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What changed in Cue Biopharma, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Cue Biopharma, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+789 added−638 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-21)

Top changes in Cue Biopharma, Inc.'s 2023 10-K

789 paragraphs added · 638 removed · 455 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

161 edited+157 added−128 removed268 unchanged
Biggest changeWe believe that our Immuno-STAT and derivative drug product candidates may offer important clinical advantages over competing immunotherapy approaches, including: 10 • “Off-the-Shelf” and ready to use biologics that specifically target and selectively modulate disease relevant T cells; • Administration directly into the patient’s body without involving extraction and ex-vivo manipulation of T cells (e.g., cell therapy) or rigorous pre- and post- therapy conditioning of the patient; • Ability to selectively target disease specific T cells and control the quantity and properties of the co-stimulatory signal – in contrast to global activation through systemic, non-selective signaling that is common to therapies such as rIL-2 and bi-specific antibodies; • Access to a broad set of disease targets and patient populations with unmet medical need; • Standard delivery format (intravenous or subcutaneous) with a convenient dosing schedule (weekly to monthly) that can be administered by specialists and community-based physicians; and • Utilization of industry standard development and production process to support a cost-of-goods and supply chain similar to monoclonal antibodies, providing for timely and efficient drug supply.
Biggest changeWe believe that our Immuno-STAT and derivative drug product candidates may offer important clinical advantages over competing immunotherapy approaches, including: • Ability to selectively target disease specific T cells and control the quantity and properties of the co-stimulatory signal, in contrast to global activation through systemic, non-selective signaling that is common to therapies such as rIL-2 and bi-specific antibodies and is associated with poor tolerability; • “Off-the-Shelf” and ready to use biologics that specifically target and selectively modulate disease relevant T cells; • Utilization of industry standard development and production process that support a cost-of-goods and supply chain similar to monoclonal antibodies, providing for timely and efficient drug supply; • Standard delivery format (intravenous or subcutaneous) with a convenient dosing schedule (weekly to monthly) that can be administered by specialists and community-based physicians; • Administration directly into the patient’s body without involving extraction and ex-vivo manipulation of T cells (e.g., cell therapy) or rigorous pre- and post- therapy conditioning of the patient; and • Access to a broad set of disease targets and patient populations with high unmet medical need.
To realize the full potential of co-stimulatory molecules, such as IL-2 for cancer therapy, we engineered Immuno-STATs to take advantage of the specificity of the TCR allowing for selective activation and expansion of disease relevant T cells with the concurrent engagement of a co-stimulatory molecule, such as IL-2.
To realize the full potential of co-stimulatory molecules, such as IL-2, for cancer therapy, we engineered Immuno-STATs to take advantage of the specificity of the TCR allowing for selective activation and expansion of disease-relevant T cells with the concurrent engagement of a co-stimulatory molecule.
The Einstein License is a royalty-bearing license obligating us to pay a percentage of proceeds received from sales of categories of Licensed Products at low single digit rates. We have also agreed to share a portion of our proceeds that we derive from other agreements, like sublicense agreements, relating to Licensed Products that we may enter into.
The Einstein License is a royalty-bearing license obligating us to pay a percentage of proceeds received from sales of categories of Licensed Products at low single digit rates. We have also agreed to share a portion of our proceeds that we derive from other agreements, like sublicense agreements, that we may enter into relating to the Licensed Products.
The majority of the research phase of the collaboration agreement was substantially complete on March 31, 2022. The LG Chem Collaboration Agreement includes various representations, warranties, covenants, indemnities and other customary provisions.
The majority of the research phase of the LG Chem Collaboration Agreement was substantially complete on March 31, 2022. The LG Chem Collaboration Agreement includes various representations, warranties, covenants, indemnities and other customary provisions.
LG Chem may terminate the LG Chem Collaboration Agreement for convenience or change of control of us on a program-by-program, product-by-product or country-by-country basis, or in its entirety, at any time following the notice period set forth in the LG Chem Agreement.
LG Chem may terminate the LG Chem Collaboration Agreement for convenience or a change of control of us on a program-by-program, product-by-product or country-by-country basis, or in its entirety, at any time following the notice period set forth in the LG Chem Collaboration Agreement.
Licensure and Regulation of Biologics in the United States In the United States, our product candidates are regulated as biological products, or biologics, under the Public Health Service Act, or the PHSA, and the Federal Food, Drug and Cosmetic Act, or the FDCA, and its implementing regulations and guidance.
Licensure and Regulation of Biologics in the United States In the United States, our drug product candidates are regulated as biological products, or biologics, under the Public Health Service Act, or the PHSA, and the Federal Food, Drug and Cosmetic Act, or the FDCA, and its implementing regulations and guidance.
Restrictions under applicable federal and state healthcare laws and regulations, include the following: • the U.S. federal Anti‑Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; • the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious, or fraudulent or knowingly making, using, or causing to made or used a false record or statement to avoid, decrease, or conceal an obligation to pay money to the federal government; • the federal civil monetary penalty and false statement laws and regulations relating to pricing and submission of pricing information for government programs, including penalties for knowingly and intentionally overcharging 340b eligible entities and the submission of false or fraudulent pricing information to government entities; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for health care benefits, items or services; • the Foreign Corrupt Practices Act, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable treatment; • the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the Patient Protection and Affordable Care Act, or PPACA, as amended by the Health Care Education Reconciliation Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, within HHS information related to payments and other transfers of value made by that entity to physicians, other healthcare providers and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti‑kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non‑governmental third‑party payors, including private insurers.
Restrictions under applicable federal and state healthcare laws and regulations, include the following: • the U.S. federal Anti‑Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, offering, paying, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid; • the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false, fictitious, or fraudulent or knowingly making, using, or causing to made or used a false record or statement to avoid, decrease, or conceal an obligation to pay money to the federal government; • the federal civil monetary penalty and false statement laws and regulations relating to pricing and submission of pricing information for government programs, including penalties for knowingly and intentionally overcharging 340b eligible entities and the submission of false or fraudulent pricing information to government entities; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for health care benefits, items or services; • the Foreign Corrupt Practices Act, which prohibits companies and their intermediaries from making, or offering or promising to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business 43 or otherwise seeking favorable treatment; • the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the Patient Protection and Affordable Care Act, or PPACA, as amended by the Health Care Education Reconciliation Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, within HHS information related to payments and other transfers of value made by that entity to physicians, other healthcare providers and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws and regulations, such as state anti‑kickback and false claims laws, which may apply to healthcare items or services that are reimbursed by non‑governmental third‑party payors, including private insurers.
We expect any drug product candidate that we commercialize, either independently or with our strategic partners, will compete with existing, market-leading products and believe that our ability to compete will depend on our ability to execute on the following objectives: • design, develop and commercialize products that are superior to other products in the market in terms of, among other things, safety, efficacy, convenience, or price; 21 • obtain patent and/or other proprietary protection for our processes and drug product candidates; • obtain required regulatory approvals; • obtain favorable reimbursement, formulary and guideline status; and • collaborate with others in the design, development and commercialization of our products.
We expect any drug product candidate that we commercialize, either independently or with our strategic partners, will compete with existing, market-leading products and believe that our ability to compete will depend on our ability to execute on the following objectives: • design, develop and commercialize products that are superior to other products in the market in terms of, among other things, safety, efficacy, convenience, or price; • obtain patent and/or other proprietary protection for our processes and drug product candidates; • obtain required regulatory approvals; • obtain favorable reimbursement, formulary and guideline status; and • collaborate with others in the design, development and commercialization of our products.
Under the Einstein License, we are also obligated to make milestone payments corresponding to: (i) approval of the first IND by the FDA or foreign equivalent for a Licensed Product; (ii) approval of any subsequent IND application or foreign equivalent for a “new indication” for a Licensed Product; (iii) initiation of Phase 2 clinical trials or foreign equivalent on a Licensed Product; (iv) initiation of Phase 2 clinical trials or foreign equivalent for a “new indication” for a Licensed Product; (v) initiation of Phase 3 clinical trials or foreign equivalent on a Licensed Product; (vi) initiation of Phase 3 clinical trials or foreign equivalent for a “new indication” for a Licensed Product; (vii) the first commercial sale of a Licensed Product; (viii) the first commercial sale of each “new indication” for one of our previously approved Licensed Products; and (ix) cumulative 17 sales of certain Licensed Products reaching certain threshold amounts.
Under the Einstein License, we are also obligated to make milestone payments corresponding to: (i) approval of the first IND by the FDA or foreign equivalent for a Licensed Product; (ii) approval of any subsequent IND application or foreign equivalent for a “new indication” for a Licensed Product; (iii) initiation of Phase 2 clinical trials or foreign equivalent on a Licensed Product; (iv) initiation of Phase 2 clinical trials or foreign equivalent for a “new indication” for a Licensed Product; (v) initiation of Phase 3 clinical trials or foreign equivalent on a Licensed Product; (vi) initiation of Phase 3 clinical trials or foreign equivalent for a “new indication” for a Licensed Product; (vii) the first commercial sale of a Licensed Product; (viii) the first commercial sale of each “new indication” for one of our previously approved Licensed Products; and (ix) cumulative sales of certain Licensed Products reaching certain threshold amounts.
In addition, the LG Chem Collaboration Agreement also provides that LG Chem will pay us tiered single-digit royalties on net sales of commercialized Product Candidates, or Collaboration Products, in the LG Chem Territory on a product-by-product and country-by-country basis, until the later of expiration of patent rights in a country, the expiration of regulatory exclusivity in such country, or ten years after the first commercial sale of a Collaboration Product in such country, subject to certain royalty step-down provisions set forth in the LG Chem Collaboration Agreement.
In 18 addition, the LG Chem Collaboration Agreement also provides that LG Chem will pay us tiered single-digit royalties on net sales of commercialized Product Candidates, or Collaboration Products, in the LG Chem Territory on a product-by-product and country-by-country basis, until the later of expiration of patent rights in a country, the expiration of regulatory exclusivity in such country, or ten years after the first commercial sale of a Collaboration Product in such country, subject to certain royalty step-down provisions set forth in the LG Chem Collaboration Agreement.
The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. There have been recent government proposals to reduce the 12-year reference product exclusivity period, but none has been enacted to date. At the same time, since passage of the BPCIA, many states have passed laws or amendments to laws, which address pharmacy practices involving biosimilar products.
The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable 32 products. There have been recent government proposals to reduce the 12-year reference product exclusivity period, but none has been enacted to date. At the same time, since passage of the BPCIA, many states have passed laws or amendments to laws, which address pharmacy practices involving biosimilar products.
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).
Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a 45 new discounting program (beginning in 2025).
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or 29 failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post‑market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post‑market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Those criteria include whether: the investigational product is likely to demonstrate substantial improvements over available therapy; the study design is straight forward, as determined by the review division and the OCE; the endpoints can be easily interpreted. Applications with chemistry, manufacturing and control formulation changes and supplements with pharmacology/toxicology data are excluded from RTOR.
Those criteria include whether: the investigational product is likely to demonstrate substantial improvements over available therapy; the study design is straight forward, as determined by the review division and the OCE; the endpoints can be easily interpreted. Applications with chemistry, manufacturing and control formulation changes and supplements with 29 pharmacology/toxicology data are excluded from RTOR.
Based on the premise that CUE-102 shares the same core molecular framework as CUE-101, except for the T cell epitope pertaining to HPV-E7 versus WT-1, its IND was supported by clinical and safety data from the ongoing CUE-101 monotherapy trial and did not require additional IND-enabling toxicology studies.
Based on the premise that CUE-102 shares the same core molecular framework as CUE-101, except for the T cell epitope pertaining to HPV-E7 versus WT-1, its IND was supported by clinical and safety data from the ongoing CUE-101 monotherapy trial and did not require additional 6 IND-enabling toxicology studies.
Regulation and Procedures Governing Approval of Medicinal Products in the European Union In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products.
Regulation and Procedures Governing Approval of Medicinal Products in the European Union 35 In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of products.
In addition, the manufacturing of authorized products, for which a separate manufacturer’s license is mandatory, must also be conducted in strict compliance with the EMA’s GMP requirements and comparable requirements of other regulatory bodies in the European Union, which mandate the methods, facilities, and 35 controls used in manufacturing, processing and packing of drugs to assure their safety and identity.
In addition, the manufacturing of authorized products, for which a separate manufacturer’s license is mandatory, must also be conducted in strict compliance with the EMA’s GMP requirements and comparable requirements of other regulatory bodies in the European Union, which mandate the methods, facilities, and controls used in manufacturing, processing and packing of drugs to assure their safety and identity.
State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 39 Healthcare Reform A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. Healthcare Reform A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
For products with a new active substance indicated for the treatment of other diseases and products that are highly innovative or for which a centralized process is in the interest of patients, the centralized procedure may be optional. Manufacturers must demonstrate the quality, safety, and efficacy of their products to 34 the EMA, which provides an opinion regarding the MAA.
For products with a new active substance indicated for the treatment of other diseases and products that are highly innovative or for which a centralized process is in the interest of patients, the centralized procedure may be optional. Manufacturers must demonstrate the quality, safety, and efficacy of their products to the EMA, which provides an opinion regarding the MAA.
An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of fifteen years of marketing exclusivity for a drug. These periods can be extended for six additional months if pediatric exclusivity is obtained, which is described in detail below.
An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can provide up to a maximum of fifteen years of 38 marketing exclusivity for a drug. These periods can be extended for six additional months if pediatric exclusivity is obtained, which is described in detail below.
Regulatory Data Protection in the European Union In the European Union, new chemical entities approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Regulation (EC) No 726/2004, as amended, and Directive 2001/83/EC, as amended.
Regulatory Data Protection in the European Union In the EU, new chemical entities approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Regulation (EC) No 726/2004, as amended, and Directive 2001/83/EC, as amended.
Sponsors that receive a CRL may submit to the FDA information that represents a complete response to the issues identified by the FDA. Such resubmissions are classified under PDUFA as either Class 1 or Class 2. The classification of a resubmission is based on the information submitted by a sponsor in response to an action letter.
Sponsors that receive a CRL may submit to the FDA information that represents a complete response to the issues identified by the FDA. Such resubmissions are classified under PDUFA as either Class 1 or 27 Class 2. The classification of a resubmission is based on the information submitted by a sponsor in response to an action letter.
In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, 32 and post‑market surveillance.
In the United States, the FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post‑market surveillance.
In addition, a sponsor of a product that is otherwise the same product as an already approved orphan 30 drug may seek and obtain orphan drug designation for the subsequent product for the same rare disease or condition if it can present a plausible hypothesis that its product may be clinically superior to the first drug.
In addition, a sponsor of a product that is otherwise the same product as an already approved orphan drug may seek and obtain orphan drug designation for the subsequent product for the same rare disease or condition if it can present a plausible hypothesis that its product may be clinically superior to the first drug.
Part I is assessed by the appointed reporting Member State, whose assessment report is submitted for review by the sponsor and all other competent authorities of all EU member states in which an application for authorization of a clinical trial has been submitted, or concerned member states. Part II is assessed separately by each 33 concerned member state.
Part I is assessed by the appointed reporting Member State, whose assessment report is submitted for review by the sponsor and all other competent authorities of all EU Member States in which an application for authorization of a clinical trial has been submitted, or concerned member states. Part II is assessed separately by each concerned member state.
The conduct of such a clinical trial could be expensive and result in delays in our commercialization efforts. In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has been agreed.
The conduct of such a clinical trial could be expensive and result in delays in our commercialization efforts. 42 In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has been agreed.
Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials. 24 • Phase 3 clinical trials proceed if the Phase 2 clinical trials demonstrate that a dose range of the product candidate is potentially effective and has an acceptable safety profile.
