102. On the autoimmune front, we are focused on two distinct and highly promising approaches to reset immune balance. CUE-401 is a novel bispecific that stimulates the generation and expansion of regulatory T cells. Regulatory T cells, or Tregs, possess the ability to dampen and control autoreactive lymphocytes, hence are an important cell type to maintain immune homeostasis and health. CUE-401 has been partnered with Ono Pharmaceuticals and this collaboration continues to move forward strongly. In addition to CUE-401, we've also made significant progress developing CUE-501 from the CUE-500 series to enable T cell mediated depletion of B cells. This approach has the potential to deliver CAR-T like efficacy in a biologic while preserving patient safety, which offers significant differentiation from other competing approaches. Both CUE-401 and CUE-500 series are designed to address large patient populations across numerous autoimmune and inflammatory diseases with a multi-billion dollar market potential. We will expand on both programs in the next few slides. The next slide, Slide 4, exemplifies the unique attributes of CUE-401 in induction and expansion of Tregs. CUE-401 is a bispecific composed of the two key cytokines, IL-2 and TGF-beta that are known to convert peripheral CD4 T cells into Tregs, as well as expand pre-existing natural Tregs. This ability to induce new populations of Tregs provides CUE-401 with the prospects of significant superiority over other approaches deploying IL-2 variants to focus on only the pre-existing natural Tregs. As shown in Slide 4, we believe the mechanism of action of CUE-401 to enhance Tregs is qualitatively and quantitatively superior to IL-2 muteins targeting CD25, which is the high affinity subunit of the IL-2 receptor expressed on regulatory T cells. Slide 5 highlights data sets that show superiority of CUE-401 over an IL-2 mutein analog currently in clinical development for Treg generation. As shown on the left side of the slide, in an in-vitro human MLR assay, which is an in-vitro model for graft-versus-host disease, CUE-401 induces differentiation and expansion of Tregs. In contrast, a Treg directed IL-2 mutein is unable to achieve these effects. The bottom left panel confirms that both IL-2 and TGF-beta signals are needed for Treg generation, either alone is unable to achieve this effect. As shown on the right side and as previously discussed, short-term administration of CUE-401 results in long-term protection from autoimmunity, in this case, autoimmune gastritis. In our ongoing collaboration with Ono Pharmaceuticals, we have further extended the in-vivo efficacy with CUE-401 in several other disease models where we have noted a significant increase in Tregs accompanied by a notable decrease in pro-inflammatory cytokines. Let's now move to Slide 6 to provide an overview and update on the CUE-500 series for B cell depletion. The primary goal behind the design of the CUE-500 T cell engagers was to achieve T cell mediated depletion of B cells, while avoiding the adverse effects of systemic immune activation and broad engagement of all T cells. Our approach enables the potential to achieve CAR-T like efficacy, while avoiding the safety pitfalls of PAN-T-Cell Engagers. By design, the CUE-500 series Immuno-STAT’s bind to CD19 on B cells and effectively paint the B cells with a viral epitope, such as CMV. These B cells are then readily recognized and killed by the memory antiviral T cells as shown in the slide. Engaging virus-specific T cells, or VSTs, offers several advantages. These are trained killer T cells present in high frequency across the human population. They are localized in disease tissue and perform rapid killing of targets. And due to their specificity of virus antigens, the VSTs avoid the risk of potential reactivity against self-tissue or systemic immune activation as would be with PAN-T-Cell Engagers. Importantly, and as shown in Slide 7, VSTs, in this case CMV specific memory T cells, can achieve the same degree of killing of B cells as PAN-T-Cell Engagers, in this case an anti-CD19, anti-CD3 bispecific molecule. Note here, that the killing is specific to the engagement of CMV T cells since a CUE-500 molecule expressing an HIV epitope is unable to mediate B cell killing since HIV specific T cells are largely absent in most individuals. Slide 8 further exemplifies the difference in safety and cytokine production between CUE-501 and PAN-T-Cell Engagers. Due to their high selective engagement, the CUE-501 molecule does not result in copious production of inflammatory cytokines, such as interferon gamma and TNF as shown here. In contrast, a PAN-T-Cell Engagers molecule due to its anti-CD3 binding to all T cells results in significantly high levels of cytokine released, which ultimately compromises patient safety and drug tolerability. The following slide, Slide 9, highlights some of the notable points of differentiation between CUE-500 CAR-T approaches and PAN-T-Cell Engagers molecules. Note that all three approaches involve T cell mediated killing of target B cells, but it's only the CUE-500 series that can selectively engage trained memory killer T cells and redirect them to kill B cells. The selective engagement while avoiding systemic activation results in a significant reduction in cytokine release and related toxicities, which should favor patient safety while preserving efficacy. We believe the CUE-500 series of biologics are likely positioned as the best-in-class T cell engages for B cell depletion and could address a very large segment of autoimmune patients across many indications. In summary, there are three key takeaway messages. First, due to the shared core structural framework, the clinical de-risking and validation of Immuno-STAT’s in oncology via CUE-101 and CUE-102, including lack of clinically relevant immunogenicity, bolsters and supports the clinical application of CUE-500 series for B cell depletion in autoimmunity. Second, selective harnessing of antiviral memory T cells to kill B cells circumvents the safety risks associated with systemic T cell activation, as noted with PAN-T-Cell Engagers. And third, data demonstrating comparable killing while avoiding high levels of pro-inflammatory cytokine production positions the CUE-500 series to achieve desirable efficacy while not compromising patient safety, which is of highest clinical relevance when considering therapeutic applications in autoimmune diseases. With that background and update, I'll turn the call over to Matteo to describe the maturing clinical data from the ongoing oncology trials. Matteo?

