Cyclacel Pharmaceuticals Inc (CYCC) 2010 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Cyclacel fourth-quarter and full-year 2010 earnings call. (Operator Instructions). Thank you. I would now like to turn the conference over to Mr. Cory Sohmer, Director of Corporate Finance. Sir, you may begin your conference.

Thank you. Good afternoon and welcome to our quarterly conference call. During today's call, members of our senior management team will review Cyclacel's financial performance and business highlights for the fourth quarter and full year of 2010.

Before turning the call over to senior management, I would like to remind everyone that during this conference call any 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 others our Form 10-K. These filings are available from the SEC or our website, www.cyclacel.com. 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, Cyclacel's President and Chief Executive Officer; Paul McBarron, Executive Vice President of Finance and Chief Operating Officer; and Dr. Judy Chiao, Vice President of Clinical Development and Regulatory Affairs.

At this time I would like to turn the call over to Spiro Rombotis.

Thank you. Good afternoon, everyone, and thank you for joining us on today's call. By now we hope you have had the opportunity to review this afternoon's press release.

The second half of 2010 marked the achievement of a major milestone for Cyclacel. By reaching agreement with the US Food and Drug Administration or FDA on a special protocol assessment, or SPA, for a registration-directed Phase 3 trial for our lead product candidate, sapacitabine, we set the foundation for late stage development of an important new therapeutic option for patients with hematologic malignancies. With the initiation this quarter of the SEAMLESS pivotal Phase 3 trial of sapacitabine in elderly patients with acute myeloid leukemia, or AML, we have moved one step closer to realizing sapacitabine's commercial potential.

From a financial perspective, we continue to be a frugal innovator and spend our cash resources in a thoughtful manner while concentrating our efforts on opening Phase 3 clinical trial sites and recruiting patients in the SEAMLESS study. In October 2010, we completed a private placement, raising approximately $14 million in net proceeds. If investors take up the rights to acquire additional units under the October financing, we could potentially receive a further $6.5 million in net proceeds.

As of December 31, 2010, our cash and cash equivalents totaled $29.5 million. The SEAMLESS study is a registration-directed Phase 3 clinical trial of sapacitabine oral capsules as a frontline treatment in elderly patients aged 70 years or older with newly diagnosed AML who are not candidates for intensive induction chemotherapy.

In January 2011 we opened the study for enrollments and began treatment of several patients. Over the last few weeks, we have been working diligently to open a large number of clinical trial sites and continue recruiting patients. We have been encouraged by the interest shown in SEAMLESS by investigators and patients from hospitals across the United States.

SEAMLESS is chaired by Hagop Kantarjian M.D., Chairman and Professor Department of Leukemia at the University of Texas MD Anderson Cancer Center in Houston, Texas. SEAMLESS is a multicenter, randomized Phase 3 study against an active control. The control drug is decitabine, a hypomethylating agent approved for the frontline treatments of high-risk patients with myelodysplastic syndromes, or MDS, but available off-label in the clinical setting of AML.

SEAMLESS is comparing three treatment arms. In Arm A sapacitabine is administered in alternating cycles with decitabine. In Arm B sapacitabine is administered alone, and in Arm C decitabine is administered alone. The primary efficacy point is overall survival.

In accordance with our SPA for SEAMLESS, the study is designed to demonstrate an improvement in overall survival of either one out of two pairwise comparisons -- Arm A versus Arm C or Arm B versus Arm C. Approximately 150 patients per arm for a total of 450 patients will be enrolled.

The Arm A treatment regimen of sapacitabine administered in alternating cycles with decitabine has been tested in an ongoing parallel study conducted at MD Anderson Cancer Center and found to be safe and effective. Data from this parallel study has been submitted for publication at an upcoming medical conference.