Multiple Phase 2 clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more costly Phase 3 clinical trials. • Phase 3 clinical trials proceed if the Phase 2 clinical trials demonstrate that a dose range of the product candidate is potentially effective and has an acceptable safety profile.
Delaying, denying, limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated. Changes to the manufacturing process, specifications or container closure system for an approved product are strictly regulated and often require prior FDA approval before being implemented.
Delaying, denying, limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated. 26 Changes to the manufacturing process, specifications or container closure system for an approved product are strictly regulated and often require prior FDA approval before being implemented.
After approval, many types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval. 27 Expedited Review Programs The FDA is authorized to expedite the review of applications in several ways.
After approval, many types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval. Expedited Review Programs The FDA is authorized to expedite the review of applications in several ways.
In the case of orphan medicinal products, a two year extension of the orphan market exclusivity may be available. This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.
In the case of orphan medicinal products, a 39 two year extension of the orphan market exclusivity may be available. This pediatric reward is subject to specific conditions and is not automatically available when data in compliance with the PIP are developed and submitted.
A sponsor seeking approval to market and distribute a new biologic in the United States generally must satisfactorily complete each of the following steps: • preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the FDA’s Good Laboratory Practice, or GLP, regulations and standards and other applicable regulations; • completion of the manufacture, under current Good Manufacturing Practices, or GMP, conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; • design of a clinical protocol and submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; • performance of adequate and well‑controlled human clinical trials to establish the safety, potency, and purity of the product candidate for each proposed indication, in accordance with current Good Clinical Practices, or GCP; • preparation and submission to the FDA of a Biologic License Application, or BLA, for a biologic product requesting marketing for one or more proposed indications, including submission of detailed information on the manufacture and composition of the product in clinical development and proposed labelling; • review of the product by an FDA advisory committee, where appropriate or if applicable; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with GMP 22 requirements and to assure that the facilities, methods, and controls are adequate to preserve the product’s identity, strength, quality, and purity, and, if applicable, the FDA’s current good tissue practice for the use of human cellular and tissue products; • satisfactory completion of any FDA audits of the non‑clinical and clinical trial sites to assure compliance with GCPs and the integrity of clinical data in support of the BLA; • payment of user Prescription Drug User Free Act, or PDUFA, securing FDA approval of the BLA and licensure of the new biologic product; and • compliance with any post‑approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and any post‑approval studies required by the FDA.
A sponsor seeking approval to market and distribute a new biologic in the United States generally must satisfactorily complete each of the following steps: • preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the FDA’s 21 Good Laboratory Practice, or GLP, regulations and standards and other applicable regulations; • completion of the manufacture, under current Good Manufacturing Practices, or GMP, conditions, of the drug substance and drug product that the sponsor intends to use in human clinical trials along with required analytical and stability testing; • design of a clinical protocol and submission to the FDA of an investigational new drug application, or IND, application for human clinical testing, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; • performance of adequate and well‑controlled human clinical trials to establish the safety, potency, and purity of the product candidate for each proposed indication, in accordance with current Good Clinical Practices, or GCP; • preparation and submission to the FDA of a Biologic License Application, or BLA, for a biologic product requesting marketing for one or more proposed indications, including submission of detailed information on the manufacture and composition of the product in clinical development and proposed labelling; • review of the product by an FDA advisory committee, where appropriate or if applicable; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities, including those of third parties, at which the product, or components thereof, are produced to assess compliance with GMP requirements and to assure that the chemistry, methods, and controls, or CMC, for the product are adequate to preserve the product’s identity, strength, quality, and purity, and, if applicable, the FDA’s current good tissue practice for the use of human cellular and tissue products; • satisfactory completion of any FDA audits of the non‑clinical and clinical trial sites to assure compliance with GCPs and the integrity of clinical data in support of the BLA; • payment of user Prescription Drug User Free Act, or PDUFA, securing FDA approval of the BLA and licensure of the new biologic product; and • compliance with any post‑approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy, or REMS, and any post‑approval studies required by the FDA.
The strategic collaboration with Ono is an important advancement in our corporate development plan to seek third party support to further develop its CUE-400 series and provides dedicated resources and capabilities to help advance CUE-401 toward the clinic.
The strategic collaboration with Ono is an important advancement in our corporate development plan to seek third-party support to further develop the CUE-400 series and provides dedicated resources and capabilities to help advance CUE-401 toward the clinic.
As a condition of approval, the FDA may require that a sponsor of a biologic product candidate receiving accelerated approval perform adequate and well controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials.
As a condition of approval, the FDA may require that a sponsor of a biologic product candidate receiving accelerated approval 28 perform adequate and well controlled post-marketing clinical trials. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials.
In December 2022, Congress clarified through FDORA that FDA may approve multiple first 31 interchangeable biosimilar biological products so long as the products are all approved on the first day on which such a product is approved as interchangeable with the reference product.
In December 2022, Congress clarified through FDORA that FDA may approve multiple first interchangeable biosimilar biological products so long as the products are all approved on the first day on which such a product is approved as interchangeable with the reference product.
If the TCR is not engaged, as would be the case with the majority of non-tumor-specific T cells, then the signal from the reduced-affinity IL-2 variant by itself is insufficient to activate the non-tumor-specific T cells.
If the TCR is not engaged, as would be the case with the majority of non-tumor-specific T cells, then the signal from the reduced-affinity IL-2 variant by itself is insufficient to fully activate the non-tumor-specific T cells.
This group may recommend continuation of the study as planned, changes in study conduct, or cessation of the study at designated check points based on certain available data from the study to which only the DSMB has access.
This group may recommend continuation of the study as planned, changes in study conduct, or cessation of the study at designated check points based on certain available data from the study to which only the DSMB or DMC has access.
The review process and the PDUFA goal date may be extended by 26 three months if the FDA requests or if the sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.
The review process and the PDUFA goal date may be extended by three months if the FDA requests or if the sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.
If a product with orphan designation receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will receive orphan drug exclusivity.
If a product with orphan designation receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product 31 generally will receive orphan drug exclusivity.
Our Collaboration Agreement with LG Chem Effective November 6, 2018, we entered into a Collaboration, License and Option Agreement, or the LG Chem Collaboration Agreement, with LG Chem, related to the development of Immuno-STATs focused in the field of oncology.
Our Collaboration Agreement with LG Chem Effective November 6, 2018, we entered into a Collaboration, License and Option Agreement, or the LG Chem Collaboration Agreement, with LG Chem Ltd., or LG Chem, related to the development of Immuno-STATs focused in the field of oncology.
The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off‑label uses, and a company that is found to have improperly promoted off‑label uses may be subject to significant liability.
The FDA and other agencies actively 30 enforce the laws and regulations prohibiting the promotion of off‑label uses, and a company that is found to have improperly promoted off‑label uses may be subject to significant liability.
Patients are unlikely to use any drug product candidates we may develop unless coverage is provided and reimbursement is adequate to cover a significant 37 portion of the cost of such drug product candidates.
Patients are unlikely to use any drug product candidates we may develop unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of such drug product candidates.
Either party may terminate the LG Chem Agreement, in its entirety or on a program-by-program, product-by-product or country-by-country basis, in the event of an uncured material breach.
Either party may terminate the LG Chem Collaboration Agreement, in its entirety or on a program-by-program, product-by-product or country-by-country basis, in the event of an uncured material breach.
Our website and the information contained on, or that can be accessed through, the website will not be deemed to be incorporated by reference in, and are not considered part of, this Annual Report on Form 10-K or any other report or document we file with the Securities and Exchange Commission, or the SEC, and any reference to our website address is intended to be an inactive textual reference only. 42
Our website and the information contained on, or that can be accessed through, the website will not be deemed to be incorporated by reference in, and are not considered part of, this Annual Report on Form 10-K or any other report or document we file with the Securities and Exchange Commission, or the SEC, and any reference to our website address is intended to be an inactive textual reference only. 47
Under certain circumstances and upon prior notice to Einstein, we may have the right to an additional extension of our Diligence Milestones if, despite our commercially reasonable efforts we are not able to satisfy the Phase 2 clinical trial Diligence Milestone or any subsequent Diligence Milestone. As of the date of this report, we have met all required Diligence Milestones.
Under certain circumstances and upon prior notice to Einstein, we may have the right to an additional extension of our Diligence Milestones if, despite our commercially reasonable efforts we are not able to satisfy the Phase 3 clinical trial Diligence Milestone or any subsequent Diligence Milestone. As of the date of this report, we have met all required Diligence Milestones.
ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patent registries. The FDA may prevent or limit further marketing of a product based on the results of post‑market studies or surveillance programs.
ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patent registries. The FDA may prevent or limit further marketing of a product based on the results of post‑approval studies or surveillance programs.
Specifically, the process governing approval of medicinal products in the European Union generally follows the same lines as in the United States. It entails satisfactory completion of preclinical studies and adequate and well‑controlled clinical trials to establish the safety and efficacy of the product for each proposed indication.
Specifically, the process governing approval of medicinal products in the European Union, or EU, generally follows the same lines as in the United States. It entails satisfactory completion of preclinical studies and adequate and well‑controlled clinical trials to establish the safety and efficacy of the product for each proposed indication.
Failure to exhibit due diligence with regard to conducting Phase 4 clinical trials could result in withdrawal of approval for products. A clinical trial may combine the elements of more than one phase and the FDA often requires more than one Phase 3 trial to support marketing approval of a product candidate.
Failure to exhibit due diligence with regard to conducting post-approval clinical trials could result in withdrawal of approval for products. A clinical trial may combine the elements of more than one phase and the FDA often requires more than one Phase 3 trial to support marketing approval of a product candidate.
The FDA may limit the approved indications for use of the product. It may also require that contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may call for post‑approval studies, including Phase 4 clinical trials, to further assess the product’s safety after approval.
The FDA may limit the approved indications for use of the product. It may also require that contraindications, warnings or precautions be included in the product labeling. In addition, the FDA may call for post‑approval studies, including post-approval clinical trials, to further assess the product’s safety after approval.
Our patent applications describe certain features of our technologies, including our Immuno-STAT platform, our Neo-STAT platform, CAR-T and ex-vivo applications of our Immuno-STAT platform, our RDI-STAT platform, our CUE-400 Series platform, including CUE-401, as well as specific biologic molecules, drug product candidates and methods of treatment using our Immuno-STATs.
Our patent applications describe certain features of our technologies, including our Immuno-STAT platform, our Neo-STAT platform, CAR-T and ex-vivo applications of our Immuno-STAT platform, our RDI-STAT platform, our CUE-300 Series platform, including CUE-301, our CUE-400 Series platform, including CUE-401, as well as specific biologic molecules, drug product candidates and methods of treatment using our Immuno-STATs.
Such post‑approval trials are typically referred to as Phase 4 clinical trials. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved under accelerated approval regulations.
Such trials are typically referred to as post-approval clinical trials. These studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of biologics approved under accelerated approval regulations.
Clinical Trial Approval On January 31, 2022, the new Clinical Trials Regulation (EU) No 536/2014 became effective in the European Union and replaced the prior Clinical Trials Directive 2001/20/EC. The new regulation aims at simplifying and streamlining the authorization, conduct and transparency of clinical trials in the European Union.
Clinical Trial Approval On January 31, 2022, the new Clinical Trials Regulation (EU) No 536/2014, or CTR, became effective in the European Union and replaced the prior Clinical Trials Directive 2001/20/EC. The new regulation aims at simplifying and streamlining the authorization, conduct and transparency of clinical trials in the EU.
When a foreign clinical trial is not conducted under an IND, the sponsor must ensure that the trial complies with certain regulatory requirements of the FDA in order to use the trial as support for an IND or application for marketing approval.
When a foreign clinical study is not conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements of the FDA in order to use the study as support for an IND or application for marketing approval.
In order to achieve this objective, we are focused on the following strategies: Advance our Tumor Antigen-specific IL-2-based CUE-100 series for oncology • Through CUE-101, as representative and exemplary of our IL-2 based CUE-100 series, we have generated data that demonstrated that IL-2 may be selectively and tolerably delivered to the tumor-specific T cells that are most relevant for anti-tumor immunity.
In order to achieve this objective, we are focused on the following strategy: Advance our Tumor Antigen-specific IL-2-based CUE-100 series for oncology • Through CUE-101, as representative and exemplary of our IL-2 based CUE-100 series, we have generated data that demonstrated that IL-2 may be selectively and tolerably delivered to the tumor-specific T cells relevant for anti-tumor immunity.
None of these expedited programs changes the standards for approval but each may help expedite the development or approval process governing product candidates. Project Optimus 28 Project Optimus is an initiative of the Oncology Center of Excellence at the FDA.
None of these expedited programs changes the standards for approval but each may help expedite the development or approval process governing product candidates. Project Optimus Project Optimus is an initiative of the Oncology Center of Excellence, or OCE, at the FDA.
For the year ended December 31, 2022, there were no payments related to Einstein license maintenance fees under the Einstein License, as they were creditable against actual payments owed to Einstein during the twelve month period.
For the year ended December 31, 2023, there were no payments related to Einstein license maintenance fees under the Einstein License, as they were creditable against actual payments owed to Einstein during the twelve-month period.
Clinical testing also must satisfy extensive GCP rules and the requirements for informed consent. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board, or DSMB.
Clinical testing also must satisfy extensive GCP rules and the requirements for informed consent. 23 Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board, or DSMB, or data monitoring committee, or DMC.
If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any Phase 4 clinical trial requirement or to request a change in the product labeling.
If the FDA approves a product while a company has ongoing clinical trials that were not necessary for approval, a company may be able to use the data from these clinical trials to meet all or part of any post-approval clinical trial requirement or to request a change in the product labeling.
Marketing Authorization To obtain a marketing authorization for a product under the European Union regulatory system, a sponsor must submit an MAA, either under a centralized procedure administered by the EMA or one of the procedures administered by competent authorities in European Union Member States (decentralized procedure, national procedure, or mutual recognition procedure).
Marketing Authorization To obtain a marketing authorization for a product under the EU regulatory system, a sponsor must submit an MAA, either under a centralized procedure administered by the EMA or one of the procedures administered by competent authorities in EU Member States (decentralized procedure, national procedure, or mutual recognition procedure).
The Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products. Thereafter, the EU and the United Kingdom will form two separate markets governed by two distinct regulatory and legal regimes.
The Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products. Thereafter, the EU and the UK will form two separate markets governed by two distinct regulatory and legal regimes.
In return for performing CMC process development, LG Chem is eligible to receive low-single digit percentage royalty payments on the sales of Collaboration Products sold in all countries outside the LG Chem Territory. As of December 31, 2022, we recorded approximately $19.6 million in collaboration revenue related to this agreement since inception.
In return for performing CMC process development, LG Chem is eligible to receive low-single digit percentage royalty payments on the sales of Collaboration Products sold in all countries outside the LG Chem Territory. As of December 31, 2023, we recorded approximately $19.9 million in collaboration revenue related to this agreement since inception.
Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops when additional information or written or oral explanation is to be provided by the sponsor in response to questions of the CHMP.
Under the centralized procedure in the EU, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops when additional information or written or oral explanation is to be provided by the sponsor in response to questions of the CHMP.
Pediatric Studies Under the Pediatric Research Equity Act of 2003, a BLA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
Pediatric Studies Under the Pediatric Research Equity Act of 2003, or PREA, a BLA or supplement thereto must contain data that are adequate to assess the safety, potency and purity of the product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
Our second drug product candidate in our CUE-100 series, CUE-102, targets Wilms’ Tumor 1 protein, or WT-1, an oncofetal antigen known to be over-expressed in more than 20 different cancers, including both solid tumors (such as colorectal, ovarian, pancreatic and lung) and hematologic malignancies (such as acute myeloid leukemia, multiple myeloma and myelodysplastic syndromes).
