Cue Biopharma Inc., which in September filed for an IPO to raise up to $40 million – having only emerged from stealth mode in January – inked a deal with Merck & Co. Inc. that brings an undisclosed up-front payment along with as much as $374 million in research, development, regulatory and commercial milestone payments, plus tiered royalties on sales if all goes well.

The research collaboration and license agreement has Cue leveraging its platform to develop biologics engineered to selectively modulate disease-relevant T-cell subsets for the treatment of autoimmune disease. Designed to encompass multiple targets across certain primary disease indication areas that were not specified, the multiyear pact will deploy Cue technology that devises biologics that mimic antigen-presenting cells to selectively deliver signals to disease-associated T cells.

A spokesperson for the Cambridge, Mass.-based firm said Cue would not comment on the deal with Merck, of Kenilworth, N.J., beyond a brief press release. Cue was more talkative at the start of the year, when it added a $16.4 million round to seed funding of $10 million to accelerate development of its platform of T-cell receptor biologics. Cue aims to help refine pro-stimulatory molecules so that systemic toxicity is avoided. Achieving specificity involves fusing engineered T-cell co-stimulatory signaling molecules with a T-cell receptor-targeting complex on a traditional antibody scaffold. When the peptide interacts with T cells that matter to the given disease, the biologic delivers one of Cue's engineered signaling ligands. (See BioWorld Today, Jan. 25, 2017.)

In March, Cue selected its lead candidate, Cue-101, which targets human papillomavirus (HPV)-associated cancers, and expects to enter the clinic in the first half of next year. Cue-101 couples interleukin-2 with a T-cell antigen (HPV-E7 oncoprotein) in a single biologic to target and activate T cells specific to HPV cancers. The approach could enable synergistic combinations with existing therapies, such as checkpoint inhibitors, with lower compounded toxicities, Cue noted. In preclinical work, Cue-101 monotherapy yielded potent activity in HPV-driven cancer models, and showed durable tumor clearance when combined with checkpoint inhibitors.

"We believe that the net proceeds from this offering (assuming that at least the minimum amount of common stock offered [$35 million] is sold), combined with our existing cash resources, will be sufficient to fund our projected operating requirements into and possibly through the second half of 2018," Cue said in the S-1 filing related to the IPO. "However, the expected net proceeds from this offering are not expected to be sufficient for us to complete the development and commercialization of any of our drug candidates or platform technologies."

The would-be IPO intends to sell about 4.3 million shares of common stock (minimum) up to about 6.6 million shares, with the exact number of shares contingent on the offering's price per share. If the offering is conducted on a price of $7 per share, the midpoint of the range set forth by Cue, then it will consist of 5 million shares (minimum) up to about 5.7 million shares. Proceeds would let the firm finish IND-enabling studies for the lead candidate, file the IND and start a phase I trial. Cue could also identify, optimize and nominate one more candidate in immuno-oncology, while optimizing the drug scaffold for the treatment of autoimmune indications through the generation of T regulatory cells in vivo. With its IPO money, the firm would continue to advance drug discovery platform technologies, and reach proof of concept of viratope, a T-cell epitope discovery platform.

Good show, Inovio

Cue was incorporated as Imagen Biopharma Inc. in Delaware on Dec. 31, 2014, and in October of last year changed its name. As of June 30, the company had an accumulated deficit of about $17.4 million.

"Our initial focus and objective is to develop drug candidates for cervical/head and neck cancers, hepatocellular carcinomas and melanoma," the company said in the S-1, though the "future developmental roadmap will also focus on new drug candidates that target autoimmune disorders."

HPV-linked cancer has been getting plenty of attention. Globally, cervical cancer affects more than a half million women and causes more than a quarter million deaths every year, with almost all caused by an HPV infection. This summer, Merck and Genexine Inc., of Seongnam, South Korea, said Genexine was given the go-ahead from the South Korean Ministry of Food and Drug Safety for a phase Ib/II trial testing a combination vaccine. The trial will test Genexine's DNA vaccine, GX-188E, in combination with Merck's anti-PD-1 blockbuster, Keytruda (pembrolizumab). GX-188E already has demonstrated the ability to induce a tumor-specific immune response and curative activity against high-grade cervical intraepithelial neoplasia, or CIN. A phase I vaccine study showed significant E6/E7-specific IFN-γ-producing T-cell responses in all CIN 3 – "3" designating the highest degree of cervical involvement – patients when given intramuscularly by electroporation. CIN 3 is usually caused by certain types of HPV and may turn into cancer. (See BioWorld, June 21, 2017.)

More recently, evidence backing Cue's thesis with Cue-101 surfaced when Inovio Pharmaceuticals Inc., of Plymouth Meeting, Pa., disclosed positive phase I data with INO-3112 (now known as MEDI-0457), a T-cell activation immunotherapy that targets cancers caused by HPV types 16 and 18. The compound is licensed to Medimmune, the research and development arm of Astrazeneca plc, of Cambridge, U.K. In the study that enrolled 22 HPV-positive patients with squamous cell carcinoma of the head and neck, one person that first displayed a slight increase in T-cell immune responses developed progressive disease 11 months into the study, and received PD-1 inhibitor Opdivo (nivolumab, Bristol-Myers Squibb Co.). After four doses, the patient showed a sustained complete response and continues on therapy with no evidence of disease 16 months after Opdivo was started. "Analyses showed that MEDI-0457 had activated HPV16-specific CD8+ T cells and the subsequent nivolumab treatment helped unleash the expansion of these killer T cells," wrote H.C. Wainwright analyst Raghuram Selvaraju in a report. "Evidently, MEDI-0457 prior to PD-1 inhibition can be synergistic and help increase the efficacy of checkpoint inhibitors, in our view." The results were disclosed at poster presentations at the Society for Immunotherapy of Cancer annual meeting in National Harbor, Md.