Cyclacel Pharmaceuticals Inc (CYCC) 2020 Q4 法說會逐字稿

Good afternoon, and welcome to the Cyclacel Pharmaceuticals Fourth Quarter and Full Year 2020 Results Conference Call and Webcast. (Operator Instructions) Please note, today's call is being recorded.

I would now like to turn the conference over to the company.

Good afternoon, everyone. This is Jason Assad. I want to thank you for joining today's conference call to discuss Cyclacel's financial results and business highlights for the fourth quarter and full ending -- full year ending December 31, 2020.

Before turning the call over to management, I'd like to remind everyone that during this conference call, 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 on 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. Mark Kirschbaum, Senior Vice President and Chief Medical Officer. Spiro will begin with an overview of our business strategy and accomplishments on Cyclacel's clinical programs, and Paul will provide financial highlights for the fourth quarter of 2020, which will be followed by a Q&A session.

At this time, I'd like to now turn the call over to Spiro.

Thank you, Jason, and thank you, everyone, for joining us today for our fourth quarter and full year 2020 business update call. On our last call, we introduced you to Dr. Mark Kirschbaum, our recently appointed Chief Medical Officer. After reviewing our pipeline, Mark has made his recommendations regarding the composition of our team and clinical development plans.

On today's call, we will provide an overview of the clinical development strategy for fadraciclib and CYC140, which was designed to deliver registration-directed outcomes for multiple indications. Based on the mechanism of action of fadraciclib and CYC140, we have decided to advance the next stage of development for both drugs as oral agents.

Based on preclinical and clinical data collected to date, supporting an optimal biological dose, continuous pressure on their respective targets requires daily dosing. This is best achieved by the oral route, which is also what patients and doctors demand during and after the global pandemic.

Let us first review the plan for fadraciclib or fadra for short, our CDK 2/9 inhibitor. Fadra is differentiated by its unique targeting of both CDK2 and CDK9. Inhibiting CDK2 results in reduction of cyclin E, and CDK9 in reduced expression of MCL1, MYC and other short-lived transcripts. Elevated levels of these proteins correlate with the development of cancer resistance and jamming of the apoptotic mechanism by which a healthy body controls proliferation of cells.

Our strategy with fadra is to suppress these proteins pharmacologically and reactivate the apoptotic machinery leading to cancer cell death. Given intravenously, fadra has demonstrated in patients durable suppression of MCL1 and other mechanistically related proteins, including cyclin E and MYC, at tolerated doses.

Anticancer activity, including durable partial response as monotherapy was observed in heavily pretreated patients with solid tumors nearly all of whom had amplification of MCL1, cyclin E and/or MYC at baseline. We believe these findings make fadra a leader in the race to bring to market medicines that work on this cancer pathway.

As reported at the 32nd EORTC/NCI/AACR Symposium last quarter, a patient with MCL1 amplified endometrial cancer, who had achieved geographically confirmed PR after 4 cycles is continuing treatment for more than 18 months, with reduction in her target tumor lesions having reached 96%.

We also reported pharmacokinetic and pharmacodynamic results and high bioequivalents in 5 patients treated orally compared to patients treated intravenously on the same schedule.

In our hematological malignancies program, we're evaluating fadra in combination with venetoclax in relapsed or refractory CLL and AML. Antileukemic activity consistent with the mechanism of action and good tolerability were observed. In the CLL study, 3 patients achieved MRD negativity, while on the combination, 1 in bone marrow and 2 in bone marrow and peripheral blood. The latter 2 patients also demonstrated continued shrinkage of lymph nodes, while on the combination. In AML, antileukemic activity was observed in 4 out of 12 patients treated with escalating doses.

Our clinical development plan for fadra includes a streamlined Phase Ib/II clinical study in patients with advanced solid tumors to start in the first half of 2021. The study design includes a Phase Ib part with patients receiving continuous escalating doses of oral fadra as monotherapy. The Phase II part includes 5 patient cohorts defined by histology, including breast, endometrial and ovarian cancers. A sixth cohort is designated as a basket, which would include additional histologies enriched for pharmacodynamic markers of relevance to fadra's mechanism. The study design allows rapid expansion or discontinuation of the cohort subject to observation of efficacy signals based on prespecified statistical rules.

