Cyclacel Pharmaceuticals Inc (CYCC) 2012 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Cyclacel Pharmaceuticals second-quarter 2012 earnings call. (Operator Instructions). I would now like to turn the conference over to Cory Sohmer. Sir, you may begin your conference.

Thank you. Good afternoon, and welcome to our quarterly conference call.

During today's call, members of our senior management team will review Cyclacel's financial performance and business highlights for the second quarter ended June 30, 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 Securities Exchange Act of 1934, as amended.

As set forth in our press release, forward-looking statements involve risks and uncertainties that may affect the Company's business and prospects, including those discussed in our filings with the SEC, which include, among others, our Form 10-K. These filings are available from our -- 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 Paul McBarron, Executive Vice President, Finance, and Chief Operating Officer, and Dr. Judy Chiao, Vice President of Clinical Development and Regulatory Affairs.

As announced in today's press release, Spiro Rombotis, our President and Chief Executive Officer, is on medical leave and will resume his duties in early September 2012. Paul McBarron, our Executive Vice President, Finance, and Chief Operating Officer, will perform additional duties during Mr. Rombotis's medical leave, including conducting this call.

At this time, I would like turn the call over to Paul McBarron, our Executive Vice President, Finance, and Chief Operating Officer.

Thank you, Cory, and good afternoon, everyone.

As mentioned by Cory, I've been asked to temporarily assume some additional duties of Spiro's during his medical leave. We wish Spiro a rapid recovery and expect that he will resume his duties in early September.

It is a pleasure to update you this afternoon on our corporate progress and financial results for the second quarter ended June 30, 2012. First, we are pleased to report that during this last quarter we continued to open new study sites in the US, bringing the total to 35, and enroll patients in the SEAMLESS Phase III trial. We are making steady progress in terms of enrollment towards the second planned periodic safety review to be performed by the independent Data Safety Monitoring Board, or DSMB, in late 2012 or early 2013.

As a reminder, SEAMLESS is a randomized, Phase III registration directed trial under a SPA, or special protocol assessment, agreement with the FDA testing our lead product candidate for oral sapacitabine capsules as front-line treatment in acute myeloid leukemia, or AML.

SEAMLESS is expected to enroll approximately 485 elderly patients, aged 70 years or older, who are not candidates for, or have refused, intensive induction therapy. There is a high unmet medical need for the treatment of elderly patients with AML, as the disease is associated with high mortality and poor quality of life. Currently, there is no standard treatment for this group of patients.

In addition to SEAMLESS, we are working with collaborators in investigator-sponsored studies to explore sapacitabine in other indications. These studies are where we supply drug product and the cost of the studies are borne by the investigators.

These include the Phase II/III Pick a Winner, or LI-1, low-intensity trial, run by the International Cooperative Leukemia Group, chaired by Professor Alan Burnett. This is a randomized trial comparing sapacitabine to low-dose cytarabine in patients aged 60 years or older with previously untreated AML or high-risk myelodysplastic syndromes, MDS, who are unfit for intensive chemotherapy.

The Phase II part of this study has been completed, and over 100 patients have been enrolled. The principal investigator of LI-1 has verbally indicated that, based on the observed number of events in the study, the study DSM-V is expected to meet later this year to assess overall survival as per protocol.

Another investigator-sponsored Phase II study, evaluating sapacitabine in combination with cyclophosphamide and rituximab, is being conducted by the Department of Leukemia at the University of Texas MD Anderson Cancer Center. This study is enrolling patients with previously treated chronic lymphocytic leukemia or small lymphocytic leukemia who carry the 11q22-23 deletion. Deletion of chromosome 11q22-23 is associated with the ATM mutation, an important regulator of the HRR DNA repair pathway.

In June, we reported new data at the American Society of Clinical Oncology annual meeting on ongoing studies conducted by Cyclacel. In a Phase II randomized trial of all sapacitabine capsules in older patients with MDS after treatment failure of front-line hypomethylating agents such as azacitidine, or Vidaza, and/or decitabine, Dacogen, we reported median overall survival for all patients at 252 days, or approximately 8.4 months. We will initiate regulatory discussions regarding an appropriate registration plan in this setting after a dosing schedule in MDS is selected.

At ASCO, we also reported data from an ongoing Phase I study of sapacitabine in combination with seliciclib in heavily pretreated patients with advanced solid tumors. Among 19 patients treated at the maximum tolerated dose, or MTD, three partial responses occurred in patients with breast, ovarian, and pancreatic cancer, and one stable disease in a patient with ovarian cancer. 13 out of the 19 patients are BRCA mutation carriers. All four responding patients were part inhibitor-naive BRCA mutation carriers.

Also, in April, the US Patent and Trademark Office issued a US Patent Number 8,124,593, which grants claims to a specified method of administration of sapacitabine and extends existing composition of matter, US patent protection, and supports US market exclusivity after 2030.

Regarding our earlier translational research and pipeline, in April 2012 at the annual meeting of the American Association of Cancer Research, we presented preclinical results to three of our compounds, sapacitabine; Aurora-A kinase inhibitors, including CYC116; and polo-like kinase 1 inhibitor.

