Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) Q2 2023 Earnings Call Transcript

Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) Q2 2023 Earnings Call Transcript August 9, 2023

Cyclacel Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.44, expectations were $-0.54.

Operator: Good afternoon, and welcome to the Cyclacel Pharmaceuticals Second Quarter 2023 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After today’s call members of the financial community will have the opportunity to ask questions. [Operator Instructions] Please note today’s call is being recorded. I would now like to turn the conference call over to the company. Please go ahead.

Grace Kim: Good afternoon, everyone, and thank you for joining today’s conference call to discuss Cyclacel’s financial results and business highlights for the second quarter of 2023. Before turning the call over to management, I’d like to remind everyone that during this conference call, forward-looking statements made by management are intended to fall within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended. As set forth in our press release, forward-looking statements involve risks and uncertainties that may affect the company’s business and prospects, including those discussed in our filings with the Securities and Exchange Commission, which include, among other things, our Form 10-Q and 10-K.

All of our projections and other forward-looking statements represent our judgment as of today, and Cyclacel does not take any responsibility to update such information. With us today are Spiro Rombotis, President and Chief Executive Officer; Paul McBarron, Executive Vice President, Finance and Chief Operating Officer; and Dr. Mark Kirschbaum, Senior Vice President and Chief Medical Officer. Spiro will begin with an overview of our business strategy and progress. Mark will provide details on Cyclacel’s clinical programs, and Paul will provide financial highlights for the second quarter of 2023, which will be followed by a Q&A session. At this time, I would like to turn the call over to Spiro.

Spiro Rombotis : Thank you, Grace, and thank you everyone for joining us today for our quarterly business update. Both clinical programs with fadraciclib or fadra and plogosertib or plogo are progressing well. And we are on track to deliver key data readouts over the coming months. We expect to report complete dose escalation data with fadra and determination of the recommended Phase 2 dose or RP2D. And in the plogo study, dose escalation data, and further elucidation of its novel epigenetic mechanism. In the fadra 065-101 study in patients with solid tumors and lymphoma. Our immediate task is to determine the recommended Phase 2 dose or RP2D. And we’re very close to achieving this goal. Pharmacokinetic and Pharmacodynamic data from the initial patients at this dose level suggest that we are achieving level above the predicted target engagement levels on our daily dosing.

In addition to choosing RP2D, another parameter that may increase the chance of success in Phase 2 is the selection of the histologies in which we may expect to see anti-cancer activity. As previously reported, we have seen PRs and stable disease in patients with T-cell lymphoma, women’s cancers, including cervical and Demetrio and ovarian and also pancreatic cancer, all on fadra monotherapy. Our Phase 2 sites have been selected with this in mind and they are ready to participate once we declare RP2D and elect to start the Phase 2 proof-of-concept or POC stage of a study. Clinical data from this open label POC stage will be reported as they become available. Based on the totality of data collected to date, we believe that fadra’s CDK2/9 profile is differentiated from other molecules in its class in terms of safety and anti-cancer activity reported thus far.

Of notes, a competitor recently disclosed that after a strategic portfolio prioritization, they have discontinued three clinical trials of their AZD4573 candidates, AZD4573 is a CDK9 inhibitor administered intravenously once a week. We believe that continuous pressure on CDK2 and CDK9 targets is required to enable apoptosis. Accordingly fadra is a CDK2/9 inhibitor administered by oral tablets on a daily schedule. Let us not turn to plogo. We are very excited that plogo could emerge as a PLK1 inhibitor with novel epigenetic activity. In our 140-101 study, we are evaluating plogo in escalating doses, now at dose level five is a treatment for patients with advanced solid tumors and lymphoma. plogo has shown early signals of anti-cancer activity at low concentrations in patients with adenoid cystic carcinoma, biliary tract, non-small cell lung, and ovarian cancer.

Our preclinical program, aiming to elucidate plogo’s differentiated biological profile has revealed novel epigenetic activity at low concentrations. A further data, corroborate these findings, will may enroll in the future, one or more patient cohorts selected on the basis of specific biomarkers. I will now turn the call over to Dr. Mark Kirschbaum, our Chief Medical Officer to provide details on recent clinical data. Mark?

