Cyclacel Pharmaceuticals Inc (CYCC) 2011 Q3 法說會逐字稿

Good afternoon. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cyclacel Pharmaceuticals third-quarter 2011 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. I will now turn the conference over to Cory Sohmer. Please go ahead.

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 third 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 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 all available from the SEC or our website. All of our projections and forward-looking statements represent our management 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, Vice President of 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, and good afternoon, everyone. It is a pleasure to update you this afternoon on the events of the past quarter and share our outlook for the balance of the year. We will focus our prepared remarks today on our SEAMLESS Phase 3 study.

Over the past few months, we have continued to advance the development of our lead drug candidate, oral sapacitabine capsules, as a potential treatment for elderly patients with newly diagnosed acute myeloid leukemia, or AML, who are unsuitable for or choose not to have treatment with intensive induction chemotherapy. These patients are currently underserved because of their poor prognosis and the absence of effective therapies approved for AML. Turning to our Phase 3 pivotal study called SEAMLESS, we announced today that we have simplified the SEAMLESS trial design by converting the study protocol to a 2-arm from a 3-arm design.

Importantly, we have received written confirmation from the USFDA that, following the modification in the trial design, the previously agreed special protocol assessment, or SPA agreement, remains valid. In other words, SEAMLESS continues to be conducted under the SPA. As a reminder, a SPA is a binding written agreement with the FDA that the design of the trial's protocol, clinical endpoints, and statistical analyses are acceptable to support regulatory approval. We believe that running a Phase 3 trial under a SPA in a challenging indication like AML, differentiates the risk profile of our program from others.

The original 3-arm design of SEAMLESS was based on the information available at the time. The protocol compared two treatment pairs of either sapacitabine versus decitabine or sapacitabine given in alternating cycles with decitabine versus decitabine. Every design involved in effect two bets in one trial, we had to split the alpha. In other words, they required two tail statistical significance hurdle was a P value equal to or less than 0.025 for each of the two pair-wise comparisons.

So, what has changed? We now have safety and efficacy data from the pilot Phase 1/2 study of sapacitabine given in alternating cycles with decitabine, which meant that for specified criteria in the protocol and the SPA. We also have a positive recommendation from the Data Safety Monitoring Board, or DSMB, to continue the SEAMLESS study with no safety or efficacy concerns, confirming that the regimen of sapacitabine, given in alternating cycles with decitabine, is safe and tolerable in a multi-center setting. After analyzing all available information, we chose to simplify the protocol into a 2-arm design, comparing sepacitabine dosed sequentially with decitabine versus decitabine alone. Judy will discuss the SEAMLESS trial design in more detail in her remarks.

The primary endpoint of the study is still improvement in overall survival but at a statistical significance level of P value equal to or less than 0.05. We believe that the amendment increases the chance of a positive outcome while staying within our existing budget and time frame. We are excited about our progress toward realizing the potential of sapacitabine and are gratified by the support of clinical investigators and thought leaders at leading cancer centers across the United States. With a pivotal Phase 3 trial now enrolling and ongoing Phase 2 studies in hematological malignancies, including MDS, and solid tumors, including non-small cell lung cancer, expected to report in the near term, we believe that we have established a solid foundation to evaluate sapacitabine's therapeutic potential across multiple indications. If sapacitabine is successfully commercialized, it will be the first oral therapy to reach the AML market and will offer a new treatment alternative with improved survival to elderly patients.

Let me now turn the call over to Judy to provide a brief update on SEAMLESS and our other clinical activities. Judy?

Thank you, Spiro, and good afternoon. Allow me to begin by highlighting the recent progress with SEAMLESS. Thanks to the support of our SEAMLESS investigators, we currently have approximately about 40 clinical centers either opened for enrollment or in the process of joining the study. We are encouraged by the pace of early enrollment and the interest shown by investigators in SEAMLESS study.

Let me summarize the SEAMLESS study design. SEAMLESS is a Phase 3 study of sapacitabine as the front-line treatment in patients with newly diagnosed AML aged 70 years or older who are not candidates for or have refused intensive induction chemotherapy. This 2-arm study will enroll approximately 485 patients who will be randomized one to one or about 243 patients into each of the two arms, sapacitabine dosed sequentially with decitabine versus decitabine alone. A pre-specified entering analysis for futility will be performed and reviewed by the DSMB when 212 deaths have occurred. The primary objective is to detect, with a power of 90%, an improvement in overall survival at AP value equal to or less than 0.05. The secondary objectives are to compare the response rate in terms of complete remissions, complete remissions with incomplete platelet recovery, partial response, hematological improvement, stable disease and the corresponding durations, transfusion requirements, number of days in hospital, 1-year survival, and safety.

Based upon our clinical experience with sepacitabine and guidance from external thought leaders, we are working on additional clinical programs to evaluate the activity of sapacitabine in other hematologic and oncology indications. During the quarter, collaborators from the University of Texas MD Anderson Cancer Center began an investigator-initiated Phase 2 trial of sapacitabine in combination with cyclophosphamide and rituximab in patients with relapsed chronic lymphocytic leukemia or small lymphocytic lymphoma and the 11q22-23 chromosome deletion.

