Cue Biopharma's (CUE) CEO Dan Passeri Hosts Business Update Conference Call (Transcript)

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About: Cue Biopharma (CUE)
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Cue Biopharma, Inc. (NASDAQ:CUE) Business Update Conference Call November 20, 2018 4:30 PM ET

Executives

John Woolford - IR, Westwicke Partners

Dan Passeri - President and CEO

Anish Suri - Chief Scientific Officer

Bethany Mancilla - Chief Business Officer

Kerri-Ann Millar - VP of Finance and Principal Accounting and Finance Officer

Analysts

Mark Breidenbach - Oppenheimer & Co.

Gil Blum - Needham & Company

Yale Jen - Laidlaw & Company

Lou Basenese - Disruptive Tech Research

Operator

Good afternoon, and welcome to Cue Biopharma's Quarterly Investor and Analyst Update Conference Call. All lines have been placed on mute to prevent any background noise. Following the speaker's prepared remarks, there will be a question-and-answer session. As a reminder, this call is being recorded.

I will now turn the call over to the company.

John Woolford

Good afternoon. This is John Woolford from Westwicke Partners. Thank you for joining us on today's investor and analyst update call. Joining me on the call today are Dan Passeri, Cue Biopharma's President and CEO; Dr. Anish Suri, Chief Scientific Officer; and Kerri-Ann Millar, VP of Finance and Principal Accounting and Finance Officer. Also on the call is Bethany Mancilla, Chief Business Officer who is available for the Q&A session of the call.

I want to note that a slide deck for today's call is available through the webcast in the Investors section of our Web site www.cuebio.com.

Before we begin, I'd like to remind you that during today's call the Company will be making forward looking statements. Various remarks that the company makes during this call about the Company's future expectations, plans and prospects constitute forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors, including those discussed in the risk factors section of the Company's quarterly report on Form 10-Q filed with the SEC on November 13, 2018, which can be accessed on the EDGAR database at www.sec.gov and the other filings the Company makes with the SEC from time-to-time.

In addition, any forward-looking statements represent the Company's views only as of today, November 20, 2018 and should not be relied upon as representing the Company's views as of any subsequent date. While the company may elect to update these forward-looking statements at some future point, the Company specifically disclaims any obligation to do so even if the Company's view is changed. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to today. Please be advised today's call is being recorded and webcast.

I'd now like to turn the call over to Cue Biopharma's CEO, Dan Passeri.

Dan Passeri

Thanks, John. Good afternoon, everyone. Thank you for joining us for today’s investor and analyst update call. In today’s call, we will be providing an overview of our accomplishments over the past quarter and review the upcoming milestones and cover this material with a slide deck focused upon five main topics which can be found in the agenda in Slide 3.

As outlined in this slide, we will provide a brief overview of our core advantages and key differentiation features of our Immuno-STAT platform. We will be providing an overview of our pipeline and provide a brief update of our programs. We will then elaborate upon the recently announced LG Chem transaction providing a summary of the highlights and core strategic features of this important collaboration.

I'll then be turning the call over to Dr. Anish Suri, our Chief Scientific Officer, who will provide you first with a high-level summary of our foundational data recently reported at the Society of Immunotherapy of Cancer or SITC as its referred to, which is an annual meeting in Washington DC.

At this scientific meeting, we presented data demonstrating mechanistic and translational activity of our lead drug CUE-101, showing selective T-cell engagement and activation. As a reminder to everyone, Cue-101 is representative of our Cue-100 series which is based upon the costimulatory cytokine IL-2. The CUE-100 series represents a biologics framework upon which we can develop multiple drug programs by altering the target antigen.

Anish will also provide an overview of the supporting mechanistic data presented at SITC that is representative of the CUE-100 series for oncology. Anish will then turn the call over to Kerri Millar, our VP of Finance to provide an update of our financials as well as future outlook. Finally, I will come back on and highlight some of our near-term milestones and strategic objectives before opening the call to questions.

Now let's turn to Slide 4, which [indiscernible] highlights of our competitive positioning and differentiation of the Immuno-STAT biologics platform as a potential breakthrough approach for selective immune modulation. As a quick reminder, our innovative platform, which is referred to as Immuno-STAT selectively and effectively modulates disease associated T cells and based upon its versatility and modularity has the potential of providing us with a broad therapeutic pipeline in oncology, autoimmune diseases and chronic infectious diseases.