To further confirm the safety and efficacy of the alternating regimen in Arm A in a multicenter setting, SEAMLESS has been designed with a lead-in stage comprising only of Arm A. A Data Safety Monitoring Board, or DSMB, will perform a prespecified safety analysis of data from this initial stage of the study before recommending continuation into the randomization part of SEAMLESS, following which the DSMB will continue to monitor the study.

An additional pre-specified interim analysis for futility will be performed and reviewed by the DSMB when 50% of the events or patient deaths have occurred for each of the two pairwise comparisons.

In addition to SEAMLESS and our previously reported Phase 2 data in AML, in the December 2010 American Society of Hematology, or ASH, conference, we also reported one-year survival data from a Phase 2 randomized trial of oral sapacitabine capsules in older patients with MDS, refractory to hypomethylating agents such as azacitabine and/or decitabine.

Similarly with the design of our Phase 2 study in AML, the MDS Phase 2 study is a three-arm randomized trial with a goal of selecting an optimal treatment schedule in the event that more than one are active.

We were encouraged by the MDS data reported at ASH, demonstrating that the primary endpoints of one-year survival was achieved in 29% of the patients in Arm A, 30% of the patients in Arm B, and 35% of the patients in Arm C. Median overall survival as of December 2010 in this ongoing study was 217 days for Arm A with a range of 15 to 663 days, 232 days for Arm B ranging from 37 to over 811 days, and 236 days for Arm C ranging from 16 to over 672 days. This survival data indicates that sapacitabine is promising in the second-line setting of high risk MDS and warrants further development. We plan to initiate discussions with the FDA regarding potential registration pathways in MDS patients refractory to hypomethylating agents.

We have also continued to make progress in our sapacitabine Phase 2 clinical trial in patients with non-small cell lung cancer who have received at least one prior chemotherapy treatment before receiving sapacitabine. This is an ongoing open-label, single-arm, multicenter study. The primary objective of the initial stage of the Phase 2 study is to evaluate sapacitabine's activity using a hurdle of a combined 40% observed response rate, in line with observed response rates in the same setting reported with other approved or available single agent treatments. Observed response rate, or ORR, is defined as complete response, plus partial response, plus stable disease of at least four months in duration. Secondary objectives are to assess progression-free survival, duration of response, duration of stable disease, one-year survival, overall survival and safety. We expect to report interim data from this Phase 2 lung cancer study during 2011.

In October we also published preclinical model data demonstrating that sapacitabine works synergistically with several classes of novel, targeted, anticancer drugs, including HDAC, ATM, and PARP inhibitors. This work paves the way for further developments of sapacitabine as part of combination therapies in hard to treat cancers that are resistant to current treatments.

Turning to Seliciclib, in December 2010 we announced topline data from the APPRAISE Phase 2b study of oral Seliciclib capsules as a third-line or later treatment in patients with non-small cell lung cancer. APPRAISE is a randomized discontinuation, double-blinded, placebo-controlled study. No difference was observed in the primary endpoints of median progression-free survival, or PFS, between the Seliciclib and placebo arms of 48 days versus 53 days respectively.

An increase in the secondary endpoints of median overall survival favoring Seliciclib over placebo was observed of 388 days versus 218 days respectively. We plan to collect and analyze available biopsy samples from APPRAISE patients who granted informed consent. The purpose of the biopsy analysis is to examine whether there is a biological basis for the difference in overall survival such as K-RAS or N-RAS mutations and/or overexpression of cyclin E proteins. We expect to report the results of the biopsy analysis in 2011.

Finally, with regard to our early-stage pipeline, we continued to make progress through our own work and that of our collaborators. For example, at the 2010 ASH conference, preclinical data were presented demonstrating that CYC065, our CDK inhibitor, has anticancer activity and induced apoptosis at sub-micromolar concentrations against myeloma cell lines derived from patients, even in the presence of growth stimulatory affects of both cytokines and stromal cells in the bone marrow.

In February of this year, we announced the publication of preclinical data demonstrating that cyclin E, one of the main targets of CYC065 and Seliciclib, plays a major role in making human epidermal growth factor receptor 2 positive, or HER2 positive, breast cancer resistant to trastuzumab or Herceptin.