Mark Kirschbaum: Thank you, Spiro. As you heard, both the fadra and plogo clinical programs are accruing well, and are in our important stages in their respective studies. Regarding fadra, we were completing enrollment at dose levels six, eight, and expect to shortly select the RP2D. Of note, we are now dosing all patients using the oral tablet form of fadra which may eventually support a commercial launch. I would like to summarize what we have seen recently in the 065-101 study. The patient was heavily pretreated endometrial cancer in dose level 6A has documented tumor shrinkage after one cycle and is ongoing. We previously reported that two out of three patients with T-cell lymphoma achieved PR, including a patient with very aggressive angioimmunoblastic form of peripheral T-cell lymphoma.

13 of 19 patients with cervical endometrial liver and ovarian cancers achieved stable disease with target lesion reductions as their best response. In pancreatic patient maintain stable disease for five cycles of treatment. These are promising responses for this phase of clinical testing and may predict deeper responses in Phase 2. The major toxicities we have seen thus far continue to be nausea and hyperglycemia, which were manageable and reversible. The primary objective of the Phase 2 stage to follow the determination of RP2D is to assess fadra’s activity and safety in relevant tumor types. The design of this registration directed study allows us to recruit different tumor types and discrete cohorts, each running in parallel and independently of each other.

Let’s now turn to plogo, our oral PLK1 inhibitor, in the 140-101 study of plogo in patients with advanced solid tumors and lymphoma. We have observed intriguing clinical activity at these early low dose concentrations given continuously. These included stable disease at dose level one and two patients with non-small cell lung cancer for eight cycles and ovarian cancer for five cycles at dose level two in a patient with biliary tract cancer for three cycles and a dose level four in a patient with adenoid cystic carcinoma for three cycles. We are currently enrolling dose level five. No SAE have been reported thus far. Preclinical data have shown that plogo had epigenetic mechanism. Term epigenetic refers to the way cell control gene activity without changing DNA sequence.

Approved drugs with epigenetic mechanisms such as histone deacetylase inhibitors or hypo methylating agents typically work at low concentrations, as opposed to chemotherapy and other traditional forms of cancer therapies. We are actively investigating this potential epigenetic mechanism in the preclinical setting as well as in our clinical correlative study. The 140-101 study is designed to target several important tumor types with preclinical models and biology suggests possible single agent activity. These include colon, lung cancer and lymphoma. Our study is designed to efficiently evaluate both dose and schedule to optimize RP2D for the proof-of-concept or cohort stage of the study. We look forward to updating you as we progress our evaluation of fadra and p plogo.

I will now turn the call over to Paul to review our second quarter and financial results.

Paul McBarron: Thank you, Mark. As of June 30 2023, cash equivalents total $10.2 million compared to $18.3 million as of December 31 2022. Net cash used in operating activities was $8.2 million for the six months ended June 30 2023, compared to $8.7 million for the same period of 2022. The company estimates that its available cash will fund currently planned programs through the end of 2023. However, the operating plan includes discretionary expenditures, which have not incurred could extend our liquidity requirements into the second quarter of 2024. Research and development or R&D expenses were $4.7 million for the three months ended June 30 2023 as compared to $4.2 million for the same period in 2022. R&D expenses relating to fadra were $3 million for the three months ended June 30 2023 as compared to $2.6 million for the same period in 2022 due to increase in non-clinical expenditures.

R&D expenses related to plogo were $1.4 million for the three months ended June 30 2023, as compared to $1.5 million for the same period in 2022 due to clinical trial costs associated with the progression of the 140-101study. General and administrative expenses for the three months ended June 30 2023 and 2022 remained relatively flat at $1.6 million. Total other expense net for the three months ended June 30 2023 was $0.1 million compared to an income of $0.2 million for the same period of the previous year. United Kingdom Research and Development tax credits for the three months ended June 30 2023 were $0.6 million, compared to $1 million for the same period of the previous year, due to a decrease in the tax credit rate that took effect in April of this year.

Research and development tax credits are directly correlated to qualifying research and development expenditure. Net loss for the three months ended June 30 2023 was $5.4 million, compared to $4.6 million for the same period in 2022. Operator, we are now ready to take questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Ahu Demir, Ladenburg.