Phase II expansion cohort outcomes are designed as registration-directed, which is predicated on discussions with regulators, if a strong efficacy signal is observed. The design also includes the possibility of combination treatment in relevant histologies as required by available or emerging standard of care. We believe this streamlined design represents an efficient use of patient and capital resources and increases probability of success across multiple tumor types. We will disclose further details as the study gets underway.

We are designing a similar second protocol with oral fadra for patients with hematological malignancies. This Phase Ib/II study will include 4 leukemia cohorts and a fifth basket cohort.

Let us now turn to the antimitotic program and the plan for CYC140, our Polo-Like Kinase or PLK1 inhibitor or 140 for short, which like fadra was discovered in-house. 140 is a small molecule, high potency PLK1 inhibitor, which has demonstrated potent and selective target inhibition and impressive efficacy and cures in human tumor and leukemia xenografts at nontoxic doses. We believe that 140 is differentiated by PLK family selectivity, administration by both the intravenous and oral routes and a short half-life.

PLK1 is essential for dividing cells. However, normal sales was intact cell cycle checkpoints are less sensitive to PLK1 depletion. A short half-life, therefore, enables dosing flexibility in patients and may minimize potential effects on nonmalignant hematopoietic cells. PLK1 overexpressing tumors with levels correlating with patient prognosis are cancers such as esophageal, gastric, leukemia, non-small cell lung cancer, ovarian and squamous cell cancers as well as MYC-amplified cancers. Recent data with the only other PLK1 inhibitor in clinical development suggest that PLK1 inhibition may be effective in KRAS-mutated metastatic colorectal cancer.

Seven patients with advanced leukemias have been recruited so far to our first in human, single-agent dose escalation study of 140 given intravenously. No dose-limiting toxicities have been observed thus far. Encouragingly, the last patient enrolled on the third dose level with a proliferative form of leukemia experienced reduction in leukemia blasts, both in bone marrow and peripheral blood. Like fadra, we believe that optimal biological doses can be achieved by oral administration of 140.

Our clinical development plan for 140 includes a third streamlined Phase I/II clinical study in patients with advanced solid tumors to start in the second half of 2021, which is largely similar to the fadra program. The Phase I part would enroll patients receiving continuous escalating dosing of oral 140 as monotherapy. The Phase II part includes 5 patient cohorts defined by histology and a sixth cohort designated as a basket enriched for PD markers of relevance to 140's mechanism. Like fadra, we also plan to open a fourth Phase I/II study in leukemia with oral 140.

Let us now provide brief updates on investigator sponsor trials, or ISTs. We are collaborating with an international cooperative group to evaluate fadra in pediatric cancers, including high-risk neuroblastoma, an aggressive cancer often associated with MYC amplification and pediatric leukemias. We will provide updates once we're informed that the study has opened for enrollment.

Our first-generation oral CDK 2/9 inhibitor, seliciclib is being tested in a Phase II multicenter open-label IST, sponsored by Cedar-Sinai Medical Center evaluating safety and efficacy in patients with Cushing's disease. Reduction of mean urinary free cortisol 24 hours after lot (inaudible) administration was observed in all 8 patients enrolled. However, none met the primary endpoint of urinary free cortisol less or equal to the upper limit of normal or above upper limit of normal, but more than 50% lower than baseline. The investigators report that preliminary data are encouraging, seliciclib was found to be generally tolerable and will continue enrolling patients. The study is funded by the FDA's office of orphan products development through 2023.

The third IST is sponsored by the Dana-Farber Cancer Institute and is evaluating a combination of sapacitabine with olaparib, Astrazeneca's Lynparza in patients with BRCA-mutant breast cancer. Seven patients have been enrolled to date with 2 partial responses and prolonged stable disease is observed.

Lastly, let us provide an update on our proclinical collaboration with the MRC Centre for Inflammation Research at the University of Edinburgh, comparing fadra to seliciclib as a potential treatment for COVID-19 pneumonia, acute lung injury or acute respiratory distress syndrome. The study was based on extensive research carried out in Professor Adriano Rossi's laboratory which demonstrated that MCL1 done regulation by seliciclib induced anti-inflammatory effects and promoted resolution of inflammation in relevant models. Initial results from the comparative program confirmed the hypothesis that fadra is effective in this setting than seliciclib, in line with its higher dose potency. The investigators consider that further preclinical and potentially clinical research is merited to prove the therapeutic use of fadra in COVID-19 pneumonia and other pulmonary diseases.