Thanks, Anish. Good afternoon to everyone listening in on today's call. The maturing clinical data from the ongoing CUE-101 trial continues to demonstrate highly encouraging and robust metrics of clinical benefit for patients newly diagnosed with recurrent metastatic HPV+ positive head and neck cancer treated in combination with pembrolizumab, and for heavily pretreated recurrent metastatic HPV-positive head and neck cancer patients treated with monotherapy. The latest data continues to bolster prior observations, further enhancing our confidence in CUE-101 as a potential new standard of care therapeutic to improve outcomes for patients battling HPV+ head and neck cancer. As previously and consistently stated, we believe CUE-101's unique mechanism of action, as evidenced by the data generated to date, enables effective and tolerated dosing and selective expansion of the targeted tumor-specific T cells. Pembrolizumab is approved as the current standard of care treatment of first-line patients with recurrent metastatic head and neck cancer that have tumors with a combined positive score or CPS score of greater than or equal to 1%, which is a measure of PDL expression. The approval of pembrolizumab in this setting was based on immediate overall survival of 12.3 months and with an objective response rate of 19%, as observed in the KEYNOTE-048 study. As presented at ASCO in June, following combination treatment with CUE-101, the objective response rate of 46%, as shown on Slide 10, observed in patients with CPS greater than or equal to one represents a greater than doubling compared to the historical ORR of 19% observed with pembrolizumab monotherapy. As shown on the waterfall plot, out of 24 valuable patients, we have observed significant tumor reductions across many of these patients, including confirmed partial responses in 10 patients and a confirmed complete response in one patient. Importantly, four patients remain on treatment, including one with stable disease that exhibits a reduction in their target lesions of minus 28%. Notably for patients with low CPS scores, or scores of one to 19, an ORR of 50% was observed with CUE-101 and pembrolizumab, which represents a greater than tripling of the historical ORR of approximately 15% observed with pembrolizumab alone. In totality, our data suggests that not only does CUE-101 appear to demonstrably enhance the response rate of PD-1 inhibitions, but also does so by substantially enhancing responses in patients that are traditionally less likely to respond. This is particularly important since patients with low CPS scores represent approximately 50% of all patients that are CPS positive and eligible for treatment with pembrolizumab in the frontline setting. The responses observed in these patients have been durable as reflected in the 12-month OS and median OS, which is shown on the next slide, Slide 11. For patients treated with CUE-101 and pembrolizumab as first-line treatment, the median PFS of 5.8 months compares favorably to the median PFS of 3.2 months that was observed in the pembrolizumab arm of the KEYNOTE-048 trial. Importantly, the 12-month OS of 90% and the median OS of 21.8 months observed in patients with CPS greater than or equal to one, treated with combination treatment, is notable and substantially better than the historical data with pembrolizumab monotherapy, where 12-month OS and median OS were 51% and 12.3 months, respectively. These enhanced survival metrics, which continue to be followed, are particularly evident when looking at the patients with both low and high PD-L1 expression, as shown on Slide 12. Consistent with the enhanced ORR observed in patients with low PD-L1 expression, treated with CUE-101 and pembrolizumab, these patients are demonstrating favorable metrics of survival. In CPS-low patients treated with CUE-101 and pembrolizumab, the 12-month OS of 82% and the median OS of 21.8 months is importantly notable given the historical values of 44% in 10.8 months observed for pembrolizumab in the KEYNOTE-048. The benefit to CPS-high patients is also noteworthy with 12-month OS of 100% and a median OS that has not yet been reached in patients with CPS greater than or equal to 20, treated with CUE-101 and pembrolizumab compared to the historical values of 56% in 14.8 months, respectively. As a reminder, these maturing data from the combination trial appear to be following what we observed in the monotherapy second line plus setting, where CUE-101 demonstrated significant prolongation of survival, as shown in the following slide, Slide 13. As shown on the left, the median OS observed in patients treated with CUE-101 monotherapy at 2 mgs per kg was 24.8 months, and 20.8 months for those treated with CUE-101 at a dose of 4 mgs per kg. The survival observed in these patients is remarkable when compared to the median OS observed in the second line with checkpoint inhibitors, where median OS of 7.5 and 8.4 months were observed for nivolumab and pembrolizumab, respectively. We believe this enhancement of survival to be mediated by the durable and selective expansion of targeted tumor-specific T cells by CUE-101. In totality, our data suggests that CUE-101 increases the number of patients benefiting from checkpoint inhibition and appears to substantially improve survival in these patients. We continue to monitor and carefully follow the patients remaining on treatment, as well as in survival follow-up, and look forward to providing an update at [CITC] (ph) in November. The data continues to mature over time, and we believe the observations to date, particularly pertaining to what appears to be a substantial enhancement of survival, will place CUE-101 and by implication the CUE-100 series in a favorable and competitive position to potentially become a new standard of care. Moving onto the CUE-102 program, which is being explored in patients with WT1 expressing tumors, including colon, pancreatic, gastric, and ovarian cancers, CUE-102 has been well tolerated to date and no DLTs have been observed. Preliminary and emerging data shows dose-dependent increases in exposure and activation and expansion of WT1-specific T cells. Patients in all four indications have been treated at the expansion dose of 4 mgs per kg and remain on treatment or an active follow-up. As previously reported, we've observed anti-tumor activity in gastric and ovarian patients, as well as durable disease control in several tumor types, including pancreatic cancer. These data continue to mature, and we look forward to presenting updated data at CITC in November. With that, I will now turn the call back over to Dan. Dan?