This study is the first to explore the potential of sapacitabine in a targeted group of patients based on their genetic profile. In the area of solid tumors, we expect to announce later this year entering results from the initial stage of the Phase 2 study of sapacitabine in non-small cell lung cancer. This study was designed to determine if sapacitabine can be dosed safely to patients with non-small cell lung cancer. In addition, we expect to announce entering data from the Phase [1] combination study of sapacitabine and seliciclib in patients with solid tumors.

With that, I would like now to turn the call over to Paul for the financial overview. Paul?

Thank you, Judy, and good afternoon, everyone.

As you saw from today's press release regarding our consolidated financial statements, for the three months ending September 30, 2011, we reported a net loss applicable to common stockholders of $3.6 million or $0.07 per share and compared to a net loss applicable to common stockholders of $4 million or $0.11 per basic and diluted share for the third quarter of 2010. For the nine months ended September 30, 2011, we reported a net loss applicable to common stockholders of $12.1 million or $0.25 per basic and diluted share, compared to a net loss of $16.3 million or $0.47 per basic and diluted share for the nine months ended September 30, 2011.

Research and development expenses in the third quarter of 2011 increased to $2.1 million, compared to $1.5 million for the same period in 2010. For the nine months ended September 30, 2011, research and development expenses were $7 million, as compared to $5 million for the same period in 2010. The increase in expenses was primarily due to a $1.6 million milestone payment in the first quarter of 2011 payable to Daiichi-Sankyo as part of our contractual obligation resulting from the start of SEAMLESS and clinical trial costs related to the study.

Selling, general, and administrative, or SG&A expenses for the third quarter of 2011, decreased to $2.1 million, as compared to $2.6 million for the third quarter of 2010. For the nine months ended September 30, 2011, total SG&A expenses were $5.9 million, versus $8.1 million for the same period in 2010. The decrease of $2.2 million in expenses was primarily attributable to a decrease in professional and consulting expenses, the elimination of costs related to a facility lease that expired in December 2010, and a decrease in compensation-related costs.

With regard to our commercial products, total net sales of Xclair Cream and Numoisyn products for the quarter and nine months ended September 30, 2011, were $0.2 million and $0.5 million, respectively, compared to approximately $0.2 million and $0.4 million, respectively, for the same periods in 2010. In July, we raised net proceeds of $9.3 million in an underwritten registered direct offering, and we continue to be disciplined in managing our cash resources. And we ended the third quarter with $27.7 million in cash and cash equivalents. We expect our capital resources should be adequate to fund operations and commitments into 2013.

With that, I would like to turn the call back to Spiro.

Thank you, Paul.

Before opening the call for questions, I will review our priorities in the months ahead. Presentation of sapacitabine data from the Phase 1/2 pilot study in elderly patients with AML at the 2011 American Society of Hematology, or ASH, annual meeting. Report interim data from the Phase 2 study in non-small cell lung cancer. Report interim data from the Phase 1 combination study of sapacitabine and seliciclib in patients with solid tumors, and report patient biomarker analyses from the APPRAISE Phase 2b randomized discontinuation study of seliciclib in patients with non-small cell lung cancer.

We will further discuss the SEAMLESS Phase 3 study of sapacitabine and other programs during the analyst and investor day we are hosting on Wednesday, December 7, 2011, in New York City. The meeting will include a discussion of treatment alternatives for elderly patients with AML by an expert hematologist, the design of the SEAMLESS Phase 3 trial, and a discussion of the potential utility of sapacitabine in non-small cell lung cancer by a thoracic oncology expert. Details of the event will be provided in a forthcoming announcement.

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

Thank you. (Operator Instructions). Your first question comes from Brian Klein of Lazard Capital Markets.

Thanks for taking the questions. A very exciting change in the trial design. Maybe we can start with that. I'm just wondering, in terms of your internal assessment of sapacitabine as a monotherapy, did you lose confidence that it could succeed alone versus Dacogen? What exactly was the thought process there?

Thank you, Brian. We have not lost confidence in sapacitabine as a single agent, and we will be revealing in the fullness of time additional plans of exploring single-agent activity. The question that we were addressing here is, do we have adequate confidence that the trial is the best design that we can use to win, given our budget forecast and time frame?

And it seems to us that trying to win on two bets and facing the higher double hurdle of the P value of 0.025 is an inferior strategy compared to making one bet and facing a hurdle of a P value equal or less of 0.05. That was the main driver for converting the design into a 2-arm design.

I noticed also that you added maybe 8% to 10% larger number of patients. Is that going to change your timeline at all in terms of enrollment and data read-outs?

The original study, Brian, was 470 patients, and now it is 485.

I had it as 450.

That did not include the pilot element, which is another 21 patients or so. The answer is that the change is relatively small, to the point of being of marginal significance, as far as timeline.