During the year, we continued to move our programs forward to multiple data outcomes over the next 2 years. Our upcoming key milestones include: first patient dosed with oral fadraciclib in Phase Ib/II advanced solid tumor study, first patient dosed with oral CYC140 in Phase I/II advanced solid tumor study, manufacture clinical supplies of fadraciclib and CYC140 for registration-enabling studies, data on safety and antileukemic activity from the IV fadraciclib venetoclax Phase I study in relapsed or refractory AML and CLL, data from the sapacitabine venetoclax Phase I/II study in relapsed or refractory AML or MDS, initial data from the CYC140 Phase I first-in-human study in patients with advanced leukemias, data from the Phase Ib/II IST of sapacitabine olaparib combination in patients with BRCA-mutant metastatic breast cancer when reported by the investigators.

With capital on hand estimated through early 2023, we have the resources to deliver key milestones in our clinical programs. I would now like to turn the call over to Paul to review our fourth quarter and full year 2020 financials. Paul?

Thank you, Spiro. As of December 31, 2020, cash and cash equivalents totaled $33.4 million compared to $11.9 million as of December 31, 2019. And the increase of $21.5 million was primarily due to $29.5 million of net cash provided by financing activities, offset by net cash used in operating activities of $7.9 million and $0.1 million of net cash used in investing activities.

Research and development expenses were $1.4 million and $4.8 million for the 3 months and year ended December 31, 2020, as compared to $1.4 million and $4.7 million for the same period in 2019. R&D expenses relating to the transcriptional regulation or CDK inhibitor program with fadraciclib increased by $0.5 million from $3.1 million for the year ended December 31, 2019, to $3.6 million for the year ended December 31, 2020, as the clinical evaluation of fadraciclib progressed.

R&D expenses relating to CYC140 decreased by $0.1 million from $0.7 million for the year ended December 31, 2019, to $0.6 million for the year ended December 31, 2020, primarily as a result of a reduction in expenditures associated with drug supply manufacturing, which were not required in 2020.

Other R&D expenses decreased by $0.1 million from $0.4 million for the year ended December 31, 2019, to $0.3 million for the year ended December 31, 2020, due to a reduction in consultancy costs.

General and administrative expenses for the 3 months and year ended December 31, 2020, were $1.7 million and $5.9 million, respectively, compared to $1.4 million and $5 million for the same period of the previous year.

Total other income, net for the 3 months and year ended December 31, 2020, were $14,000 of expense and $1 million of income compared to $41,000 and $0.6 million of income for the same period of the previous year. The increase of $0.4 million for the year ended December 31, 2020, is primarily related to income received under an asset purchase agreement with Thermo Fisher Scientific.

The United Kingdom R&D tax credits were $0.4 million and $1.2 million for the 3 months and year ended December 31, 2020, as compared to $0.3 million and $1.3 million for the same period in 2019.

Our net loss for the 3 months and year ended December 31, 2020, were $2.8 million and $8.4 million compared to $2.5 million and $7.8 million for the same periods in 2019.

The company raised net proceeds of approximately $29.7 million during 2020 from agreements to sell securities and warrant conversions. An additional $4.3 million in proceeds from warrant conversion was received following the year-end. The company estimates that the pro forma cash resources of $37.7 million, which includes proceeds of recent warrant exercises up to December 31, 2020, will fund our currently planned programs through early 2023.

Operator, we are now ready to take questions.

(Operator Instructions) Our first question comes from line of Jonathan Aschoff of ROTH Capital Partners.

Regarding PLK1 inhibition, why is the field generating so much interest for investors and drug developers after having been dormant for so long? What's changed?

Jonathan, thank you very much for your question. It's really hard to say why a field has become hot again, but of course, clinical data usually is the reason. And as we mentioned in our remarks, the only other compound in clinical development has recently shown activity in a single-arm study in metastatic colorectal cancer that was KRAS-mutated. As we all know, KRAS is one of the Holy Grails in modern oncology drug development and thought to be undruggable until recently. The activity of the PLK1 drug from the competing company was broad-based, encompassing several mutations, and that suggests broad therapeutic effect. We believe that CYC140 may have similar activity based on preclinical data.

