Cyclacel Pharmaceuticals Inc (CYCC) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Cyclacel Pharmaceuticals fourth-quarter and full-year 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. Corey 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 overview Cyclacel's financial performance and business highlights for the fourth quarter and year ended December 31, 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 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'd like to turn the call over to Cyclacel's President and Chief Executive Officer, Spiro Rombotis.

Thank you, Corey, and good afternoon, everyone. It's a pleasure to update you this afternoon on our corporate progress and financial results for the fourth quarter and year ended December 31, 2011, and to also review certain expected milestones for 2012.

2011 was a defining year for Cyclacel, as the Company advanced its first product candidate, oral sapacitabine capsules, into a pivotal Phase 3 trial which is an achievement after years of effort by Cyclacel employees, our board and advisers.

The study which is called SEAMLESS is a randomized trial testing sapacitabine in approximately 485 elderly patients with acute myeloid leukemia, or AML, who are not candidates for or have refused intensive induction therapy. If SEAMLESS is successful and sapacitabine reaches the market, it will be the first new therapy to improve survival for this patient population.

In addition to SEAMLESS, we have reported clinical data showing that sapacitabine is active in patients with myelodysplastic syndromes, or MDS, in certain solid tumors positive for the BRCA genetic mutation. We're very encouraged as the potential for line extensions of sapacitabine as a pipeline within the drug is starting to emerge.

I will now turn the call over to Judy who will review our clinical progress. Judy?

Thank you, Spiro. SEAMLESS is a two-arm randomized trial comparing the regimen of sapacitabine dosed sequentially with decitabine, versus decitabine alone. The study is being conducted under SPA, or special protocol assessment agreement, we reached with the US FDA. It is worth noting that at the end of October 2011, we received a letter from FDA reaffirming that our SPA remains valid.

The regulatory SPA agreement letter was issued after the presentation at ASCO in June 2011 of data from the randomized Phase 3 DACO-016 study, which compares decitabine to low-dose cytarabine of that supportive care. The randomized stage of SEAMLESS was initiated last October following a favorable review of the available data from a pilot Phase 1/2 study and the lead-in part of SEAMLESS by the independent monitoring committee in accordance with our SPA.

The primary endpoint of the study is that improvement in overall survival at a statistical significant level of p-value equal to or less than 0.05 with 90% power. An interim analysis by the independent study committee is planned when 212 events have occurred.

We are encouraged by the support and interest in the SEAMLESS study, which we have received from clinical investigators and thought leaders as leading cancer centers across the United States, Europe and elsewhere. This suggests to us the magnitude of the unmet clinical need and the attractiveness of sapacitabine's features for elderly patients, such as its tolerability and oral availability.

It is still early days, but after approximately four months into the randomized stage of the study, we have opened approximately 30 clinical centers in the United States, with a further 10 additional US sites have expressed an interest in joining the study. We plan to open approximately 40 clinical sites in the United States this year. Once we accumulate two to three quarters of patient enrollment experience, we will determine whether we will expand the study outside the United States.

At last December's American Society of Hematology annual meeting, we reported updated results from the pilot Phase 1/2 clinical trial evaluating sapacitabine dosed sequentially with decitabine, which is the same schedule as the active arm in SEAMLESS. That study enrolled 25 patients aged 70 years or older, 76% of which were aged 75 years and older. As reported at that time, 30-day mortality from all causes were 4%, and 60-day mortality from all causes was 12%.

The overall response rate was 40%, median overall survival was 231 days with 44% of patients still alive. We will provide an update on survival once the data reaches maturity.

In parallel with enrolling patients in SEAMLESS, we are also evaluating sapacitabine's therapeutic utility in other potential indications, both as a single agent and in combination. This includes Phase 2 studies in other hematological malignancies such as myelodysplastic syndromes, or MDS, and also in solid tumors where we are exploring sapacitabine's unique methods of action via the DNA repair pathways.

Sapacitabine's activity in both hematological malignancies and solid tumors is a key differentiator for this unique oral agent. We previously announced topline results from the ongoing, multicenter, Phase 2 randomized trial of sapacitabine in older patients with MDS after treatment failure of hypomethylating agents such as azacitidine and/or decitabine.

