Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) Q3 2023 Earnings Call Transcript

Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) Q3 2023 Earnings Call Transcript November 13, 2023

Operator: Good afternoon, and welcome to the Cyclacel Pharmaceuticals Third Quarter 2023 Results Conference Call and Webcast. [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 third quarter of 2023. Before turning the call over to management, I would 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 Forms 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 then Paul will provide financial highlights for the third 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 our clinical stage cell cycle programs with fadraciclib or fadra and plogosertib or plogo are progressing well. We expect to shortly report complete dose escalation data with fadra and determination of the recommended Phase II dose or RP2D to be used in subsequent studies. We also expect to report interim dose escalation data from the plogo study and disclose the preclinical data supporting its novel epigenetic mechanism. Both fadra and plogo have demonstrated single agent anticancer activity. With oral fadra, we have observed complete response, partial response and stable disease in patients across a number of solid tumors and lymphoma with good tolerability.

With oral plogo, we have seen stable disease in several patients with various solid tumors at low dosing levels, which is novel for this class of medicines. We believe that based on the innovative properties and demonstrated clinical activity, both fadra and plogo have the potential to be best-in-class in their respective classes. Based on encouraging results in the fadra program, we have implemented a capsule-to-tablet switch, with patients now receiving the more convenient tablet form of the drug. We expect that the tablet is more convenient for patients and reduces the burden of taking many capsules by mouth. As the tablet would ultimately be used in a commercial put up of fadra if it reaches the market, the switch also represents strategic value to an acquirer or licensee.

At the present time, small-cap biotech companies are not in favor by the investment community. However, the Cyclacel team has been hard at work building pharmaceutical value for the long term. This is attested by the enthusiasm demonstrated by our clinical investigators across the globe and their interest in doing the clinical work and offering our medicines as clinical trial options to patients in their care. By developing 2 innovative, high-value medicines, both of which were discovered by Cyclacel, we hope to offer our stockholders the opportunity to realize strategic value. I will now turn the call over to Mark to review our progress in the fadra and plogo studies and discuss some of the clinical results. Mark?

Mark Kirschbaum : Thank you, Spiro. In the 065-101 Phase I/II study with fadra, we have enrolled 26 patients so far. Fadra has been well tolerated, and anticancer activity has been observed, including PR in 2 out of 3 T-cell lymphoma patients, treated and stable disease in 15 solid tumor patients. Of these 15 patients, 4 out of 4 had gynecological cancer, including endometrial, ovarian and cervical; 2 out of 2, cholangiocarcinoma or biliary tract cancers; 2 out of 2, hepatocellular; 2 out of 2, prostate; 1 out of 2, head and neck; 1 out of 1, pancreatic; and 1 out of 1, colorectal cancer. Fadra has a unique activity profile inhibiting both CDK2 and CDK9, which together complement one another, leading to enhanced antitumor activity compared to either CDK2 or CDK9 alone.

A biotechnology laboratory with several scientists in white coats studying a microscope.

We have been able to maintain continuous inhibitory pressure on the tumor cells with twice daily dosing 5 days a week without hematologic toxicity at the current dose level. We are one patient away from completing the dose escalation segment of the study and expect to declare the RP2D shortly. We are also studying the PK and PD results and have identified mutational and molecular patterns on NGS and RNA-Seq that may be predictive of clinical activity. This exciting data may guide patient selection for the Phase II segment of the study. The mutational profile we identified is frequently observed in many large tumor populations. The design of the 065-101 study provides for a rapid transition to Phase II and the opportunity for multiple catalysts through 2024, leading to registration pathways.

As a reminder, the protocol provides for 7 independent cohorts by tumor type and an eighth basket cohort defined by relevant biomarkers. We have added major clinical sites in the U.S. and one more overseas to our current Phase I sites in order to rapidly achieve our enrollment objectives. Let us now turned to our PLK1 inhibitor program. We are very excited that plogo has emerged as a new oral PLK1 inhibitor with novel epigenetic activity when given continuously at low doses. In our 140-101 study, we are evaluating plogo in escalating doses as a treatment for patients with advanced solid tumors and lymphomas. We have enrolled 14 patients so far, currently enrolling dose level 5. In dose levels 1 through 5, plogo is administered once daily by mouth for 5 consecutive days, either for 2 weeks out of 3 or 3 weeks out of 3.

With this novel dosing approach, we have observed anticancer activity in patients with biliary tract non-small cell lung, ovarian and other tumor types, with no drug-related SAEs thus far. In our preclinical program, we have identified that plogo acts through a novel epigenetic mechanism. This epigenetic activity may have a crucial role in the presence of certain common tumor mutations. Patients carrying these mutations are frequent in several large tumor populations. Following these findings, we have entered into scientific collaborations with major global research centers to help further characterize this novel activity of plogo and define the tumor subsets that will benefit the most from this approach. As additional data corroborate these findings, we may enroll in the future, possibly as an expansion of our current Phase I/II study, 1 or more patient cohorts specifically selected on the basis of such biomarkers.