Ahu Demir: Hello, thank you very much for taking my questions. Three on our side. First one would be given the recent developments and names in the PLK1 field this week. Could you elaborate more on the differential profile of plogo compared to other PLK1 inhibitors? I know mechanism of action will be disclosed later in time but just curious, however, much you can disclose and mentioned some details to us.

Spiro Rombotis: Thank you for your question, Ahu. That’s an excellent question. There are two clinical stage PLK1 inhibitors as you mentioned, the difference between plogo and the other candidate is that we have an epigenetic mechanism as evidenced by cross reactivity with BRB4, a validated epigenetic target where is the other molecule does not. Very importantly, molecule has presumed single agent activity which we have seen in several patients. At the same time, we believe that the other molecule has never been tested in a single agent protocol. It’s always been tested in combinations. Last year with developments of this week relates to a change in clinical trial plans, we have the molecule in frontline of colorectal cancer, that is certainly a cancer of interest to us, as is the potential classification.

But that is only a part of the story that will emerge when we disclose the full details of plogo’s epigenetic mechanism. Last point I have one should consider here is that both of these drugs were given orally, we have a potential best-in-class half-life around 11 hours, versus about 24 without the molecule. We believe both molecules have a chance to make it to market but we believe on different indications based on the very different biological functions.

Ahu Demir: Thank you, Spiro. And a follow up question would be what — are there any indications that you see a greater efficacy of plogo when you’re trying in a clinical trial?

Spiro Rombotis: Well, it’s still early days, as I think Mark reported we have seen activity in four different tumor types in about a dozen or so patients so far. These are adenoid cystic carcinoma, obviously non- small cell lung cancer, which is very exciting given the importance of this market to any oncology, new drug, and also in ovarian and biliary tract cancers. So women’s cancers remain of great interest to us for the reasons that we have seen before in this class as is the potential for activity in lung. We have not had any colorectal patients enrolled so far that may change and then of course will change our picture. We believe also bladder cancer is sensitive to PLK1 inhibition, and possibly triple negative breast. So it remains a story to unfold.

But of course, what may matter here is if the epigenetic mechanism plogo is fully corroborated, we could be able to enroll intentionally selected patients. In other words, choose patients based on a mutation that is driving the tumor and enroll a specific cohort with this type of patient profile that can sometimes be chemo agnostic, regardless of the tumor tissue in which the tumor originated and to enroll patients only because of the mutation. More on that in the next quarter as the story fully unfolds.

Ahu Demir: Makes sense, Spiro. And my last question will be when should we expect any efficacy data from any of the programs fadra or plogo? When — what is the timeline look like?

Spiro Rombotis: Well, the first report that we mentioned will be the full Phase 1 results for fadra in the 065-101 study, this should come by the end of this year possibly a bit sooner. You should be aware that their extensive preclinical data being worked on by collaborators of Cyclacel and the company itself, that will complete the story of fadra as it unfolds in the clinic prior to us beginning Phase 2, which we’re ready to go at this moment, as soon as the last patients complete follow up. In the case of plogo, we will disclose the mechanism towards the end of this year, we expect data in December, but of course, we need to have additional confirmation by sets of sponsor studies, which are in progress, and expect to have the first clinical results for plogo early next year, conservatively, assuming would take us at least two or three more cohorts before we complete doses collection.

So both of these products will have a data flow over the next three to four quarters.

Operator: Our next question comes from Jeff Jones, Oppenheimer.

Jeff Jones: Good afternoon, guys. And thanks for taking the questions. Just a couple of follow ups to Ahu’s on fadra. I just wanted to confirm for the dose level 6A that you need to call your RP2D. Do you have six patients enrolled at this point? And how long does it take from enrollment to be able to call RP2D? And then from there what is timing look like to start the Phase 2 POC study.

Spiro Rombotis: Thank you for your question, Jeff. Let me ask Dr. Kirschbaum to answer the first part of the question, Mark and I’ll come back and talk about Phase 2 when Mark completes and response to your question.

Mark Kirschbaum: Sure. We have the last few patients have consented and are expected to start any day now.

Jeff Jones: So that time to achieve a RP2D, Mark?