Yes. Thanks, Matteo. As conveyed throughout this update call and shown on the next slide, Slide 14, we continue to make significant progress across our platform with programs in both oncology and autoimmune disease. We've demonstrated the ability to selectively modulate targeted T cells, providing what we believe to be a superior therapeutic approach in both oncology and autoimmune disease treatment. We continue to generate data from our two lead oncology programs, CUE-101 and CUE-102, and believe the data will continue to strengthen and bolster our position as a potential new standard of care, particularly supported by ongoing data generation pertaining to what appears to be highly meaningful and remarkable survival enhancement. We believe these observations support the premise that our approach is selectively activating and expanding tumor-specific T cells, providing a durable anti-cancer effect resulting in the enhanced survival. We believe we have the potential of establishing a new standard of care in the battle against cancer, as well as autoimmune disease. Importantly, as oncology data continue to mature, we have recently taken measures to prioritize our near-term focus and resource deployment upon near-term development milestones in our autoimmune programs, including lead selection and advancement towards the clinic in our partnership with Ono for CUE-401, as well as positioning CUE-501 for strategic partnering to further extend our capital runway and to enhance our capacity. As a reminder, we've retained a 50% co-development and co-marketing right to CUE-401, which has the potential application to multiple autoimmune diseases with multi-billion dollar market potential. Through various proactive measures taken, we've extended our runway to mid-2025, reduced our going forward cash burn from approximately $40 million per year to approximately $30 million per year. And importantly, additional partnering will further enhance our cash position with upfront milestone payments, as well as reduce our operational cash burn requirements through sponsored full-time equivalent supports. Through these measures, we believe we'll be increasingly capable of sustaining operational continuity through partnerships and other means of support. As a result of these measures combined with the ongoing progress with our maturing data across our programs, we believe we're very well positioned to realize a series of upcoming risk reducing and value driving milestones as we continue towards the goal of establishing a new standard of care for treating both cancer and autoimmune disease with our approach to restore health by restoring immune balance. With that, I'd now like to open the call up to questions. Operator?

