Cyclacel Pharmaceuticals Inc (CYCC) 2009 Q4 法說會逐字稿

Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter and year end 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions). Thank you. Corey Sohmer, you may begin your conference.

Thank you, operator. On the call today are Spiro Rombotis, President and CEO of Cyclacel Pharmaceuticals, Paul McBarron, Executive Vice President Finance and Chief Operating Officer, and Dr. Judy Chiao, Vice President, Clinical Development and Regulatory Affairs.

Before we turn the call over to Spiro, I will read the Company's Safe Harbor statement. Some of the information on this call may contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, about financial results and estimates, business strategy, clinical trial plans and research and development programs of Cyclacel Pharmaceuticals Inc. By their nature, forward-looking statements and forecasts involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. A number of factors could cause actual results and developments to differ materially and are discussed under risk factors in the registration statement on Form 10-K and in other reports that Cyclacel has filed with the SEC.

The information in this presentation is current as of this date. Cyclacel does not take any responsibility to update such information. At this time I would like to turn the call over to Spiro Rombotis.

Thank you, Corey. And thank you in the audience for joining us on our earnings call today. In addition to the information provided in today's press release, we will highlight our fourth quarter 2009 and 2009 annual results, as well as briefly review recent achievements before we open the call to questions. First, let me review the status of our lead program, Sapacitabine, a novel orally available nucleotide analog. In December at the annual meeting of the American Society of Hematology or ASH in New Orleans, we reported data from a randomized study of Sapacitabine as a single agent. This Phase II data included promising one year survival in a difficult to treat population of elderly patients, aged 70 years or older, with newly diagnosed acute myeloid leukemia or AML in first relapse, and activity in older patients with myelodysplastic syndromes or MDS, refractory to other agents.

In AML, the Phase II study was a three-arm randomized trial evaluating three dosing schedules of Sapacitabine with the objective of identifying a dosing schedule which produces a better one-year survival rate in the event that all three dosing schedules are active. The study enrolled 60 patients, aged 70 or older, with AML, randomized evenly across three dosing schedules of Sapacitabine. About 80% of the patients had untreated AML and 20% AML in first relapse. Each arm enrolled and treated 20 patients. Approximately 55% of patients had AML de novo, and the rest had AML preceded by hematological disorder or AHD such as MDS or myelodisease.

Approximately 30% of all patients received Sapacitabine for at least six cycles. 15 patients who survived one year or more received an average of 12 treatment cycles and seven patients are still on study, receiving Sapacitabine. The three-day dosing schedule or arm C was selected for further clinical development in elderly patients with de novo AML, based on a one-year survival rate of 30%, overall response rate of 35%, with durable complete remissions.

Median overall survival was 212 days, with a range of 13 to over 654 days. The seven-day low dose schedule or arm A was selected for further clinical development in elderly patients with AML preceded by alternative heme toe logical disorder, based on a one year survival rate of 35%. Overall response rate including durable hematological improvement of 35%. Median overall survival was 197 days, with a range of 26 to over 610 days.

Survival in older or elderly patients with AML remains poor. Most late stage studies in the literature studying older patients aged 60 or over and elderly aged 70 or older with AML have response rate as a primary end point. However, response rate has not been proven to correlate with survival. Many of these older patients are frail and have extensive prior medical conditions. As a result, after being treated with standard therapy, they typically achieve treatment duration of one to two cycles. As a chronic use drug, positioned to improve survival, Sapacitabine would address a large commercial opportunity and enable us to determine an appropriate pricing range.

At the 2009 ASH conference we also reported interim response data for the ongoing Phase II clinical trial of Sapacitabine in older patients with MDS. The study completed enrollment of 60 patients aged 60 years or older with MDS who were previously treated with hypo agents. Each arm enrolled 20 patients, randomized across the same three dosing schedules of Sapacitabine, arms A, B and C tested in the AML stratum of the study. 49 of the patients enrolled have been followed up for more than 30 days. Approximately half of the 49 patients had baseline bone marrow blast counts above 10%.