CUE-102, the second HLA-A02 drug product candidate in our CUE-100 series, targets Wilms’ Tumor 1 protein, or WT1, an oncofetal antigen known to be over-expressed in more than 20 different cancers, including both solid tumors (such as colorectal, ovarian, pancreatic and lung) and hematologic malignancies (such as acute myeloid leukemia, multiple myeloma and myelodysplastic syndromes).
The FDA is required to send a Pediatric Research Equity Act, or PREA, Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation.
The FDA is required to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation.
If the application is not approved, the FDA will issue a complete response letter, or CRL, which will contain the conditions that must be met in order to secure final approval of the application, and when possible will outline recommended actions the sponsor might take to obtain approval of the application.
If the application is not approved, the FDA will issue a CRL, which will contain the conditions that must be met in order to secure final approval of the application, and, when possible, will outline recommended actions the sponsor might take to obtain approval of the application.
The EU and the United Kingdom reached an agreement on their new partnership in the Trade and Cooperation Agreement, or the Agreement, which was applied provisionally beginning on January 1, 2021 and which entered into force on May 1, 2021.
The EU and the UK reached an agreement on their new partnership in the Trade and Cooperation Agreement, or the Agreement, which was applied provisionally beginning on January 1, 2021 and which entered into force on May 1, 2021.
The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical trials, as well as the quality and integrity of the resulting data. They further help ensure that non-IND foreign trials are conducted in a manner comparable to that required for clinical trials in the United States.
The FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical studies, as well as the quality and integrity of the resulting data. They further help ensure that non-IND foreign studies are conducted in a manner comparable to that required for IND studies.
Real-Time Oncology Review of Supplemental NDAs Through its Oncology Center for Excellence, or OCE, the FDA has established two pilot programs allowing for real-time review of supplemental applications for previously approved oncology products.
Real-Time Oncology Review of Supplemental NDAs Through its OCE, the FDA has established two pilot programs allowing for real-time review of supplemental applications for previously approved oncology products.
More recently, on August 16, 2022, the IRA was signed into law by the President of the United States.
On August 16, 2022, the IRA was signed into law by the President of the United States.
The sponsor of a licensed BLA is also subject to an annual program fee, which for federal fiscal year 2023 is $393,933. Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver for certain small businesses.
The sponsor of a licensed BLA is also subject to an annual program fee, which for federal fiscal year 2024 is $416,734. Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver for certain small businesses.
A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals. The USPTO reviews and approves the application for any patent term extension or restoration in consultation with the FDA.
A patent that covers multiple products for which approval is sought can only be extended in connection with one of the approvals. The U.S. Patent and Trademark Office reviews and approves the application for any patent term extension or restoration in consultation with the FDA.
DiPaolo has also observed the therapeutic potential of CUE-401 in a T cell transfer model of autoimmune gastritis, wherein treatment with CUE-401 led to a prolonged suppression of self-reactive T cells and significantly reduced pathological evidence of disease in the stomachs of treated mice (shown in lower figure below).
The therapeutic potential of CUE-401 has also been observed in a T cell transfer model of autoimmune gastritis, wherein treatment with CUE-401 led to a prolonged suppression of self-reactive T cells and significantly reduced pathological evidence of disease in the stomachs of treated mice.
For example, with enactment of the Tax Cuts and Jobs Act of 2017, or the TCJA, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019. Further, on December 14, 2018, a U.S.
For example, with enactment of the Tax Cuts and Jobs Act of 2017, or the TCJA, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019. On June 17, 2021, the U.S.
Clinical holds are imposed by the FDA whenever there is concern for patient safety and may be a result of new data, findings, or developments in clinical, nonclinical, and/or chemistry, manufacturing, and controls.
Clinical holds are imposed by the FDA whenever there is concern for patient safety and may be a result of new data, findings, or 22 developments in clinical, nonclinical, and/or CMC.
The regulation will, among other things: strengthen the rules on placing devices on the market and reinforce surveillance once they are available; establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance, and safety of devices placed on the market; improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the European Union; and strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market. 36 Brexit and the Regulatory Framework in the United Kingdom The United Kingdom’s withdrawal from the EU took place on January 31, 2020.
The regulation will, among other things: strengthen the rules on placing devices on the market and reinforce surveillance once they are available; establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance, and safety of devices placed on the market; improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the European Union; and strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.
We offer employees a competitive and comprehensive benefits package. The principal purposes of our incentive plans are to attract, retain and motivate selected employees, consultants, advisors and directors through the granting of stock-based compensation awards and cash-based performance bonus awards, as applicable. We support employees attending industry conferences and obtaining professional licenses.
The principal purposes of our incentive plans are to attract, retain and motivate selected employees, consultants, advisors and directors through the granting of stock-based compensation awards and cash-based performance bonus awards, as applicable. We support employees 46 attending industry conferences and obtaining professional licenses.
The BLA must contain extensive manufacturing information and detailed information on the composition of the product and proposed labeling as well as payment of a user fee. Under federal law, the submission of most BLAs is subject to an application user fee, which for federal fiscal year 2023 is $3,242,026 for an application requiring clinical data.
The BLA must contain extensive manufacturing information and detailed information on the composition of the product and proposed labeling as well as payment of a user fee. Under federal law, the submission of most BLAs is subject to an application user fee, which for federal fiscal year 2024 is $4,048,695 for an application requiring clinical data.
The former administration also took executive actions to undermine or delay implementation of the PPACA, including directing federal agencies with authorities and responsibilities under the PPACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the PPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.
Litigation and legislation over the PPACA are likely to continue, with unpredictable and uncertain results. 44 The former administration also took executive actions to undermine or delay implementation of the PPACA, including directing federal agencies with authorities and responsibilities under the PPACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the PPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices.
By selectively targeting, activating and expanding tumor-specific immune cells directly in the patient’s body, we believe our IL-2-based CUE-100 series could solve the foundational problem as to how to selectively activate and amplify only those tumor-specific T cells without broadly activating the vast majority of tumor-irrelevant cells, thus potentially achieving well tolerated and therapeutically effective dose levels.
By selectively targeting, activating and expanding tumor-specific T cells, we believe our IL-2-based CUE-100 series could solve the foundational problem of how to selectively activate and amplify only those tumor-specific T cells without broadly activating the vast majority of tumor-irrelevant cells, thus potentially achieving well-tolerated and therapeutically effective therapies.
The Einstein License also obligates us to meet certain due diligence requirements, or the Diligence Milestones, as follows: • update our research and development plan annually; • initiate Phase 1 clinical trials on a Licensed Product within a number of years from the Effective Date; • initiate Phase 2 clinical trials on a Licensed Product within a number of years from the Effective Date; • initiate Phase 3 clinical trials on a Licensed Product within a number of years from the Effective Date; • submit an application for FDA approval to market and sell a Licensed Product within a number of years from the Effective Date; • have our first commercial sale of an FDA Licensed Product within a number of years from the Effective Date; and • spend a minimum amount per year on product development until our first commercial sale of a Licensed Product.
Einstein may also terminate the Einstein License in the event we are convicted of certain felonies relating to the manufacture or use of Licensed Products. 17 The Einstein License also obligates us to meet certain due diligence requirements, or the Diligence Milestones, as follows: • update our research and development plan annually; • initiate Phase 1 clinical trials on a Licensed Product within a number of years from the Effective Date; • initiate Phase 2 clinical trials on a Licensed Product within a number of years from the Effective Date; • initiate Phase 3 clinical trials on a Licensed Product within a number of years from the Effective Date; • submit an application for FDA approval to market and sell a Licensed Product within a number of years from the Effective Date; • have our first commercial sale of an FDA Licensed Product within a number of years from the Effective Date; and • spend a minimum amount per year on product development until our first commercial sale of a Licensed Product.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, later discovery of previously unknown problems with our products, manufacturers, or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including: • restrictions on such products, manufacturers, or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on the distribution or use of a product; • requirements to conduct post-marketing clinical trials; • receipt of warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • recall of products; • fines, restitution, or disgorgement of profits or revenue; • suspension or withdrawal of marketing approvals; • suspension of any ongoing clinical trials; • refusal to permit the import or export of our products; • product seizure; and • injunctions or the imposition of civil or criminal penalties.
Biggest changeIn addition, if any product fails to comply with applicable regulatory requirements, a regulatory agency may: • issue fines, warning letters, untitled letters or impose holds on clinical trials if any are still ongoing; • mandate modifications to promotional materials or require provision of corrective information to healthcare practitioners; • impose restrictions on the product or its manufacturers or manufacturing processes; • impose restrictions on the labeling or marketing of the product; • impose restrictions on product distribution or use; • require post-marketing clinical trials; • require withdrawal of the product from the market; • refuse to approve pending applications or supplements to approved applications that we submit; • require recall of the product; • require entry into a consent decree, which can include imposition of various fines (including restitution or disgorgement of profits or revenue), reimbursements for inspection costs, required due dates for specific actions and penalties for non-compliance; • suspend or withdraw marketing approvals; • refuse to permit the import or export of the product; • seize or detain supplies of the product; or 69 • issue injunctions or impose civil or criminal penalties.
Item 1A. Ri sk Factors We are subject to various risks that may materially harm our business, prospects, financial condition and results of operations. This discussion highlights some of the risks that may affect future operating results. These are the risks and uncertainties we believe are most important for you to consider.
Item 1A. Ri sk Factors We are subject to various risks that may materially harm our business, prospects, financial condition and results of operations. This discussion highlights some of the risks that may affect our future operating results. These are the risks and uncertainties we believe are most important for you to consider.
We cannot be certain that current clinical trials will begin or be completed on time, if at all, that our planned clinical trials will begin on time, if at all, or that our planned development programs would be acceptable to the FDA or other regulatory authorities, or that, if regulatory approval is obtained, our drug product candidates can be successfully commercialized.
We cannot be certain that current or planned clinical trials will begin or be completed on time, if at all, or that our planned development programs would be acceptable to the FDA or other regulatory authorities, or that, if regulatory approval is obtained, our drug product candidates can be successfully commercialized.
Due to our limited resources and access to capital, we must prioritize development of certain drug product candidates; these decisions may prove to be wrong and may adversely affect our business. In the first quarter of 2022, we decided to strategically focus on our CUE-101 and CUE-102 oncology programs in our CUE-100 series.
Due to our limited resources and access to capital, we must prioritize the development of certain drug product candidates; these decisions may prove to be wrong and may adversely affect our business. In the first quarter of 2022, we decided to strategically focus on our CUE-101 and CUE-102 oncology programs in our CUE-100 series.
Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Risks Related to Owning Our Common Stock, Our Financial Results and Our Need for Financing We anticipate future losses and negative cash flow, and it is uncertain if or when we will become profitable.
Risks Related to Our Financial Results, Our Need for Financing and Owning Our Common Stock We anticipate future losses and negative cash flow, and it is uncertain if or when we will become profitable.
We hold our a portion of cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts at multiple financial institutions. The balances held in these accounts typically exceed the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000 per depositor and per institution.
We hold a portion of our cash and cash equivalents that we use to meet our working capital and operating expense needs in deposit accounts at multiple financial institutions. The balances held in these accounts typically exceed the Federal Deposit Insurance Corporation, or FDIC, standard deposit insurance limit of $250,000 per depositor and per institution.
We have filed a registration statement covering the resale of these shares by the purchasers in this private placement, and have agreed to keep such registration statements effective until the date the shares covered by the registration statement have been sold or can be resold without restriction under Rule 144 of the Securities Act.
We filed a registration statement covering the resale of these shares by the purchasers in this private placement, and agreed to keep such registration statements effective until the date the shares covered by the registration statement have been sold or can be resold without restriction under Rule 144 of the Securities Act.
Restrictions under applicable federal and state healthcare laws and regulations include the following: • the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order, or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid; • the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval from Medicare, Medicaid, or other government payors that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties; • the federal Health Insurance Portability and Accountability Act of 1996, as further amended by the Health Information Technology for Economic and Clinical Health Act, which imposes certain requirements, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses, and health care providers; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; • the federal transparency requirements under the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report to the Department of Health and Human Services, or HHS, information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations; and • analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and certain state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.
Restrictions under applicable federal and state healthcare laws and regulations include the following: • the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order, or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid; • the federal False Claims Act imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment or approval from Medicare, Medicaid, or other government payors that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties; • the federal Health Insurance Portability and Accountability Act of 1996, as further amended by the Health Information Technology for Economic and Clinical Health Act, which imposes certain requirements, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health plans, health care clearinghouses, and health care providers; • the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing, or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services; • the federal transparency requirements under the federal Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report to the HHS information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members and applicable group purchasing organizations; and • analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and certain state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.
Our research programs may initially show promise in identifying potential indications and/or drug product candidates, yet fail to yield results for clinical development for a number of reasons, including: • the research methodology used may not be successful in identifying potential indications and/or drug product candidates; • our key platform technology, Immuno-STAT Biologics ™ , may not adequately enable us to design, discover and validate drug product candidates; • potential drug product candidates may, after further study, be shown to have harmful adverse effects or other characteristics that indicate they are unlikely to be effective drugs; or • it may take greater human and financial resources than we will possess to identify additional therapeutic opportunities for our drug product candidates or to develop suitable potential drug product candidates through internal research programs, thereby limiting our ability to develop, diversify and expand our drug portfolio.
Our research programs may initially show promise in identifying potential indications and/or drug product candidates, yet fail to yield results for clinical development for a number of reasons, including: • the research methodology used may not be successful in identifying potential indications and/or drug product candidates; • our key platform technology, Immuno-STAT Biologics ™ , may not adequately enable us to design, discover and validate drug product candidates; • potential drug product candidates may, after further study, be shown to have harmful adverse effects or other characteristics that indicate they are unlikely to be effective drugs; or • it may take greater human and financial resources than we possess to identify additional therapeutic opportunities for our drug product candidates or to develop suitable potential drug product candidates through internal research programs, thereby limiting our ability to develop, diversify and expand our drug portfolio.
Relying on third-party clinical investigators, CROs, CMOs or collaborators may result in delays that are outside of our control. 44 Furthermore, we may not have the financial resources to continue development of, or to enter into collaborations for, a product candidate if we experience any problems or other unforeseen events that delay or prevent regulatory approval of, or our ability to commercialize, drug product candidates, including: • negative or inconclusive results from our IND-enabling studies, clinical trials or the clinical trials of other drug product candidates similar to ours, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program; • delays in submitting INDs or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced; • conditions imposed by the FDA or a foreign regulatory authority regarding the number, scope or design of our clinical trials; • delays in enrolling patients in clinical trials; • high drop-out rates of patients; • inadequate supply or quality of clinical trial materials or other supplies necessary to conduct our clinical trials; • greater than anticipated clinical trial costs; • poor effectiveness or unacceptable side effects of our drug product candidates during clinical trials; • unfavorable FDA or other regulatory agency inspection and review of a clinical trial site; • difficulty in establishing or managing relationships with CROs, CMOs, and clinical investigators; • failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all; • serious and unexpected drug-related side effects or other safety issues experienced by participants in our clinical trials or by individuals using drugs similar to our drug product candidates; • delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular; or • varying interpretations of data by the FDA and foreign regulatory authorities.