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will come from Stephen Willey with Stifel. Please go ahead.

Yes, good afternoon. Thanks for taking the questions. Anish or Dan, I was just wondering if you could speak to maybe what you know at this point about the trafficking capacity of CUE-501? And then also just what's your estimate of [CMV 0] (ph) positivity in the general population? I know it's correlated to age. I think it tends to be lower in males versus females, but just wondering kind of what your general estimate of this would be and whether you would need to screen for CMV positivity in the context of a Phase 1 dose escalation trial.

Yes, so both very good questions, Steve. CMV is an example we presented, but just to make the point, Steve, we have made CUE-500 molecules with SARS-CoV-2 and EBV and other viral epitopes as well. So we presented the case with CMV. In the particular case of CMV zero positivity anywhere around 65% to 70%. In our experience when we've screened donors for SARS-CoV-2 at this point in time in the history of mankind. Virtually 100% have been SARS-positive for obvious reasons. From the trafficking, we are now doing in-vivo studies, but with Immuno-STAT’s in general, Steve, we had published a paper in Nature Methods with [indiscernible] several years back where we used ImmunoPET imaging to make the point that Immuno-STAT’s could penetrate solid tumor tissue as well as an infectious model and directly engage the relevant antigen-specific T cells. And we believe the same should hold true for the 500 series, where you can have extravasation and local engagement to essentially be able to recognize the T cells that are bound by these molecules.

Okay, that's helpful. And then maybe just a key one on one question. So, I understand that you guys are obviously kind of pausing things for now and allowing the survival data to mature. But I guess in the context of frontline head and neck right now and what is capable with pembro monotherapy, I think that appears to be the subject of some increasing debate as a function of primarily, I guess, the LEAP-10 data. So just curious, if you think a more mature survival statistic could help attract strategic interest, and just curious if you can share anything in terms of the conversations that you've had thus far with potentially interested parties in terms of how they're thinking about what pembro monotherapy historically is capable of? Thanks.