Eight patients responded with two complete remissions, two complete remissions with incomplete platelet count recovery and four major hematological improvements of platelet counts or neutrophils, which demonstrates that sapacitabine is active in MDS after treatment failure of hypomethylating agent.

As over 50% of patients are still alive, longer follow-up is needed to assess when one-year survival and overall survival. Updated data from this study will be presented at an upcoming major medical conference. After selecting a dosing schedule, we will initiate regulatory discussion regarding an appropriate registration planned in this study.

At our analyst and investor meeting in December 2011, we announced interim topline data from ongoing clinical studies with sapacitabine in heavily pre-treated patients with advanced solid tumors, including Phase 2 single-agent data in non-small cell lung cancer and Phase 1 data in combination with Cyclacel's seliciclib in breast, ovarian, pancreatic and other cancers.

Partial responses and stable disease were observed in both studies. In the Phase 1 trial, responding patients were found to be carriers of BRCA mutations. Updated data from the study will be presented at an upcoming major medical conference. The responses in BRCA mutation carrier patients with breast, pancreatic and ovarian cancer may be directly related to sapacitabine's enhanced activity against cancer cells that are deficient in the homologous recombination DNA pathway.

Accordingly, BRCA status could be a potential marker for identifying responders across multiple solid tumor types. In view of the fact that genetic testing for BRCA status is routinely available and the BRCA mutation has been linked to predisposition to breast and ovarian cancer, we are optimistic that a biomarker driven development strategy for sapacitabine as the targeted drug in solid tumors would be feasible.

In addition to Cyclacel's sponsor program, it would be worthwhile to mention certain investigator-sponsored trials with sapacitabine currently in progress. We have previously reported an ongoing Phase 2 investigator- sponsored study of sapacitabine in combination with cyclophosphamide and rituximab sponsored by investigators at the University of Texas and the Anderson Cancer Center. This study is enrolling patients with previously treated chronic lymphocytic leukemia or small lymphocytic lymphoma who carry the 11q22-23 deletion. Deletion at chromosome 11q22-23 is associated with the ATM mutation, an important element of the homologous recombination repair pathway.

In another international investigator sponsored study, investigators from the UK Leukemia Lymphoma Research and the UK National Cancer Research Institute Working Group are conducting a Phase 2 multicenter, randomized trial comparing sapacitabine to low dose cytarabine. This so-called Pick the Winner L-1 trial is randomized one-to-one approximately 100 patients aged 60 years or older who are unfit for intensive chemotherapy with previously untreated AML or high-risk MDS.

Let me now turn the call over to Paul who will review the Company's financials.

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 December 31, 2011, we reported a net loss applicable to common stockholders of $3.8 million or $0.07 per basic and diluted share, compared to a net loss of $3.4 million or $0.07 per basic and diluted share for the same quarter of 2010.

For the year ended December 31, 2011, we reported a net loss applicable to common stockholders of $16 million or $0.32 per basic and diluted share, compared to a net loss of $19.7 million or $0.52 per basic and diluted share for the year ended December 31, 2010.

Research and development expenses in the fourth quarter of 2011 increased to $2.2 million compared to $1.4 million for the same period in 2010. The increase in R&D expense were primarily attributed to the ongoing SEAMLESS Phase 3 trial. For the 12 months ended December 31, 2011, research and development expenses were $9.2 million, as compared to $6.4 million for the year ended December 31, 2010.

The $3.6 million increase in sapacitabine expenditures was primarily due to a contractual milestone payment of $1.6 million triggered by the opening of the SEAMLESS trial in accordance with our license of certain patent rights for sapacitabine from Daiichi Sankyo, a $0.9 million increase related to clinical trial supplies, and a $1 million increase in clinical trial expenses.

Selling, general and administrative expenses, or SG&A, for the fourth quarter of 2011 decreased to $1.6 million, as compared to $2 million for the fourth quarter of 2010. For the year ended December 31, 2011, total SG&A was $7.5 million versus $10.1 million for the year ended December 31, 2010. This decrease of $2.6 million in SG&A was primarily attributed to decreased salaries, stock-based compensation charges, and rent for our former Bothell, Washington facility, the lease for which terminated in December 2010.