Before turning the call over to Paul, I would like to review our priorities for 2011 -- clinical site initiations and enrollment of patients into SEAMLESS; DSMB review of the leading stage of SEAMLESS and the start of the randomized phase; presentation of additional sapacitabine data in hematological malignancies both as a single agent and in combination with other anticancer agents; report non-small cell lung cancer interim Phase 2 data with sapacitabine; and report patient biomarker analysis from the APPRAISE study of Seliciclib in patients with non-small cell lung cancer.

At this time, I would turn the call over to Paul McBarron to discuss our financial results.

Thank you, Spiro, and good afternoon, everybody. As you may have seen from today's press release of our consolidated financial statements for the three months and full year ending December 31, 2010, we reported for the fourth quarter of 2010 a net loss applicable to common stockholders of $3.4 million or $0.07 per share compared to a net loss applicable to common stockholders of $4.6 million or $0.19 per share for the fourth quarter of 2009.

For the year ended December 31, 2010, we reported a net loss applicable to common stockholders of $19.7 million or $0.52 per share compared to a net loss applicable to common share stockholders of $20.8 million or $0.94 per share for the year ended December 31, 2009.

Our total operating expenses for the fourth quarter decreased to $3.6 million from $4.5 million for the same period of 2009. Research and development expenses in the fourth quarter of 2010 were $1.4 million compared to $2.6 million in the fourth quarter of 2009. The year-over-year decrease in R&D expenses was primarily related to costs for sapacitabine capsule clinical trial supplies, which were manufactured in the fourth quarter of 2009.

Selling, general and administrative expenses amounted to $2 million in the fourth quarter of 2010 compared to $1.8 million for the fourth quarter of 2009 with the increase primarily due to higher stock-based compensation costs and other professional costs.

Pursuant to the terms of our outstanding preferred stock issue, the Board of Directors declared a quarterly dividend on the preferred stock, which was paid on February 1, 2011.

In conclusion, we continue to be frugal in the management of our cash resources, and we ended the fourth quarter with cash and cash equivalents of $29.5 million.

I will now turn the call back to the operator to open the lines for your questions. Operator?

(Operator Instructions). Joe Pantginis, ROTH Capital Partners.

Spiro, I would like to ask you a little bit of forward-looking strategy here for Cyclacel. And I would also as part of that question make a little bit of an assumption that you might see encouraging data from the lung cancer study for sapacitabine. So with that assumption made, how do you look then with your current resources to prioritize your program for sapacitabine? You said you might be looking to engage the FDA to potentially look at a Phase 3 for MDS. If you see positive data for the lung cancer study, obviously you would look to pursue that into a Phase 3. So how do you look to prioritize these indications and also link that to potential business development activities?

Thank you, Joe. That's a lot of questions, but I will dissect them one at a time.

First of all, to avoid any ambiguity, it is very clear that our number one priority is the SEAMLESS study. We are funded to complete enrollment in this study according to our expected timetable. We have seen enthusiastic support from investigators and patients for the drug so far, and we clearly need to continue to concentrate our efforts on this program.

We will, as you said, continue to investigate the prospects of sapacitabine and MDS, and that requires an understanding of possible registration pathways, which require discussion with the regulators. And we will to wait for the lung cancer data when it comes before we can make comments about what happens further.

But since you wanted to certainly focus on the impact of the lung cancer data looking forward on the Company, I can maybe take this a little bit further to maybe ask Dr. Judy Chiao to explain the rationale on the basis of which the Phase 2 study hurdle has been constructed to determine whether sapacitabine has activity in lung. I will then come back and make one or two remarks about the partnering and business development prospects that you intimated.

Well, thank you, Spiro. I think that the non-small cell lung cancer system certainly has recently seen quite a bit of changes with the introductions of maintenance therapy. So I think the population, what we are studying now in in the second and the third-line setting certainly has seen more drugs than we used to see.

