Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) Q4 2022 Earnings Call Transcript

Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) Q4 2022 Earnings Call Transcript March 6, 2023

Operator: Good afternoon and welcome to the Cyclacel Pharmaceuticals Fourth Quarter and Full Year 2022 Results Conference Call and Webcast. Please note, today’s call is being recorded. I would now like to turn the call over to the company.

Irina Koffler: Good afternoon, everyone and thank you for joining today’s conference call to discuss Cyclacel’s financial results and business highlights for the fourth quarter and full year of 2022. 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 SEC, which include, among other things, our Form 10-K.

This filing is available from the SEC or our website. 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 fourth quarter and full year of 2022, 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, Irina and thank you everyone for joining us today for our quarterly business update. In 2022, we made excellent progress in our ongoing Phase 1/2 clinical programs with oral fadraciclib or fadra and oral plogosertib or plogo, in patients with solid tumors and lymphoma. Both programs are registration-directed and are well-positioned to deliver on key milestones during 2023. In the fadra study, in patients with solid tumors and lymphoma, we have enrolled 3 patients at dose level 6A. Recent pharmacokinetic and pharmacodynamic data from this dose level suggests that we are achieving target engagement levels on continuous dosing, which are commensurate or better than those observed in dose level 5 patients.

We will enroll 3 more patients at dose level 6A per protocol with the objective of determining the recommended Phase 2 dose, or RP2D. At our R&D Day in October 2022, we reviewed clinical activity observed in the first 5 dose levels of the study. We were excited to see monotherapy partial responses or PRs, after the first treatment cycle in lymphoma patients with both cutaneous T-cell lymphoma, or CTCL; and peripheral T-cell lymphoma or PTCL. This included a PR with a difficult-to-treat type of PTCL. In addition, 11 patients with various solid tumors achieved stable disease with target lesion reductions and a pancreatic patient’s maintain stable disease for 5 cycles of treatment. As we approach the completion of the Phase 1 dose escalation stage of the fadra study, we look forward to starting the Phase 2 proof-of-concept, or POC stage.

This will consist of multiple cohorts defined by histology, which are designed to be recruited in parallel, thus avoiding the delays inherent in sequentially designed studies. We expect that cohorts may enroll at different rates. It is possible that the fastest ones will be those in which we have already seen anticancer activity during the dose escalation stage. Clinical data from this open-label POC stage will be reported as they become available. At the R&D Day, we also reported exciting new findings from our plogo program, which focuses on PLK1 inhibition for the treatment of advanced solid tumors and lymphoma. Plogo has already shown early signals of anticancer activity at the first dose level in patients with non-small cell lung and ovarian cancer.

We also have evidence demonstrating plogo’s differentiated biological profile. Dose escalation in the plogo study has advanced, and sites are currently submitting patients for dose level 4. Over the course of this year, we expect key data readouts from the Phase 1/2 studies for fadra and plogo. We expect to report complete dose escalation data with fadra around the middle of the year. Initial data from the fadra Phase 2 POC stage are expected in the second half of 2023. Dose escalation in the plogo study continues, and we expect initial data in mid- to late 2023. Before handing over to Mark, I would like to reiterate that the Cyclacel team is concentrating our efforts on bringing our two molecules to proof-of-concept stage and creating shareholder value.

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We are well on our way to achieving that with fadra, and we will soon be in a position to potentially do the same for plogo. We are fortunate to be working with world-class institutions across the globe who are participating in our studies. We believe that our medicines are differentiated from other molecules in their respective class with properties which may be best in class. 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. We are pleased with the single-agent activity and molecular profile of oral fadra and the encouraging progress of oral plogo in our Phase 1 studies. Once the recommended Phase 2 dose is determined in the ongoing 065-101 study with oral fadra, we will immediately move into Phase 2 proof-of-concept stage, in which the primary objective is to assess activity and safety of the drug in relevant tumor types. At ENA 2022 and our R&D Day in October, we reported on the dose escalation part of the study. Fadra was well tolerated and escalated from dose levels 1 to 5, which is 100 milligrams twice daily, Monday through Friday for 4 weeks out of 4. Dose Level 5 is completed and can be considered safe. There have been no dose-limiting toxicities related to study drug.

