Cyclacel Pharmaceuticals Inc (CYCC) 2012 Q1 法說會逐字稿

Welcome to the Cyclacel First Quarter 2012 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)

I will now turn the call over to Corey Sohmer, Director of Corporate Finance. Please go ahead, sir.

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 first quarter ended March 31, 2012.

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 Security Exchange Act of 1934, as amended. As set forth in our press release, forward-looking statements involves 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 web site. 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, 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, Corey, and good afternoon, everyone. It's a pleasure to update you this afternoon on our corporate progress and financial results for the first quarter ended March 31, 2012. First, I'm pleased to report that during this period, we continued to open new study sites and enroll patients in the SEAMLESS Phase III trial of our lead drug candidate, oral sapacitabine capsules as front-line treatment in acute myeloid leukemia, or AML. As a reminder, SEAMLESS is a randomized trial testing sapacitabine in approximately 485 elderly patients with AML, aged 70 years or older who are not candidates for, or have refused, intensive induction therapy.

In addition to SEAMLESS, we reported earlier today completion of enrollment in the Phase II portion of the investigator-led Phase II/III Pick a Winner, or LI-1 trial. This is a randomized trial comparing sapacitabine to low-dose cytarabine in patients age 60 years or older, with previously untreated AML or high-risk myelodysplastic syndromes, or MDS, who are unfit for intensive chemotherapy. Importantly, except for drug product supplied by Cyclacel, costs for this investigator-led study are borne in their entirety by the International Cooperative Leukemia Group, chaired by professor Alan Burnett.

Earlier in the year, we also reported clinical data showing that sapacitabine is active in patients with myelodysplastic syndromes and certain solid tumors positive for the BRCA genetic mutation in terms of germ-line. We are encouraged that the potential for line extensions of sapacitabine as a pipeline within a drug is starting to emerge. It is pertinent to our clinical trial strategy that during the quarter, the American Society of Hematology or ASH, issued the report that identified seven specific high medical need areas for the care of patients with hematological diseases in the United States. One of the seven areas was finding an effective and personalized treatment for the elderly with AML. This recommendation from our National Society of Hematology specialists underscores the high unmet medical need that sapacitabine could address with SEAMLESS and the LI-1 investigator-led study.

During the quarter, we also reported top-line response data from an ongoing multi-center Phase II randomized trial of oral sapacitabine in older patients with MDS after treatment failure of hypomethalating agents such as azacitidine and/or decitabine. Eight patients responded, with two complete remissions or CRs; two complete remissions with incomplete platelet-count recovery, or CRPs; and four major hematological improvements of platelet counts or neutrophils. As more than 50% of the patients are still alive in this study, longer followup is needed to assess one-year survival and overall survival. Updated data from this study will be presented at the ASCO annual meeting next month. We will initiate regulatory discussions regarding an appropriate registration plan in this setting after a dosing schedule is selected.

Our efforts in combining sapacitabine with other anti-cancer agents addressed another one of the seven areas high-need areas identified by ASH. In particular, harnessing recent discoveries of important genetic and biologic markers, and new insights of how disease genetics and patient genetics affect response to treatment. This direction will help us not only develop novel therapies directed against disease targets, but also to ensure that patients receive the right treatments for the particular genetic make-up to maximize successful outcomes.

For example, during the quarter in the 103rd annual meeting of the American Association of Cancer Research or AACR, translational research findings for three studies involving sapacitabine were reported. One abstract reported additional pre-clinical data to further support the potential for sapacitabine to be used alone or in combinations to treat homologous recombination DNA repair, or HRR-defective tumors, such as ataxia telangiectasia mutated, or ATM, tumors or BRCA-defective tumors.

We have previously reported that investigators at the University of Texas MD Anderson Cancer Center are conducting, at their expense, an ongoing Phase II investigator-led study of sapacitabine in combination with cyclophosphamide and rituximab. This study is enrolling patients with previously treated chronic lymphocytic leukemia, or CLL, or small lymphocytic lymphoma, SLL, who carry the 11q22-23 deletion. Deletion at chromosome 11q22-23 is associated with the ATM mutation, an important regulator of the HRR DNA repair pathway and the possible predictor of sensitivity to sapacitabine's mechanism.