Relying on third-party clinical investigators, CROs, CMOs or collaborators may result in delays that are outside of our control. 49 Furthermore, we may not have the financial resources to continue development of, or to enter into collaborations for, a product candidate if we experience any problems or other unforeseen events that delay or prevent regulatory approval of, or our ability to commercialize, drug product candidates, including: • negative or inconclusive results from our IND-enabling studies, clinical trials or the clinical trials of other drug product candidates similar to ours, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program; • delays in submitting INDs or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced; • conditions imposed by the FDA or a foreign regulatory authority regarding the number, scope or design of our clinical trials; • delays in enrolling patients in clinical trials; • high drop-out rates of patients; • inadequate supply or quality of clinical trial materials or other supplies necessary to conduct our clinical trials; • greater than anticipated clinical trial costs; • poor effectiveness or unacceptable side effects of our drug product candidates during clinical trials; • unfavorable FDA or other regulatory agency inspection and review of a clinical trial site; • difficulty in establishing or managing relationships with CROs, CMOs, and clinical investigators; • failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all; • serious and unexpected drug-related side effects or other safety issues experienced by participants in our clinical trials or by individuals using drugs similar to our drug product candidates; • delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular; or • varying interpretations of data by the FDA and foreign regulatory authorities.
Further, collaborations involving our drug product candidates are subject to numerous risks, which may include the following: 48 • our collaborators may have significant discretion in determining the efforts and resources that they will apply to our collaboration as compared to their other then-existing collaborations; • our collaborators may not pursue development and commercialization of our drug product candidates or may elect not to continue or renew development or commercialization of our programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; • our collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • our collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our drug product candidates; a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of each of our potential products; • our collaborators may not properly maintain or defend our intellectual property rights in accordance with the terms of our contractual arrangements with them or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to other potential liability; • disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our drug product candidates, or that result in costly litigation or arbitration that diverts our managements’ attention and our other resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable drug product candidates; and • our collaborators may own or co-own intellectual property covering our potential products that results from our collaboration with them, and in such case, we would not have the exclusive right to commercialize such intellectual property without our collaborators’ involvement and consent.
Further, collaborations involving our drug product candidates are subject to numerous risks, which may include the following: • our collaborators may have significant discretion in determining the efforts and resources that they will apply to our collaboration as compared to their other then-existing collaborations; 52 • our collaborators may not pursue development and commercialization of our drug product candidates or may elect not to continue or renew development or commercialization of our programs based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; • our collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • our collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our drug product candidates; • a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of each of our potential products; • our collaborators may not properly maintain or defend our intellectual property rights in accordance with the terms of our contractual arrangements with them or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to other potential liability; • disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our drug product candidates, or that result in costly litigation or arbitration that diverts our managements’ attention and our other resources; • collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable drug product candidates; and • our collaborators may own or co-own intellectual property covering our potential products that results from our collaboration with them, and in such case, we would not have the exclusive right to commercialize such intellectual property without our collaborators’ involvement and consent.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our potential drugs; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants and inability to continue clinical trials; • initiation of investigations by regulators; • costs to defend the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; 57 • loss of revenue; • financial cost; • exhaustion of any available insurance and our capital resources; and • the inability to commercialize any product candidate.
Regardless of the merits or eventual outcome, liability claims may result in: • decreased demand for our potential drugs; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants and inability to continue clinical trials; • initiation of investigations by regulators; • costs to defend the related litigation; • a diversion of management’s time and our resources; • substantial monetary awards to trial participants or patients; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • loss of revenue; • financial cost; • exhaustion of any available insurance and our capital resources; and • the inability to commercialize any product candidate.
If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our business, financial condition, results of operations, and prospects.
If our operations are found to be in violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health 72 care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of our operations, any of which could adversely affect our business, financial condition, results of operations, and prospects.
If we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or, once required, provide an attestation report from our independent 77 registered public accounting firm, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.
If we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective or, once required, provide an attestation report from our independent registered public accounting firm, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.
Although we generally do not begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the clinical trial, any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a contract manufacturer or other third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our drug product candidates.
Although we generally do not begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the clinical trial, any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to 57 replace a contract manufacturer or other third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our drug product candidates.
We expect that we will be subject to additional risks in commercializing any of our product candidates that receive marketing approval outside the United States, including tariffs, trade barriers and regulatory requirements; economic weakness, including inflation, or political instability in particular foreign economies and markets; compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; and workforce uncertainty in countries where labor unrest is more common than in the United States. 59 We may seek orphan drug designation for one or more of our drug product candidates, but even if such designation is granted, we may be unable to maintain any benefits associated with orphan drug designation, including market exclusivity that prevents the FDA or the EMA from approving other competing products.
We expect that we will be subject to additional risks in commercializing any of our drug product candidates that receive marketing approval outside the United States, including tariffs, trade barriers and regulatory requirements; economic weakness, including inflation, or political instability in particular foreign economies and markets; compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; and workforce uncertainty in countries where labor unrest is more common than in the United States. 64 We may seek orphan drug designation for one or more of our drug product candidates, but even if such designation is granted, we may be unable to maintain any benefits associated with orphan drug designation, including market exclusivity that prevents the FDA or the EMA from approving other competing products.
For example, regulatory agencies may: • not deem a product candidate to be safe or effective; • interpret data from preclinical and clinical testing differently than we do; • not approve the manufacturing processes; • conclude that our product candidate does not meet quality standards for durability, long-term reliability, biocompatibility, compatibility, or safety; and • change their approval policies or adopt new regulations.
For example, regulatory agencies may: • not deem a product candidate to be safe or effective; • interpret data from preclinical and clinical testing differently than we do; • not approve the manufacturing processes; • conclude that our drug product candidate does not meet quality standards for durability, long-term reliability, biocompatibility, compatibility, or safety; and • change their approval policies or adopt new regulations.
We are actively seeking third party support through partnerships and collaborations, or alternative funding structures, to further develop CUE-103 and our Neo-STAT and RDI-STAT programs outside of oncology, including our CUE-200, CUE-300 and CUE-400 series, and there is no guarantee that we will be able to do so on favorable terms or at all.
We are actively seeking third party support through partnerships and collaborations, or alternative funding 53 structures, to further develop CUE-103 and our Neo-STAT and RDI-STAT programs outside of oncology, including our CUE-200, CUE-300 and CUE-400 series, and there is no guarantee that we will be able to do so on favorable terms or at all.
There is increasing pressure on biotechnology companies to reduce healthcare costs. In the United States, these pressures come from a variety of sources, such as managed care groups and institutional and government purchasers. Increased purchasing power of entities that negotiate on behalf of federal healthcare programs and private sector beneficiaries could increase pricing pressures in the future.
There is increasing pressure on biotechnology and pharmaceutical companies to reduce healthcare costs. In the United States, these pressures come from a variety of sources, such as managed care groups and institutional and government purchasers. Increased purchasing power of entities that negotiate on behalf of federal healthcare programs and private sector beneficiaries could increase pricing pressures in the future.
In January 2021, we were notified by our CMO that the manufacture of our GMP material for the CUE-102 drug product candidate would be delayed by approximately six weeks due to the invocation of the Defense Production Act, or DPA, which gives priority to the manufacture of vaccines and other drug products used to prevent or treat COVID-19.
For example, in January 2021, we were notified by our CMO that the manufacture of our GMP material for the CUE-102 drug product candidate would be delayed by approximately six weeks due to the invocation of the Defense Production Act, or DPA, which gives priority to the manufacture of vaccines and other drug products used to prevent or treat COVID-19.
Further, any government investigation of alleged violations of law could require us to 63 expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize any drug product candidates we develop and adversely affect our business, financial condition, results of operations, and prospects.
Further, any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize any drug product candidates we develop and adversely affect our business, financial condition, results of operations, and prospects.
We are a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting and non-voting common shares held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common shares held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter.
We are a smaller reporting company, and we will remain a smaller reporting company until the fiscal year following the determination that our voting and non-voting shares of common stock held by non-affiliates is $250 million or more measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting shares of common stock held by non-affiliates is $700 million or more measured on the last business day of our second fiscal quarter.
The termination of this license agreement would have a material adverse effect on our financial condition, results of operations, and prospects. If we are unable to patent and protect the intellectual property used in our potential products, others may be able to copy our innovations, which may impair our ability to compete effectively in our markets.
The termination of this license agreement would have a material adverse effect on our financial condition, results of operations, and prospects. 59 If we are unable to patent and protect the intellectual property used in our potential products, others may be able to copy our innovations, which may impair our ability to compete effectively in our markets.
Among other things, the IRA contains many provisions aimed at reducing this financial burden on individuals by reducing the co-insurance 68 and co-payment costs, expanding eligibility for lower income subsidy plans, and placing price caps on annual out-of-pocket expenses, each of which could have potential pricing and reporting implications.
Among other things, the IRA contains many provisions aimed at reducing this financial burden on individuals by reducing the co-insurance and co-payment costs, expanding eligibility for lower income subsidy plans, and placing price caps on annual out-of-pocket expenses, each of which could have potential pricing and reporting implications.
If these market conditions persist when we need to raise capital, and if we are unable to sell shares of our common stock under then prevailing market conditions, we might have to accept lower prices for our shares and 46 issue a larger number of shares than might have been the case under better market conditions, resulting in significant dilution of the interests of our stockholders.
If these market conditions persist when we need to raise capital, and if we are unable to sell shares of our common stock under then prevailing market conditions, we might have to accept lower prices for our shares and issue a larger number of shares than might have been the case under better market conditions, resulting in significant dilution of the interests of our stockholders.
We plan to also seek strategic alliances or collaborations with other third parties that we believe will complement or augment our development and commercialization efforts with respect to our drug product candidates and any future drug product candidates that we may develop. In addition, we currently do not have sales, marketing, manufacturing or distribution capabilities or arrangements.
We plan to also seek additional strategic alliances or collaborations with other third parties that we believe will complement or augment our development and commercialization efforts with respect to our drug product candidates and any future drug product candidates that we may develop. In addition, we currently do not have sales, marketing, manufacturing or distribution capabilities or arrangements.
The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal 80 accounting controls for international operations.
There can be no assurance that the results seen in preclinical studies for any of our drug product candidates ultimately will result in success in clinical trials or that results seen in Phase 1 or 2 trials will be replicated in Phase 3 trials. There is a high failure rate for drugs and biologic products proceeding through clinical trials.
There can be no assurance that the results seen in preclinical studies for any of our drug product candidates ultimately will result in success in clinical trials or that results seen in Phase 1 or 2 trials will be replicated in Phase 3 trials. 51 There is a high failure rate for drugs and biologic products proceeding through clinical trials.
The majority of the intellectual property rights we have licensed are generated through the use of U.S. government funding and are therefore subject to certain federal regulations. As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future drug product candidates pursuant to the Bayh-Dole Act of 1980, or Bayh-Dole Act.
The majority of the intellectual property rights we have licensed are generated through the use of U.S. government funding and are therefore subject to certain federal regulations. As a result, the U.S. government may have certain rights to 60 intellectual property embodied in our current or future drug product candidates pursuant to the Bayh-Dole Act of 1980, or Bayh-Dole Act.
Filing, prosecuting, maintaining and defending patents on drug product candidates in all countries throughout the world could be prohibitively expensive for us, and our intellectual property rights in some non-U.S. countries can have a different scope and strength than do those in the United States.
Filing, prosecuting, maintaining and defending patents on drug product candidates in all countries throughout the world could be prohibitively expensive for us, and our intellectual property rights in some non-U.S. countries can have a 58 different scope and strength than do those in the United States.
HIPAA provides for significant fines and other penalties for wrongful use or disclosure of PHI, including potential civil and criminal fines and penalties. Computer networks are always vulnerable to breach and unauthorized persons may in the 69 future be able to exploit weaknesses in the security systems of our computer networks and gain access to PHI.
HIPAA provides for significant fines and other penalties for wrongful use or disclosure of PHI, including potential civil and criminal fines and penalties. Computer networks are always vulnerable to breach and unauthorized persons may in the future be able to exploit weaknesses in the security systems of our computer networks and gain access to PHI.
Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may 64 constrain the business or financial arrangements and relationships through which we market, sell, and distribute our products for which we obtain marketing approval.
Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell, and distribute our products for which we obtain marketing approval.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other 65 healthcare laws and regulations.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other healthcare laws and regulations.
While we work closely with our CMOs on the manufacturing process for our drug product candidates, including quality audits, we generally do not control the implementation of the manufacturing process of, and are completely dependent on, our CMOs for compliance with GMP regulatory requirements and for manufacture of both active drug substances and finished drug products.
While we work closely with our 56 CMOs on the manufacturing process for our drug product candidates, including quality audits, we generally do not control the implementation of the manufacturing process of, and are completely dependent on, our CMOs for compliance with GMP regulatory requirements and for manufacture of both active drug substances and finished drug products.
Currently, we use Catalent and Ajinomoto as our source of supply for manufacturing clinical supply of our lead product candidates, CUE-101 and CUE-102. If we experience multiple successive batch failures, or if supply from Catalent and Ajinomoto is otherwise interrupted, there could be a significant disruption in our product candidates supply.
Currently, we use Catalent and Ajinomoto as our source of supply for manufacturing clinical supply of our lead product candidates, CUE-101 and CUE-102. If we experience multiple successive batch failures, or if supply from Catalent and Ajinomoto is otherwise interrupted, there could be a significant disruption in our drug product candidates supply.
Further, the legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation.
The legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation.
If significant adverse events or other side effects are observed in any of our future clinical trials, we may have difficulty recruiting patients to the clinical trial, patients may drop out of our trial, or we may be required to abandon the trial or our development efforts of that product candidate altogether.
If significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to the clinical trial, patients may drop out of our trial, or we may be required to abandon the trial or our development efforts of that product candidate altogether.
These restrictions on our development, manufacturing, and commercialization activities could impact our ability to successfully develop certain drug product candidates, which could harm our future business prospects for commercializing drugs for those drug product candidates. 49 We may not be successful in our efforts to identify additional drug product candidates.
These restrictions on our development, manufacturing, and commercialization activities could impact our ability to successfully develop certain drug product candidates, which could harm our future business prospects for commercializing drugs for those drug product candidates. We may not be successful in our efforts to identify additional drug product candidates.
The trial population must also have a similar profile to the U.S. population, 61 and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful, except to the extent the disease being studied does not typically occur in the United States.
The trial population must also have a similar profile to the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful, except to the extent the disease being studied does not typically occur in the United States.
Under the LG Chem Agreement, we will engineer the selected Immuno-STAT for up to three alleles, which are expected to include the predominant alleles in the LG Chem Territory, while LG Chem will establish a CMC process for the development and commercialization of Drug Product Candidates.
Under the LG Chem Collaboration Agreement, we will engineer the selected Immuno-STAT for up to three alleles, which are expected to include the predominant alleles in the LG Chem Territory, while LG Chem will establish a CMC process for the development and commercialization of Drug Product Candidates.
Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D.
Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under 75 Medicare Part B and Part D.
The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing business, and could lead to government enforcement actions, private litigation and significant fines and penalties against us and could have a material adverse effect on our business, financial condition or results of operations.
The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities, and could lead to government enforcement actions, private litigation and significant fines and penalties against us, all of which could increase our cost of doing business and have a material adverse effect on our business, financial condition or results of operations.
Risks Related to Intellectual Property and Other Legal Matters If we or our licensor is unable to protect our or its intellectual property, then our financial condition, results of operations and the value of our technology and potential products could be adversely affected.
Risks Related to Intellectual Property and Other Legal Matters If we or our licensor(s) is unable to protect our or its intellectual property, then our financial condition, results of operations and the value of our technology and potential products could be adversely affected.
There is no assurance that we will be successful in meeting all of the milestones in the future on a timely basis or that this important license agreement will not be terminated for other reasons, depriving us of significant rights.
There is no assurance that we will be successful in meeting all of the milestones in the future on a timely basis or that this license agreement will not be terminated for other reasons, depriving us of significant rights.