By selectively engaging and modulating disease relevant T cells directly in the patient's own body via an off-the-shelf injectable drug we believe our programs will be able to realize the true potential of effective and safe immune modulation. Our Immuno-STAT platform allows us to efficiently design and develop drug candidates that are intended to specifically and selectively engage disease relevant T cells for therapeutic effect, thereby maximizing clinical benefit while minimizing or eliminating the unwanted side effects often seen with global nonselective approaches.

We expect that our approach will allow us to harness the full potential of the intrinsic immune repertoire inside the body, while avoiding broad immune activation in the case of immuno oncology and chronic infectious disease or broad immune suppression in the case of autoimmunity and inflammation. The competitive positioning and potential differentiation of our platform is highlighted on Slide #4.

Our Immuno-STAT approach has demonstrated enhanced T cell responses by selectively delivering a designated costimulatory signal molecule such as IL-2 as in the CUE-100 series to the targeted tumor specific T cells. Our approach enables us to elicit a targeted diverse T cell response recognizing the selected tumor antigen and we’ve demonstrated that these T cells recognize and attack tumor cells and also generate T cell memory for the targeted antigen.

The result is a selective response that appears to overcome the barriers and challenges of antigen presentation, which has significant implications for enhanced efficacy and safety. Additionally, it’s well known that many costimulatory molecule such as IL-2 CD80 etcetera are limited in their clinical usefulness due to the safety concerns resulting from a broad nonspecific activation of all T cells. So based on the design and modularity of our Immuno-STATs we're able to target a myriad of cancers by altering tumor specific antigen T cells.

Due to the versatility of our Immuno-STAT platform, we also have the potential to address a broad range of autoimmune infectious diseases. Furthermore, because our drugs are designed to selectively elicit T cell responses we're able to utilize a variety of preclinical and translational models including human blood and tissue samples, thereby gaining mechanistic insights and study various treatment protocols which basically guide our clinical development strategies.

Also of importance, as we move into clinical development, we have standardized our cost of goods to make logistics and manufacturing comparable to the costs associated with traditional monoclonal antibodies. Our platform thus offers the potential for timely and cost efficient off-the-shelf treatment with significant advantages over cost and time intensive protocols associated with other approaches.

Based on these potential clinical and commercial advantages, we believe that Cue Biopharma is very well-positioned to become a leader in the immunotherapy space. Our current pipeline of Immuno-STAT is shown on the next slide, Slide 5.

We remain on track to file an IND for the clinical development of CUE-101 for HPV driven malignancies during the first quarter of 2019, and expect to initiate patient enrollment early in the second quarter with the potential for initial biomarker data readout in late 2019. We are currently completing IND enabling studies and our team has been working diligently towards the selection and optimization of clinical biomarkers to support translational clinical studies for CUE-101.

Moving on to our other immuno oncology programs and to remind everyone we will be disclosing the target antigen for CUE-102 by the end of the year, and will be working towards choosing 103, CUE-103 during the second half of 2019. As you know, these programs are based upon the CUE-100 framework, which is the same IL-2 framework of CUE-101, but will be replacing the HPV peptide with different tumor antigens epitopes to target various cancer indications.

Also as we elaborate upon -- as we will elaborate upon in a moment, we are planning to expand our patient reach for CUE -- for the CUE-100 series by exploring and developing additional alleles with our strategic partner LG Chem.

Now moving on to the 200 series, we also recently established a collaboration with the Albert Einstein College of Medicine to expand our Immuno-STAT platform for addressing the serious medical conditions of chronic infectious disease due to T-cell exhaustion. Through this collaboration, we intend to establish proof of mechanism for our CUE-200 series.

We've initiated optimization studies for our CUE-200 framework which uses the cytokine CD80 and 4-1BBL, two additional costimulatory molecules with the ability to reactivate exhausted T cells. Also we’ve generated a CUE-300 series for addressing the autoimmune space with the aim of modulating self reactive T cells that have been working and have been working in this area in close collaboration with Merck.