In dose levels up to 5, the only consistent side effect of the drug is nausea at manageable levels, typically grade 1 to 2. As per protocol, we escalated to dose level 6, which is 150 milligrams twice daily, Monday through Friday for 4 weeks out of 4. At that dose level, we observed 2 Grade 3 dose-limiting toxicities at dose level 6, hyperglycemia in 1 patient and nausea in a second patient. Both were reversible after holding drug. In accordance with the protocol, we have enrolled 3 of the planned 6 patients at dose level 6A, which is 125 milligrams twice daily, Monday through Friday for 4 weeks out of 4. At this stage of the study, we seek to optimize the dose and schedule and then commence the Phase 2 stage. As reported, we have seen anticancer activity in the dose escalation up to Level 5.

2 out of 3 patients with T-cell lymphoma achieved PR, including a patient with a very aggressive angioimmunoblastic form of peripheral T-cell lymphoma. 11 of 15 patients with cervical endometrial liver and ovarian cancer achieved stable disease with target lesion reductions as their best response. A pancreatic patient maintains stable disease for 5 cycles of treatment. These are promising responses for this earlier phase of clinical testing and may predict deeper responses in the Phase 2 stage. With regard to our second oral fadra study, 065-102, in patients with acute myeloid leukemia and myelodysplastic syndrome, we are enrolling patients at dose level 5, which is 100 milligrams twice daily, Monday through Friday for 4 weeks out of 4. We look forward to providing an update on the 065-102 trial during the year.

Let’s now turn to our second program with plogosertib, our oral PLK1 inhibitor. We have reported initial encouraging results from 140-101 our Phase 1/2 study of plogo in patients with advanced solid tumors and lymphoma. This study is currently enrolling in dose level 4, which is 15 milligrams once a day, Monday through Friday for weeks 1 and 3. This is a first-in-human study for oral plogo. And as is traditional, we have started at lower doses. We were, therefore, pleasantly surprised at this early stage of the study to observe stable disease at dose level 1 in two patients with non-small cell lung cancer for eight cycles and ovarian cancer for five cycles, respectively; and a dose level 2 in a patient with biliary tract cancer for three cycles.

Published preclinical evidence suggests that low dose continuous administration may be an effective strategy for PLK1 inhibitors, as well as the more documented higher dose pulse type strategy. This is particularly true for plogo given that it has a favorable PLK inhibitory profile and a shorter half-life, thus potentially minimizing toxicities. Our ongoing Phase 1/2 trial of plogo is designed to target several important tumor types, where the drug may show broad single-agent activity. This was observed across multiple preclinical models, and in particular, colon cancer, lymphoma and small cell lung cancer. Our study efficiently evaluates both dose and schedule so as to optimize the recommended Phase 2 dose for the proof-of-concept or cohort stage of the study.

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

Paul McBarron: Thank you, Mark. As of December 31, 2022, cash and cash equivalents totaled $18.3 million compared to $36.6 million as of December 31, 2021. Net cash used in operating activities was $20.8 million for the 12 months ended December 31, 2022, compared to $18.5 million for the same period of 2021. On a pro forma basis, cash and cash equivalents totaled $23 million, which includes $4.7 million of R&D tax credits receivable in the second quarter of 2023. The company estimates that its available cash will fund currently planned programs into the fourth quarter of 2023. Research and development or R&D expenses was $6.7 million for the 3 months ended December 31, 2022, as compared to $4.6 million for the same period in 2021.

R&D expenses related to fadra were $5.3 million for the 3 months ended December 31, 2022, as compared to $3.4 million for the same period in 2021 due to the increase in clinical trial costs of $0.3 million, associated with ongoing clinical trials evaluating fadra in the Phase 1/2 study, an increase of $1.6 million in non-clinical expenditures. R&D expense related to plogo were $1.3 million for the 3 months ended December 31, 2022 as compared to $1.1 million for the same period in 2021 due to clinical trial costs associated with the plogo Phase 1/2 study. General and administrative expenses for the 3 months ended December 31, 2022, were $2.1 million compared to $1.9 million for the same period of the previous year due to an increase in employment and professional costs.