One more is regarding CDK 2/9 versus CDK2, what data support one approach versus the other, given that bold approaches like venetoclax are legitimate antiapoptotics?

Well, that's a great question because, of course, venetoclax inhibits the BCL2 protein, which is known to be an antiapoptosis marker. There are, however, many other proteins that are members of the same BCL2 family. They include MCL1, which is targeted by fadra. It also includes BFL1, BCL-W and BCL-XL. And all of these proteins work in tandem. They both have a short life, they're called, therefore, shorter transcripts. So I suppose that any CDK9 inhibitor could potentially work in these mechanisms. They should be able to transcriptionally modulate the expression or amplification of these proteins with a desired effect of activating apoptosis. It is hard to see an MCL1 only targeting compound work as comprehensively because, of course, inhibiting MCL1 itself may be compensated by other proteins that can be up-regulated at the same time.

Lastly, what about CDK2. We believe that fadra is the only drug that hits both CDK2 and CDK9. And as reported in our clinical data, these proteins (inaudible) happen sometimes at the same time in the same patient. So several of the patients that had tumor shrinkage on fadra single agent therapy had simultaneous amplifications of MCL1 and cyclin E. A drug that doesn't hit CDK2 is probably not going to have a lot of activity against cyclin E amplified tumors. In this regard, a CDK 2/9 drug like fadra would enjoy some broader activity profile and possibly address a larger commercial market opportunity.

Can I have one with Paul just briefly. In the fourth quarter. Are these R&D and G&A numbers kind of a spike or are they a trend going forward?

Jonathan, I think they are a trend. As you heard in the remarks, clearly, we're looking to start a clinical study with fadra and 140 in 2021. So we expect that the Q3 to Q4 trend would continue on the R&D. G&A, we expect to be flat, relatively flat from the Q4 going forward.

Our next question comes from the line of Kumar Raja of Brookline Capital Markets.

First, with regard to half-life of CYC140, how does it compare with onvansertib? And also in terms of the patients that have been dosed with the intravenous dosing, how does that compare in terms of efficacy seen in the animal models?

Okay. Let me take the second question first, then I'll ask Dr. Kirschbaum Mark to pick up the first question. So clinically, we've seen curative effect of CYC140 in virtually all leukemia models tested. These are leukemia xenografts, the tumor growth lines simply flat line, they go down to 0 upon application of CYC140. It's probably the most potent drug we ever made in the cell leukemia (inaudible) xenografts. So we are very happy to see the first indication of activity, as we mentioned in our remarks, with a patient at the third dose level. We are showing blast reduction after CYC140 monotherapy. But let's not forget, Kumar, that this is potentially a class effect given the success of volasertib early in Phase II in addressing this disease setting of AML. Mark, would you mind answering this second -- or the first part of the question which is about elimination half-life of 140 versus onvansertib?

The comparisons of onvansertib, I don't know if I can speak to that here, but we believe that the short half-life is a positive in this drug in that having short half-life would minimize toxicity. It also allows us to maximize the potential of the drug by allowing repeated dosing, which is, again, much more feasible with an oral drug than an IV drug.

Okay. And in terms of the oral trials in leukemia versus solid tumors, what are your expectation in terms of starting dose there?

Mark, that's a question for you as well?

Well, these trials will all be designed with input from the FDA. So there are starting dose levels that are ascertained as a result of the toxicology in the animals, et cetera. So we will be in compliance with the normal procedure for that.

So will there be some overlap with regard to the intravenous, like what data from the intravenous trials can be leveraged in terms of the oral trials?

Well, we get a certain amount of PK data from the IV drug. But much of this will be regenerated again based on the studies that are ongoing now, and as we get into the clinic.

And also what are your thoughts in terms of combination, especially based on (inaudible) effects in animal models?

I think both agents have very, very good capacity for combinations. The critical thing is first to get the single-agent activity. Once that's well determined, and we understand how the drug works as a single agent. There is a whole host of potential combinations. Even addressing the question that came up before in my own like academic career, I published some things of that sort along those lines with drugs of this type. So hopefully, some of those will be built into some of the studies, and some of them will be added as we get our dose, and we start to see our ideal targets of activity.