Pursuant to the LG Chem Agreement, we have granted certain exclusive license rights to LG Chem in Australia and in certain countries in Asia and LG Chem has agreed to provide certain services to us and to make payments to us that include licensing fees, milestone payments and sales royalties.
Pursuant to the LG Chem Collaboration Agreement, we have granted certain exclusive license rights to LG Chem in Australia and in certain countries in Asia and LG Chem has agreed to provide certain services to us and to make payments to us that include licensing fees, milestone payments and sales royalties.
The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical, or other studies.
Finally, the FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical, or other studies.
If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit 73 markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of our funds.
If a financial institution in which we hold such funds fails or is subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of such uninsured funds or be subject to a delay in accessing all or a portion of our funds.
Our efforts may not lead to commercially successful products for a number of reasons, including: • we and our licensor, prospective business partners and other collaborators may not be able to complete research regarding, and nonclinical and clinical development of, our drug product candidates; • regulatory approvals and marketing authorizations may not be achieved for our drug product candidates, or the scope of the approved indication may be narrower than sought; • we and our licensor, prospective business partners and other collaborators may experience delays in our development program, clinical trials and the regulatory approval process; • our technology may not prove to be safe and effective in clinical trials or preclinical studies and our drug product candidates may have adverse side effects which outweigh any potential benefit to patients; • we may not be able to identify suitable collaborators to complete development or commercialization of our potential products; • we may not be able to maintain, protect or expand our portfolio of intellectual property rights, including patents, trade secrets and know-how; 43 • any future products that are ultimately approved by the FDA or other regulatory bodies may not be commercially accepted in the marketplace by physicians or patients; • any future products that are ultimately approved by the FDA or other regulatory bodies may not be able to be manufactured in commercial quantities or at an acceptable cost; • physicians may not receive any reimbursement from third-party payors, or the level of reimbursement may be insufficient to support widespread adoption of any of our future products once approved by the FDA or other regulatory bodies; and • rapid technological change may make our technology and drug product candidates obsolete.
Our efforts may not lead to commercially successful products for a number of reasons, including: • we and our licensor, prospective business partners and other collaborators may not be able to complete research regarding, and nonclinical and clinical development of, our drug product candidates; • regulatory approvals and marketing authorizations may not be achieved for our drug product candidates, or the scope of the approved indication may be narrower than sought; • we and our licensor, prospective business partners and other collaborators may experience delays in our development programs, clinical trials and the regulatory approval process; • our technology may not prove to be safe and effective in clinical trials or preclinical studies and our drug product candidates may have adverse side effects which outweigh any potential benefit to patients; • we may not be able to identify suitable collaborators to complete development or commercialization of our potential products; • we may not be able to maintain, protect or expand our portfolio of intellectual property rights, including patents, trade secrets and know-how; 48 • any future products that are ultimately approved by the FDA or other regulatory bodies may not be commercially accepted in the marketplace by physicians or patients; • any future products that are ultimately approved by the FDA or other regulatory bodies may not be able to be manufactured in commercial quantities or at an acceptable cost; • physicians may not receive any reimbursement from third-party payors, or the level of reimbursement may be insufficient to support widespread adoption of any of our future products once approved by the FDA or other regulatory bodies; and • rapid technological change may make our technology and drug product candidates obsolete.
In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or the CPRA, which went into effect on January 1, 2023, and significantly expanded the California Consumer Privacy Act to incorporate additional GDPR-like provisions including requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information.
In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or the CPRA, which went into effect on January 1, 2023, and significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information.
Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions. 71 Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products.
Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions. 81 Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products.
We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party CROs to assist us in this process.
We have only limited experience in filing and 62 supporting the applications necessary to gain marketing approvals and expect to rely on third-party CROs to assist us in this process.
Our ability to achieve commercial revenue-generating operations and, ultimately, achieve profitability will depend on whether we can obtain additional capital when we need it, complete the development of our technology, receive regulatory approval of our drug product candidates and find strategic collaborators that can incorporate our drug product candidates into new or existing drugs which can be successfully commercialized.
Our ability to achieve commercial revenue-generating operations and, ultimately, achieve profitability will depend on whether we can obtain additional capital when we need it, complete the development of our technology, receive regulatory approval of our drug product candidates, successfully commercialize our drug product candidates and/or find strategic collaborators that can incorporate our drug product candidates into new or existing drugs which can be successfully commercialized together.
In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy or requirements during the period of our product candidate development. Any such delays could materially and adversely affect our business, financial condition, results of operations and prospects. We plan to seek collaborations or strategic alliances.
In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy or requirements during the period of our drug product candidate development. Any such delays could materially and adversely affect our business, financial condition, results of operations and prospects. We plan to continue to seek collaborations or strategic alliances.
If approved, our product candidates that are licensed and regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway.
If approved, our drug product candidates that are licensed and regulated as biologics may face competition from biosimilars approved through an abbreviated regulatory pathway.
Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into license agreements on acceptable terms. This could harm our business significantly.
Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into license agreements on acceptable terms or at all. This could harm our business significantly.
If the FDA does not accept the data from any trial that we conduct outside the United States, it would likely result in the need for additional trials, which would be costly and time-consuming and delay or permanently halt our development of our product candidates.
If the FDA does not accept the data from any trial that we 67 conduct outside the United States, it would likely result in the need for additional trials, which would be costly and time-consuming and delay or permanently halt our development of our drug product candidates.
The GDPR also permits data protection authorities to require destruction of improperly gathered or used personal information and/or impose substantial fines for violations of the GDPR, which can be up to four percent of global revenues or €20 million, whichever is greater, and it also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.
The GDPR also permits data protection authorities to require destruction of improperly gathered or used personal information and/or impose substantial fines for violations of the GDPR, which can be up to four percent of global revenues of the respective group of companies or €20 million, whichever is greater, and it also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR.
Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products will depend on a number of marketplace and regulatory factors that are still 60 developing.
Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products will depend on a number of marketplace and regulatory factors that are still 65 developing.
Under the FDA policies, a product candidate is eligible for priority review, or review within a six-month time frame from the time a complete BLA is accepted for filing, if the product candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease.
Under the FDA's policies, a product candidate is eligible for priority review, or review within a six-month time frame from the time a complete BLA is accepted for filing, if the product candidate provides a significant improvement compared to marketed drugs in the treatment, diagnosis or prevention of a disease.
Our future funding requirements will depend on many factors, including, but not limited to: 72 • the progress, timing, scope and costs of our clinical trials, including the ability to timely enroll patients in our planned and potential future clinical trials; • the outcome, timing and cost of regulatory approvals by the FDA and comparable regulatory authorities, including the potential that the FDA or comparable regulatory authorities may require that we perform more studies than those that we currently expect; • the number and characteristics of drug product candidates that we may in-license and develop; • our ability to successfully commercialize our drug product candidates, if approved; • the amount of sales and other revenues from drug product candidates that we may commercialize, if any, including the selling prices for such potential products and the availability of adequate third-party reimbursement; • selling and marketing costs associated with our potential products, including the cost and timing of expanding our marketing and sales capabilities; • the terms and timing of any potential future collaborations, licensing or other arrangements that we may establish; • cash requirements of any future acquisitions and/or the development of other drug product candidates; • the costs of operating as a public company; • the cost and timing of completion of commercial-scale, outsourced manufacturing activities; • the time and cost necessary to respond to technological and market developments; • any disputes which may occur between us and Einstein, employees, collaborators or other prospective business partners; and • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
Our future funding requirements will depend on many factors, including, but not limited to: 82 • the progress, timing, scope and costs of our clinical trials, including the ability to timely enroll patients in our current and future clinical trials; • the outcome, timing and cost of regulatory approvals by the FDA and comparable regulatory authorities, including the potential that the FDA or comparable regulatory authorities may require that we perform more studies than those that we currently expect; • the number and characteristics of drug product candidates that we may in-license and develop; • our ability to successfully commercialize our drug product candidates, if approved; • the amount of sales and other revenues from drug product candidates that we may commercialize, if any, including the selling prices for such potential products and the availability of adequate third-party reimbursement; • selling and marketing costs associated with our potential products, including the cost and timing of expanding our marketing and sales capabilities; • the terms and timing of any potential future collaborations, licensing or other arrangements that we may establish; • cash requirements of any future acquisitions and/or the development of other drug product candidates; • the costs of operating as a public company; • the cost and timing of completion of commercial-scale, outsourced manufacturing activities; • the time and cost necessary to respond to technological and market developments; • any disputes which may occur between us and our employees, collaborators, including Einstein, LG Chem and Ono, or other prospective business partners; and • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
We rely completely on third parties to manufacture our preclinical and clinical drug supplies for our drug product candidates. 52 We rely completely on third parties to manufacture clinical drug supplies for our drug product candidates.
We rely completely on third parties to manufacture our preclinical and clinical drug supplies for our drug product candidates. We rely completely on third parties to manufacture clinical drug supplies for our drug product candidates.
The provisions in our Certificate of Incorporation and Bylaws: 76 • authorize our board of directors to issue preferred stock without stockholder approval and to designate the rights, preferences and privileges of each class; if issued, such preferred stock would increase the number of outstanding shares of our common stock and could include terms that may deter an acquisition of us; • limit who may call stockholder meetings; • do not provide for cumulative voting rights; • provide that all vacancies may be filled only by the affirmative vote of a majority of directors then in office, even if less than a quorum; • provide that stockholders must comply with advance notice procedures with respect to stockholder proposals and the nomination of candidates for director; • provide that stockholders may only amend our Certificate of Incorporation and Bylaws upon a supermajority vote of stockholders; and • provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal claims.
The provisions in our Certificate of Incorporation and Bylaws: • authorize our board of directors to issue preferred stock without stockholder approval and to designate the rights, preferences and privileges of each class; if issued, such preferred stock would increase the number of outstanding shares of our common stock and could include terms that may deter an acquisition of us; • limit who may call stockholder meetings; • do not provide for cumulative voting rights; • provide that all vacancies on our board of directors may be filled only by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director; 87 • provide that stockholders must comply with advance notice procedures with respect to stockholder proposals and the nomination of candidates for director; • provide that stockholders may only amend our Certificate of Incorporation and Bylaws upon a supermajority vote of stockholders; and • provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal claims.
This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition.
This provision applies to drug products that have been approved for at least nine years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition.
In addition, the FDA may withdraw these designations if it believes that the designation is no longer supported by data from our clinical development program. A delay in the review process or in the approval of our potential products will delay revenue from their potential sales and will increase the capital necessary to fund these product development programs.
In addition, the FDA may withdraw these designations if it believes that the designation is no longer supported by data from our clinical development program. A delay in the review process or in the approval of our potential products would delay revenue, if any, from their potential sales and would increase the capital necessary to fund these product development programs.
Although we have recruited a team that has experience with clinical trials in the United States, as a company, we have limited experience conducting clinical trials and have not had previous experience commercializing drug product candidates or submitting a BLA to the FDA or similar submissions to initiate clinical trials or obtain marketing authorization to foreign regulatory authorities.
Although we have recruited a team that has experience with clinical trials in the United States, as a company, we have limited experience conducting clinical trials and have not had previous experience commercializing drug product candidates or submitting a Biologic License Application, or BLA, to the FDA or similar submissions to initiate clinical trials or obtain marketing authorization to foreign regulatory authorities.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms.
If any of our relationships with these third-party CROs terminate for any reason, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms.
Even if the side effects do not preclude the drug from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance of the approved product due to its tolerability versus other therapies. Any of these developments could materially harm our business, financial condition and prospects.
Even if the side effects do not preclude the drug from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance of the approved product due to its tolerability as compared to other therapies. Any of these developments could materially harm our business, financial condition and prospects.
If we and such collaborators are not able to comply with post-approval regulatory requirements, we and such collaborators could have the marketing approvals for our products withdrawn by regulatory authorities and our, or such collaborators’, ability to market any future products could be limited, which could adversely affect our ability to achieve or sustain profitability.
If we and such collaborators are not able to comply with post-approval regulatory requirements, we and such collaborators could have the marketing approvals for our products withdrawn by regulatory authorities and our, or such 68 collaborators’, ability to market any future products could be limited, which could adversely affect our ability to generate revenue and achieve or sustain profitability.
Such pressures may also increase the risk of litigation or investigation by the government regarding pricing calculations. The biotechnology industry will likely face greater regulation and political and legal actions in the future. There is increased uncertainty related to the insurance coverage and reimbursement of newly approved products.
Such pressures may also increase the risk of litigation or investigation by the government regarding pricing calculations. The biotechnology and pharmaceutical industries will likely face greater regulation and political and legal actions in the future. There is increased uncertainty related to the insurance coverage and reimbursement of newly approved products.
Our outstanding shares of common stock may be freely sold in the public market at any time to the extent permitted by Rules 144 and 701 under the Securities Act of 1933, as amended, or the Securities Act, or to the extent such shares have already been registered under the Securities Act and are held by non-affiliates of ours.
Our outstanding shares of common stock may be freely sold in the public market at any time to the extent permitted by Rules 144 and 701 under the Securities Act or to the extent such shares have already been registered under the Securities Act and are held by non-affiliates of ours.
Our ability to raise additional funds may be adversely impacted by general economic conditions, both inside and outside the U.S., including disruptions to, and instability and volatility in, the credit and financial markets in the U.S. and worldwide, heightened inflation, interest rate and currency rate fluctuations, and economic slowdown or recession as well as concerns related to the COVID-19 pandemic and geopolitical events, including civil or political unrest.
Our ability to raise additional funds may be adversely impacted by general economic conditions, both inside and outside the U.S., including disruptions to, and instability and volatility in, the credit and financial markets in the U.S. and worldwide, heightened inflation, interest rate and currency rate fluctuations, and economic slowdown or recession as well as concerns related to pandemic events and spread of disease, such as the COVID-19 pandemic, and geopolitical events, including civil or political unrest.
Given the breadth and depth of changes in data protection obligations, preparing for and complying with these requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data collected in the European Union.
Given the breadth and depth of changes in data protection obligations, complying with the GDPR’s requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data collected in the European Union.
We also cannot be certain that, following a strategic transaction or license, we will achieve sufficient revenue or net income to justify such transaction.
We also cannot be certain that, following a strategic transaction or license, we will achieve sufficient revenue, net income or other benefits to justify such transaction.
Upon the occurrence of an event of default, which includes our failure to satisfy our payment obligations under the Loan Agreement, the breach of certain of these covenants under the Loan Agreement, or the occurrence of a material adverse change in our business, SVB is entitled to accelerate amounts due under the Loan Agreement and dispose the collateral as permitted under applicable law.
Upon the occurrence of an event of default, which includes our failure to satisfy our payment obligations under the Loan Agreement, the breach of certain of these covenants under the Loan Agreement, or the occurrence of a material adverse change in our business, First Citizens Bank is entitled to accelerate amounts due under the Loan Agreement and dispose the collateral as permitted under applicable law.
In the event of an ownership change, Section 382 imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carry forwards and Section 383 imposes an annual limitation on the amount of tax a corporation may offset with business credit (including the R&D credit) carry forwards.
In the event of an ownership change, Section 382 imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carryforwards and Section 383 imposes an annual limitation on the amount of tax a corporation may offset with business credit (including the R&D credit) carryforwards.
Under the Loan Agreement, we are also restricted from incurring future debt, granting liens, making investments, making acquisitions, distributing dividends on our common stock and selling assets and making certain other uses of our cash, without SVB’s consent, subject in each case to certain exceptions.
Under the Loan Agreement, we are also restricted from incurring future debt, granting liens, making investments, making acquisitions, distributing dividends on our common stock and selling assets and making certain other uses of our cash, without First Citizens Bank’s consent, subject in each case to certain exceptions.