Sure. Thanks, Steve. This is Dan. So it's an important question. We've had dialogue with multiple potential partners on the data sets that we've had historically. When we look at the monotherapy data, we've actually had the comment of the data looks so promising that how do they know that we haven't biased by selecting healthy patients? That's one of the reasons we emphasize the randomized strategy for the Phase 2. I think what's really important here when you look at the landscape of competing molecules, different kinase inhibitors, et cetera, in this space, we think the survival data is going to really differentiate and truly position Cue with an advantage and a competitive advantage in terms of the durability of triggering an immune response. So that survival data as it continues to mature, I think what we've seen in monotherapy is very impressive. What we're seeing emerge with the combination appears to be following suit. And I think that's going to be dispositive in the long run. I think ultimately a randomized study is basically far more convincing because you're going directly against pembro as a single agent. But it is an important topic and it is being watched. And we do have ongoing dialogue with companies on 101.

All right. Thanks for taking the questions.

The next question will come from Ren Benjamin with Citizens JMP. Please go ahead.

Hey, good afternoon, guys. Thanks for taking the questions. So, thanks for the update on 101 in combination with KEYTRUDA and as in the monotherapy. I guess my first question would be, how to think about these results given the current landscape. And in particular, kind of the developing landscape given the provocative data we saw at ASCO from Merus and some of the others, that are also in the space. And just as a follow-up to that, I'm kind of curious -- I don't think it was mentioned in the earlier comments, can you provide any sort of an update on the neoadjuvant study?

Sure. Matteo, why don't you take that question?

Yes. No, I will. And again, just to follow up on the prior question, again, I think this really -- the data from the LEAP-10 trial underscores the importance of looking at early survival metrics, specifically like a 12-month survival and also median OS as it matures. And so, if you actually look at the pembro mono data set from LEAP-10, the 12-month survival is 59%, okay? If we look at the CUE-101 combination data, our current 12-month survival is 90%, okay? And if you look at CPS high, it's 100% of patients are alive at 12 months. Okay? And so with regards to the question now of the evolving landscape and with, I guess, in particular, Merus's compound PetoSemtamab, again, it's really important to look at the data that they've shared with regards to their survival, okay? And so, in the second line setting and beyond, they reported a survival of 11.5 months. With CUE-101 mono, we're currently at 20.8 months, and even 20 -- almost 5 months in the 2 mg/per kg cohort. So although in the second line plus they reported a response rate of 37%, their survival is about half as long, okay, as CUE monotherapy where we observed a response rate of 5%. And again, this is fully consistent with patterns of clinical benefit that have been now well defined in immunotherapy. So if we look at KIMMTRAK, recently approved for uveal melanoma, really modest response rate but a clear survival benefit led to its approval. And so back to pertuzumab now in the frontline setting, they -- at ASCO reported some very preliminary data. They actually only reported data on about half of the patients that were treated with very minimal follow-up. So with the follow-up -- a median follow-up, if you looked at the swimmer plot about four months. So again, I would just use caution and clearly hear the data needs to mature. And as I mentioned before, we have maturing metrics both at 12-month OS and median OS that are established. So that's real data and we'll have to see what happens going forward with pertuzumab and perhaps one could hypothesize it'll be similar to different inhibitors of these pathways for which they're inevitably pop-up bypass pathways and hence the advantages of engaging the immune system and inducing expansion of a durable anti-tumor T cell population.

Got it. And just…

I'm sorry, Ren. I think there was one other question about the new adjuvant, if I recall. And so, that study is progressing well. The investigators at Washington University are very close to completing enrollment in schedule B, where patients are getting two doses of 101 and we're getting tissue pre and post-treatment. Again, this is the preliminary data that we've seen looks very encouraging. The investigators really, I think, have -- I know, have the intent of submitting this for publication in a very high-level journal. And so, when this will become public and shared really depends on how they choose to proceed.

Got it. And then just maybe a final question on kind of funding and your current cash position and the like. Can you maybe help us understand how you plan on bridging the gap between now and kind of initial milestone payments expected from the Ono opt-in versus selection of lead candidates and the like, how do you see that kind of unfolding? Thanks.

