Cyclacel Pharmaceuticals Inc (CYCC) 2011 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Cyclacel first quarter 2011 earnings 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. I would now like to turn the conference over to Mr. Cory Sohmer. Sir, you may begin your call.

Thank you. Good afternoon and welcome to our quarterly conference call. During today's call, members of our senior management team will review and Cyclacel's financial performance and business highlights for the first quarter of 2011.

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 21-E 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 all 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, Cyclacel's President and Chief Executive Officer; Paul McBarron, Executive Vice President Finance and Chief Operating Officer; and Dr Judy Chiao, VP Clinical Development and Regulatory Affairs.

At this time, I would like to turn the call over to Cyclacel's President and Chief Executive Officer, Spiro Rombotis.

Thank you, Cory. Good afternoon, everyone, and thank you for joining us on today's call. First of all, I need to submit my apologies. I'm on the road, and it's possible that my cell connection may not be of a high quality [on this end], in which case Paul McBarron will continue.

By now we hope you have had the opportunity to review this afternoon's press release. The first quarter of 2011 marked a major transition point for Cyclacel as the Company started enrollments of patients in SEAMLESS, the registration-directed Phase 3 trial of oral sapacitabine as a front-line treatment of elderly patients aged 70 years or older with newly diagnosed acute myeloid leukemia, or AML, that are not candidates for intensive induction chemotherapy.

SEAMLESS is a multi-center randomized Phase 3 study against an active control of decitabine, a hypomethylating agent. Pilot study data of some sapacitabine in combination with decitabine, the dosing regimen of arm A in SEAMLESS, will be presented at an upcoming medical conference.

With the opening of SEAMLESS, we believe that we are a step closer to our ultimate goal of getting sapacitabine to patients in need and potentially the market.

From a financial perspective, we continued to spend our cash resources in an effective manner while focusing our priorities on the advancement of sapacitabine, our lead candidate. As of March 31, 2011, our cash and cash equivalents totaled $25.4 million.

As a recap of our recent activities with regard to sapacitabine, during the fourth quarter of 2010 we reached an agreement with the FDA regarding a SPA, or special protocol assessment, on the design of SEAMLESS as a registration-directed clinical trial of sapacitabine oral capsules to be conducted under the SPA.

SEAMLESS is chaired by Hagop M. Kantarjian, M.D., Chairman and Professor, Department of Leukemia at the University of Texas M.D. Anderson Cancer Center in Houston. SEAMLESS compares three treatment arms. In arm A, sapacitabine is administered in alternating cycles with decitabine. In B, sapacitabine is given alone, and in C decitabine is given alone.

The primary efficacy endpoint is overall survival. The study is designed to demonstrate an improvement in overall survival of either of two pair-wise comparisons, either arms A versus arm C, or arm B versus arm C. Approximately 150 patients per arm or a total of 450 patients will be enrolled.

The treatment regimen of sapacitabine administered in alternating cycles with decitabine in arm A has been tested in an ongoing pilot study conducted at M.D. Anderson and other centers. The 30-day and 60-day mortality outcomes from this pilot study will be reported shortly at an upcoming medical conference.

During the quarter, we have began enrollment of patients on arm A of SEAMLESS to further confirm the safety and efficacy of the alternating regimen in arm A in a multicenter setting.

The SEAMLESS Data Safety Monitoring Board, or DSMB, will perform a prespecified analysis of the leading stage of the study, reviewing the safety of arm A before recommending continuation of the study into its randomized stage. An additional prespecified interim analysis (inaudible) [utility] will be performed and reviewed by the DSMB when 50% of the events or patient deaths in each of the two pair-wise comparisons have occurred.

We have also been making progress with our Phase 2 open label, single-arm, multi-center study of sapacitabine in patients with non-small cell lung cancer who have had at least one prior chemotherapy. The primary objective of this study is to evaluate the rate of response and stable disease in patients with previously treated non-small cell lung cancer. Secondary objectives are to assess progression-free survival, duration of response, duration of stable disease, one-year survival, overall survival and safety. This study is powered to detect an active dosing schedule if the observed response rate is approximately 40%. We expect to report later this year interim Phase 2 data from the study's initial stage, which was designed to determine if sapacitabine can be dosed safely to patients with non-small cell lung cancer.

A positive outcome in this initial study may open new opportunities for further development of sapacitabine in non-small cell lung cancer. It may also further distinguish sapacitabine as a unique agent with activity in both solid tumors and hematological malignancies.

In April, investigators led by Professor William Plunkett, Deputy Chair, Department of experimental therapeutics at M.D. Anderson Cancer Center, reported at the American Association of Cancer Research Conference data from in vitro studies that demonstrated synergy of sapacitabine when given together with inhibitors of the homologous recombination, or HR, DNA repair response, such as inhibitors of ATM, HARP 1 and c-ABL kinase. These findings further support the rationale for clinical testing of sapacitabine with inhibitors of DNA repair in both solid tumors and hematological malignancies.