But, nonetheless, we feel that with the incremental increase in the improvement of survival with different lines of patients, there still is a need for a well-tolerated and effective therapy for patients who have unfortunately relapsed or progressed on prior therapies.

Now the challenge is to look carefully at one's data and look at a patient population and say, what type of signals that we will think that were suggested that we have something there that is worthy of further clinical development.

And if one looks at the recent publications of investigational agents in the space to non-small cell lung cancer, then I think that a general threshold of about 40% response in the second- and third-line seems to be a threshold. Below that, we will wonder whether the agent will be worthy for further development.

So I think that is what we will be looking for in our non-small cell lung cancer studies, and pending the maturity of the data, then use that to make further decisions regarding clinical development.

Thanks, Judy.

Thank you, Judy. So let me come back and take the BD question. I mean clearly if sapacitabine is a drug active in hematologic malignancies as we have said many times on these calls in the past, there is a very different business development audience for the drug as opposed to if it is also active at the same time in solid cancers, including non-small cell, which remains the highest challenged, the highest hurdle disease in the family of cancers that we are all challenged to treat.

And it is my understanding that if we were able to demonstrate activity of sapacitabine along the lines of the hurdle rate described by Judy as observed with other agents such as Sutent, Tarceva, Alimta and even adding chemotherapy to Avastin as a double so you don't get much above 50% response rate.

So it appears to us that if we were to achieve that hurdle, there will be significant attention leveled at sapacitabine given that we have, as Judy explained nicely, a scarcity of agents that address the second- or third-line setting of non-small cell lung cancer.

Brian Klein, Lazard Capital Markets.

I had a question on the run-in data that is going to be presented in an upcoming medical meeting. Could you give us a little bit more information on what kind of data there might be? If it is specifically safety data, or if we will see some signs of efficacy as well?

Let me ask Dr. Chiao. Judy, would you take this question, please?

I think to answer your questions, it will be both. I think that the pilot study is a single-arm study. It is looking at sapacitabine administering alternating cycles with decitabine. And, therefore, we were looking at the dose-limiting toxicities, and we are looking at 30-day mortality, 60-day mortality, as well as the traditional response endpoint, for example, CR's partial responses and any improvement in the forecast.

And for how long have those patients been treated?

Well, this study started to accrue during 2010, so I think a follow-up is not as large as our other Phase 2 studies. But, nonetheless, I think we will have another information to look for these endpoints I just mentioned.

I think just to add to Judy's comment, is it is safe to say that hematologists tell us that they view the 30-day induction mortality rate of death as a hint of potential safety and the 60 day as a hint of potential efficacy.

So, for the purposes of the DSMB decision, which is to allow the Company to move into the randomized portion of the study, I think there will be sufficient follow-up for these patients for the independent members of the DSMB to make this decision.

Great. And will you announce when you initiate the randomized portion of the trial? I assume it would come prior to be presentation of the data.

Well, this is unclear at this point. We obviously do not know as these are ongoing events. But certainly we will make an announcement when we enter that inconsistent with the DSMB event having happened. In other words, we are not going to anticipate the DSMB decision. We will let them make the decision independently of the Company, and when they do, we will report that and discuss the consequences.

At this time, there are no further questions. I will now turn the call back over for any closing remarks.

Thank you, operator. In closing, if the SEAMLESS trial is successful, sapacitabine would address a major unmet need for patients as a frontline treatment in the setting of newly diagnosed AML for patients who are not candidates for intensive induction chemotherapy age 70 years or older. We believe that sapacitabine as an agent potentially both in hematological malignancies and possibly solid tumors, together with our CDK inhibitor drugs, represent outstanding growth opportunities for Cyclacel.

Thank you for attending this call and your continued support of our efforts. Operator, at this time, please conclude the call.

Thank you. This does conclude today's conference. You may now disconnect.