Cyclacel Pharmaceuticals Inc (CYCC) 2017 Q2 法說會逐字稿

Good afternoon, and welcome to the Cyclacel Pharmaceuticals' Second Quarter 2017 Results Conference Call and Webcast.

(Operator Instructions) The company will also be accepting a limited number of questions submitted via e-mail to the address ir@cyclacel.com.

It is now my pleasure to turn the floor over to the company.

Thank you, Susan.

Good afternoon, everyone, and thank you for joining our conference call to discuss Cyclacel's second quarter results and business highlights for the quarter ended June 30, 2017.

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 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, Cyclacel's President and CEO.

Spiro?

Thank you, Alex, and good afternoon, everyone.

On today's call, we will provide our second quarter business update and review progress with our clinical development priorities, particularly in our transcriptional regulation program with CYC065, our lead CDK inhibitor drug candidate.

Before updating you on our programs, I would like to thank existing and new shareholders for their support in the recently closed July underwritten offering, in which we received net proceeds of $13.8 million.

Following completion of our recent offering and with pro forma cash and cash equivalents of $27.4 million as of the end of the quarter, we're able to advance the clinical investigation of CYC065 in selected molecularly-defined patient populations.

We are evaluating CYC065 in a dose-escalating Phase I first-in-human study in patients with advanced solid cancers to assess safety, pharmacokinetics, pharmacodynamics and identify a recommended Phase II dose.

As announced on Monday, the recommended Phase II dose was determined to be dosing level 6, which enrolled 9 evaluable patients with advanced cancers.

Here's what we observed at that level: Prolonged reduction of the Mcl-1 biomarker in 7 out of 9 evaluable patients for at least 24 hours following a single dose of CYC065, which was generally well tolerated; preliminary anticancer activity in 3 patients whose cancers had molecular features consistent with the mechanism of action of CYC065, specifically, elevated expression of the Mcl-1, MYC and Mcl-1/cyclin E biomarkers respectively.

Durable reduction of Mcl-1 expression in the majority of patients at the recommended Phase II dose is an important differentiator for CYC065, as other CDK inhibitors only do so transiently.

Indications of anticancer activity after a single dose of CYC065 alone in patients with molecular features related to the drug's mechanism are unexpected and potentially exciting.

There are currently no drugs available for patients with such molecular features.

Let us briefly consider the implications of these findings.

There was extensive evidence in the literature that elevated levels of Mcl-1 are associated with resistance of cancer cells to available therapies.

This means that while cancer cells may have been sensitive to such therapies, they eventually find ways to escape and ultimately become immortal or impossible to kill.

There is an intensive effort to find new drugs that can modulate these resistance mechanisms and resensitize cancer cells to treatment in combination with available drugs.

This is the case with the 2 approved CDK inhibitors, palbociclib and ribociclib, which are used in patients with a subtype of breast cancer in combination with existing chemotherapy.

We expect CYC065 to work best in a similar fashion, i.e., in combination with an approved anticancer drug.

Similarly to Mcl-1-associated resistance, cancer cells survive and proliferate by becoming addicted to cancer promoting genes or oncogenes, including MYC family genes and/or cyclin E. Cancers with such features are called amplified because of the manyfold increase in these markers observed in specimens from patient biopsies.

One particularly challenging type of such addiction is cyclin E-amplified ovarian cancer.

Experts suggest that cyclin E amplification is mutually exclusive with homologous recombination or HR-deficient features of ovarian cancers, such as BRCA mutations.

As such, patients with cyclin E-amplified cancers are not offered treatment with PARP inhibitors, the current standard of care.

If successful, CYC065 could become an important alternative in cancer patients with such molecular features.

This is timely because regulatory authorities are starting to approve cancer drugs based on molecular features, not just on the tissue or organal origin of the cancer.

At this point, let us summarize our key data from the CYC065 clinical study so far.

We enrolled 24 heavily pre-treated patients with various advanced solid tumors and progressed through 7 dose-level cohorts ranging from 8 to 288 mg per meter square per day, administered as a 4-hour intravenous infusion once every 3 weeks.

