Cyclacel Pharmaceuticals Inc (CYCC) 2013 Q4 法說會逐字稿

Good afternoon, and welcome to Cyclacel Pharmaceuticals first-quarter 2014 earnings conference call and webcast. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode. And the floor will be opened for your questions following the presentation. (Operator Instructions). It is now my pleasure to turn the floor over to Bill Harris, Cyclacel's Corporate Controller. Sir, you may begin.

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, 2014.

Before turning the call over to senior management, I would like to remind everyone that, during this conference call, any forward-looking statements made by management are intended to fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and Section 21-E of the Securities Exchange Act of 1934 as amended. As set forth in our press release, forward-looking statements involve risks and uncertainties that may affect the Company's business and prospects, including those discussed in our filings with the SEC which include, among other things, our Forms 10-Q and 10-K. These filings are 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, 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 Spiro Rombotis, our President and CEO.

Thank you Bill, and good afternoon everyone. In the short time that has elapsed since our year-end results call, we have been expanding SEAMLESS, our Phase III study of oral sapacitabine capsules as first-line therapy in elderly patients with newly diagnosed acute myeloid leukemia, or AML, who are not candidates for standard intensive therapy into Europe. And we are pleased to report that we have enrolled our first European patients. Based on our enrollment forecasts of European sites joining US sites and recent US and European investigator meetings, we expect to complete SEAMLESS enrollment around the end of 2014 with topline data readouts in the second half of 2015. As indicated previously, SEAMLESS is funded to completion.

In addition to progress with SEAMLESS, we are preparing the ground for other key milestones for the future. We have recently appointed external experts to advise us on the complex tasks of compiling a new drug application, or NDA, in the United States, and a marketing authorization application, or MAA, in Europe.

The net proceeds from our April underwritten offering will be allocated to a randomized controlled file, or RCT, in myelodysplastic syndromes, or MDS, which is our second proposed indication for sapacitabine after AML. Following the raise, our pro forma cash resources stand at approximately $40 million.

With the first European patients now on study, it is worthwhile to remind you that we have achieved SEAMLESS enrollment of approximately 60% from mostly US clinical sites. Henceforth, we expect an acceleration of enrollment as we open the study in additional European sites.

In total, we expect that approximately 100 to as many as 120 sites will enroll patients in SEAMLESS. Around two-thirds of these sites will be in Europe and the rest in the US. However, in terms of final patient numbers, we expect the majority of SEAMLESS patients to be from the US.

In addition to completion of enrollment, our other forthcoming milestones for SEAMLESS are the next Data Safety Monitoring Board, or DSMB, periodic safety review, and, separately, the interim analysis for futility. The safety review is scheduled to occur when approximately 300 patients are enrolled with 60 days of follow-up. We expect that this will occur soon, and we will make an announcement once the DSMB has met and advised us of their recommendations.

The interim analysis for futility is scheduled to occur when 212 events or deaths are recorded. It is difficult to forecast with accuracy and event-based milestone. Our rough estimates is that this will likely occur in the second half of 2014, or early 2015, or close to the completion of enrollment. Again, once advised by the DSMB, we will announce the outcome of their review.

As we get closer to achieving key milestones of SEAMLESS, it may be helpful to review the study design and its rationale. As a reminder, we are evaluating a sapacitabine regimen as front-line treatment in elderly patients with newly diagnosed AML, who are not candidates for or have refused intensive induction therapy. The primary endpoint is overall survival.

SEAMLESS is being conducted under a Special Protocol Assessment agreement with the US FDA, and is comparing a sequential regimen of sapacitabine administered in alternating cycles with decitabine, versus decitabine alone. The rationale for the SEAMLESS randomized design arose from two previous studies in the same patient population. The first was our randomized Phase II study of sapacitabine alone given every month, which was published in the Lancet Oncology. The second study was the single-arm pilot lead-in part of SEAMLESS testing the same regimen of sapacitabine alternating with decitabine, which means each drug is given separately one month apart, which was reported as a poster at the ASH 2012 conference. This is the same regimen that we are testing in the randomized part of seamless. Data from these studies suggest that sapacitabine is active in AML as a single agent and the treatment regimen of sapacitabine administered in alternating cycles with decitabine has sufficient anti-leukemic activity for further evaluation in the Phase III setting. The alternating regimen resulted in nearly half the mortality at 60 days than that previously reported for decitabine alone given every month.