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

Thank you, Paul.

SEAMLESS is a two-arm randomized trial comparing the regimen of sapacitabine dosed in alternating cycles with decitabine versus sapacitabine alone. The study is being conducted under a SPA, or special protocol assessment, agreement we reached with the US FDA.

The randomized state of SEAMLESS was initiated last October following a favorable review of the available data from a pilot Phase I/II study and the lead-in part of SEAMLESS by the independent safety monitoring committee. The primary endpoint of this study is the improvement in overall survival. An interim analysis for futility by the DSM-V is planned when 212 events have occurred.

In addition, several safety reviews are planned by the DSM-V after each group of approximately 100 patients have had 60 days of follow-up. We anticipate the next planned safety review in late 2012 or early 2013.

We continue to be encouraged by the support and interest in the SEAMLESS study, and we will continue to recruit and open sites to reach our target of approximately 40 clinical centers this year. At present, we have 35 sites opened in the US.

Once we accumulate a few quarters of patient enrollment experience, we will determine whether to expand the study outside the United States. In this respect, we are encouraged that recently the European CHMP, or the Committee for Medicinal Products for Human Use, recommended decitabine for approval for patients aged 65 years and older with AML. As you know, decitabine is used in both arms of SEAMLESS.

In parallel with enrolling patients in SEAMLESS and in addition to investigator-sponsored studies, we are also evaluating sapacitabine's therapeutic utility in other potential indications, both as a single agent and in combination. Sapacitabine's activity in both hematological malignancy and solid tumors is a key differentiator for this unique oral agent.

As Paul mentioned, we reported new data at ASCO, and I will give you some additional details on these sapacitabine studies. In an open-label, multi-center Phase II study, we randomized 63 patients aged 60 years or older with MDS of intermediate two or higher risk classification by the International Prognostic Scoring System, or IPSS. At the study entry, [peer] received sapacitabine every four weeks on one of the three dosing schedules.

The primary efficacy endpoint of the study is one-year survival with the objective of identifying dosing schedule that produces a better one-year survival rate in the event all three dosing schedules are active.

All patients in the study progressed after receiving azacitidine, decitabine, or both agents. The median survival for all three arms is 252 days, approximately eight months. Published studies show a median overall survival for patients after treatment failure of hypomethylating agents ranges from 4.3 months to 5.6 months.

Complete remissions and major hematological improvement in platelet counts and neutrophils, the secondary efficacy endpoint of the study, were observed on all three dosing schedules. The 30-day mortality from all causes is 5%. 41% of all patients received four or more cycles; more than 34% of the patients were still alive at the time of reporting at ASCO, and longer follow-up is needed to assess one-year survival and overall survival.

Once we have determined the dosing schedule for MDS, we will initiate discussions with the regulators to agree on a registration pathway.

We also reported data at ASCO on a Phase I study of sapacitabine in combination with seliciclib in patients with advanced solid tumors, which is ongoing at the Dana-Farber Cancer Institute. As of ASCO, 34 heavily-pretreated patients with advanced solid tumors have been treated with escalating doses, and the maximum tolerated dose for sequential administration of sapacitabine and seliciclib was determined.

Among 19 patients treated at the MTD, three partial responses occurred in patients with breast, ovarian, and pancreatic cancer and one stable disease in a patient with ovarian cancer. 13 out of the 19 patients are BRCA mutation carriers, of which seven were polyadrenal ribose polymerase inhibitor naive, the so-called PARP inhibitor naive, and six had prior PARP inhibitor treatment. All four responding patients were PARP inhibitor naive BRCA mutation carriers. Stable disease was achieved in six additional patients treated with the other dosing schedules.

The number of treatment cycles administered ranges from two to over 15 cycles. The breast cancer patients who achieved partial remission remained on study with over 15 cycles, and both ovarian cancer patients remained on study with over two and 12 cycles, respectively. We will continue follow-up of patients.

We are encouraged that the data shows the potential for life extension of sapacitabine as a pipeline within the drug has started to emerge.

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

Thank you, Judy.

As you saw from today's press release regarding our consolidated financial statements for the three months ending June 30, 2012, we reported a net loss applicable to common shareholders of $3.8 million, or $0.06 per basic and diluted share, compared to a net loss of $3.7 million, or $0.08 per basic and diluted share, for the same quarter of 2011.

For the six months ending June 30, 2012, we reported a net loss applicable to common shareholders of $6.9 million, or $0.12 per basic and diluted share, compared to a net loss of $8.5 million, or $0.18 per basic and diluted share, for the same period of 2011.

Research and development expenses decreased from $1.9 million for the three months ended June 30, 2011, to $1.6 million for the three months ended June 30, 2012. Research and development expenses decreased from $4.9 million for the six months ended June 30, 2011, to $3.1 million for the six months ended June 30, 2012. The six months' decrease in costs of $2 million was mainly due to $1.6 million of contractual expenses recognized during the three months ended March 31, 2011, resulting from a milestone payment triggered by the opening of enrollment in our SEAMLESS trial pursuant to the Daiichi-Sankyo license.