CYC065 was generally well tolerated.

Dose-limiting toxicity at dose level 7 was reversible neutropenia, febrile neutropenia and diarrhea.

10 patients were treated at dose level 6 at 192 mg per meter square per day, of which 9 are evaluable at present.

PK parameters have demonstrated dose-proportional increases in CYC065 exposure with increasing dose levels.

Based on analysis of surrogate tissue, a recommended Phase II dose of 192 mg per meter square per day was established as biologically effective dose.

Consistent Mcl-1 suppression over 24 hours after a single dose was observed in 7 out of 9 evaluable patients at dose (inaudible), an important differentiator for CYC065 compared to other CDK inhibitors.

Anticancer activity was reported by the investigators in a patient with Mcl-1, an ovarian cancer patient, with reduction of CA-125 tumor marker levels; MYC, a patient with cancer of the larynx with radiographic tumor shrinkage; and Mcl-1/cyclin E in ovarian cancer patients with radiographic tumor shrinkage, amplified tumors, respectively.

Having successfully achieved the objectives of part 1 of the study, part 2 will be initiated shortly, aiming to enroll patients with advanced solid tumors and, in particular, cyclin E-amplified tumors.

Such tumors include subsets of high-grade serous ovarian and uterine cancers.

Part 2 will evaluate CYC065 in a more intensive schedule for 2 days per week, for 2 weeks out of a 3-week cycle.

Biospecimens will be collected for assessment of biomarkers related to CYC065's mechanism of action.

Our Phase I clinical results and establishment of the recommended Phase II dose provide the basis to progress clinical evaluation of CYC065 alone and in combinations in both liquid and solid cancers.

Specifically, our top priority is to finalize designs for a Phase I/II study testing CYC065 in combination with venetoclax, a BCL-2 inhibitor approved for chronic lymphocytic leukemia, where we believe Mcl-1 suppression may be beneficial.

Let us briefly review our strategy, business highlights and future milestones.

Cyclacel's strategy has 2 thrusts.

Firstly, using our CDK inhibitors to interfere with transcription and overcome resistance of cancer cells or break their addiction to oncogenes.

We are executing on this strategy, having achieved the objectives of the CYC065 Phase I study, including determination of a recommended Phase II dose, and planning to initiate a Phase I/II study of CYC065 with combination with venetoclax, and start part 2 of the Phase I study incorporating patients with cyclin E-amplified tumors.

Secondly, employing our sapacitabine and CDK-inhibitor regimen to disrupt the ability of cancer cells to repair damage to the DNA and thus, restore their sensitivity to anticancer therapy.

We are currently evaluating the strategy as a non-PARP-based treatment alternative in a Phase I/II study of an all-oral regimen of sapacitabine followed sequentially with seliciclib, our first-generation CDK inhibitor, in a targeted population of BRCA-positive patients.

We will shortly start part 3 of this study with a goal of testing an alternative dosing schedule in patients with additional BRCA mutation-positive cancers, including ovarian and pancreatic.

We are planning to substitute seliciclib with CYC065 when appropriate.

Our additional future catalysts include: report top line result of the CYC065 Phase I trial in patients with advanced solid tumors; progress sapacitabine and seliciclib extension cohorts in BRCA-positive breast cancer patients; initiate part 3 in BRCA-positive patients with solid tumors other than breast cancer; submission of an IND for a first-in-human study of CYC140, our Polo-like kinase inhibitor; following final subgroup analysis, discuss outcome of the SEAMLESS Phase III study of sapacitabine in elderly patients with acute myeloid leukemia; present, if accepted, the SEAMLESS Phase III data at the 59th American Society of Hematology or ASH annual meeting to be held December 9 to 12, 2017.

Before handing over to Paul to take us through the financials, let us summarize the highlights of Cyclacel's business.

CDK inhibitors are a validated drug class generating sizable revenues and profits.

We believe Cyclacel has in CYC065 a differentiated and promising candidate in this space.