In another abstract presented at AACR, Professor William Plunkett and his group from MD Anderson Cancer Center described the sensitization of HRR-defective model cell lines to sapacitabine when combined with other DNA-damaging agents, whose effects are repaired by HRR and other DNA repair pathways. Combinations of sapacitabine with bendamustine, Cisplatin, Oxaliplatin, or a cyclophosphamide analog each showed effects in cells with DNA repair pathway defects that were pronounced more than when giving each drug on its own.

Finally, the third abstract presented at AACR by Dr Kent Christopherson and colleagues at Rush Medical College in Chicago performed a comparison, among others, of sapacitabine and cytarabine activity in AML cell lines and in bone marrow and peripheral blood cells from AML patients. The authors concluded that sapacitabine exhibited improved activity and induction of cell death in AML cell lines and patient samples compared with cytarabine. As a reminder, cytarabine is the only drug approved as front-line AML therapy in the United States. The fact that since its approval in 1969, we have had no other drugs reach the market underlines the unique opportunity addressed by sapacitabine. As a further reminder, cytarabine is the comparator control drug in the LI-1 investigator-led trial previously reported.

Progress with two additional pipeline candidates from Cyclacel was also reported during the quarter at AACR -- specifically, the development of a potent and selective pre-clinical stage polo-like kinase 1, or Plk1 inhibitor, as well as one of our oral kinase inhibitors. In the Plk1 program, in addition to proposing a predictive biomarket-driven clinical development strategy to use in P53 protein status, the discovery which leverages the efforts of Cyclacel's founders in the areas of P53 and mitotic kinases such as polo, to develop oral therapies that target for various phases of cell cycle control for treating cancer and other serious diseases.

In particular, Cyclacel scientists and academic collaborators reported at AACR the biological characterization of a compound named Number 4, a potent and selective pre-clinical stage Plk1 inhibitor, selected for further development from Cyclacel's novel Plk1 inhibitor compound series. In particular, in the panel of esophageal cancer cell lines, sensitivity to this compound correlated with the status of P53. Esophageal cell lines that lacked functional P53 showed the greatest sensitivity to this compound.

Short drug-exposure times demonstrated differential sensitivity between cancerous esophageal cells versus control, outlining the potential broad therapeutic index for this compound and other Plk1 inhibitors from Cyclacel in treating esophageal cancers, and in particular those with non-functional P53. Moreover, status for P53 could be used as a predictive biomarkers in future clinical trials to identify responder patients to the activity of this Plk1 drug. I will now turn the call over to Judy, who will review our clinical progress. Judy?

Thank you, Spiro. First, many of you on the call today know by now, SEAMLESS is a two-arm randomized trial comparing the regiment of sapacitabine to those in alternating cycles with decitabine, versus decitabine alone. The study is being conducted under a SPA, or Special Protocol Assessment agreement, we reached with the US FDA. The randomized stage of SEAMLESS was initiated last October following a favorable review of the available data from a pilot Phase I-II study, and the leading part of SEAMLESS by the independent data monitoring committee. The primary end point of the study is an 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 data monitoring committee is planned when 212 events have occurred.

We continue to be encouraged by the support and interest in the SEAMLESS study, which 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. After approximately six months into the randomized stage of the study, we have over 80% of the targeted number of approximately 40 clinical sites open for enrollment in the United States, and we'll continue to recruit and open sites to reach our target this year. Once we accumulate 50% to 75% of patient enrollment experience, we will determine whether we will expand the study outside the United States.

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. These include Phase II studies in other hematological malignancies such as myelodsyplastic syndromes and also in solid tumors where we are exploring sapacitabine's unique mechanism of action via the DNA repair pathway. Sapacitabine's activity in both hematological malignancies and solid tumors is a key differentiator for this unique oral agent.

A Phase I study of sapacitabine in combination with seliciclib in patients with advanced solid tumors, is ongoing at the Dana Farber Cancer Institute. As previously reported, among 11 patients in the study treated at the recommended Phase II doses, three with advanced breast, ovarian, and pancreatic cancer responded. All three patients were reported by the investigators to be BRCA-defective. The responses in BRCA mutation carrier patients with breast, pancreatic, and ovarian cancers may be directly related to sapacitabine's enhanced activity against cancer cells that are deficient in the homologous recombination DNA repair, or HRR pathway.

Accordingly, BRCA status could be a potential biomarker 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 a targeted drug in solid tumors would be feasible. Updated results from the Phase 1 study will be reported at the upcoming ASCO annual meeting.