Let me now turn to our second clinical candidate, seliciclib, a cyclin-dependent kinase, or CDK, inhibitor. In December 2010 we announced top-line data from the APPRAISE Phase 2b randomized discontinuation double-blinded placebo-controlled study of all seliciclib capsules as the third-line or later treatment in patients with non-small cell lung cancer. The data showed no difference between seliciclib and placebo in median progression-free survival, or PFS, an early measure of efficacy incorporating radiographic measurements of tumor size and patient death.

However, an increase in median overall survival favoring seliciclib over placebo of 388 days versus 218 days was observed. This is a provocative finding in light of the importance of a true increase in overall survival in these heavily pre-treated patients. There are no approved treatment options for this population.

Over the last few months we have been scrutinizing our data to gain confidence that the increase in overall survival is not an artifact of study design. To gain further insight into this result and its implications for further development, we have commissioned a pathology laboratory to collect patient samples from participating investigators for biomarker analysis. The purpose of the analysis is to examine whether there is a biological or genetic basis on the basis of the patient's mutation profile for the difference of approximately seven months in overall survival seen in APPRAISE. We expect to report the results of the analysis later this year.

Lastly, we continued to make progress with our clinical programs through our own work and that of collaborators. In February 2011, independent investigators from Mass General Hospital announced the publication of the clinical data demonstrating that our CDK inhibitor, CYC065, the backup compound to seliciclib, reverses resistance to trastuzumab or Herceptin, a widely used medicine for breast cancer patients who test positive for Herceptin's target.

The data also showed that cyclin E, the target of CYC065, plays a major role in making Herceptin breast cancer cells resistant to the drug. We believe that the publication provides a rationale for exploring Cyclacel's orally available CDK inhibitors in its population of patients with breast cancer as well.

Before turning the call over to Paul, I will review our priorities for 2011 -- present pilot study data of sapacitabine in combination with decitabine; report non-small cell lung cancer interim Phase 2 data with sapacitabine; present additional sapacitabine data in patients with hematological malignancies; report DSMB review of safety data from the SEAMLESS Phase 3 AML registration-directed study; report patient biomarker analysis from the APPRAISE Phase 2b randomized discontinuation study of seliciclib against placebo in patients with non-small cell lung cancer.

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

Thank you, Spiro, and good afternoon, everyone. As you saw from today's press release of our consolidated financial statements for the three months ended March 31, 2011, we reported a net loss applicable to common shareholders of $4.8 million or $0.10 per basic and diluted share compared with a net loss applicable to common shareholders of $5.8 million or $0.18 per basic and diluted share for the first quarter of 2010.

Our research and development expenses in the first quarter of 2011 were $3.1 million compared to $2.2 million for the same period in 2010. The increase in costs of $0.9 million is primarily due to $1.6 million of contractual expenses resulting from the achievement of a milestone triggered by the opening of enrollment in our SEAMLESS trial pursuant to the Daiichi-Sankyo license under which Cyclacel licensed certain patent rights for sapacitabine. This cost was partially offset reductions of $0.4 million in stock-based and other employee-related compensation.

Selling, general and administrative expenses amounted to $1.8 million for the first quarter of 2011 compared to $2.4 million for the same period in 2010 with the $0.5 million decrease primarily related to professional and consultancy costs.

With regard to our commercial products, total net sales of Xclair Cream and Numoisyn products were $0.2 million in 2011 compared to $0.3 million in 2010.

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

In conclusion, we continue to be disciplined in managing our cash resources, and we ended the first quarter with $25.4 million. We expect our capital resources should be adequate to fund operations and commitments for at least the next 12 months.

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

(Operator instructions) Brian Klein, Lazard Capital Markets.

So, Spiro, can we assume since you are planning on presenting the run-in data for the combination of Dacogen and that you have already started enrolling in that cohort, that the data is as you expected and there's no new safety concerns?

That would be a fair assumption, Brian. If, of course, we have safety issues we would have to report them. As you know, Cyclacel sets a very high bar for patient safety. And of course we take our responsibility to investors in a similar gravitas. So I think it's a safe assumption that the sequential regimen of the two drugs is well tolerated.

And is there any chance we might see that data at ASCO?

It's a good guess. Obviously, we need to observe embargo requirements of the various medical conferences where our collaborating investigators present data. But certainly we will be expecting to put a press release out in the right time.

Great. And then just one final question for Paul -- in terms of your SG&A spend, can we expect -- there was a slight decline from the fourth quarter. Can we expect that this is a fair level that we will see going forward? Or do you expect material increases throughout the rest of the year?