Selling, general, and administrative expenses, or SG&A, for the second quarter of 2012 were $2.4 million, as compared to $2 million for the second quarter of 2011. SG&A for the six months ended June 30, 2012, were $4.3 million, as it compared to $3.8 million the six months ended June 30, 2011.

With regard to our commercial products, total net sales of Xclair cream and Numoisyn products were $0.2 million and $0.1 million for the three months ended June 30, 2011, and 2012, respectively. Total sales for the six months ended June 30, 2011, and 2012 were $0.4 million and $0.3 million, respectively.

As indicated in today's press release, we reached an agreement with Sinclair Pharmaceuticals Ltd. to return to them the distribution rights for the Xclair cream and Numoisyn products. Until the return of rights back to Sinclair is completed, and in line with our commitment to serving patients in need, we will continue to provide support to patients with cancer and other conditions and the medical professions caring for them who rely on these products to provide relief of radiation dermatitis and xerostomia.

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.

Now, before I open 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 survival data from the Pick A Winner LI-1 randomized study of sapacitabine versus low-dose cytarabine, and other investigator-sponsored studies as they become available; report updated Phase II sapacitabine data in second-line MDS following previous treatment with hypomethylating agents; report updated Phase II sapacitabine data in AML proceeded by MDS following previous treatment with hypomethylating agents for the preceding MDS; report updated Phase II sapacitabine data in non-small cell lung cancer; and report updated Phase I sapacitabine and seliciclib combination data in patients with solid tumors.

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

(Operator Instructions). [Steve Vu], Lazard Capital Markets.

Thank you for taking my question. I was wondering, could you comment on the implication of the recent CHMP opinion on Dacogen and how it may impact your development plans?

Hello, Steve, thanks very much for your question.

Clearly we're encouraged that the CHMP gave a positive opinion. We'll have to wait for the commission to ratify that sometime, I think, by the end of September. But clearly, the recommended use of decitabine for these patients over 65 years or older, given it's both in the two arms of SEAMLESS, is encouraging.

And I think the appeal of SEAMLESS to both US and non-US investigators will be further enhanced by the positive opinion from the CHMP.

Okay. And the 11q22-23 deletion that you mentioned, could you tell me what's the estimated prevalence in the general CLL population? Does it vary between whether a patient's treatment-naive versus refractory patients?

Judy, do you have an answer to that question?

Not offhand. We certainly would be happy to get back to you, if possible, afterwards with the frequency.

We can do that, Steve.

Okay, and if I could get another quick question in, could you provide an update on the litigation that's ongoing with Celgene?

I'd like to, Steve, but clearly you understand that as this is under legal review, there is only limited information that we can disclose.

This litigation you mention refers to alleged infringement of four Cyclacel-owned patents. It should be clear that these four patents in the case directly involve the use and administration of romidepsin, or Istodax. They're no relation to sapacitabine or other Cyclacel products.

But the case is currently pending in the United States District Court in the District of Delaware. There is -- the docket is open for public inspection and there is a schedule there, as well, for the process. And there are certain times for discovery and pretrial activity, which are all going. And there's a schedule in terms of when the jury trial would be finalized. But today as we look at these, it's something you really want to be settling.

Okay. Thank you very much for taking my questions.

Thank you very much, Steven. Congratulations on your appointment to Lazard.

Thank you.

[Steve Rosenman], [AMS].

Hi, guys. Thanks for taking the call (multiple speakers). I know that the news has been out there for a little while, but congratulations on the patent. It's a pretty good (multiple speakers) in there.

Thank you very much.

You mentioned some collaborations to advance the sapacitabine. I was wondering, in general, if you can describe how active the business development or strategic collaboration front is, and has it -- have you seen it being on the increase recently?

Well, I think the collaborations that both Judy and I discussed were collaborations with investigators and physicians to progress sapacitabine in different indications, as opposed to business development.

For example, the Pick A Winner LI-1 study, which has been run by the UK cooperative, allows us to look at sapacitabine in a different AML patient population, as well as the CLL that we discussed.

Do you see any more on the business development front?

Well, I figured you'd understand that we don't generally comment on whether we're having partner discussions or not, but I think in framing sapacitabine in this respect, I would, I think, reiterate Judy's remarks that sapacitabine is unique in its activity in both blood cancers as well as solid tumors.

We do hold worldwide rights, and I think, as you mentioned, the patent and the IP coverage extended to 2013 -- 2030 certainly presents us a very nice value proposition.

Right. Okay. Thanks, guys.

(Operator Instructions). This concludes today's question-and-answer session. I will now turn the floor back over to management for any closing remarks.

Thank you very much.

In closing, if the SEAMLESS trial is successful, sapacitabine would address a major unmet medical 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 to Cyclacel. Thank you for your continued support of our efforts.

And operator, at this time, will you please conclude the call?

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