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

Paul McBarron : Thank you, Mark. As of September 30, 2023, cash equivalents totaled $5.9 million compared to $18.3 million as of December 31, 2022. Net cash used in operating activities was $12.2 million for the 9 months ended September 30, 2023, compared to $15.7 million for the same period of 2022. The company estimates that its available cash will fund currently planned programs through the end of 2023. The operating plan includes discretionary expenditures, which have not incurred, and taken together with the anticipated receipt of research and development tax credits of approximately $3.1 million in the first quarter of 2024, could extend available cash into the second quarter. Research and development or R&D expenses were $5.2 million for the 3 months ended September 30, 2023, as compared to $4.4 million for the same period in 2022.

R&D expenses relating to fadra were $3.6 million for the 3 months ended September 30, 2023, and as compared to $2.5 million for the same period in 2022 due to increased costs associated with manufacture scale-up and introduction of the tablet form. R&D expenses related to plogo were $1.5 million for the 3 months ended September 30, 2023, as compared to $1.7 million for the same period in 2022. General and administrative expenses for the 3 months ended September 30, 2023, were $1.6 million as compared to $2.1 million for the same period in 2022 due to nonrecurring professional fees of $0.4 million last year. Total other income net for the 3 months ended September 30, 2023, was $0.1 million compared to an income of $0.4 million for the same period of the previous year.

United Kingdom research and development tax credits for the 3 months ended September 30, 2023, were $0.6 million compared to $1 million for the same period of the previous year. The decrease is due to legislative changes that took effect in April 2023, which reduced the amount of tax credit which could be claimed. The R&D tax credits are directly correlated to qualifying research and development expenditure. Net loss for the 3 months ended September 30, 2023, was $6.1 million compared to $5.1 million for the same period in 2022. Operator, we’re now ready to take questions.

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Q&A Session

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

Ahu Demir: I have 3 questions. First one is regarding the biomarker studies. What type of biomarkers? Are they novel targets? Or are they known biomarkers that we have seen before? And when do you plan to disclose and report on the biomarker studies?

Spiro Rombotis: Thank you for your question, Ahu. These are known biomarkers in terms of appearance on next-gen sequencing, scans and past reports and so forth. However, they are novel for the CDK class. We believe we’ve made a discovery that has not been reported previously for this class, and we think that there is sufficient clinical support for these hypothesis to be pursued further in the clinic. Disclosure should occur, as we said, when we give the full Phase I update. We’re obviously hoping to present this data at upcoming medical meetings, and that will be important as far as deadlines are concerned as to when we made the announcement. But I would expect probably around the end of the year or early next year.

Ahu Demir: My second question is on the plogo program. We know the epigenetic aspect is very unique, unlike any other PLK inhibitor. I am curious. Given that you already dosed 12 patients, what type of activity do you observe? Is there anything that’s so unique that you see activity in certain indications given the epigenetic agent targeting? So just curious on the clinical activity.

Spiro Rombotis: I believe this is a question for Mark, who is also an expert in epigenetics. Mark?

Mark Kirschbaum: Well, some of it is still a little early to disclose, but we have been seeing at these low dose levels very prolonged stable disease in a number of very bad tumors. So that led the search for the mechanism of why this would be happening at these low doses. And it turns out to be a really interesting story. I think there’ll be some abstracts and some things in the near future, and as Spiro said, at the disclosure times, we’ll reveal all that.

Ahu Demir: Sounds good. And my last question is on the financials. Paul, it looks like there is an increase, as you pointed out on the — even the manufacturing and the clinical activities. So curious how much increase are we expecting in the next quarters. Is the manufacturing going to continue to increase? So how should we model forecast?

Paul McBarron: No, exactly, Ahu. Thanks for the question. So the manufacturing cost was, as Spiro mentioned, as we move from a capsule form to the cablet form. So that was the active ingredient manufacturing which happened in Q3, so that should decline in Q4.

Operator: [Operator Instructions] Our next question comes from Jonathan Aschoff, ROTH MKM.

Jonathan Aschoff: I was wondering if you could say anything about the fadraciclib’s strategic options that you’re looking at. Can you give us any clarity there as to the level of interest? Or what’s a real gating factor to move a conversation probably from where it is now?

Spiro Rombotis: Thank you, Jonathan. This is a topic we have discussed before in these calls. There is strategic interest in next-gen CDKs and fadraciclib, in particular. This interest comes from multiple parties at different points in time who have different hurdle rates. I think the disclosure in the very near future of the biomarkers, as I mentioned to the previous questioner, is an important catalyst that would bring home much of the interest which is preliminary, but now I think we have not only evidence of single-agent activity, including CR, PR and stable disease, but we also know now possibly which patient population to target future trials. So I would expect that this would catalyze further strategic interest, and we look forward to continue those discussions with relevant parties.

Jonathan Aschoff: Also lastly, you don’t want to tell us if you’re finishing off the Phase I fadra at dose 5 or 6A, right? That’s [indiscernible].

Spiro Rombotis: Well, I think it’s a question for Mark, and then I can come back and give you a bit more color. But Mark, why don’t you take that? What’s your guess about RP2D?