Based on interim data, the highest number of responses was observed on the seven-day, high dose schedule or arm B. 30 day mortality from all causes is 8.2%. Approximately 30% of the MDS patients received four or more cycles of Sapacitabine. Approximately six times as many patients develop MDS as compared to AML. In many MDS patients, the disease progresses and eventually transforms into AML, which is why we call the disease in such patients AML preceded by MDS.

Although AML and MDS are like diseases, they behave very differently, both at the level of gene mutations and in terms of disease characteristics. Accordingly, different dosing schedules may be required for MDS and AML preceded by MDS than with AML de novo. Sapacitabine's properties are well-suited for the treatment of patients with line MDS, particularly as patients require treatment for long periods. If the Phase II results in terms of one-year survival are reproduced in registration studies in patients with malignancies, Sapacitabine could become an important new treatment in the quest of improving survival in these difficult to treat patients. It may also be one of the first oral drugs marketed for these indications, based upon improvement in survival.

In addition to malignancies, we continue to enroll in a further Phase II study of Sapacitabine, patients with non-small cell lung cancer after treatment with a platinum containing regimen. We believe that there is a high unmet medical need for patients with this most common type of lung cancer, following front line combination regimens, and we look forward to reporting data from this ongoing study. As previously announced, in late 2009 we held a type A meeting with the FDA to discuss the design of Phase III registration studies in AML and MDS. During the first quarter of 2010, we submitted a request for a special protocol assessment or SPA, for a randomized Phase III registration study of Sapacitabine in elderly patients with AML.

I will now turn briefly to our other drugs in the pipeline. Recently announced publications of peer-reviewed journal articles highlighted the potential of our Cytabine dependent kinase inhibitors, or CDK inhibitors, in treating resistant forms of lung cancer and breast cancer. The articles in preclinical studies the mechanism of action, target profile and selectivity of Cyclacel's CDK inhibitors, including Seliciclib and in one instance, a Cyclacel next generation CDK inhibitor.

The studies demonstrated activity in cancers such as hormone receptor positive breast cancer, resistant to the aromatase inhibitor lectrosol, and in lung cancer cell lines including those with RAS activating mutations, such as KRAS and NRAS. Our completed Phase II-b randomized double blinded appraised study of Seliciclib in pretreated non-small cell lung cancer is expected to be unblinded during 2010. Additionally, peer reviewed publications have reported the therapeutic potential of our CDK inhibitors in proliferative diseases outside oncology including autoimmune and inflammatory conditions. Preclinical data from Cyclacel's next generation CDK inhibitors will be presented at the 2010 American Association For Cancer Research, AACR, annual meeting in April.

Before I turn the call over to Paul to address our financial condition, I would like to review briefly our upcoming milestones. In short, during 2010 we plan to progress our discussions with FDA regarding a spot for the pivotal trial of Sapacitabine in elderly patients with AML, initiate a registration study of Sapacitabine in elderly patients with AML, report MDS Phase II interim data with Sapacitabine at the American Society of Clinical Oncology, or ASCO annual meeting, report non-small cell lung cancer Phase II interim data with Sapacitabine, report top line results from the appraised non-small cell lung cancer Phase II-b trial with Seliciclib, and present preclinical data with next generation CDK inhibitors at the AACR annual meeting.

At this point, I will turn the call over to Paul McBarron for a brief review of our financial performance. Paul?

Thank you, Spiro, and good afternoon, everyone.

I will summarize the financial results for the fourth quarter and full year, which you can also review in detail in the press release issued earlier today, which is also posted on our website. For the fourth quarter of 2009, Cyclacel reported a net loss of $4.3 million or $0.18 per share, compared to a net loss of $7.9 million or $0.39 per share for the fourth quarter of 2008. For the year ended December 31st, 2009, Cyclacel reported a net loss of $19.6 million, or $0.88 per share, compared to a net loss of $40.4 million or $1.98 per share for the year ended December 31, 2008.

These results primarily reflect the cost reduction initiatives we have undertaken over the last 18 months to allow us to focus on the advancement of Sapacitabine towards a pivotal trial. The cost reductions have been implemented across the board and affecting all areas of Cyclacel. Research and development expenditure was reduced by $9.1 million, or 48% from $18.9 million in 2008 to $9.8 million in 2009. Selling, general and administrative expenses was reduced by $6.8 million or 44% from $15.4 million in 2008, to $8.6 million in 2009.