If we are unable to establish additional strategic partnerships or other alternative arrangements to develop our drug product candidates, the costs for us to independently develop our drug product candidates may be higher than we currently anticipate, which could materially harm our business prospects, financial condition and results of operation.
If we are unable to establish additional strategic partnerships or collaborations to develop our drug product candidates, the costs for us to independently develop our drug product candidates may be higher than we currently anticipate, which could materially harm our business prospects, financial condition and results of operation.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom for our product candidates, which could significantly and materially harm our business.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the UK for our drug product candidates, which could significantly and materially harm our business.
In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We or these third parties may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all.
In addition, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe use this space as our principal executive offices and for general office, research and development, and laboratory uses. The monthly rental rate is currently $209,700 until April 2023 and when it will increase to $218,088.
Biggest changeWe use this space as our principal executive offices and for general office, research and development, and laboratory uses. The monthly rental rate was $209,700 until April 2023, when it increased to $218,088. In April 2024, it will increase to $226,812 and in April 2025 will increase to $235,884 for the remainder of the term through April 2026.
The monthly payments due under this lease agreement will be approximately $59,000 until November 2023 and will increase to $61,500 for the remainder of the lease term which expires in November 2024.
We also lease additional laboratory space consisting of one procedure and two holding rooms. The monthly payments due under this lease agreement were $59,153 until November 2023, when they increased to $61,519 for the remainder of the lease term which expires on December 1, 2024.
Removed
In April 2024, it will increase to $226,800 and in April 2025 will increase to $235,883 for the remainder of the term through April 2026. We also lease additional laboratory space consisting of one procedure and two holding rooms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Saf ety Disclosures Not applicable. 78 PART II
Biggest changeMine Saf ety Disclosures Not applicable. 90 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of March 13, 2023, there were approximately 108 registered holders of our common stock. Dividend Policy We have never paid cash dividends on our securities and we do not anticipate paying any cash dividends on our shares of common stock in the foreseeable future.
Biggest changeAs of March 25, 2024, there were approximately 86 registered holders of our common stock. Dividend Policy We have never paid cash dividends on our securities and we do not anticipate paying any cash dividends on our shares of common stock in the foreseeable future.
Recent Sales of Unregistered Securities During the period covered by this Annual Report on Form 10-K, we did not issue any unregistered equity securities other than pursuant to transactions previously disclosed in our Current Reports on Form 8-K. Item 6. [Reserv ed] 79
Recent Sales of Unregistered Securities During the period covered by this Annual Report on Form 10-K, we did not issue any unregistered equity securities other than pursuant to transactions previously disclosed in our Current Reports on Form 8-K. Item 6. [Reserv ed] 91

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash used during the year ended December 31, 2022 consisted primarily of our net loss of approximately $53,010,000, and decreases of approximately $1,071,000 in accrued expenses, $735,000 in operating lease liability, $645,000 in research and development contract liabilities, $395,000 in deposits, $321,000 in amortization of premium/discount on purchased securities, and $277,000 on gain on right-of-use asset modification.
Biggest changeCash used was partially offset by increases of approximately $8,180,000 in stock-based compensation expense, $2,880,000 in operating lease right-of-use asset amortization, $2,112,000 in research and development contract liabilities, $770,000 in accounts payable, $588,000 in accrued expenses, $556,000 in depreciation and amortization, $426,000 in deposits, $157,000 on loss on disposal of fixed asset, $130,000 in accretion of final repayment of the Term Loans, and $37,000 in amortization of debt issuance costs. 101 Cash used during the year ended December 31, 2022 consisted primarily of our net loss of approximately $53,010,000 and decreases of approximately $1,071,000 in accrued expenses, $735,000 in operating lease liability, $645,000 in research and development contract liabilities, $395,000 in deposits, $321,000 in amortization of premium/discount on purchased securities, and $277,000 on gain on right-of-use asset modification.
Cash used during the year ended December 31, 2022 consisted primarily of approximately $29,445,000 for the purchase of marketable securities, and purchases of property and equipment of $171,000, offset by $5,000,000 for the redemption of marketable securities, and the cash received for sale of fixed assets of approximately $6,000.
Cash used during the year ended December 31, 2022 consisted primarily of approximately $29,445,000 for the purchase of marketable securities, and purchases of property and equipment of $171,000, offset by $5,000,000 for the redemption of marketable securities, and the cash received for the sale of fixed assets of approximately $6,000.
Our expenses will also increase if, and as, we: • continue the clinical development of our CUE-100 series, including CUE-101 and CUE-102; • leverage our programs to advance our other drug product candidates into preclinical and clinical development; • seek regulatory approvals for any drug product candidates for which we successfully complete clinical trials; • seek to discover and develop additional drug product candidates in the CUE-100 series, including Neo-STATs; • establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any drug product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly; • hire additional clinical, quality control and scientific personnel; • expand our manufacturing, quality, operational, financial and management systems; • increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; • maintain, expand and protect our intellectual property portfolio; • acquire or in-license other drug product candidates and technologies; and • incur additional legal, accounting and other expenses in operating as a public company.
Our expenses will also increase if, and as, we: • continue the clinical development of our CUE-100 series, including CUE-101 and CUE-102; • leverage our programs to advance our other drug product candidates into preclinical and clinical development; • seek regulatory approvals for any drug product candidates for which we successfully complete clinical trials; • seek to discover and develop additional drug product candidates in the CUE-100 series, including Neo-STATs; • establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any drug product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly; • hire additional clinical, quality control and scientific personnel; • expand our manufacturing, quality, operational, financial and management systems; • increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; 102 • maintain, expand and protect our intellectual property portfolio; • acquire or in-license other drug product candidates and technologies; and • incur additional legal, accounting and other expenses in operating as a public company.
We will need to raise additional capital or incur indebtedness to continue to fund our operations in the future. Our ability to raise additional funds will depend on financial, economic and market conditions, many of which are outside of our control, and we may be unable to raise financing when needed, or on terms favorable to us.
We will need to raise additional capital or incur additional indebtedness to continue to fund our operations in the future. Our ability to raise additional funds will depend on financial, economic and market conditions, many of which are outside of our control, and we may be unable to raise financing when needed, or on terms favorable to us.
Significant Contracts and Agreements Related to Research and Development Activities Einstein License Agreement On January 14, 2015, we entered into a license agreement, as amended and restated on July 31, 2017, and as amended on October 30, 2018, or the Einstein License, with Albert Einstein College of Medicine, or Einstein, for certain patent rights relating to our core technology platform for the engineering of biologics to control T cell activity, precision, immune-modulatory drug product candidates, and two supporting technologies that enable the discovery of costimulatory signaling molecules (ligands) and T cell targeting peptides.
Significant Contracts and Agreements Related to Research and Development Activities Einstein License Agreement On January 14, 2015, we entered into a license agreement, as amended and restated on July 31, 2017, and as amended on October 30, 2018, or the Einstein License, with Albert Einstein College of Medicine, or Einstein, for certain patent rights, or the Patents, relating to our core technology platform for the engineering of biologics to control T cell activity, precision, immune-modulatory drug product candidates, and two supporting technologies that enable the discovery of costimulatory signaling molecules (ligands) and T cell targeting peptides.
In addition, the LG Chem Collaboration Agreement also provides that LG Chem will pay us tiered single-digit royalties on net sales of commercialized Product Candidates, or Collaboration Products, in the LG Chem Territory on a product-by-product and country-by-country basis, until the later of expiration of patent rights in a country, the expiration of regulatory exclusivity in such country, or ten years after the first commercial sale of a Collaboration Product in such country, subject to certain royalty step-down provisions set forth in the LG Chem Collaboration Agreement.
In addition, the LG Chem Collaboration Agreement also provides that LG Chem will pay us tiered single-digit royalties on net sales of commercialized Drug Product Candidates, or Collaboration Products, in the LG Chem Territory on a product-by-product and country-by-country basis, until the later of expiration of patent rights in a country, the expiration of regulatory exclusivity in such country, or ten years after the first commercial sale of a Collaboration Product in such country, subject to certain royalty step-down provisions set forth in the LG Chem Collaboration Agreement.
Under the LG Chem Collaboration Agreement, we will engineer the selected Immuno-STATs for up to three alleles, which are expected to include the predominant alleles in the LG Chem Territory, thereby enhancing our market reach by providing for greater patient coverage of populations in global markets, while LG Chem will establish a chemistry, manufacturing and controls, or CMC, process for the development and commercialization of selected Product Candidates.
Under the LG Chem Collaboration Agreement, we will engineer the selected Immuno-STATs for up to three alleles, which are expected to include the predominant alleles in the LG Chem Territory, thereby enhancing our market reach by providing for greater patient coverage of populations in global markets, while LG Chem will establish a chemistry, manufacturing and controls, or CMC, process for the development and commercialization of selected Drug Product Candidates.
Under the Einstein License, we are required to: • Pay royalties and amounts based on certain percentage of proceeds, as defined in the Einstein License, from sales of Licensed Products and sublicense agreements. • Pay escalating annual maintenance fees, which are non-refundable, but are creditable against the amount due to Einstein for royalties. • Make significant payments based upon the achievement of certain milestones, as defined in the Einstein License.
Under the Einstein License, we are required to: • Pay royalties and amounts based on a certain percentage of proceeds, as defined in the Einstein License, from sales of Licensed Products and sublicense agreements. • Pay escalating annual maintenance fees, which are non-refundable, but are creditable against the amount due to Einstein for royalties. • Make significant payments based upon the achievement of certain milestones, as defined in the Einstein License.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Until we have established a trading history for our common stock that approximates the expected term of the options, estimated volatility is based on the average historical volatilities of comparable public companies in a similar industry.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Until we have established a trading history for our common stock that approximates the expected term of the options, estimated volatility is based on the average historical volatility of comparable public companies in a similar industry.
In October 2021, we entered into an open market sale agreement, or the October 2021 ATM Agreement, with Jefferies LLC, or Jefferies, to sell shares of our common stock for aggregate gross proceeds of up to $80.0 million, from time to time, through an ATM equity offering program under which Jefferies acts as sales agent.
In October 2021, we entered into an open market sale agreement, or the October 2021 ATM Agreement, with Jefferies LLC, or Jefferies, to sell shares of our common stock for aggregate gross proceeds of up to $80.0 million, from time to time, through an "at-the-market" equity offering program under which Jefferies acts as sales agent.
While the Company’s significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing elsewhere in this Form 10-K, we believe that the estimates, assumptions and judgments involved in the following accounting policies may have the greatest potential impact on the financial statements, so we consider these to be our critical accounting policies and estimates.
While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing elsewhere in this Form 10-K, we believe that the estimates, assumptions and judgments involved in the following accounting policies may have the greatest potential impact on the financial statements, so we consider these to be our critical accounting policies and estimates.
If we are unable to raise additional 90 funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market drug product candidates that we would otherwise prefer to develop and market ourselves, which could adversely affect our business prospects, and we may be unable to continue our operations.
If we are unable to raise additional funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market drug product candidates that we would otherwise prefer to develop and market ourselves, which could adversely affect our business prospects, and we may be unable to continue our operations.
Likewise, should we determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made. We are subject to U.S. federal and Massachusetts state income taxes.
Likewise, should we determine that we would not be able to realize all or part of our deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made. 94 We are subject to U.S. federal and Massachusetts state income taxes.
Research and development expenses for the year ended December 31, 2022 included expenses related to employee and Scientific and Clinical Advisory Board compensation of approximately $10,087,000, research and laboratory expenses of $9,966,000, clinical expenses of $6,690,000, stock-based compensation of $4,881,000, rent of $3,283,000, and other research and development related expenses totaling $3,671,000.
Research and development expenses for the year ended December 31, 2022 included expenses related to employee and Scientific and Clinical Advisory Board compensation of approximately $10,087,000, research and laboratory expenses of $9,966,000, clinical expenses of $6,690,000, stock-based compensation of $4,881,000, rent expense of $3,283,000, and other research and development related expenses totaling $3,671,000.
Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, results 91 of operation and financial condition, including the possibility that a lack of funds could cause our business to fail, dissolve and liquidate with little or no return to investors.
Any inability to raise adequate funds on commercially reasonable terms could have a material adverse effect on our business, results of operation and financial condition, including the possibility that a lack of funds could cause our business to fail, dissolve and liquidate with little or no return to investors.
As our net operating losses have yet to be utilized, all previous tax years remain open to examination by federal and state taxing authorities in which we currently operate. 82 We recognize interest accrued relative to unrecognized tax benefits in interest expense and penalties in operating expense.
As our net operating losses have yet to be utilized, all previous tax years remain open to examination by federal and state taxing authorities in which we currently operate. We recognize interest accrued relative to unrecognized tax benefits in interest expense and penalties in operating expense.
Research and development expenses consist primarily of compensation expenses, fees paid to consultants, outside service providers and organizations (including research institutes at universities), facility expenses, and development and 85 clinical trial expenses with respect to our drug product candidates. We charge research and development expenses to operations as they are incurred.
Research and development expenses consist primarily of compensation expenses, fees paid to consultants, outside service providers and organizations (including research institutes at universities), facility expenses, and development and clinical trial expenses with respect to our drug product candidates. We charge research and development expenses to operations as they are incurred.
General and administrative expenses for the year ended December 31, 2022 included expenses related to employee and board compensation of $4,766,000 professional and consulting fees of approximately $4,676,000, stock-based compensation of $4,615,000, rent of $899,000, and other general and administrative expenses totaling $1,213,000.
General and administrative expenses for the year ended December 31, 2022 included expenses related to employee and board compensation of $4,766,000, professional and consulting fees of approximately $4,676,000, stock-based compensation of $4,615,000, rent expense of $899,000, and other general and administrative expenses totaling $1,213,000.
Such prepayment premium would be 3.00% of the principal amount of the Term Loans if prepaid prior to the first anniversary of the date on which we entered the Loan Agreement, 2.00% of the principal amount of the Term Loan if prepaid on or after the first anniversary of the date on which we entered the Loan Agreement but prior to the second anniversary of the date on which we entered the Loan Agreement, and 1.00% of the principal amount of the Term Loan if prepaid on or after the second anniversary of the date on which we entered the Loan Agreement.
Such prepayment premium would be 2.00% of the principal amount of the Term Loans if prepaid on or after the first anniversary of the date on which we entered the Loan Agreement but prior to the second anniversary of the date on which we entered the Loan Agreement, and 1.00% of the principal amount of the Term Loan if prepaid on or after the second anniversary of the date on which we entered the Loan Agreement.
The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements, and the reported revenue and expenses during the reported periods.
GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements, and the reported revenue and expenses during the reported periods.