Sapacitabine and decitabine may target different populations of leukemia cells because the mechanisms of action are different. With data readout of SEAMLESS anticipated in about a year or so, we have started preparations for compiling potential NDA and MAA submissions to regulators in the US and Europe once data is analyzed. To this end, we have appointed external experts to advise us on these complex tasks. As these submissions include both clinical and nonclinical biopharmaceutical and manufacturing sections, it is worthwhile to note that we have qualified and have been collaborating for quite some time with multiple third-party manufacturers supplying us with drug substance, or API, and drug product, or finished form capsules.

During our previous financial results call in March, we provided some context on how we are approaching the development of sapacitabine for the second indication of MDS after failure of front line agents. We discussed the complexity of the disease, the similarities, and differences compared to AML, the challenges of treating MDS patients, and our Phase II results to date.

As we mentioned previously, we are in discussions with key opinion leaders and other experts regarding the design of our RCT in MDS. We will broadly describe our approach in MDS at the end of this month at a Company event taking place in Chicago during the ASCO 2014 meeting.

Specifically, we will be holding an institutional investor and analyst reception in which a globally regarded key opinion leader will discuss the unmet medical needs of patients with MDS after front-line agent failure, and Company representatives will discuss our plans for an RCT in MDS. As mentioned, the net proceeds from our April raise and other Company funds will be used to conduct this study.

In addition to our clinical and regulatory progress, we have been working to broaden sapacitabine's exclusivity and recently announced two Japanese patent grants which further enhance our sapacitabine intellectual property estate in one of the world's top pharmaceutical markets. One patent claims novel pharmaceutical formulations of sapacitabine, and the other claims methods of treating cancer comprising sapacitabine in combination with certain histone deacetylase, or HDAC, inhibitors. Equivalent patents have been granted in the United States and other countries.

Before turning over the call to Paul, let me summarize our key upcoming milestones: completion of European rollout of SEAMLESS to approximately 80 new clinical sites; DSMB safety review of approximately 300 patients enrolled in SEAMLESS with 60-day follow-up; DSMB review of the SEAMLESS data for futility once 212 events have been observe; completion of SEAMLESS enrollment, disclosure of our approach for a randomized controlled trial of sapacitabine in MDS after failure of front line agents.

Paul?

Thank you, Spiro. As you saw from today's press release regarding our consolidated financial statements for the first quarter of 2014, our cash position was $28.2 million as of March 31, 2014, compared to $31.1 million at the end of 2013. This excludes the approximately $9.3 million in net proceeds raised in the underwritten equity offering in April. With pro forma cash of approximately $40 million, excluding any funds to be drawn down from our SPA equity line, we are well-funded to complete the SEAMLESS study and also conduct the proposed MDS RCT.

We estimate that the remaining cost to complete SEAMLESS is less than $12 million. We have managed the US sites in SEAMLESS through our own clinical research team. We are expanding to European sites with the help of a CRO who have also helped us with national regulatory submissions for the study.

Revenue for the three months ended March 31, 2014 was $0.4 million compared to $0.2 million for the same period of the previous year. The revenue is related to a grant award from the UK government totaling $1.9 million to progress CYC065, a cyclin-dependent kinase inhibitor, to IND.

Research and developed expenses increased to $4.3 million for the three months ended March 31, 2014 compared to $1.6 million for the same period in the previous year. The increase was primarily due to study and site startup costs, and drug supply costs associated with the expansion of the SEAMLESS registration study into Europe.

It is worth highlighting the research and development tax credit, which is cash we elect to receive annually from the UK tax authorities. We can claim the credit for eligible R&D expenditure, which includes our clinical studies. For the three months ended March 31, 2014, the credit was $0.6 million compared to $0.3 million in 2013. However, due to changes in tax legislation, we anticipate, based on our budgeted spend, that the annual R&D tax credit and the amount of cash we will receive going forward will be in the range of $3 million to $4 million.

General and administrative expenses for the three months ended March 31, 2014 decreased to $1.5 million compared to $2.7 million for the same period in 2013. The decrease was primarily due to higher legal and professional fees during the three months ended March 31, 2013 related to the litigation that was ultimately dismissed in April 2013 with the sale of four Cyclacel-owned patents to Celgene for $5.5 million.

To summarize, we have sufficient funds to expand SEAMLESS into Europe, complete enrollment and take us beyond the projected topline data readout in the second half of next year. Our efforts remain focused on our AML registration study, and advancing our second indication in MDS.