As previously disclosed, we successfully generated our first collaborative Immuno-STAT against undisclosed autoimmune disease targets and have continued to make progress. The first milestone achieved this past July demonstrated the feasibility of our platform to target autoimmune diseases. Due to the confidentiality of our partnership agreement with Merck, we're unable to provide further details on potential indications at this time.

As we have previously announced, we expect to achieve our second milestone under the collaboration by establishing proof of mechanism in the second half of 2019. The establishment of proof of mechanism is an important milestone as it would validate the promise of the Immuno-STAT platform for treating autoimmune diseases, trigger a milestone payment and allow us to potentially expand our relationship with Merck and our partner with the other pharmaceutical companies for additional programs.

Now moving on to highly significant important development for Cue Biopharma and its shareholders is the recent strategic collaboration and license agreement with LG Chem. As conveyed in Slide 6, we entered into a multi-target strategic collaboration agreement with LG Chem Life Sciences granting Asia rights to three of our CUE-100 assets, CUE-101, CUE-102, and CUE-103 with the ability to develop several alleles. It also provides LG Chem with an expansion option to worldwide rights for one additional program.

In addition to launching our Asia strategy for enhancing our patient reach and development capabilities, it also provides us with world-class manufacturing capabilities for our Immuno-STAT program in oncology. Through this collaboration, we will be working very closely with LG Chem to coordinate on clinical development strategies. We are proud to have LG Chem as our strategic partner as they offer leading biologics capabilities as well as clinical development capabilities that will enhance our ability to engage in global development of our CUE-100 series.

I want to highlight that we conducted a competitive process evaluating multiple potential partners for the Asia territory, and we believe that LG Chem represents an outstanding strategic partner with strong immunology and technology competencies as well as top-tier proven biologics manufacturing and development capabilities.

Now moving on to the terms of the agreement. I first want to acknowledge the leadership of Bethany Mancilla, our Chief Business Officer and the contributions of Colin Sandercock, our General Counsel as well as the BD and legal team of LG Chem will collectively work diligently on this agreement. Under the agreement, we received an upfront cash payment and a $5 million equity investment at a 20% premium. We are eligible to receive up to an additional $400 million in research, development, regulatory and commercial milestone payments if successfully achieved and a tiered single-digit royalty on net sales of collaboration products in all LG Chem territories on a product-by-product and country-by-country basis.

LG Chem will further contribute to the collaboration by providing Cue Biopharma with research funding, CMC, process development and potentially additional downstream manufacturing capabilities including clinical and commercial supply for the collaboration product. In return, particularly for the CMC and manufacturing contributions, LG Chem will receive royalties on sales of collaboration products and Cue Biopharma's territories outside of Asia.

Furthermore, if LG Chem decides to exercise the option to select an additional fourth program, LG Chem would pay a one-time nonrefundable upfront payment and we are also eligible to receive up to $675 million in fees and milestone payments with tiered royalties ranging from high single-digit to mid-teens based upon sales. Importantly, under the agreement, Cue Biopharma retains an option to co-develop and co-commercialize the additional program worldwide.

That concludes our pipeline update. And with that, I'll now turn the call over to Anish to highlight our preclinical CUE-101 data presented at SITC earlier this month.

Anish Suri

Thanks, Dan, and good afternoon, everyone. I'm excited to start by reviewing the data today, especially for those of you who were not able to attend the SITC Annual Meeting earlier this month in Washington DC. As detailed on Slide 7, at SITC we presented foundational data for CUE-101 that underscores the potential of our Immuno-STAT platform and demonstrates its potential to address many diseases including immuno oncology, autoimmunity and chronic infectious diseases.

The platform's modularity and flexibility allow for the design and engineering of biologics for in-vivo cell modulation, which we believe is a potential breakthrough in selective immune modulation. To summarize, the data highlight the potential of our lead candidate CUE-101 to selectively engage activate and expand HPV E7 specific T cells for HPV driven cancers, including head and neck cancer and cervical cancer.

We saw notable preclinical efficacy of CUE-101 as a monotherapy and it was further enhanced in combination with anti-PD-1. The mechanistic data demonstrated selective expression of PD-1 in tumor resident T cells, which provides a rational basis for combination with checkpoint inhibitors. Finally and importantly, the data also demonstrates the ability of CUE-101 to prime and expand antigen specific T cells from the naïve T cell repertoire.