Factors that may affect our planned future capital requirements and accelerate our need for additional working capital include the following: • the progress, timing, scope and costs of our clinical trials, including the ability to timely enroll patients in our planned and potential future clinical trials; • the outcome, timing and cost of regulatory approvals by the FDA and other comparable regulatory authorities, including the potential that the FDA or other comparable regulatory authorities may require that we perform more studies than those that we currently expect; • the number and characteristics of drug product candidates that we may in-license and develop; • our ability to successfully commercialize our drug product candidates, if approved; • the amount of sales and other revenues from drug product candidates that we may commercialize, if any, including the selling prices for such potential products and the availability of adequate third-party reimbursement; • selling and marketing costs associated with our potential products, including the cost and timing of expanding our marketing and sales capabilities; • the terms and timing of any potential future collaborations, licensing or other arrangements that we may establish; • cash requirements of any future acquisitions and/or the development of other drug product candidates; • the costs of operating as a public company; • the cost and timing of completion of commercial-scale, outsourced manufacturing activities; • the time and cost necessary to respond to technological and market developments; • any disputes which may occur between us and Einstein, employees, collaborators or other prospective business partners; and • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
Factors that may affect our planned future capital requirements and accelerate our need for additional working capital include the following: • the progress, timing, scope and costs of our clinical trials, including the ability to timely enroll patients in our ongoing, planned and potential future clinical trials; • the outcome, timing and cost of regulatory approvals by the FDA and other comparable regulatory authorities, including the potential that the FDA or other comparable regulatory authorities may require that we perform more studies than those that we currently expect; • the number and characteristics of drug product candidates that we may in-license and develop; • our ability to successfully commercialize our drug product candidates, if approved; • the amount of sales and other revenues from drug product candidates that we may commercialize, if any, including the selling prices for such potential products and the availability of adequate third-party reimbursement; • selling and marketing costs associated with our potential products, including the cost and timing of expanding our marketing and sales capabilities; • the terms and timing of any potential future collaborations, licensing or other arrangements that we may establish; 103 • cash requirements of any future acquisitions and/or the development of other drug product candidates; • the costs of operating as a public company; • the cost and timing of completion of commercial-scale, outsourced manufacturing activities; • the time and cost necessary to respond to technological and market developments; • any disputes which may occur between us and our employees, collaborators, including Einstein, LG Chem and Ono, or other prospective business partners; and • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
There were no material changes to our critical accounting policies and estimates during the year ended December 31, 2022. Revenue Recognition We recognize collaboration revenue under certain of our license and collaboration agreements that are within the scope of Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, or ASC 606.
There were no material changes to our critical accounting policies and estimates during the year ended December 31, 2023. Revenue Recognition We recognize collaboration revenue under certain of our license and collaboration agreements that are within the scope of Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers .
We were in compliance with our obligations under the Einstein License at December 31, 2022 and 2021. The Einstein License expires upon the expiration of the last obligation to make royalty payments to Einstein which may be due with respect to certain Licensed Products, unless terminated earlier under the provisions thereof.
We were in compliance with our obligations under the Einstein License at December 31, 2023 and 2022. The Einstein License expires upon the expiration of the last obligation to make royalty payments to Einstein which may be due with respect to certain Licensed Products, unless terminated earlier under the provisions thereof.
We also believe that rising inflation, supply chain disruptions and labor shortages may also contribute to increased research and development costs. Years Ended December 31, 2022 and 2021 Our consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021, as discussed herein are presented below.
We also believe that rising inflation, supply chain disruptions and labor shortages may also contribute to increased research and development costs. Years Ended December 31, 2023 and 2022 Our consolidated statements of operations and comprehensive loss for the years ended December 31, 2023 and 2022, as discussed herein are presented below.
Cash generated during the year ended December 31, 2022 consisted primarily of cash proceeds from the common stock sold through the October 2021 ATM Agreement of approximately $16,599,000, net of underwriting commissions and fees, cash proceeds from the sale of common stock in the PIPE Financing, net of fees of $22,702,000, cash proceeds from the sale of pre-funded warrants in the PIPE Financing of $4,700,000, net of fees, and $10,000,000 of proceeds from borrowing under the term loan, offset by restricted stock awards net of taxes withheld of $200,000 and $142,000 for the payment of debt issuance costs.
Cash generated during the year ended December 31, 2022 consisted primarily of cash proceeds from the common stock sold through the October 2021 ATM Agreement of approximately $16,599,000, net of commissions and fees, cash proceeds from the sale of common stock in the PIPE Financing of $22,702,000, net of fees, cash proceeds from the sale of pre-funded warrants in the PIPE Financing of $4,700,000, net of fees, and $10,000,000 of proceeds from borrowing under the Term Loans, offset by restricted stock awards net of taxes withheld of $200,000 and $142,000 for the payment of debt issuance costs.
We evaluate these estimates and judgments, including those described below, on an ongoing basis.
We evaluate these estimates and judgments, 92 including those described below, on an ongoing basis.
Accordingly, the transaction price is generally comprised of a fixed fee due at contract inception and variable consideration in the form of milestone payments due upon the achievement of specified events and tiered royalties earned when customers recognize net sales of licensed products.
Accordingly, the transaction price is generally comprised of a fixed fee due at contract inception and variable consideration in the form of pass through costs and milestone payments due upon the achievement of specified events and tiered royalties earned when customers recognize net sales of licensed products.
In 2022, we also determined to take proactive steps to decrease our office and lab footprint and to restructure our research and development functions in support of prioritized corporate objectives and strategies. These steps have realized cost savings to date that have been allocated to our key programs.
In 2022, we also took proactive steps to decrease our office and lab footprint and to restructure our research and development functions in support of prioritized corporate objectives and strategies. These steps have realized cost savings to date that have been allocated to our key programs.
During the year ended December 31, 2022, we recognized a right of use asset of approximately $1,307,000 and a short and long term operating lease liability of approximately $712,000, and $535,000, respectively, using the weighted average discount rate of 10%, which were recorded as of the Term Commencement Date related to the License.
During the year ended December 31, 2022, we recognized a right of use asset of approximately $1,307,000 and a short and long term operating lease liability of approximately $712,000, and $535,000, respectively, using the weighted average discount rate of 10%, which were recorded as of the Term Commencement Date related to the 40G Additional Laboratory Lease.
Einstein License Agreement Our commitments with respect to the Einstein License are summarized above at “Significant Contracts and Agreements Related to Research and Development Activities”.
Einstein License Agreement Our commitments with respect to the Einstein License are summarized above at “Significant Contracts and Agreements Related to Research and Development Activities."
On December 7, 2020, we earned a $1.25 million milestone payment on the selection of a preclinical candidate pursuant to the LG Chem Collaboration Agreement. On November 23, 2021, we earned a $3.0 million milestone on the confirmation of Collaboration Product Candidate.
On December 7, 2020, we earned a $1.25 million milestone payment on the selection of a preclinical candidate pursuant to the LG Chem Collaboration Agreement. On November 23, 2021, we earned a $3.0 million milestone payment for the selection of a Drug Product Candidate.
The term loans under the Loan Agreement, or the Term Loans, bear interest at a floating rate per annum equal to the greater of (A) the prime rate (as published in the money rates section of The Wall Street Journal) plus 2.25% and (B) 5.50%.
The Loan Agreement was amended in April 2023. The term loans under the Loan Agreement, or the Term Loans, bear interest at a floating rate per annum equal to the greater of (A) the prime rate (as published in the money rates section of The Wall Street Journal) plus 2.25% and (B) 5.50%.
The exercise price of the Warrants is $3.93 per share, or if exercised for a Pre-Funded Warrant in lieu thereof, $3.9299 per Pre-Funded Warrant. The Warrants are exercisable at any time after they are issued and ending on the fifth 88 anniversary of the closing.
The exercise price of the Warrants is $3.93 per share, or if exercised for a Pre-Funded Warrant in lieu thereof, $3.9299 per Pre-Funded Warrant. The Warrants are exercisable at any time after they are issued and ending on the fifth anniversary of the closing. The Pre-Funded Warrants are exercisable at any time after they are issued and will not expire.
The difference between the carrying amounts of the right of use asset and lease liability of $19,000 was recorded to gain on right of use asset termination and included in the consolidated statement of operations. For the year ended December 31, 2022, we recorded approximately $626,000 in interest expense to the lease liability.
The difference between the carrying amounts of the right of use asset and lease liability of $19,000 was recorded to gain on right of use asset termination and included in the consolidated statement of operations. For the year ended December 31, 2023, we recorded approximately $512,000 in interest expense to the lease liability.
Pursuant to the LG Chem Collaboration Agreement, we granted LG Chem an exclusive license to develop, manufacture and commercialize our lead product, CUE-101, as well as Immuno-STATs that target T cells against two additional cancer antigens, or Product Candidates (to be elected within a defined timeframe), in Australia, Japan, Republic of Korea, Singapore, Malaysia, Vietnam, Thailand, Philippines, Indonesia, China (including Macau and Hong Kong) and Taiwan, which we refer to collectively as the LG Chem Territory.
Pursuant to the LG Chem Collaboration Agreement, we granted LG Chem an exclusive license to develop, manufacture and commercialize our lead product, CUE-101, as well as Immuno-STATs that target T cells against two additional cancer antigens, or the Drug Product Candidates, in Australia, Japan, Republic of Korea, Singapore, Malaysia, Vietnam, Thailand, Philippines, Indonesia, China (including Macau and Hong Kong) and Taiwan, which we refer to collectively as the LG Chem Territory.
Research and development expenses incurred under contracts are expensed ratably over the life of the underlying contracts, unless the achievement of milestones, the completion of contracted work, or other information indicates that a different pattern of performance is more appropriate. Other research and development expenses are charged to operations as incurred.
Research and development expenses incurred under contracts are expensed ratably over the life of the underlying contracts, unless the achievement of milestones, the completion of contracted work, or other information indicates that a different pattern of performance is more appropriate.
Liquidity and Capital Resources We have financed our working capital requirements primarily through private and public offerings of equity securities, cash received from Merck and LG Chem under the respective collaboration agreements and borrowings under the Loan Agreement.
Liquidity and Capital Resources We have financed our working capital requirements primarily through private and public offerings of equity securities, cash received from Merck Sharp & Dohme Corp., LG Chem, and Ono under the respective collaboration agreements and borrowings under the Loan Agreement.
Under the terms of the LG Chem Collaboration Agreement, LG Chem paid us a $5.8 million non-refundable, non-creditable up-front payment and purchased approximately $5.0 million of shares of our common stock at a price per share 84 equal to a 20% premium to the volume weighted-average closing price per share over the thirty (30) trading day period immediately prior to the effective date of the LG Chem Collaboration Agreement.
Under the terms of the LG Chem Collaboration Agreement, LG Chem paid us a $5.0 million non-refundable, non-creditable upfront payment and purchased approximately $5.0 million of shares of our common stock at a price per share equal to a 20% premium to the volume weighted-average closing price per share over the 30 trading day period immediately prior to the effective date of the LG Chem Collaboration Agreement.
The LG Chem Collaboration Agreement provided LG Chem with the option to select one additional Immuno-STAT for an oncology target, or an Additional Immuno-STAT, for an exclusive worldwide development and commercialization license. On December 18, 2019, we and LG Chem entered into a global license and collaboration agreement, which was amended on November 5, 2020.
In addition, LG Chem has the option to select one additional Immuno-STAT for an oncology target, or an Additional Immuno-STAT, for an exclusive worldwide development and commercialization license. On December 18, 2019, we and LG Chem entered into a global license and collaboration agreement, which was amended on November 5, 2020.
In return for performing CMC process development, LG Chem is eligible to receive low-single digit royalty payments on the sales of Collaboration Products sold in all countries outside the LG Chem Territory. For the years ended December 31, 2022 and 2021, we recognized revenue of approximately $1,245,000 and approximately $12,786,000, respectively, related to the LG Chem Collaboration Agreement.
In return for performing CMC process development, LG Chem is eligible to receive low-single digit percentage royalty payments on the sales of Collaboration Products sold in all countries outside the LG Chem Territory. For the years ended December 31, 2023 and 2022, we recognized revenue of approximately $324,000 and approximately $1,245,000, respectively, related to the LG Chem Collaboration Agreement.
On the first calendar day of each month, we will be required to make monthly interest payments and commencing on June 30, 2023 (extended to December 31, 2023 if the additional term loans are advanced), we will be required to repay the Term Loans in (i) 30 consecutive installments of principal plus monthly payments of accrued interest if the additional term loans are not advanced and (ii) 24 months if the additional term loans are advanced.
On the first calendar day of each month, we will be required to make monthly interest payments and commencing on June 30, 2023, we began repayment of the Term Loans in (i) 30 consecutive installments of principal plus monthly payments of accrued interest if the additional term loans are not advanced and (ii) 24 months if the additional term loans are advanced.
The Loan Agreement permits voluntary prepayment of all, but not less than all, of the Term Loans, subject to a prepayment premium except if the facility is refinanced with another SVB facility.
The Loan Agreement permits voluntary prepayment of all, but not less than all, of the Term Loans, subject to a prepayment premium except if the facility is refinanced with another First Citizens Bank facility.
LG Chem may terminate the LG Chem Collaboration Agreement for convenience or in the event we undergo a change of control on a program-by-program, product-by-product or country-by-country basis, or in its entirety, at any time following the notice period set forth in the LG Chem Collaboration Agreement.
LG Chem may terminate the LG Chem Collaboration Agreement for convenience or change of control of us on a program-by-program, product-by-product or country-by-country basis, or in its entirety, at any time 96 following the notice period set forth in the LG Chem Collaboration Agreement.
Cash used was partially offset by increases of approximately $9,496,000 in stock-based compensation expense, $3,085,000 in accounts receivable, $922,000 in depreciation and amortization, $884,000 operating lease right-of-use asset, $109,000 in accretion of final payment of term loan, $83,000 in accounts payable, $34,000 in prepaids and other assets, $31,000 in amortization of debt issuance costs, and $4,000 on loss on disposal of fixed asset.
Cash used was partially offset by increases of approximately $9,496,000 in stock-based compensation expense, $3,085,000 in accounts receivable, $922,000 in depreciation and amortization, $884,000 operating lease right-of-use asset, $109,000 in accretion of final repayment of the Term Loans, $83,000 in accounts payable, $34,000 in prepaid expense and other current assets, $31,000 in amortization of debt issuance costs, and $4,000 on loss on disposal of fixed asset.
We hold an exclusive worldwide license, with the right to sublicense, import, make, have made, use, provide, offer to sell, and sell all products, processes and services that use the patents covered by the Einstein License, including certain technology received from Einstein related thereto, or the Licensed Products.
We hold an exclusive worldwide license, with the right to sublicense, import, make, have made, use, provide, offer to sell, and sell all products, processes and services that use the Patents, including certain technology received from Einstein related thereto, which we refer to as the Licensed Products.
Collaboration Agreement with LG Chem Effective November 6, 2018, we entered into a collaboration agreement with LG Chem, Ltd., or LG Chem, which we refer to as the LG Chem Collaboration Agreement, related to the development of Immuno-STATs focused in the field of oncology.
Collaboration Agreement with LG Chem Effective November 6, 2018, we entered into a Collaboration, License and Option Agreement, or the LG Chem Collaboration Agreement, with LG Chem Ltd., or LG Chem, related to the development of Immuno-STATs focused in the field of oncology.
See “Our Collaboration Agreement with Merck” under Part I, Item 1 of the Annual Report on Form 10-K for additional discussion of the Merck Collaboration Agreement.
See “Our Collaboration Agreement with LG Chem” under Part I, Item 1 of the Annual Report on Form 10-K for additional discussion of the LG Chem Collaboration Agreement.
Net Loss As a result of the foregoing, our net loss was approximately $53,010,000 for the year ended December 31, 2022, as compared to approximately $44,161,000 for the year ended December 31, 2021.
Net Loss As a result of the foregoing, our net loss was approximately $50,733,000 for the year ended December 31, 2023, as compared to approximately $53,010,000 for the year ended December 31, 2022.
At December 31, 2022, two of these milestones had been achieved, as we had filed an investigational new drug application, or IND, in 2019, and initiated the investigator sponsored Phase 1b neoadjuvant clinical trial for CUE-101 in 2021. • Incur minimum product development costs per year until the first commercial sale of the first Licensed Product.
As of December 31, 2023, two of these milestones had been achieved, as we had filed an IND in 2019, and initiated the investigator sponsored Phase 1b neoadjuvant clinical trial for CUE-101 in 2021. • Incur minimum product development costs per year and meet certain diligence obligations until the first commercial sale of the first Licensed Product.
Operating Expenses We generally recognize operating expenses as they are incurred in two general categories, general and administrative expenses and research and development expenses. Our operating expenses also include non-cash components related to depreciation and amortization of property and equipment and stock-based compensation, which are allocated, as appropriate, to general and administrative expenses and research and development expenses.