In parallel, we are selectively progressing other programs either supported by approximately $5.5 million of government grants, such as CYC065, our novel CDK inhibitor that has completed IND enabling studies, or through investigator sponsored studies such as the planned study of seliciclib in rheumatoid arthritis.

Spiro?

Thank you Paul. Operator, we are now ready to take questions.

(Operator Instructions). Ed White, Laidlaw and Company.

Hi, good evening. So just a couple of questions for you. As far as the raise that you did, do you have enough cash now to fully fund the MDS trials all the way to completion, or maybe you can just say how far along you're going to be able to go?

Good evening Ed. I think this is for Paul.

Thank you for the question. As you said, we raised the $9.3 million net in April with the objective of funding our MDS study. As we said in our remarks, we will fund that along with other existing proceeds with resources in the Company. We still have yet to finalize a trial design, and when we've done that, we will be able to give you a much closer estimate of the final cost.

And just a question on SEAMLESS and in Europe. Can you tell us how many people are enrolled in Europe right now, and at how many sites?

We do not give play-by-play granularity of this change as we speak. In fact, we approved, in the last 48 hours, additional sites. So if I were to give the answers, almost certainly obsolete by the time I give it to you. It's an ongoing process that started a few weeks ago, as we indicated. It is ongoing. We expect, as one of our milestones, to finish rolling out in the vicinity of eight or possibly a few more sites in Europe over the next few weeks. Quite a few of them are now open and quite a few have enrolled patients. So it's an ongoing process. My guess is that by the next earnings call, virtually all of the sites, if not all of them, will be open and will have enrolled a number of patients by then.

Okay, great. I think that's all the questions I have for now. If I think of something else, I'll get back in the queue. Thank you.

Kim Lee, Janney Capital.

Good afternoon. Thanks for taking the questions. My first question is for the MDS program. I'm sorry, for the AML program. Can you remind us you have any prespecified analyses that you're going to be looking at?

And also, the second question for the MDS trial, same thing there. And also, given the heterogeneity of the population, any thoughts on a biomarker or a marker that you can use to identify and better select patients? Thanks.

Good afternoon, Kim. Thank you for your question. Let me pick up on the first question and ask Judy Chiao to answer the question of any prespecified analyses for the AML trial. I'll then pick up on the MDS question you asked of the same type, and also discuss the topic of potential biomarker or selective agents. Judy?

Okay. Before I answer the question of prespecified analyses, that I think all I can say is that the primary endpoint is survival in the prespecified analyses. And when they were occurred has been said before. The only other prespecified analysis is the interim futility analyses that were occurred at the time of 212 events, which definitely has occurred.

Okay, great. So no other specified analyses as far as subset of population or anything like that?

Well, we discuss prespecified analyses only in the context of the primary analyses and also any interim analyses. Those are the major ones. So, I think, regarding to prespecified subset analyses, then those are not primary.

Okay. All right, great. Thank you.

I think Judy is a former FDA regulator and she has given you of course what is the correct formal view of the agency, which is, as we've seen with many other sponsors, they would only accept secondary if the primary outcome measure is valid. If it is not, then all secondaries are considered to be exploratory.

But just to remind you and others on the call that trial design has the primary outcome of overall survival, and secondary outcomes are rate of remission, the CRCRb, days in the hospital, transfusion requirements, and other measures of both the quality of care and the patient's well-being such as being spared interventions such as transfusions. So, it's important to remember that there is a formal analysis for futility, which is not an unblinded look, so there is no alpha spend at the time the futility analysis will occur when half of the required events are observed. So unlike other situations in this indication or perhaps other sponsors who may have for their own good reasons chosen to outline their data, we are not. And as a result, the original prespecified analysis that was in our SPA remains very much the readout plan. I hope this makes it very clear.

Yes, I appreciate the clarity. Thank you.

You're welcome. On the second question you asked, you are absolutely correct that MDS is a very heterogeneous disease, certainly as much as AML, possibly worse, because these patients are of course earlier stage in the disease progression. And to remind anybody, and MDS patient who failed the front line may unfortunately die of either transformation or progression to AML, or they may die while they still have MDS without having transformed to AML. So you're correct to remind us of the heterogeneity of this disease, and we are not going to give more color until the end of the month during the Company event in Chicago at which we will explain in a bit more color the trial design and hope to welcome you at that institutional investor analyst meeting and address those questions about time. We will also be webcasting the event so others will have a chance to access the information.