No, Brian, your observation is correct, that we had a decrease from fourth quarter last year down to this quarter, and the trend should be coming off the first quarter this year rather than last year's.

Great, thanks so much.

Joe Pantginis, ROTH Capital Partners.

Spiro, we didn't touch upon this today, but it's something that comes up a lot with regard to the AML treatment armamentarium, and that's treatment-related mortality. Obviously, you've shown some intriguing data with regard to sapacitabine. I was just wondering if, then, you could just remind us and investors about what is seen out there with regard to treatment mortality and how sapacitabine is differentiated as well as how it could potentially translate as well into the SEAMLESS study.

Thank you, Joe; an excellent question or questions -- first of all, let me start by saying that AML is a disease that presents extreme challenges to physicians and their patients and, of course, to sponsoring companies. So anybody purporting to develop a drug for AML should approach this field with extreme humility.

Nevertheless, we know that most of the drugs tested to date have gone into pivotal development on the basis mostly of complete remission data. Yet, we know that the FDA and its advisors do not like only complete remission data; they would prefer to see durability measurements and, ideally, randomized studies with overall survival as the endpoint, which is what SEAMLESS is designed to do.

Against this backdrop I would like to remind you what we know from published sources regarding the median overall survival of patients aged 70 years or older with newly diagnosed AML. Thankfully, we have a large study, the [Harrison] study in blood in 2009 that indicated that 109 days, approximately three months, is the expected median overall survival in the population.

Without going into detail about the patient demographics, their cytogenetics and other very important prognostic factors, we can assume that any drug tested in the same population in terms of age cutoff would have to show evidence of efficacy certainly as early as 60 days after beginning therapy if that survival curve can be improved.

So against this backdrop, it is our understanding that hematology investigators use the 30-day mortality number, as you, indeed, pointed out, Joe, as treatment related and therefore a proxy for drug safety. In other words, the more toxic drugs that exceed a perceptual threshold around 10% would have a harder time to become accepted as clinical practice standards, given their high toxicity hurdle.

Similarly, although this is not validated, investigators tend to look at the 60-day mortality figure as an indication of potential efficacy for the drug. In particular, though, in this patient population of 70-year-old patients, if a drug achieves 20% or less mortality at 60 days, it clearly has a chance to move the survival curve forward and to the right, in contrast to what we have seen so far in the literature.

So the way to understand what sapacitabine does as well as to have the sapacitabine sequential regimen is to look at the two statistics against the backdrop of previously reported data and therefore develop somewhat of an understanding and insight of what the drug may be doing during this early observation period.

Let me caution; this is not a substitute for median overall survival, just an indicator, and therefore one that we have to treat with caution. I hope this gives you a sense of what the landscape looks like, at least from our perspective.

Good, that's very helpful, thank you. And then just a quick follow-up -- with regard to the DSMB safety data analysis for SEAMLESS, is it safe to assume that any sort of announcement from you would simply be a, hopefully, just that the study is safe to move to the randomization stage and nothing else?

Well, let me answer that from the fiduciary standpoint. Of course, we have an obligation to report on any findings that the DSMB communicates with us, even though if we may think they are unimportant. We need to make sure that investors have the complete picture. But I would be happy to have Judy Chiao, our VP of Clinical Development and Regulatory Affairs, to give you the a bit more color on what the DSMB charter is for this early look because I think it's clearly a very important decision point for the trial. Judy?

Yes; I think that the decision for the DSMB is pretty much based upon the safety measures taken into considerations of traditional way what we say is the 30-day mortality regardless of the cause of the death, as well as the 60-day mortality regardless of cause of death, as well as what we have defined the dose-limiting toxicity, commonly used in hematological malignancy trial. So with these criteria, we think we can be assured that with the preset standards, that it would be reasonably safe to move the arm [8] treatment regimen into the Phase 3 portion of the study.

Thank you so much, guys.

Let me also say, Joe, before we sign off that the FDA and the Company had extensive dialogue on what Judy just described, and it seems to us that the FDA was, in the end of this discussion, comfortable to, in effect, delegate to the DSMB the safety oversight decision. But as I said, this is an outcome that we will report with high fidelity to investors, and hopefully it will go on a positive note for the compound and allow us to move forward into the randomized portion of the study.

Thanks again.

This concludes the allotted time for our Q&A session today. I will now turn the floor back over to Spiro for any closing remarks.

Thank you, operator, and thank you all for taking the time to join us in this afternoon's earnings call. If the SEAMLESS trial is successful, sapacitabine would address a major unmet need for patients as a front-line treatment, aged 70 years or older with newly diagnosed AML who are not candidates for intensive induction chemotherapy. We believe that sapacitabine, along with orally available CDK inhibitor drugs, represent outstanding growth opportunities for Cyclacel.

Thank you for your continued support. Operator, at this time, please conclude the call.

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