Cyclacel's strategy is to target molecularly-defined patient populations and ensuring treatments are administered to those patients more likely to benefit.

Our compounds aim to overcome cancer cell resistance and/or addiction to oncogenes, 2 major challenges in difficult-to-treat cancers.

We believe our compounds are competitively positioned with a potential to address large markets.

For those of you who are interested, further details on our strategy, pipeline and programs are described in the July 2017 corporate presentation available in the Investor Relations page of our website.

We will now review our financials.

Paul?

Thank you, Spiro.

As you saw from our press release, for the quarter ended June 30, 2017, our cash and cash equivalents totaled $13.6 million compared to $12.7 million as of March 31, 2017.

After the July underwritten offering, pro forma cash and cash equivalents as of June 30 are $27.4 million.

Revenue for the 3 months ended June 30, 2017, were 0 compared to $0.2 million for the same period of the previous year.

Revenue is primarily related to previously awarded grants from the U.K. government being recognized over the period to progress IND-directed preclinical development of CYC140, a novel orally available Polo-like Kinase 1, or PLK 1 inhibitor, which was completed in November 2016.

Research and development expenses were $1.2 million compared to $2.6 million for the same period in 2016.

The decrease was primarily due to the completion of the SEAMLESS study and completion of preclinical development of CYC140.

General and administrative expenses for the 3 months ended June 30, 2016 and '17 remain flat at $1.3 million.

The United Kingdom government research and development tax credit for the quarter was $0.3 million.

And during the quarter, we also recognized cash received for the 2016 tax credit of $1.8 million.

Net loss for the 3 months June 30, 2017, was $2.2 million compared to $3 million for the same period in 2016.

As mentioned, the company received net proceeds of approximately $13.8 million after deducting underwriting discounts and commissions and other estimated offering expenses, including the full exercise of the underwriters' overallotment option in an underwritten offering which closed on July 21, 2017.

The company issued and sold in the offering both common stock and Series A convertible preferred stock together with warrants.

The 8,872 shares of convertible preferred stock which we issued are convertible into shares of common stock.

As of August 8, holders of 7,613 shares or approximately 86% of the shares outstanding of the Series A preferred stock elected to convert their shares into 3.8 million shares of common stock.

Following these conversions, 11.4 million shares of common stock are outstanding and 1,259 or approximately 14% of the Series A preferred stock remain outstanding.

We expect current cash to be able to fund the company's operations and planned clinical studies to the end of 2019.

Operator, we are now ready to take questions.

(Operator Instructions) Your first question comes from the line of Francis Ciabattoni of Morgan Stanley.

I got one quick question.

I mean, over the years, I've been a supporter and basically I've had a fairly substantial loss in the investment, maybe not fully understanding it.

Got one question though.

One of the things that I noticed is we've had a fair amount of dilution and reverse splits and stuff.

Can you guys answer, and I've not seen it, has the management or Board of Directors purchased any stock in the open market within the last year or so?

Fran, this is Spiro Rombotis.

And I appreciate your question.

If we have made any purchases, you'll be able to see them in Form 4 filings with the SEC.

Okay.

I have not seen any, so that -- the only reason is I know at one time you personally stepped up and bought, and I know you believed in everything that you were doing and things.

Given the way the stock has come off and the current price level and things, one of the things as a shareholder, it's very important to see that Board of Directors, which get paid for the time and things -- it would be nice to see the management show maybe some added support for their own company.

It telegraphs a great deal of presence to the shareholders.

I -- it's a comment I just wanted to make.

I appreciate you guys working hard.

I know you're trying.

But when people believe in things, they do step up.

And I think it sends a viable message to any of the shareholders that are still left.

But I do appreciate all your efforts and I wish you good luck.

And at this time, there are no further questions.

I would now like to turn the call back over to the company for any closing remarks.

Thank you, operator, and thank all of you for participating in our update call and your support of Cyclacel's efforts to serve patients in need.

We look forward to updating you on our progress and meeting some of you at upcoming conferences.

Operator, at this time, you may end the call.

Thank you.

Thank you for participating in today's conference.

You may now disconnect.