Our operating expenses also include non-cash components related to depreciation and amortization of property and equipment and stock-based compensation, which are allocated, as appropriate, to general and administrative expenses and research and development expenses.
Interest income for the year ended December 31, 2022 included approximately $437,000 in income resulting from amortization of discounts received on certain of our marketable securities, approximately $170,000 of interest income from our operating sweep account, and approximately $321,000 from amortization/accretion on investments, compared to approximately $46,000 of other income for the year ended December 31, 2021.
Interest income for the year ended December 31, 2023 included approximately $2,065,000 in income from cash equivalents, approximately $361,000 of income from our operating sweep account, and approximately $234,000 from amortization/accretion on investments, compared to approximately $437,000 in income resulting from amortization of discounts received on certain of our marketable securities, approximately $170,000 of interest income from our operating sweep account, and approximately $321,000 from amortization/accretion on investments for the year ended December 31, 2022.
As of December 31, 2022, we had sold an aggregate of 3,593,407 shares of common stock under the October 2021 ATM Agreement for proceeds of $23.6 million, net of commissions paid, but excluding transaction expenses. On February 15, 2022, we entered into the Loan Agreement, pursuant to which we have borrowed $10.0 million.
As of December 31, 2023, we had sold an aggregate of 7,600,373 shares of common stock under the October 2021 ATM Agreement for proceeds of $37.0 million, net of commission paid, but excluding transaction expenses. On February 15, 2022, we entered into the Loan Agreement, pursuant to which we have borrowed $10.0 million.
The Licensor is obligated under the License to provide certain services to us, including providing certain gases, chemicals and equipment to the Premises’ laboratory space, IT support, security, office support and health and safety training. The Licensor has the right to terminate the License for Cause (as defined in the License).
The Licensor is obligated under the License to provide certain services to us, including providing certain gases, chemicals and equipment to the Premises’ laboratory space, IT support, security, office support and health and safety training.
We utilize the “most likely amount” method to estimate the amount of variable consideration, to predict the amount of consideration to which we will be entitled for our one open contract.
We utilize the “expected value method” method to estimate the amount of variable consideration, to predict the amount of consideration to which we will be entitled for our one open contract.
The Loan Agreement also requires us to maintain in accounts at the Lender unrestricted and unencumbered cash equal to the lesser of all of our cash and 110% of the obligations to the Lender. On March 10, 2023, SVB was closed and the FDIC was appointed receiver for the bank.
The Loan Agreement also requires us to maintain in our accounts at the Lender unrestricted and unencumbered cash equal to the lesser of all of our cash or $20,000,000. On March 10, 2023, Silicon Valley Bank, or SVB, was closed and the Federal Deposit Insurance Company, or FDIC, was appointed receiver for the bank.
All collaboration revenue recognized was related to the performance of services under our collaboration agreements with Merck and LG Chem. General and Administrative General and administrative expenses totaled approximately $16,169,000 and $17,307,000 for the years ended December 31, 2022 and 2021, respectively.
All collaboration revenue recognized in the year ended December 31, 2022 was related to the performance of services under our collaboration agreement with LG Chem. 98 General and Administrative General and administrative expenses totaled approximately $16,680,000 and $16,169,000 for the years ended December 31, 2023 and 2022, respectively.
This decrease of approximately $1,138,000 was due primarily to lower professional and consulting fees, rent, stock-based compensation, offset by employee and board compensation and other business expenses related to the ongoing management of the company.
This increase of approximately $511,000 was due primarily to increases in professional and consulting fees, and employee and board compensation, offset by decreases in stock-based compensation, rent expense, and other business expenses related to the ongoing management of the company.
The FDIC created a successor bridge bank, Silicon Valley Bridge Bank, N.A., or SVBB, and all deposits of SVB were transferred to SVBB under a systemic risk exception approved by the United States Department of the Treasury, the Federal Reserve and the FDIC.
The FDIC created a successor bridge bank, and all deposits of SVB were transferred to the bridge bank under a systemic risk exception approved by the U.S. Department of the Treasury, the Federal Reserve and the FDIC.
We have not yet commenced any commercial revenue-generating operations, have limited cash flows from operations, and will need to access additional capital to fund our growth and ongoing business operations.
We have not yet commenced any commercial revenue-generating operations, have limited cash flows from operations, and will need to access substantial additional capital to fund our growth and ongoing business operations. Plan of Operation Our technology is in the development phase.
Additional information concerning our financial condition and results of operations is provided in the financial statements included in this Annual Report on Form 10-K. 87 The amounts that we actually spend for any specific purpose may vary significantly and will depend on a number of factors, including, but not limited to, our research and development activities and programs, clinical testing, regulatory approval, market conditions, and changes in or revisions to our business strategy and technology development plans.
The amounts that we actually spend for any specific purpose may vary significantly and will depend on a number of factors, including, but not limited to, our research and development activities and programs, clinical testing, regulatory approval, market conditions, and changes in or revisions to our business strategy and technology development plans.
Nonrefundable advance payments for research and development services are included in prepaid and other current assets on the balance sheet. To the extent that a nonrefundable advance 81 payment is for contracted services to be performed within 12 months from the reporting date, such advance is included in current assets; otherwise, such advance is included in non-current assets.
To the extent that a nonrefundable advance payment is for contracted services to be performed within 12 months from the reporting date, such advance is included in current assets; otherwise, such advance is included in non-current assets.
This increase of $277,000 for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was due to the gain on right-of-use asset related to the termination of our operating lease agreement for our laboratory and office space in Cambridge, Massachusetts at 21 Erie Street, effective on April 30, 2022, and the termination of our lease agreement for additional procedure and holding rooms in Cambridge, Massachusetts effective December 6, 2022.
This gain related to the termination of our operating lease agreement for our laboratory and office space in Cambridge, Massachusetts at 21 Erie Street, effective on April 30, 2022, and the termination of our lease agreement for additional procedure and holding rooms in Cambridge, Massachusetts effective December 6, 2022.
Upon execution of the First Amendment, we prepaid three months of rent, two of which will be held in escrow and credited against future rent payments and the other of which was applied to the first month’s rent. Effective July 15, 2022, the monthly rental rate under the First Amendment increased to $209,700 from $200,700.
In consideration of the First Amendment, the security deposit was increased from $225,760 to $235,884 effective July 15, 2022. Upon execution of the First Amendment, we prepaid three months of rent, two of which will be held in escrow and credited against future rent payments and the other of which was applied to the first month’s rent.
Nonrefundable advance payments are recognized as an expense as the related services are performed. We evaluate whether we expect the services to be rendered at each quarter end and year end reporting date. If we do not expect the services to be rendered, the advance payment is charged to expense.
Other research and development expenses are charged to operations as incurred. 93 Nonrefundable advance payments are recognized as an expense as the related services are performed. We evaluate whether we expect the services to be rendered at each quarter end and year end reporting date.
Investing Activities During the year ended December 31, 2022, our investing activities used approximately $24,610,000 in cash, compared to cash generated by investing activities of approximately $9,109,000 during the year ended December 31, 2021.
Investing Activities During the year ended December 31, 2023, our investing activities provided approximately $25,002,000 in cash, compared to cash used in investing activities of approximately $24,610,000 during the year ended December 31, 2022.
The Global License and Collaboration Agreement supersedes the provisions of the LG Chem Collaboration Agreement related to LG Chem’s option for an Additional Immuno-STAT but generally does not become effective unless and until LG Chem exercises its option, other than certain select provisions including the length of the option period and representations, warranties and covenants of the parties.
The Global License and Collaboration Agreement supersedes the provisions of the LG Chem Collaboration Agreement related to LG Chem’s option for an Additional Immuno-STAT, which agreement provided for effectiveness if and when LG Chem exercised its option, other than certain select provisions including the length of the option period and representations, warranties and covenants of the parties.
Piper Sandler & Co. acted as lead placement agent and Public Ventures LLC acted as co-placement agent for the PIPE Financing. If we issue additional equity securities to raise funds, the ownership percentage of our existing stockholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock.
If we issue additional equity securities to raise funds, the ownership percentage of our existing stockholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock.
General and administrative expenses for the year ended December 31, 2021 included expenses related to professional and consulting fees of approximately $5,564,000, stock-based compensation of $5,308,000, employee and board compensation of $4,182,000, rent of $1,082,000, and other general and administrative expenses totaling $1,171,000.
General and administrative expenses for the year ended December 31, 2023 included expenses related to professional and consulting fees of approximately $5,801,000, employee and board compensation of $5,238,000, stock-based compensation of $3,687,000, rent expense of $716,000, and other general and administrative expenses totaling $1,238,000.
At December 31, 2022, we recorded approximately $9,203,000 to operating lease right-of-use asset, and approximately $3,300,000 and $6,018,000 to the short-term and long-term operating lease liability, respectively. At December 31, 2021, we recorded approximately $9,809,876 to operating lease right-of-use asset, and approximately $4,931,675 and 92 $5,121,179 to short- and long-term operating lease liability, respectively.
At December 31, 2023, we recorded approximately $6,323,000 to operating lease right-of-use asset, and approximately $3,368,000 and $3,162,000 to the short-term and long-term operating lease liability, respectively. At December 31, 2022, we recorded approximately $9,203,000 to operating lease right-of-use asset, and approximately $3,300,000 and $6,018,000 to the short-term and long-term operating lease liability, respectively.
On June 22, 2020, we filed a registration statement on Form S-3ASR, which became automatically effective upon filing with the SEC (File No. 333-239357), or the 2020 Shelf, to register for sale from time to time up to $300.0 million of our common stock, preferred stock, debt securities, warrants, rights and/or units in one or more offerings.
On May 9, 2023, we filed a registration statement on Form S-3, which was declared effective on May 26, 2023 (File No. 333-271786), to register for sale from time to time up to $300.0 million of our common stock, preferred stock, debt securities, warrants, subscription rights and/or units in one or more offerings.
As of December 31, 2022 and 2021, a security deposit of approximately $794,000 was included in deposits on the consolidated balance sheet related to the 40G Additional Laboratory Lease. Cash was collected in the amount of approximately $803,000 for the 21 Erie Laboratory and Office Lease during the year ended December 31, 2022.
As of December 31, 2023 and 2022, a security deposit of approximately $595,000 was included in deposits on the consolidated balance sheet related to the 40G Additional Laboratory Lease.
We are actively seeking third party support through partnerships and collaborations, or alternative funding structures, to further develop CUE-103 and our Neo-STAT and RDI-STAT programs, as well as our programs outside of oncology, including our CUE-200, CUE-300 and CUE-400 series.
We are actively seeking third party support through partnerships and collaborations, or alternative funding structures, to more fully exploit the potential of our technology platform in the areas of oncology and autoimmune disease, accelerate and expand our CUE-100 series pipeline including the further development of CUE-103 and our Neo-STAT and RDI-STAT programs, as well as our CUE-300 and CUE-400 series.
In addition to the highly selective modulation of T cell activity, we believe the core features of Immuno-STATs offer competitive differentiation, including modularity, manufacturability, and convenient administration that allows for versatility to treat a broad range of disease.
Our selective immune modulation approach may be deployed for treating cancer, autoimmune diseases and chronic infections. In addition to the selective modulation of T cell activity, we believe core features of Immuno-STATs offer differentiated competitive advantages, including modularity, manufacturability, and convenient administration enabling the versatility to treat a broad range of disease.
Interest Income Interest income was approximately $928,000 for the year ended December 31, 2022, as compared to approximately $46,000 for the year ended December 31, 2021.
Interest Income Interest income was approximately $2,661,000 for the year ended December 31, 2023, as compared to approximately $928,000 for the year ended December 31, 2022. The increase in interest income was due to an increase in interest rates in 2023.
This increase of $714,000 was primarily due to cash paid for interest expense related to the proceeds from borrowings under our Loan and Security Agreement, or the Loan Agreement, with Silicon Valley Bank, or SVB, of $679,000, and amortization of deferred issuance costs of $31,000.
This increase of $532,000 was primarily due to cash paid for interest expense of approximately $1,003,000 related to the proceeds from borrowings under our Loan and Security Agreement, as amended, or the Loan Agreement, with First Citizens Bank & Trust Company, or First Citizens Bank (and formerly with Silicon Valley Bank, or SVB), as well as 99 approximately $130,000 in interest expense related to accretion of final payment, and amortization of deferred issuance costs of $37,000.
On May 3, 2022, we entered into the First Amendment to the License, or the First Amendment, with the Licensor, pursuant to which the License was expanded to include an additional room effective July 15, 2022. In consideration of the First Amendment, the security deposit was increased from $225,760 to $235,884 effective July 15, 2022.
The Licensor has the right to terminate the License for Cause (as defined in the License). 104 On May 3, 2022, we entered into the First Amendment to the License, or the First Amendment, with the Licensor, pursuant to which the License was expanded to include an additional room effective July 15, 2022.
Research and development expenses for the year ended December 31, 2021 included expenses related to research and laboratory expenses of approximately $12,321,000, employee and Scientific and Clinical Advisory Board compensation of $9,634,000, stock-based compensation of $6,208,000, clinical expenses of $4,301,000, rent of $3,881,000, and other research and development related expenses of $5,002,000.
Research and development expenses for the year ended December 31, 2023 included expenses related to research and laboratory expenses of $11,003,000, employee and Scientific and Clinical Advisory Board compensation of approximately $9,879,000, clinical expenses of $9,584,000, stock-based compensation of $4,493,000, rent expense of $2,705,000, and other research and development related expenses totaling $3,138,000.
SVBB continues to hold our Term Loans under the same existing terms and covenants which were in place with SVB. The vast majority of the Company’s cash, cash equivalents and marketable securities reside in custodial accounts at US Bank for which SVB Asset Management is the advisor.
The vast majority of our cash and cash equivalents reside in custodial accounts at US Bank for which SVB Asset Management is the advisor.
Manufacturing Agreement with Catalent We entered into an agreement with Catalent Pharma Solutions, LLC or Catalent, for Catalent to provide us with contracted manufacturing services related to the manufacture of CUE-102 materials. At December 31, 2022, we have committed to contract manufacturing services totaling approximately $2,423,000 in which work will begin in January 2023.
Manufacturing Agreement with Catalent We have entered into agreements with Catalent Pharma Solutions, LLC or Catalent, for Catalent to provide us with contracted manufacturing services related to the manufacture of CUE-401 materials and CUE-101 late stage process optimization. Work related to these services began in 2023, and at December 31, 2023, work totaling approximately $8,105,000 is still to be performed.
Cash Flows The following table summarizes our changes in cash, cash equivalents, and restricted cash for the year ended December 31, 2022 and 2021: December 31, 2022 2021 Net cash provided by (used in): Operating activities $ (41,805,954 ) $ (38,837,166 ) Investing activities (24,609,877 ) 9,108,511 Financing activities 53,659,133 19,233,322 Net decrease in cash, cash equivalents, and restricted cash $ (12,756,698 ) $ (10,495,333 ) Operating Activities During the year ended December 31, 2022, we used cash of approximately $41,806,000 in operating activities, as compared to approximately $38,837,000 of cash used in operating activities during the year ended December 31, 2021.
The following table summarizes our changes in cash, cash equivalents, and restricted cash for the year ended December 31, 2023 and 2022: December 31, 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ (39,961 ) $ (41,806 ) Investing activities 25,002 (24,610 ) Financing activities 11,860 53,659 Net decrease in cash, cash equivalents, and restricted cash $ (3,099 ) $ (12,757 ) Operating Activities During the year ended December 31, 2023, we used cash of approximately $39,961,000 in operating activities, as compared to approximately $41,806,000 of cash used in operating activities during the year ended December 31, 2022.

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