T cells activated with Immuno-STAT molecules such as CUE-101 can be monitored in peripheral blood as well as tumor infiltrating lymphocytes or TILs within a tumor. And this has important implications for future clinical trials and translational strategies.

Moving on to Slide 8, I will detail the preclinical efficacy findings we presented at SITC in a murine preclinical tumor model with the TC1 tumor cell line that is HPV driven, CUE-101 inhibited tumor growth both as a monotherapy and in combination with the PD-1 inhibitor. As shown in the graph on the left, CUE-101 alone significantly extended overall survival in this model and that the red curve that you see, which was further improved when this molecule was combined with the PD-1 inhibitor and that's the total line [ph].

Importantly, as you see here, PD-1 alone in this model showed no extended overall survival benefit. As shown in the graph to the right, in the same disease model, CUE-101 demonstrated selective expansion of E7 specific T cells in the tumor, either as monotherapy or combination with anti-PD-1.

We've reported similar results when the same T cells are tracked in blood and that is a part of the broader SITC presentation that we disclosed a few weeks ago. Importantly, CUE-101 monotherapy and in combination with anti-PD-1 demonstrated selective expansion of E7 specific T cells as shown in the right panel. Hence Slide 9 raises the question despite having comparable numbers of T cells in the monotherapy or the combination, the survival outcomes were very different. Why? This answer is addressed in the next slide, Slide 10 where we could demonstrate that the tumor specific T cells resident in the tumor selectively upregulated the expression of PD-1.

This Slide shows a representative example where clear expression of PD-1 as shown by the red arrow is evident among the tumor specific T cells in the tumor, while no major expression of PD-1 is noted in the same T cells when they're in the blood. The result was confirmed in other animals of the same cohort, detailed analysis of these data were a significant part of our SITC presentation by Steve Quayle at all. For your convenience a web link to the complete SITC presentation is available on the slide.

Taken together, the preclinical data provide a strong mechanistic basis for both CUE-101 monotherapy and for potential for rational combination with checkpoint inhibitors such as anti-PD-1.

The next slide, Slide 11 provides a deeper insight into the nature of long-term immunological memory that was induced after combo treatment with CUE-101 with anti-PD-1. As shown in the slide, we rechallenged the long-term protected mice with new tumors to postdate AT after the initial tumor challenge. And all five out of the five mice year rejected the new tumor challenge in absence of any additional treatment, which demonstrated induction of immunological memory.

As a controller of naïve mice when challenged with the same tumors, did not demonstrate tumor progression. We are now in the process of determining whether the antitumor immune memory response is dependent upon either CD8, or CD4s above subsets.

Lastly on Slide 12, we asked a fundamental question. Can CUE-101 the clinical candidate prime and expand CDH T cells from the naïve T cell repertoire. To address this we resorted to using the HLA A 02 transgenic mice which express the human HLA A 02 molecule and they have CD8 T cells that recognize this molecule, these mice provide a robust model system where CUE-101, which is composed of HLA A 02 can be administered directly to probe whether one can elicit E7 specific CD8 T cells.

I should point out that this is a challenging more since the interactions between the mouse CD8 core receptor and the human HLA A 02 molecule are not optimal which affects T-cell activation and strength of signaling. Despite these hurdles are shown in the slide, CUE-101 could activate and expand antigen specific CD8 T cells, representative facts plot [ph] showing these illicit T cells, and it was only a top left panel there, that red circle outlines the T cells as detected by staining [ph] with peptide amity tetramers and the bar graph below shows you frequency of antigen specific T cells across different mice were two different dosing groups.

Importantly, the expansion of T cells from the naïve repertoire was evident despite no major changes in the broader immune cell subsets shown in the right panel, indicating that the IL-2 component of CUE-101 appeared not to be broadly stimulatory and immune activating. As would have been the case with systemic IL-2. And as you can see there are no major changes in the CD8 positive T cells, the NK T cell -- of the NK cell compartment or the regulatory T cells directs between the vehicle or the CUE-101 treated groups.

The same cells would have been [indiscernible] had you have systemic IL-2 being administered. We believe these data support our faces that selective delivery of IL-2; to tumor specific T cells can be achieved with minimal to no perturbation of the broader immune compartment, hence creating a safety window.