Yes. Thanks, Ren. This is Dan. It's an important question. One thing I want to emphasize, we were very prudent and deliberate in basically looking at that question in a very dynamic way. The one thing we have not chosen to do historically is with the cost of capital as the small cap biotech sector has basically been compressed in terms of valuations. We have not chosen to go out and do a massively dilutive financing. So we've taken a look at a business model where we have programs that are all kind of moving over time. We have a partnered program right now, 401 with Ono. And if one looks back at that, it was actually a really nice design. They're helping, they're subsidizing basically the preclinical development, working very closely with us. They're supporting scientists. And that has resulted in a really good, high-quality body of data going forward to select a lead candidate that then with the objective of getting into the clinic, we have a 50% opt-in there. Even with the 50% opt-in, we'll receive milestones. So if those milestones get triggered, they help subsidize the development of that program. We have 501 in late stage discussions with several companies. The objective there is to consummate a transaction where we have an upfront. We have additional support of our scientists that are going to be committed to that program. That reduces our burn rate. And then a series of milestones beginning, obviously, with lead candidate selection, IND filing. Those milestones overlapped with the Ono milestones, are really important to basically give us continuity. So the measures we've taken for reducing our burn, basically enabling 101 data to mature without going into a very costly Phase 2 and just being prudent about what we're focusing on in the near term, focusing on partnering 501 to supplement. So these milestones help extend the runway in a sort of tiered manner. So if we do need to raise any capital, and not sure right now where we're going to need to, but if we do, it's going to be a modest amount, we're really trying to keep dilution down to a minimum because cost of capital is key. And ultimately what we want to do is, hit these milestones, further develop the pipeline, demonstrate further robustness of our clinical competitive positioning, and ultimately at some point in the future when the stock is a healthy evaluation, cost of capital isn't as onerous. So I hope that's a clear answer, but it's basically a dynamic analysis and we have a lot of moving parts here, but it's basically building up. That's why I meant by a balanced business model, having a stream of capital options coming in with these milestones being triggered and looking at raising capital in a very prudent, pragmatic manner based on cost of capital.

Great. Thanks, and good luck going forward.

All right. Appreciate it, Ren. Thank you.

The next question will come from Maury Raycroft with Jefferies. Please go ahead.

Hi, congrats on the data update, and thanks for taking my questions. I'll ask one on the CUE-500 series. For CUE-501, can you talk more about plans or options for next steps to position this program for partnering? Would it enhance potential for BD if you got regulator feedback or even key investigator buy-in to help define what the clinical development path could look like?

Yes, very important question. I think obviously the Ono partnership has enhanced our sort of insight on the autoimmune space. We have a very attractive sort of preclinical data set right now. We've been in discussions with several potential pharma partners on 501, various stages of diligence and progression. We're just highly confident that based on the feedback we have, it's a differentiated asset. It's very attractive based on basically being a biologic that mirrors what CAR-T was able to do with lupus. That's what the intent is. Compares favorably with bispecifics, the CD3, CD19 molecules. So we think the data set presents an opportunity for us to partner in the near term. And in terms of indications with that molecule, we're obviously going to hold off until the asset's partnered and we're able to engage in strategic dialogue with the partner on what to focus on in a sort of a series of indications. But I think for that program, we look at partnering as an important means of subsidizing development. We'd also aim to preserve a cell type, for instance, eosinophils or mast cells, something like that, where we retain control and upside of sort of a number of indications from those cell types. So I hope that answers your question, Maury.

Yes, really helpful. And maybe just to follow-up on the financial side as well, I guess for the Ono opt-in, is there any room to negotiate and potentially accelerate milestones or opt-in potential based on the data that you've generated so far, or would it not make sense to try to do that at this point?

Yes, I don't think it would make sense to try to modify it right now. We've been making really good progress. The partnership's actually been extremely productive. They've really been an outstandingly supportive partner. And we're aligned on what the next steps are, so I think we're very much seeing things from a similar perspective.