And maybe finally, in terms of the initial data from the IV study, what can we expect when those are presented later this year?

Well, we don't know yet because they're just at all 3 dose levels. But as Mark explained, it is very likely that the events will be overtaken. This is a pandemic here still with many parts of the country in lockdown. So patient enrollment is low as people are reluctant to get IV therapy. So we suspect, as we open in a few weeks, the fadra and later on, CYC140 oral programs, if we give a patient a choice, they will go with their feet and take the oral. So we cannot give precise guidance sometime but (inaudible) and of course, any activity or responses observed.

(Operator Instructions) Our next question comes from the line of Wangzhi Li of Ladenburg.

Maybe a question on fadraciclib, Spiro, you discussed the molecule detail, the mechanism regarding CKD9 and the CDK2. Maybe could you also provide an update on what the latest clinic readout from yours and the competitors, CDK9 targets and the CDK2 targets? Or any other compound target dose? Or what's the latest can you read out in terms of efficacy or safety?

Thank you, Wangzhi. We have seen very limited data in the family of essentially transcriptional drug, which as you point out, of those that inhibit either CDK9 like fadra or other compounds that hit only CDK9. After the 2 most proximal drugs (inaudible). Both of these (inaudible) hit only CDK9 or CDK2. (inaudible) compound which appears to have activity against the intravenous drug. We don't know yet about the recommended Phase II dose and from earlier Phase I studies, it appears that there were (inaudible).

In terms of CDK2 drugs, I feel there is an (inaudible). The reason for that is that indiscernible] two major papers were published by academic investigators, one in the United States and one in Europe, which show that (inaudible). Recently though, thanks to findings by Pfizer in their (inaudible) CDK 4/6 inhibitors have amplification of cyclin E which, of course, is targeted by CDK2, as we've seen in Cyclacel clinical data with fadraciclib (inaudible). There are 2 drugs that we know that are in early Phase I trials, both are CDK2, 4 and 6 inhibiting. There's only a CDK2. (inaudible) so maybe another.

To summarize of the (inaudible) ware the only company with CDK 2/9 inhibitor to (inaudible).

Got it. And then a question on the PLK1 inhibitor, you mentioned the sort of half-life earlier. Is there any other color you can share regarding the molecule difference or the (inaudible) difference from the oncology drug and their development strategy?

We can certainly report what is publically known and I will ask Mark to then comment of his own background as he has conducted research as a Phase I investigator area with kinase inhibitors. But largely, there are 3 large (inaudible). I would say that our drug (inaudible) hit their primary target PLK1 almost (inaudible). So it's really (inaudible) for both drugs appear to be (inaudible). So at this point, we would presume that the drug will probably (inaudible) as Mark explained (inaudible). Mark would you like to take any further remarks on Wangzhi's question?

Well, I will just add that in the past agents with structures more similar to our had single agent activity in various tumor types, and we believe that our agent has an advantage over those drugs in that it has a shorter half-life and the ideal -- what appears to be the ideal kinase profile for this kind of activity. So we believe that we will see single agent activity replicating that without -- with much less toxicity that was seen in the past. With that agent, we can replicate the single agent activity and be able to develop it further.

All right. My last question and maybe a speculative question. Is there any rationale or data for the combination of 2 drugs, the PLK1 inhibitor and your in PKD 9 inhibitor? The reason I ask that question because the -- (inaudible).

That's an excellent question. We don't know the answer. (inaudible) take 2 unapproved drugs forward, so it's probably best to develop each drug as a single agent and once activity is defined then to consider what is the appropriate combination. So that could turn out to be the case in the future but for now I think we expect to develop a drug initially as single agent.

And at this time, I'm showing no further questions. I'd like to turn the floor back over to management for any additional or closing remarks.

Thank you, operator. And thank you all for participating in Cyclacel Fourth Quarter and Full Year 2020 Earnings Call. We appreciate support of our efforts to (inaudible) by demonstrating safety, efficacy and cost effectiveness. We look forward to updating you on our progress at some of the upcoming conferences either virtually or in person. Please stay safe and well. And operator, at this time you may end the call.

Thank you, ladies and gentlemen, this does conclude today's call. You may now disconnect.