In conclusion, the strong mechanistic preclinical data suggests that CUE-101 both alone and in combination which are [indiscernible] inhibitors may offer a significant therapeutic advantage of the current immuno-oncology approaches. These data also underscore the value and importance of a robust translational framework and approach that will be deployed to our clinical development plan.

With that, I will turn the call over to Kerri, to review our financial position. Kerri?

Kerri-Ann Millar

Thank you, Anish. Good afternoon, everyone. Turning to Slide 13, I would now like to provide a quick update on our financial results for the quarter ending September 30, 2018. We finished the quarter with $39.2 million in cash, cash equivalents and marketable securities, $44.6 million in total assets and working capital of $36 million. These amounts do not include the upfront payment and proceeds from the common stock purchase from LG Chem. This transaction was not completed until after the quarter end.

Revenue generated from our collaboration with Merck was $449,000. No revenue was recognized during the three months ended September 30, 2017. Research and development expenses for the quarter ended September 30, 2018 were $10 million -- $10.3 million, excuse me and compared to $4 million for the same period of 2017. This increase in R&D expenses is due primarily to activities associated with CMC drug manufacturing and translational studies for CUE-101 as we prepare to enter the clinic in 2019.

As all of the growth of the company have to continue to build out the Immuno-STAT platform with additional programs in oncology and to expand into autoimmune and chronic infectious disease applications. General and administrative expenses were $2.9 million for the three months ended September 30, 2018 compared to $1 million for the same period in 2017. The increase in general and administrative expenses is primarily due to the growth of the company and the cost associated with operating a public company.

We expect expenses to continue to increase as we expand our operations. As a result of our recent accomplishments that Dan previously touched upon, Cue Biopharma continues to be well-positioned to support the development of our Immuno-STAT platform, including the clinical development of CUE-101 until approximately [indiscernible] 2020.

I'll now turn the call back over to Dan for closing remarks. Dan?

Dan Passeri

Yes. Thanks, Kerri. As you can see on Slide 14, 2018 has truly been a foundational year for Cue Biopharma as we continue to make significant progress towards establishing ourselves as a leader in immunotherapy by executing on our research, clinical development and corporate objectives. We look forward to updating you on our progress over the upcoming 12 months and we expect to execute on a multiple upcoming value creating opportunities in our pipeline.

Key expected catalyst as you can see on the slide, include filing our IND in the first quarter of 2019 and beginning clinical trials for CUE-101 which is exemplary and representative, I should say of our CUE-100 IL-2 base series, selecting and disclosing nonviral antigens for CUE-102, and the fourth quarter of this year we look forward to providing you with that selection upcoming shortly, and CUE-103 in the second half of 2019 that's expanding our reach into additional oncology indications.

Next establishing proof of mechanism for our CUE-200 series to our collaboration with the Albert Einstein College of Medicine in the first half of 2019 and demonstrating proof of mechanism in the second half of 2019 for our autoimmune program working in close collaboration with Merck. We look forward to updating you on these expected milestones as we continue to execute on our strategy.

And with that, I would like to now open the line to questions. Operator, you can open the line please.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from Mark Breidenbach with Oppenheimer. Your line is now open.

Mark Breidenbach

Hey, good afternoon, guys. Thanks for taking the question and congrats on the recent progress. Maybe just a question going back to slide 12 from the presentation. I'm wondering if you can explain why we are not seeing a really clear dose response in terms of the percentage of tumor specific CD8 positive T cells that are being expanded between 10 and 30 milligrams per kg?

Anish Suri

Yes, Mark. Thanks for the question. This is an initial analysis Mark, as you can see between the 10 and 30 mg dose. There is a slight trending up of the overall group within the 13. This obviously have to be [not][ph] extended. To be honest, Mark we were not very hopeful initially as you well know that the CD8 core receptor interactions with the alpha 3 domain of plus one are quite critical and even in the absence of that one could generate this with an IV injection. The experiment continues to be this -- these analysis continues to be an ongoing experimentation where the animals have been [followed out] [ph]. And the trending is that you do consistently see a robust repertoire that can be induced and one as you look at the precursor frequency is looking at even in the fraction of percentages here off the initial treatment, which you are seeing here. When you look at the naive repertoire, Mark, where frequencies can be north of 1 and 50,000. The fact that you see something in the 1 and 200 range is still a significant enrichment. So we see that overall as a positive. The fact of the matter of tracking these out in the longer period with systemic rechallenges and how that sort of bumps up and amplifies is still an open question.