Got it. Okay, thanks for taking my questions.

The next question will come from Leland Gershell with Oppenheimer. Please go ahead.

Hey, good afternoon. Thanks for the update and taking my questions. May be just a few for you, Dan or Anish. It looks like you have a good base of preclinical data here for 401, 501. I wanted to know what might be the next set of non-clinical data that we might be looking for that you might have to present to us. And in that, are there any particular studies you're doing that may guide your thought process with respect to the indications that you prioritize for both those assets? Thank you.

Yes. Thanks, Leland. This is Anish. So we continue to generate pretty exciting data for both programs in autoimmunity with 401, obviously in collaboration with Ono, where we have seen efficacy in activity in several disease models and in due time collectively and collaboratively we'll release that in the public domain. In total, the data does seem to reflect what I've mentioned, which is a molecule that generates copious amounts of regulatory T cells along with signatures for halting autoimmune processes, seizing and reversing or minimizing pro-inflammatory cytokine production and related pathologies. For 500, we are in the process of in-vivo experiments, and again, we hope to release that as we start further understanding the relationship between dosing, B cell depletion, and some of the models that we're characterizing now. So both programs, the intentions are -- as we continue to go through this year to be able to talk about these datasets as they emerge.

Very thanks for taking my questions.

[Operator Instructions] Our next question will come from Ted Tenthoff with Piper Sandler. Please go ahead.

Great. Thank you very much. Just to sort of the evolving world of targeting CD19 [indiscernible] B cells for autoimmune disease. How much is the safety, the potential safety profile that you generated on the Immuno-STAT platform from 101 and 102 differentiating from the cell therapies? And is that something that investors are focused on? Thanks so much.

Yes. Ted, again, very good question. And I think I try to stress that, but the clinical de-risking and vulnerability of Immuno-STAT’s in man, in general, what we've shown with 101 and 102, we believe has an almost positive implication on the 500 series of B cell depletion. Simply, even if you look at the metrics of tolerability from immunogenicity, as you will know, we have not seen any clinically relevant immunogenicity in our 100 series trials with 101, 102. We've had patients receiving drugs up to two years. So again, that speaks to the nature of selective TCR engagement via this framework. The second is the fact that by virtue of the fact that you're only co-opting a very small percentage of your peripheral T cell repertoire in an individual and not carpet bombing all T cells with anti-CD3 based approaches, which we refer to as the PAN-T-Cell Engagers, we believe should also offer superior safety and tolerability metrics. And some of that is evident from this in-vitro assessments of cytokine release that we did, where you saw this profound production of cytokines by PAN-T-Cell Engagers molecules as opposed to CUE-500, where it was significantly reduced, despite the fact that CUE-500 shows very comparable metrics of killing efficacy of B cells. So that's also quite important. Thirdly, I think we should sort of reemphasize the fact that through nature, your memory antiviral T cells is something that all of us have harbored from the time we're born through our life to provide us protective immunity. So there's no other better long-lasting killer T cell population that one harbors, as compared to what these cells offer. So we do think being able to redirect them to kill targets such as B cells provides a very exciting avenue for really harnessing a potential of what nature has already given the individual.

Yes, I agree and obviously a very different manufacturing approach than what we're seeing with the [indiscernible]

That's exactly right. So just to add to that, the manufacturability is exactly what we've seen with 101, 102, antibody-based biologics. The yields are in line with what we've seen at similar stages for Immuno-STAT’s, which are clinically great products have yielded in grams per liter with very good shelf stability of the GMP product. That's a very important point. Thank you.

Great. Well, thanks, [indiscernible] progress.

Thank you, Ted.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Dan Passeri for any closing remarks. Please go ahead, sir.

Thank you. We just want to thank everyone for listening and your continued interest in our progress. And we look forward to keeping you updated with the progress we make going forward. So thank you very much and take care.