Okay, thanks. And also, when you look at the mortality rates between the two arms at the final analysis, I assume that because both arms start with Dacogen for the first month of dosing, is there any relevancy to the 30-day mortality, or will we be looking just at 60-day mortality?

Maybe Judy should take that question.

I think that our 30-day mortality of the single-agent sapacitabine study that was presented in 2009 at ASH was very similar to the 30-day mortality rate of the Dacogen single-arm study in the Phase 2 study, and was about the same as in the Phase 3 study. The 60-day mortalities, barring the bias of a now-randomized comparison from the sapacitabine alternating with decitabine, is certainly nominally lower than either sapacitabine or decitabine alone in the published domain.

Okay, thanks. Moving onto sapacitabine in non-small cell lung cancer. This is going to be interim data. Can you tell us around how many patients we are going to see data from?

I think, Brian, we will wait for the press release to come before we can comment on details of what is in that study. We have discussed the trial design in the past. It is a dose escalation study intended to define a maximum tolerated dose, and we have also published the prospectively defined overall response rate hurdle in order for the treatment to be declared active. I would ask for your patience, and when the press release comes out, we will give you a lot more details.

Thanks a lot. That's all my questions.

Your next question is from Jonathan Eckart of Leerink Swann.

Thank you very much for taking the question. Could I just ask, was the prior interim analysis on the 3-armed design, was it also based on or around the 212 events?

I think that was to depend on the post events from the 2-arms.

If I'm not mistaken, it was a different trial design. We have 2 pairwise comparisons, Jonathan, and therefore, the interim analysis would kick on a total pairwise comparison sample size of 300 patients, for each of the 2 pairwise comparisons. Clearly, the number of events required for interim look will be different in that than a 2-arm trial design, where the overall sample is 485.

Very good. And I guess because it's a pairwise, you wouldn't know exactly how many events were in each arm. But, overall with this new design, is it fair to assume that the powering of the interim analysis has also been changed? And would it be a similar proportion to what the overall trial design change is, or what are the general impacts on the potential interim analysis and the powering of that?

It does not impact on the power of the final analysis, if that is the question, because of the futility analysis.

The interim analysis --

(inaudible) is not for looking to stop the study early, but rather to look for a lack of certain possibility of achieving the endpoint. The hit that we take on that is very, very small.

Okay, so the amount of alpha you're spending on the interim has not changed, it's pretty small still?

That's correct.

The last question I would have is, based on I guess the publicly available information from the ASH abstract, could you kind of give us your view on what you thought was the most telling advancement from the presentation you saw at ASCO this year?

I think the most telling presentation of the pilot study data is the 60-day mortality rate. As you know, that the 60-day mortality rate is not just a toxicity issue. Most people would think the initial 30-day probably would be more toxicity rather than efficacy, and the 60-day mortality has the implication for the efficacy.

When we get down to the numbers in the 12% range, that looks very promising, even in the light of the intensive therapy, when you look at several hundred patients here at MD Anderson, that was about 36% or 37%. When we got our own single-agent data with results of 25%, decitabine around the same range, so when we saw that number, we were quite pleasantly surprised. Of course, that number was from the pilot study. When the leading phase confirmed the safety probability that gives us further confidence that perhaps that (inaudible) sequence regimen appears to be quite good.

Thank you very much. I'll get back in the queue.

Jonathan, thank you very much for your questions.

(Operator Instructions). Your next question comes from William Myers of Miller Asset Management.

Thank you. Could you review for us the timeline for the SEAMLESS trial? Can you tell us approximately when you think enrollment would be completed, for instance? Thanks.

We have not disclosed yet in clinicaltrials.gov the duration of the study, but it's very similar to the 39 months previously disclosed for the trial. There is, as we already answered in a previous question, a slight increase in the number of patients, which is below 10%, and that would normally have a substantial impact with the duration of the study.

This estimate includes the 7 months of follow-up which is part of the trial design. The in-life portion of the study or part that involves patients, of course, that estimate minus 7 months. I would also like to add that we will review the actual enrollment that we will observe in the first half of 2012 and compare this to forecast, and that clearly will allow us to give a more precise estimate as to the actual duration of the study, if you bear in mind that the original estimate was constructed when two other companies were also enrolling trials in front-line AML in elderly patients.

At the moment, to our understanding, this is the only corporate IND study enrolling in the United States in this population. And therefore, we would wait for the actual data before we can recalibrate our duration of study estimates.

That's very helpful. Thank you.

Thank you.

At this time, there are no further questions. I will turn it back to management for closing remarks.

Thank you, operator. In closing, if the SEAMLESS trial is successful, sapacitabine would address a major unmet need as a front-line treatment in elderly patients aged 70 years or older with newly diagnosed AML who are not candidates for intensive induction chemotherapy. We believe that sapacitabine, along with our pipeline, represents outstanding growth opportunities for Cyclacel. Thank you for your continued support of our efforts. Operator, at this time, please end the call.

Thank you for participating in today's conference. You may now disconnect.