With regard to our commercial products, total net sales of Xclair cream and Numoisyn products were $0.7 million for the year ended December 31, 2011, compared to approximately $0.6 million for the year ended December 31, 2010.

In March this year, we entered into a purchase agreement with certain existing institutional stockholders of the Company, raising $3 million in gross proceeds. The proceeds from this financing will be used to fund ongoing litigation-related expenses on certain intellectual property, and otherwise for general corporate purposes. We expect our cash resources are sufficient to meet anticipated short-term working capital needs and fund ongoing clinical trials for at least the next 12 months.

Finally, the Company is scheduled for a hearing before a NASDAQ listing qualifications panel on Thursday, April 26, of this year to present its plan to regain compliance with the minimum bid price requirement for continued listing on the global market. The panel at its discretion may determine to continue the Company's listing pursuant to an exception to the rule for a maximum of 180 calendar days from the date of the NASDAQ staff notification or through to September 10, 2012.

Alternatively, the Company could transfer its listing to the NASDAQ capital market, which would provide an additional period of 180 calendar days in which to regain compliance with the minimum bid price requirement.

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

Thank you, Paul. Before opening the call for questions, I will review our priorities for 2012. Continued enrollment in the SEAMLESS pivotal Phase 3 study of sapacitabine in AML; report updated Phase 2 sapacitabine data in second-line MDS following previous treatment with hypomethylating agents; report updated Phase 2 sapacitabine data in AML preceded by MDS, following previous treatment with hypomethylating agents for the preceding MDS; report updated Phase 2 sapacitabine data in non-small cell lung cancer; and report updated Phase 1 sapacitabine and seliciclib combination data in patients with solid tumors.

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 starting with the SEAMLESS trial, can you give us maybe a better sense of when we might expect the interim analysis to occur? I know it's still early days in the enrollment, but maybe you can just help us -- give us some timing on when that might happen.

The interim analysis of the SEAMLESS study would have to occur after 212 events have occurred. That means that we will have to wait for the number of deaths to occur. It's too early to predict when these deaths will occur.

Brian, I think to add to Judy's comments, we have published in ClinicalTrials.gov the timeline for the study which is 39 months, including of the seven months of follow-up, or 32 months for the in-life portion of the study. So we'd expect somewhat earlier than completion of the in-life portion, but fairly toward the second half of the study to have maturity based on the assumption the control arm will have a median survival around six to eight months, which was corroborated in the recent ODAC hearing for decitabine.

As you know, this is hard to simulate, but our thinking is that this is probably towards the end of 2013, early 2014.

Great, that's really helpful. Thanks. And then maybe just a more strategic question. Can you help us understand how you're viewing sapacitabine, now that the Phase 3 trial is ongoing, in terms of potential partnerships or collaborations?

Yes, that's an excellent question. Obviously, we are very keen to maximize stockholder value. And in our mind and that of the board of the Company, the major concern would be to ensure that we don't have a significant timeline between development of the drug for AML and other indications like MDS or solid tumors that carry the BRCA mutation. So our approach to partnering is driven by these considerations, and we are open to discussions with relevant parties who may have an interest in either the hematological malignancy aspect of the program or the earlier stage; but very exciting potential targeted development of the drug as a BRCA positive agent in patients with solid tumors.

Great. So do you expect that your current financial position would allow you to begin pursuing those indications with the intention of finding external resources at some point in the future? Or would you wait to have something in place before you begin to initiate those additional trials?

This is a question for Paul, I think.

No, I think, Brian -- thanks for the question -- clearly our resources, as we've said many times, are directed towards SEAMLESS. So we don't currently have money to divert into those trials as we've been discussing them.

So to be clear, this does not stop us from engaging with FDA or other regulators in discussions that would define, for example, a registration pathway for MDS. And it's our view that potential partners, or acquirers for that matter, would be very interested in having a regulatory clarity such as one could obtain from minutes of FDA meetings which suggest what the development path forward might be.