Mark Breidenbach

Okay. Fair enough. Just to following up on that, I'm wondering if we can extrapolate from any of the clinical studies of HPV E7 targeting TCR products. I know there's always one in the clinic at the NCI. And they’ve seen some responses with that in a small cohort of patients so far. I’m just wondering if there's -- if we can extrapolate from that study sort of a minimum threshold of tumor reactive T cells that you would want to have in a body to potentially elicit a clinical response?

Mark Breidenbach

Yes, thanks, Mark. It's Dan, I’m just going to take a shot at and then I’m going to turn it over to Anish to elaborate. So you are referring to a couple of these studies from NCI, Kite and Rosenberg and others. I think a couple of distinctions. First, it's very encouraging because there -- some of these studies they are using the same epitope that we're using, which demonstrates that from a patient's own samples they are able to generate a repertoire that can then be re-infused back into the patient. So that A isn't encouraging. And B, it's not a apple-to-apple comparison, because they’re infusing one large bolus at one-shot. What we believe a real strategic advantage is we’re inducing this directly in the patient's own body and that we can be dosing the drug over sort of multiple schedule, so that we could like a PCR reaction increase it. We also don't think it's a direct comparable where you’re looking at a one-time infusion versus the ability to be on a dosing regimen schedule over time. So we find that the data very encouraging in terms of the basic approach, the same cytokines, same epitope, very different approach. One is endogenous, the other is ex vivo; I’ll turn it over to Anish, if he wants to elaborate.

Anish Suri

Yes. I think that's true. I think the other part, Mark, which we think is an important parameter of immune fitness is the fact that our molecules should induce an [indiscernible] endogenous repertoire rather than focus at a singular TCF base. And I think that may have no answers around TCR [indiscernible] as you look at effect of functions. I think there's tractability in the blood and tells that relationship still needs to be established. We continue to follow that out. But the positive is the fact that as you can track these things in the blood and detect them by either tetramers or [indiscernible] of course encourages us and we plan to deploy very similar modalities as we trend towards the clinic. So there are nuances as Dan mentioned, but there are also extremely positive outcomes in terms of at least the shared belief that we believe this is an important epitope in context of A2 with the fact that ours is of course an en vivo administered molecule as opposed to a cell therapy approach.

Mark Breidenbach

It makes sense. Just one last one for me. Is it too early to talk about sort of the overall design of the Phase 1 trial where we would likely see that starting with healthy volunteers or would you go right into HPV positive cervical and/or head and neck cancer patients?

Dan Passeri

Yes, so we're going to be going directly into HPV positive head and neck cervical, not having to start with healthies. And the only thing we will clarify at this point because it is still a working in progress in terms of the specifics of the design. But we will be doing a classic 3x3 dose escalation, we will be looking at monotherapy upon monitoring biomarker activity and seeing a -- targeted repertoire increasing in population. We would then look at the prospects of starting a second cohort which should be combination with PD-1 and then comparing the two of them. Bearing in mind that the monotherapy those will be likely PD-1 already treated in refractory. The second would be PD treatment naïve. And do you want to add anything to that?

Anish Suri

No, I think that’s appropriately captured.

Mark Breidenbach

Okay, perfect. Thank you for taking the questions and have a great Thanksgiving.

Dan Passeri

You as well Mark.

Anish Suri

Thank you.

Operator

Thank you. And our next question comes from Gil Blum with Needham & Company. Your line is now open.

Gil Blum

Hi, Dan. Hi, Anish. Thank you for taking my question. So this is a bit -- a little bit out to -- towards the future here. And there was lot of excitement at SITC about a new antigen. Are you guys thinking of using more personalized approach in the future? Any signs in that direction?

Anish Suri

Yes, Gil, thanks for the question. I can address that, Gil. So the first iteration of the platform as you've seen is going after well-characterized determinants in the case of the HPV viral [foreign] [ph] epitope to which one would hopefully have a robust repertoire. The intention is to evolve the platform, Gil, to a point where we can get personalized and load in new antigenic epitopes at will. A significant part of the organization is focused on evolution of the version 2, if I may of the platform to putting it in that direction. So you’ve got a basic framework as you would for HLA-A02. You would have sequence derived motifs coming through from new antigenic screening approaches and as you determine what may look like potential epitopes one could slope those in and create stable warheads. And the other part that is it allows us to do mixtures as well and going with more than one specificities at a given moment in time, but that certainly is the intention for the company to move in that direction.