In addition to Cyclacel-sponsored programs, we reported today on the Pick a Winner study being conducted by the UK's Leukemia Lymphoma Research and UK National Cancer Research Institute Working Group, chaired by Professor Alan Burnett. The randomized study comparing sapacitabine to low-dose Ara-C has enrolled approximately 100 patients aged 60 years and older who are unfit for intensive therapy, with previously untreated AML, or high-risk MDS. More than 40% of these patients are still alive, and longer followup is needed to assess overall survival. We understand from Dr. Burnett that the survival data will mature in the next few months, at which time the study's Data Monitoring and Ethics Committee will make recommendations whether sapacitabine should enter Phase III development.

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 March 31, 2012, we reported a net loss applicable to common stockholders of $3.1 million, or $0.06 per basic and diluted share, compared to a net loss of $4.8 million, or $0.10 per basic and diluted share for the same quarter of 2011.

Research and development expenses in the first quarter of 2012 decreased to $1.3 million, compared to $3.1 million for the same period in 2011. The decrease in costs of $1.8 million was due to $1.6 million of contractual expenses recognized during the three months ending March 31, 2011, which resulted from an achievement of a milestone triggered by the opening of enrollment in our SEAMLESS trial, pursuant to the Daiichi Sankyo license.

Selling, General, and Administrative expenses for the first quarter of 2012 were $2 million, as compared to $1.8 million for the first quarter of 2011. With regard to our commercial products, total net sales of Xclair cream and Numoisyn products were $0.2 million for both first quarter ended March 31, 2012, and for 2011. In March of this year, we entered into a purchase agreement with certain existing institutional stockholders, raising $3 million in gross proceeds. The proceeds from the 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 sapacitabine clinical trials for at least the next 12 months.

Finally, the Company's annual meeting is scheduled to be held on May 23, and we strongly encourage you to exercise your vote or your right to vote if you've not already done so. Please vote by telephone or internet or by mail using the instructions provided in the documentation, and that you should have already received. With that, I would like to turn the call back to Spiro.

Thank you, Paul. Before opening the call for questions, I would like to briefly review our priorities for the remainder of 2012 -- continue enrollment in the SEAMLESS pivotal Phase III study of sapacitabine in AML; report updated Phase II, sapacitabine data in second-line MDS following previous treatments with hypomethalating agents; report updated Phase II sapacitabine data in AML preceded by MDS, following previous treatment with hypomethalating agents for the preceding MDS; report updated Phase II sapacitabine data in non-small cell lung cancer; report updated Phase I sapacitabine and seliciclib combination data in patients with solid tumors; and report data from the Pick a Winner LI-1 study and other investigator-sponsored studies as they become available.

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

Hi, thanks for taking my questions. First of all, I just wanted to get a sense of the enrollment for SEAMLESS. I know it's still a little early, it's only been about six months, but can you give us a sense as to whether the enrollment is along the trajectory that you expected?

Yes. We can say a few things. We have not make a public announcement on real-time enrollment trends because of course AML is a referred disease. As patients get diagnosed in the community they get referred to tertiary centers, which results in a wave-like pattern, where one month you may have a high enrollment and the next month you may have a low enrollment. It's hard to pinpoint trends as you described from a few months of enrollment experience.

But I would like to give you and the public one metric which is unambiguous. In the study of decitabine versus low-dose Ara-C, reviewed by ODAC and the FDA earlier this winter, about 10% of patients were enrolled in the United States from a total sample size of 485 patients. I can tell you then the first few months of SEAMLESS enrollment, we have already exceeded that number. It took that sponsor 3.5 years to enroll that study. By comparative terms, we feel the study is not only enrolling well, but based on actual feedback from participating investigators, it remains a priority study within the clinical settling -- i.e., one which they continue to propose to their patients as an available therapy option for the AML condition.

Great, thanks. Moving on to the Pick a Winner trial, how many cohorts of therapies are there, and how many patients were enrolled per cohort?

Right. I think Judy will just take that first part of the question and describe the overall design of Pick a Winner, which is multiple investigational agents.

Yes. The Pick a Winner design is a randomized trial comparing several novel drugs or combination of novel drugs against low-dose Ara-C. I think that based on what's listed on their web site, there are about two or three depending what time that you're looking at the trial. Two and three cohort links [with three] novel drug or novel drug combinations.

Do we know how many patients were enrolled within each cohort, or how many patients were treated with the sapacitabine?

Well, we don't know other novel drugs cohort, we know that from the cohort of sapacitabine and its corresponding low-dose Ara-C because this is a randomized allocation, there are approximately 100 patients.