Total other expense net for the 3 months ended December 31, 2022, was $0.2 million compared to an income of $43,000 for the same period of the previous year. The decrease of $0.2 million for the 3 months ended December 31, 2022, is primarily related to foreign exchange adjustments. United Kingdom research and development tax credits were $1.6 million for the 3 months ended December 31, 2022, compared to $1.2 million for the same period of the previous year and are directly correlated to qualifying research and development expenditure. Net loss for the 3 months ended December 31, 2022, was $7.4 million compared to $5.3 million for the same period in 2021. Operator, we are now ready to take questions.

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Q&A Session

Operator: We will take a question from Jonathan Aschoff of ROTH MKM. Your line is open.

Jonathan Aschoff: Thank you, guys. Hi. Just a brief first question, is that R&D rate kind of a minimum new quarterly rate such that the 4Q that will be at least a level in each of the 2023 quarters?

Paul McBarron: Jonathan, thanks for the question. It will be for the first quarter. But in the United Kingdom, they are changing the tax rate. So it will drop from the 4.7%, probably down to about 2% a quarter going forward.

Jonathan Aschoff: You are saying that R&D is only going to be 2% a quarter going forward?

Paul McBarron: No, I thought you asked for the R&D tax credit.

Jonathan Aschoff: No, no, no, no. I’m asking for your GAAP reported R&D.

Paul McBarron: So the R&D will be consistent with the fourth quarter going forward into 2023, yes.

Jonathan Aschoff: Okay. Thank you. The second question is, what can you say about the indications in which fadra and plogo are already looking the most effective?

Spiro Rombotis: Well, this is Spiro. Thank you, Jonathan. I think we can say that the lymphoma indication is the one that we feel the most encouraged, having seen early single-agent responses without toxicity in patients. Obviously, as we open the Phase 2 this indication, may be together with women’s cancers like endometrial and ovarian are the ones that would likely enroll the fastest. And the reason, of course, is that physicians will find it easier to persuade patients to go on these protocols given the indication of previous activity. Going beyond that, we think that the other type of lymphoma, B-cell is also a likely candidate. We know that other drugs in this space have reported recently at ASH, activity in B-cell lymphoma, but they had enormous toxicities such as tumor lysis syndrome that has not been reported for fadraciclib in these studies.

And also, we expect some other women’s cancers and possibly colorectal and liver cancer might be of interest given early indication of activity. So I think that lymphoma and women’s cancers are the ones that we feel most comfortable. For plogo, I think it’s early days. We’ve obviously seen prolonged stable disease in the very first dose level, which is almost at homeopathic levels, in lung and also ovarian and biliary. But I just think that we need to wait for one or two more dose levels before we can suggest that we are comfortable, let alone, enthusiastic for any specific indication at this point.

Jonathan Aschoff: Okay. Thank you. And are you contemplating any kind of combination therapy or just running for the single agent approval goal as fast as you can?

Spiro Rombotis: Well, that is certainly our primary objective in the event that we continue to see single-agent activity. As we all know, the combination strategy, although producing substantial revenue opportunity, does take more time and more capital. The protocol that’s written for both fadra and plogo allows for combinations. And the work is underway not only to prepare for that but also to do the clinical work to assess combinability and safety for fadra, for example, with other agents that are suitable depending on the tumor type. But it’s fair to say, as you correctly pointed out, that our primary goal is to see if we can get a monotherapy indication developed up until POC and then approach regulators.

Jonathan Aschoff: Okay. And lastly, just a quick one, what can you say about enrollment numbers between your last call and this call versus the second and third quarter call?

Spiro Rombotis: I think this is a question for Mark.

Mark Kirschbaum: Yes. Enrollment is going very quick in both studies. We pretty much fill all the slots the day we open. So we don’t see any problem there.