Gil Blum

Very good. Just another question about the clinical data that you’ve shown with the PD-1 inhibition. Have you guys done an experiment of where your PD-1 receptors were attached directly to the construct itself? Because I remember we've discussed this before.

Anish Suri

Yes, we have not made it in – it’s something we’ve debated, you mean an anti-PD-1, Gil to …?

Gil Blum

An anti-PD, yes.

Anish Suri

Yes, we’ve debated that as a blocking. It's something experimentally we've not tested, but that's certainly the modularity of the platform is flexible enough. And that's one of the advantages as you remember from the previous conversations where one could bring in those sorts of reagents either as fabs or domain antibody fragments to have selective blockers. It's something that’s indefinitely on the radar. We’ve just got to prioritize and move the pipeline as you can see with the work and the scope Dan outlined, but will likely hopefully get to it at some point.

Gil Blum

Excellent. Thank you very much for taking my questions and enjoy the holidays.

Anish Suri

Great, Gil. Thank you.

Dan Passeri

Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from Yale Jen with Laidlaw. Your line is now open.

Yale Jen

Good afternoon and thanks for taking the questions and have happy holidays ahead.

Dan Passeri

Thank you.

Yale Jen

Nectar [ph] recently presented a [indiscernible]. So, it's a very interesting outcome there so far. So what do you think about that readout specifically into the IL-2 with your construct and overall in the 100 series?

Dan Passeri

Yes, Yale we saw it slightly different in the access that we're not a formatted systemic IL-2 where the sync is likely every single T cell out there. As you well remember, our IL-2 has a targeted affinity attenuation such that it biases away from the alpha chain. But more importantly when it's presented in context of the peptide MHC, the effect or outcome is only seen very selectively in a nice window -- therapeutic window with antigen specific T cells. So we believe that selective targeting of IL-2 over systemic may have its own advantages and so far at least the preclinical data seem to bear that.

Yale Jen

Do you see your data so far further supporting, I guess, in the way out using IL-2 as a co-stimulator or part of that in the 100 series to be -- I guess, correct selection, if you will.

Anish Suri

Yes, I think in the thesis of going in with IL-2 as a immune modulator is a reasonable assumption. The issue there is how do you compartmentalize it to the appropriate T cells and I think that’s where we sort of would present a rationale that platform differentiates in that aspect. But we would support the utility of IL-2. [Indiscernible] was one of the reasons we made the choices ourselves, because of earlier data prior to Nectar as well. But hopefully now mitigating some of the issues around specificity and selectivity.

Dan Passeri

Yes, Yale. This is Dan. I will just add to that. We really selected IL-2 for a couple of primary reasons. One is it's very well-characterized and understood in terms of its potential therapeutic utility, but also the safety profile and the challenges that come along with global administration. So we felt that as a first series it really represented a great foray into demonstrate the power of targeting the cytokine to particular T cell population. And by doing that, educating the FDA on the benefits of our approach thereby making it a more productive dialogue in the future on additional constructs.

Yale Jen

Okay, great. And maybe two quick questions here. The first one is the collaboration with the LG Chem. What are the specific alleles that you were focusing on, given that -- different in Asia, its different from United States?

Dan Passeri

Yes. So we’ve not predefined for LG what alleles they're going to be selecting on. We're collaborating and cooperating on global strategy. So they also have access to HLA A 02 which we're developing and really depends on the geographic region. So for instance in China, A:11 is the predominant allele. I think it's about 60%, 65% of the Chinese population followed by A:24 and then a smaller number, I think about 10% to 13% A:02. And Korea A:24 is the predominant followed by A:02. Surprisingly A:02 was approximately I think in the 30s about 30% of the Korean population, followed with A:11 also being part of the population in Japan. A:24 is about 70%, A:02 is a very -- it's a much smaller percentage. So those are obviously three alleles that are the priorities, but we will look at other alleles as well. And what we will be doing is working in collaboration with them to select: A, the allele types for each drug candidate and then designing the clinical strategies around that.