In the case of solid tumors, Brian, I think we all know that if the early results, which will be reported soon in a major medical conference, are reproduced in subsequent Phase 1 and Phase 2 patients, then we have some very recent examples, for instance, of the approval of crizotinib or Xalkori for ALK positive lung cancers which point to rapid development opportunity.

There we think that the necessary requirement to the development of biomarker enabled clinical data that associate observed clinical benefit, such as partial responses to people that have tested positive for BRCA gene mutations. And that clearly is the challenge we face in solid tumors to identify a subset of patients who will be exceptionally likely to respond to the drug or what we call super responders, which would by definition provide a potential partner or acquirer with a rapid development path to market.

Great. Thanks a lot for taking my questions.

Thank you.

(Operator Instructions). Jonathan Eckard, Leerink Swann.

I've just got a quick question on some of the data for sapacitabine that's coming out in both MDS and AML later this year. Is there going to be any relevant data points or observations from these trials that may be useful in or relevant to the SEAMLESS trial with regard to the mechanism of the drug?

Judy?

Well, I think as I mentioned just a couple moments ago, once the survival data matures for a pilot study, then we will provide an update on that.

Based on for that specific trial and the ladder of patients who are enrolled, are you anticipating that the follow-up should be mature enough that you may be able to get something in, even if it's not the final data, for the ASH at the end of the year?

Well, that depends on the number of events that will occur in the study. But you recall that typically when we say mature, you would have to wait for enough deaths to occur. So short of those deaths, that data is not mature. So really it is dependent on how well, I would think, the patients resume.

I think the way to perhaps interpret your question, Jonathan, if I understood it right, is since the ASH cutoff is typically around the beginning of August, will there be enough deaths to have a mature [CAPA] marker from this single-arm pilot study by that time, and we don't know the answer.

But if we assume, and that's an assumption that we do not have any way of validating because we have no crystal ball, that around 80% power is needed to have a stable CAPA marker, then that sounds reasonable. If you recall Judy's recent mention in her remarks that as of December, 44% of patients were still alive.

And the reason we feel comfortable with our projections that this is a similar result to what we observed in the Phase 2 studies of sapacitabine monotherapy, which is that roughly in the same schedule we're using in SEAMLESS, one-third of patients were exceeding one year of survival, which in AML we think is important data point.

Since, however, one-year survival is not a predictor for overall survival, this is a risky comparison and, therefore, risky projection. But we feel comfortable that it's heading in the right direction and that there is a good chance we might have the data into ASH for this year. Other than that, it could be certainly up to the investigators, if they agree with us, to report ongoing updates.

Thanks, very good. And then from the MDS trials, I mean I know it's a different setting and also a monotherapy sapacitabine, are there any observations that potentially could be extracted from those data sets with regards to specific activity in patients who have failed either one or both? Is there any information that could be used that could kind of reinforce the design of the SEAMLESS trial?

Judy?

Well, let me make sure I understand the question first. Are you saying that the MDS data we will be presenting in upcoming medical conference has implications of designing a registration study in MDS? Is that the question?

I guess is there anything -- I mean, obviously, the drug has activity in patients who have failed hypomethylating agents. I guess one of the strategies or thoughts about the SEAMLESS design would be sequential dosing is that maybe some of the complementary activity of the drug could, in alternate cycles, could be a benefit.

I'm just wondering is there anything from even of these trials with regards to the activity in certain patients based on the prior treatments or anything that we could use to kind of see a little bit more into how the complementary activity could be beneficial to the SEAMLESS trial.

The SEAMLESS trials do allow the patient -- AML patients newly diagnosed have preceding MDS. But these patients are not have failed the hypomethylating agents. So this is not the same population. Does this answer the question?

Yes, that's fine. Thank you very much.

(Operator Instructions). I'm showing no questions at this time. I would like to turn the floor back over to Mr. Rombotis for any closing remarks. Sir?

Thank you, operator. In closing, if the SEAMLESS trial is successful, sapacitabine would address a major unmet need for patients as a front-line treatment in elderly patients 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 conclude the call.

Thank you, ladies and gentlemen. This concludes today's fourth-quarter and full-year 2011 earnings conference call. You may now disconnect.