Spiro Rombotis: So this time a follow up with protocol that Jeff asked.

Mark Kirschbaum: So technically, the DLP period is one cycle. So if they get through one month in terms of safety, we could declare it, we will still be following them for activity, obviously one month to be early for that but the safety part of it is 20 days.

Spiro Rombotis: Great. Thank you, Mark. Jeff, your second question was when we are going to start Phase 2, obviously, one prerequisite is declaration of RP2D as Mark explained. The other one is corporate initiatives and the way to pursue both balance sheets and strategic options, stockholder value, so all of these parameters into the decision to start Phase 2, and as explained in his section of the remarks that our board will make toward end of Q3.

Jeff Jones: Okay. Great. Just one follow up, you mentioned presenting the data on the dose escalation in the lymphoma, solid tumor patients. So the totality of the Phase 1 data towards year end, are you thinking about that at a conference, or a company sponsored event to walk through all that data? How are you thinking about that?

Spiro Rombotis: We like to do all the above. Obviously, there are deadlines past us for some conferences at year end like Antonio or have you, and therefore, we’ll have to consider company announcement first, with con submissions for early [inaudible].

Operator: Our next question comes from Kemp Dolliver, Brookline Capital Markets.

Kemp Dolliver: Great. So with regard to discretionary s, given where you are with likely timing of data and your resources, what’s the dollar amount of discretionary spending you’re talking? You’re thinking about when you talk about extending the runway into second quarter?

Spiro Rombotis: I think this one is for Paul. Thank you, Kemp.

Paul McBarron: Thank you, Kemp. So I think the what we would look at clearly is uncommitted expenditure at the moment. That’s what we referred by discretionary. I think the important fact is that by limiting some of that uncommitted spend, it allows us to bring in the early part of 2023 about $3.5 million dollars of the UK R&D tax credit. That’s a significant cash flow into the company, which allows us to then extend into that Q2 2024 number that I mentioned in our prepared remarks.

Kemp Dolliver: Got it. And not to focus too much on this. But fadra still looks like the more interesting program, over plogo, if you had to make a choice. Is that fair?

Spiro Rombotis: That is a fair question, almost as fair as asking the parents which of the two children they liked the most. It’s certainly the most advanced and has the most clinical data. And it’s an active compound with an excellent safety record. And we said in our prepared remarks, we had actually two competitors who seem to have lost momentum if not terminating programs, and in the next generation CDK field and in our opinion, increase fadra’s scarcity value and potential exit value for stockholders. The other dimension of your question, Kemp, that we should bring to the attention of investors that there is a lot of interest in these compounds from strategics. And our interest can manifest itself in various corporate developments as well as alignments.

Obviously, you need to explore those in due course, in parallel to other initiatives, and that will dictate which molecule could come forward the fastest. For example, if you were to theoretically out license fadra could develop plogo with non-dilutive funding coming from fadra or the opposite as parties became as excited as we are about the mechanism of action of plogo, the inverse could happen. And therefore, non-dilutive capital from plogo transactions could support fadra. So we are committed to taking both drugs forward at this time, even at the spend is relatively modest to get to the end of Phase 1 for plogo, and to get fadra Phase 2 ready. So hope you understand that the company is exploring all available avenues to maximize stockholder value in this difficult time in the capital markets.

Operator: We have no further questions in the queue. At this time. I’d now like to turn the call back over to today’s speakers.

Spiro Rombotis: Thank you very much, operator. And thank you everybody for joining us today for our quarterly earnings call. Both of our programs are approaching important catalysts with a strong competitive profile in the therapeutic classes. As a reminder, our upcoming key milestones for 2023 are, report final data from dose escalation stage and RP2D determination from the 065-101 study for oral fadra in patients with advanced solid tumors and lymphoma. First patient dose with oral fadra in Phase 2, proof-of-concept study of 065-101 in patients with advanced solid tumors and lymphoma. Report Phase 1 data from 140-101 study of oral plogo in patients with advanced solid tumors and lymphoma and elaborate novel mechanism of action of plogo. We look forward to providing you with further outlook and hope to meet with you at upcoming conference. Operator, at this time you may end the call.

Operator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time.