So 50 in the sapacitabine arm and 50 in low-dose Ara-C that you're aware of?

That's right. That's the way the randomizations are done, one to one.

Got it. Can you give us a sense of what the criteria are that the investigators will utilize? Will they also be looking at comparisons between the different novel agents, or is it always looking back towards low-dose Ara-C?

It will be against low-dose Ara-C.

How many potential therapeutic combinations could be advanced into Phase III?

So far I think that -- I'm not aware, there may be one or two. I don't know whether in the future how many will be advanced, but it's not something that they will do 100% advancement, if that's what the question is, no.

Let me perhaps provide some more color here, Judy. The Pick a Winner program has not started in 2011. It's just this batch of comparisons to low-dose Ara-C, which is the standard comparator active control. In the previous version of Pick a Winner started three or four years ago, they compared six other agents to low-dose Ara-C, of which only one was successfully advanced. I believe that was clofarabine, an investigational drug in the setting of AML. All of the other active compounds failed to meet the prerequisite, the pre-specified comparison to low-dose Ara-C. In our batch of Pick the Winner, as Judy explained, there are four active arms. We believe that from what the investigators share with us, sapacitabine is the first to reach completion of enrollment and that it will be the first to be submitted upon maturity of the required number of events to the Data, Safety, and Ethics Committee of the trial.

We cannot at this point speculate how many others might or might not meet the pre-specified criteria to get there, but that clearly will determine where the Company is prepared to go and enroll additional studies. What we can say, because it is a fact that the investigators have asked us whether we have sufficient clinical supplies available to fulfill a further 300 patients if the sample size for the Phase III component will be in the range of a total of 400, minus 100 already treated, and possibly another 300 patients worth of clinical supplies will be acquired. It's an ongoing real-time program, and as each comparison reaches maturity, they make a decision whether to go forward or not.

What was your response in terms of potential supply for 300 additional patients?

We have the drug in stock. We produce drug product in large campaigns, and our clinical trial supplies based on current planning needs for SEAMLESS, for the Phase II studies that Judy explained in MDS and solid tumors, including this trial, is sufficient to meet renewed demand. We do also have a third trial which is still in negotiations, this time with a US-based cooperative group. It will be a sapacitabine trial against an undisclosed control with an undisclosed design, but that will require drug for about similar size clinical trial. Therefore at this point I cannot tell you whether we will support all of these studies, but certainly for Pick the Winner we have the material in stock.

Great. Is it fair to anticipate we might see the top-line results from this trial in the second half of 2012?

Judy, that question's for you, I think?

You mean the Pick the Winner program?

Yes.

Yes. I think this is entirely dependent upon the investigators and the data. It's the investigators I mentioned just a moment ago that they expected the rival data to mature in the next few months.

Lastly, if you can give just give us an update on potential partnerships for sapacitabine or what you're current plans are in terms of looking at potential partners?

We continue to be very interested in finding an appropriate transaction or structure that ensures we can get the drug to fulfill its potential. What do we mean by that? We know we have the firepower and the drug in stock to bring the drug to market in AML, that's clear. If the trial is successful, we have the SPA Phase III design, hopefully this will be all what is needed. We have a second opportunity to reach the market via the Pick the Winner material. If that study's successful, that may give us another opportunity, especially in Europe. Thirdly, we have activity as we know, from this agent in MDS. Next month at ASCO will have more survival data for the drug in MDS, which will eliminate its prospects in that indication, and we have early stage but very stimulating data in solid tumors, especially in the targeted setting of people carrying the germline BRCA mutation.

It's clear that we are not in the position to develop all three of these prospective indication groups on our own. For this reason, we remain open to partnerships that allow us to maximize stockholder value by allowing us to [co-travel] as much as possible these indications, rather than doing them sequentially, which would be necessitated by Cyclocel's availability of resources. Our possible partnering is a positive one, although I will tell you that given the Company's current valuation, this is more than likely to be an M&A transaction rather than a partnering deal.

Great. Thank you very much.

Thank you, Brian.

(Operator Instructions)

Jonathan Eckard with Leerink Swann.

Thank you very much for taking the questions. I just had a question with regards to the potential to open up enrollment sites for SEAMLESS outside of the US. With regards to making that decision, how should we -- how should we look at what it would cost to kind of open up a site in Europe versus the US, and how does that -- how does the kind of time benefit versus cost of balance work out in there? Is it a lot more expensive to branch out to Europe? Is it overall worthwhile with regards to the cost of time with regards to enrolling the -- completing enrollment of the trial? Could you just give us a little idea of what might go into that decision?