Yale Jen

And maybe the last housekeeping questions, which is in the last quarter your R&D is roughly $10 million -- level with $10 million, roughly almost twice as the previous two quarters or at least the previous quarters. Should we consider $10 million plus in R&D will be a potential norm coming forward [multiple speakers]?

Dan Passeri

No, not at all. No, that’s a bump up because of the requirements for CMC getting materials ready for the IND filing next quarter. So it will be basically reflective of the historic average with a small increment over time, but that that was really reflective of a significant increase in preparation for the IND filing both in terms of CMC supply as well as translational studies for IND enabling.

Yale Jen

So it will be theoretically solid normalized from the …

Dan Passeri

Yes, that’s right.

Yale Jen

… [indiscernible] number with some increases?

Dan Passeri

Yes, that’s exactly right.

Yale Jen

Okay, great. Thanks a lot, Dan, again. Have a happy holiday.

Dan Passeri

Thank you, Yale. You as well.

Operator

Thank you. And our next question comes from Lou Basenese with Disruptive Tech Research. Your line is now open.

Lou Basenese

Hey, Dan and Anish. Thanks for taking the questions. Just a couple of quick one for clarity. You mentioned that you’ve runway into mid 2020. Are there any significant milestones on under either the Merck or LG Chem deal that could come in before then that would meaningfully extend the runway?

Anish Suri

I would say just being conservative and looking at where we are, we are not relying on that to extend the runway right now.

Lou Basenese

Okay. And then on some of the slide talking about the milestones, in previous calls you mentioned that you’re in discussions with multiple partners, but there weren't -- that wasn’t a bullet point on that slide. Are there any other discussions that are underway that could come in under the timeframe that you laid out there on the milestone side?

Dan Passeri

Yes, so we are on an ongoing basis in discussions with multiple parties strategically and we prioritize those discussions based on the initiatives that we are intending to focus upon. We just executed a very important transaction with LG Chem as our Asia territory partner and we basically want to integrate that into our operations. We have Merck, we also have the Albert Einstein. So right now what I did not want to do is forecast another transaction at some given point in time. We will look at those opportunities opportunistically and strategically. Bear in mind, it also reflects discussions with our Board in terms of what is the best strategy for maintaining upside of our programs for creating maximum shareholder value versus partnering to create shareholder value. So that's the reason we have put it in right now. We will update that as they mature.

Lou Basenese

Okay. That’s helpful. And then just one last quick one, maybe for Anish. Can you share the key differences between the data that was presented at SITC and what was previously disclosed in some of the earlier corporate presentations?

Anish Suri

Sure, Lou Basenese. SITC, couple of important things. One was the fact we provided a mechanistic basis for combination with PD-1 blockade. We’ve seen that, but it's quite meaningful and sort of satisfying to see that the tumor resident T cells as you saw in the slide selectively upregulated PD-1. And if just click on the web link poster that Steve Quayle and the team presented, there's a nice description of those data sets there. Second was the analysis in A:02 transgenic mice which allow us, which is with that clinical candidate to ask [indiscernible] question about the naïve priming, we've debated whether the relevance of this is only in people where you may had early priming and you’re expanding with this modality, or could you actually prime from the naive situation and the A:02 mouse data suggest that you could go off the naive situation. These mice should have not seen HPV in any shape or form. Those are seminal data, along with the fact that there's good transactional data sets and expanded upon E7 specific responses from primary human sample, that was demonstrated there in dose response curve. You will see that as a part of the poster as well. So all of those coming together now to support as we move towards the IND, critical elements of the signs and the mechanism.

Lou Basenese

Okay, great. Thanks. Have a great Thanksgiving. Appreciate it.

Dan Passeri

Thank you, Lou.

Anish Suri

You as well.

Operator

Thank you. And I’m not showing any further questions at this time. I would now like to turn the call back over to Dan Passeri, President and CEO for any further remarks.

Dan Passeri

All right. Thank you, operator, and thanks to everyone for joining us in the call today. We look forward updating you on our progress throughout the remainder of 2018 and obviously into 2019. And with that, I just want to wish everyone a happy Thanksgiving and safe and happy holidays going forward. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes today’s program and you may all disconnect. Everyone have a wonderful day.