Cash used in operations for the year ended December 31st, 2009 was $15.2 million, compared to $29.9 million in 2008. At December 31st, 2009, our cash and cash equivalents were approximately $11.5 million. We recently considerably strengthened our balance sheet by raising approximately $15.6 million in gross proceeds through two registered direct offerings in January 2010, and warrant exercises. We expect our cash resources together with the proceeds from these financings will be sufficient to meet our anticipated short-term capital needs and fund operations, including ongoing Sapacitabine clinical trials, for at least the next 12 months.

I'll now hand the call back to the operator.

(Operator Instructions). We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Joe Pantginis of Roth Capital Partners.

Hey, guys, good afternoon. Thanks for taking the question. Just a quick question, Spiro, if you don't mind. Obviously we're waiting to hear back from the FDA regarding the SPA. If you can fast forward a few months beyond ASCO, can you maybe give some preliminary thoughts on what the pivotal program might look like, or what your plans might look like for MDS?

Thank you, Joe. As far as the AML program, we'll have to wait for the Agency and the Company to conclude our discussions before we can give more detail. We have said, however, publicly, that this will be a randomized study in the front line of AML and we expect that this would be a large trial. So I would not want to give people a different impression. This is still very much our plan.

There is no change. We're just waiting for the conclusion of our discussions with the agency before we can publicize more details. We certainly have intentions to pursue the MDS indications. We have had prior discussions with the agency in 2009 about proposed study designs from Cyclacel and MDS and we believe that this will be, again, the subject of a different SPA submission in the near future, once we have clarity on the AML program.

Thanks a lot, Spiro.

Thank you, Joe.

Your next question comes from the line of [Lakshmi Chan], a private investor.

Hello.

Hello.

My question is I had you guys getting a partnership or something, are you able to highlight something in this regard?

We do not announce partnerships until they are signed. What I can say is that Sapacitabine is an asset that appears to be attractive to other parties. The primary reason for that is multiple indication profile, primarily the fact that this is an agent that has clearly potential not only in AML, but also in MDS, and possibly in non-small cell lung cancer. And it is rare to find compounds that address both indications, as well as indications in the solid tumor area and for this reason of course we would expect that this could be of great appeal to various companies looking to enhance the product offerings in both of these areas.

My next question. Your Phase III study. How many patients you are going to enroll?

Thank you for the question. As I indicated to the previous questioner, we will not going to give out great detail at this point in the Phase III randomized study design until we conclude our discussions with FDA.

Okay. Thank you so much.

Thank you.

(Operator Instructions). Your next question comes from the line of George Zavoico of MLV.

Hi, Spiro, Corey, Judy, everybody. Congratulations on a good quarter. I have a very quick question. Your presumptions for how long the cash is going to last, the next 12 months, does that include clinical trial costs for the Phase III, presuming it begins sometime in 2010?

Paul?

No, as I indicated, it includes ongoing trials for those that we haven't yet commenced.

Okay. And can you tell me a little bit about your access to the Kingsbridge Capital, what do you need to do to get access to that CEFF and when might you do that?

Thanks, George. I think as we indicated in the press release, the S-3 registration statement won't be effective once we file the 10-K. What we need to do, George, is time an S-1 registration statement, which is a fairly straightforward process.

All right. So it's going to be pretty quick, in other words, and you should be able to access it maybe by mid-year or earlier.

This requires SEC review, so it's in that time line of an SEC review.

I see. Okay. So sounds like you'll be in pretty good shape when you're going to be ready to start the SBA trial, assuming everything falls into place as I hope it will?

Yes.

Great. Thank you very much.

Thank you, George.

(Operator Instructions). There are no further questions at this time. I would now like to turn the floor back over to management for closing remarks.

Thank you, operator. And thank you all for participating in today's call and our review of today's press release announcement. Cyclacel is a small cap Company with three products in the clinic for which we have retained marketing rights, including novel broadly applicable cancer drugs which have demonstrated survival benefit and which represent attractive assets for monetization. Operator, at this time, please end the call.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may now disconnect.