Jonathan, hello. This is a very important question you raise, and I'm afraid the one which is fairly complex. Let me explain. First of all, to remind everyone, SEAMLESS is a randomized study against the control of decitabine. It also includes decitabine in the active arm, as part of the alternating schedule in the active arm. Decitabine at this moment is not approved in Europe. In fact, it's not even available as an active therapy whether in AML or in MDS. In the United States, it's available and approved in MDS, but available not approved, i.e., off label available in AML. This suggests a dramatically different situation in Europe and the US. When we speak about non-US, we don't necessarily mean Europe -- at least not until later this Fall when the European regulator agency, the EMA, is scheduled to review the marketing authorization application submitted by Johnson&Johnson for decitabine. Following that regulatory review we will know more about the ability to enroll SEAMLESS sites in Europe.

There are, however, in addition to the United States, about 30 countries around the world in which Dacogen, or decitabine, is approved. It is in these markets we propose to go to enable us to meet our timelines, given that AML is a disease of relatively low incidence in the United States, with a number of patients not electing to go to trials, choosing -- incredulous as it may seem to us, where we're younger than this group of patients -- to go to hospice and die, typically within the short time from first diagnosis. For these reasons, we have studied this complex issue. We have asked, provided RFPs, requests for funding proposals, from several CRO vendors. They went on the process of negotiating appropriate commercial transactions that would enable us to leverage non-US patient material. We'll give a bit more color on that, Jonathan, after we complete these negotiations and have a better grip on the actual interplay between number of sites, number of patients, and timelines.

That's great. Thank you. One of the trials that I did not hear, unless I missed it today, was the pilot study for sapacitabine, decitabine sequential dosing. I know that we were waiting for some of that, the events in that trial to arise before we may have an overall survival update. Can you just provide us with a status of how that trial is moving ahead?

Judy, I think this is for you.

Well, nothing has changed at this point in terms of the survivals. I think once that we reach the one year of the last patient that was accrued, at that time we will be able to provide the one-year survival.

Is it feasible that there could be an update, say, at a medical meeting at some point later in the year, or is it still up in the air for that?

Well, I think that would depending on the maturity of the data.

Very good.

I think just to say, Jonathan, that this is a good situation/bad situation. If more patients are alive, which is terrific news for the patients and very good news for the drug, it would take longer for it to report. We have to simply wait until these events occur. Just to remind everybody to avoid confusion, in the Phase II design, we had a one-year survival arbitrarily selected end point. Why? Because we're comparing three randomized dosing schedules of sapacitabine with the goal to select the optimal one. That was the Phase II program. In the Phase III program and in the pilot study, we have the alternating schedule of sapacitabine with decitabine. It's two very different trial designs. It's very hard to extrapolate from Phase II data into the Phase III. I'm afraid that we'll have to wait until the survival data from the pilot study mature before to report at an upcoming medical meeting we should know, I would think, Jonathan, by the middle of the summer.

That's great, and if I could just ask one more. I noticed that there's been a posting on the Delaware court web page that there has been an alternative dispute resolution conference call scheduled for September 24 with Celgene. Can you give us any color about that process, at least, of what the alternative dispute resolution is, and how it could come to play with that trial?

Well, as you can imagine, under advice of counsel for ongoing litigation, we're not going to be able to comment other than what is in the public record. As you correctly portrayed it, the court seeks to bring litigants into dialogue in the presence of the magistrate with the goal to find if there is common ground to potentially settle the case, and that's what this announcement in the court docket is about. Beyond that, I'm not going to give any color on the state of the litigation or what it might mean. This is up to each individual investor to make up for themselves.

All right. Well thank you very much for taking my questions.

Thank you, Jonathan.

(Operator Instructions)

At this time, I will turn the floor back over to Spiro Rombotis for any closing remarks. Sir?

Thank you very much, operator, and thank you for attending this afternoon's conference call. In closing, if the SEAMLESS trial is successful, sapacitabine would address a major unmet medical need for patients as a front-line treatment with newly diagnosed AML who are not candidates for intensive induction chemotherapy. We believe that sapacitabine, along with our pipeline, represent outstanding growth opportunities for Cyclacel. Thank you for your continued support of our efforts. Operator, at this time, please conclude the call.

Thank you. At this time, this concludes today's call. You may now disconnect, and have a wonderful day.