You asked a final question, which is a very important one, is there any biomarker in these diseases and opportunity to preselect for patients that are more likely to respond. And I think our answer would be very unambiguous. We are very much in favor of biomarker approaches. In fact, we are pursuing such an approach in our ongoing Phase I trial of sapacitabine with our CDK drug, seliciclib, in solid cancers in patients that carry the germline BRCA mutation.

However, in MDS, where the genetic complexity is much more pronounced than in patients with solid tumors, it's at least as bad possibly worse than AML given that there are over 20 genes found in biopsy specimens of patients with MDS. One would be very unfortunate -- unfortunately in the situation of finding it very difficult mathematically to calculate the numbers of potential genetic profiles these patients have. One offer I have recently read said there are several thousand genetic profiles of patients with MDS. This renders the prospect of finding a single gene targeted by a drug as rather remote.

Just to remind everybody, though, and you, sapacitabine works on a specific pathway, which is that of homologous recombination repair. And at this point, we don't know, there's no published information to guide us on how to preselect patients that may have HR defects in DNA repair. So our approach is clearly not going to be enabled by a biomarker approach. However, we are highly encouraged by the Phase II data in MDS that we reported at ASH about a year ago in which we show specific activity and improved survival over the expected survival of patients who fail the front line drugs, which are Vidaza (azacytidine) and/or Dacogen (decitabine). So on the basis of this result in pretreated patients, we believe the drug is active in MDS after HMA failures and we will give some more detail in Chicago, at which point perhaps we can pick up this conversation in light of the trial design that we are proposing, which I think will be informative to you and to other investors.

Great. Thank you for your answers.

Thank you Kim.

George Zavoico, H.C. Wainwright.

High Spiro, Judy and Paul. Thank you for the update. I have a question regarding your third-party manufacturing process that seems to have recently begun ahead of the finishing of SEAMLESS and potential NDA and MMA submissions. First of all, to Paul, is that process -- or the costs related to that also included in the raise that you did in April? And could you briefly describe exactly what needs to be done? I presume maybe final formulation and perhaps one-year stability?

George, thanks for the question. To be clear, this is not a new item for us in manufacturing. The point we are making is that we have been manufacturing with a third party for some time and have qualified them over a period of time. And as you quite rightly say, there is the usual process of manufacturing and validation and stability studies that have been ongoing and will continue to be ongoing until an NDA is filed. The funding of that is not related to the recent financing. This is clearly pre-financing a SEAMLESS item and part of our normal operating costs, which certainly we've seen over the last couple of years and will continue over next year.

Thank you Paul. Let me just jump in, if you allow me, George, and thank you for the question, to take another point, just to make investors aware of some of the differences of the process we have been employing compared to perhaps other companies in a similar position. From my background in pharma, I remember that one of the major stumbling blocks in partnering discussions between small companies in pharma is that although the small company was ready in all regulatory respects to file an NDA, they were sometimes months and rarely years away from supplying commercial launch quantities. And that was of course a major damper on the big pharma's interest because they want to be able to launch almost immediately after an approval. This would not happen at Cyclacel.

As Paul said, we had several years, years, not months, we have been working with multiple manufacturers, both for the drug product in terms of the finished form capsules patients ingest, and the chemical that is used to actually manufacture these capsules. We have validated those sources, those different vendors. These are companies that in the finished goods context have been inspected by the FDA for previous NDA submissions and/or approvals, and therefore have been through this all-important check. We expect, given the scale at which we are manufacturing, we will be comfortably able to supply all of our clinical trial needs, including investigator initiated studies now ongoing or to be done, as well as being in a position to scale up to large quantities in a relatively short time frame following a regulatory submission.

You just answered my next question, which was whether you are prepared to launch as quickly as possible following a successful NDA submission and approval. I guess the answer to that is yes, as quickly as possible. And at the same time, you suggested that it also would help you to -- help you in potential partnering discussions. Yes, okay. Thank you very much for that. That's reassuring. Thank you Spiro. Thank you Paul.

Thank you George.

There are no further questions at this time. I will now turn the floor back over to Mr. Spiro Rombotis for any additional or closing remarks.

Thank you operator, and thank you all for listening to our quarterly conference call. We look forward to updating you on upcoming events and meeting some of you at our upcoming annual stockholder meeting and investor conferences, including the JMP Securities Healthcare Conference on June 24 in New York City.

Operator, at this time, please end the call.

Thank you. This does conclude today's teleconference. Please disconnect your line and close your webcast browser at this time and have a wonderful day.