Cyclacel Pharmaceuticals' CEO Discusses Q3 2012 Results - Earnings Call Transcript

Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC)

Q3 2012 Earnings Conference Call

November 12, 2012, 16:30 PM ET


Spiro Rombotis -- President and CEO

Paul McBarron -- EVP, Finance and COO and Secretary

Judy Chiao -- VP, Clinical Development and Regulatory Affairs

Corey Sohmer -- Director of Corporate Finance


Ladies and gentlemen, thank you for standing by, and welcome to the Cyclacel Pharmaceuticals Third Quarter 2012 Earnings 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). Thank you.

I would now like to turn the conference over to Mr. Corey Sohmer, Director of Corporate Finance. Sir, you may begin your conference.

Corey Sohmer

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 performance and business highlights for the third quarter ended September 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 and 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 all 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.

Spiro Rombotis

Thank you, Corey, and good afternoon everyone. It is a pleasure to update you this afternoon on our corporate progress and financial results for the third quarter ended September 30, 2012.

First, we're pleased to report that a few weeks ago, enrollment in our SEAMLESS Phase 3 study in AML surpassed 100 patients achieving an important milestone. With the randomized stage of SEAMLESS currently reaching its first anniversary, we are encouraged to see that the study has strong support by participating investigators.

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 or satisfactory treatment for this group of patients.

As we continue to enroll in SEAMLESS, we look forward to reporting at the upcoming 2012 annual meeting of the American Society of Hematology updated survival data from the entire population enrolled in the pilot and lead-in stage of SEAMLESS. These patients have the same entry criteria and receive sapacitabine administered in alternating cycles with decitabine or the same dosing regimen as those randomized to the experimental Arm A of SEAMLESS. This data provides an updated safety and efficacy of this treatment regimen of sapacitabine administered in alternating cycles with decitabine in a multicenter setting.

In addition to AML, we are also exploring sapacitabine in patients with myelodysplastic syndromes or MDS. We recently reported updated Phase 2 data indicating that the survival of all the patients treated with sapacitabine exceeded the expected survival of patients with intermediate-2 or high-risk MDS after treatment failure of front-line hypomethylating agents or HMAs reported in literature.

Following up on these promising results, we will be preparing regulatory submissions with the goal of defining a registration pathway for sapacitabine in patients with MDS after HMA treatment failure. We are encouraged that the data shows the potential for line extensors of sapacitabine as the pipeline was in a drug is starting to emerge.

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

Judy Chiao

Thank you, Spiro. First, let me outline the design of our Phase 3 study. SEAMLESS is a two-arm randomized Phase 3 registration directed trial comparing the regimens of all sapacitabine dosed in alternating cycles with intravenous decitabine versus intravenous decitabine alone, as the front-line treatment in patients with newly diagnosed 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. The study is being conducted under SPA or Special Protocol Assessment agreement that we reached with the US FDA.

The randomized stage of SEAMLESS was initiated in October 2011 following a favorable review of the available data from a pilot Phase 1/2 study and the lead-in part of SEAMLESS by the independent monitoring committee or DSMB. The primary endpoint of the study is an improvement in overall survival. An interim analysis for futility by the independent committee is planned when 212 events have occurred.

During the quarter, we continued to open additional study sites in the US bringing the total to 36. In terms of enrollment, we recently surpassed 100 patients. We continue to be encouraged by the support and interest of investigators and patients in the SEAMLESS study. As you know, decitabine is used in both arms of SEAMLESS and we are encouraged by the recent approvals of decitabine in Europe for patients with AML aged 65 years or older.

In November, the results from a Phase 2 randomized trial of single-agent sapacitabine in elderly patients aged 70 years or older with newly diagnosed AML or AML in first relapse were published in The Lancet Oncology. The published study demonstrates the safety and efficacy of sapacitabine in this patient population.

In parallel with enrolling patient in SEAMLESS, we are also evaluating sapacitabine's therapeutic utility in other potential indications both as a single agent and in combinations. Sapacitabine's activity in both hematological malignancies and solid tumors is a key differentiator for this unique oral agent.

As Spiro mentioned, last month updated data from an ongoing multicenter Phase 2 randomized trial of sapacitabine in older patients with intermediate-2 or high-risk MDS after treatment failure of front-line hypomethylating agents such as azacitidine and/or decitabine were discussed at two separate sessions at The Eighth Annual Hematologic Malignancies 2012 Conference. The survival reported in the literature is about 4.3 months to 5.6 months for patients with intermediate-2 or high-risk MDS after treatment failure of front-line hypomethylating agents.

In the sapacitabine Phase 2 study, a median overall survival to date for all 63 patients is 252 days or approximately eight months. Median survival for 41 out of 63 patients was 10% to 19% blasts in their bone marrow is 274 days or approximately nine months. The median survival for each arm is 291 days, approximately 10 months for Arm G, 274 days approximately nine months for Arm H and 227 days approximately eight months for ARM I. 27% of all patients received six or more cycles, 22% of patients are still alive and longer follow-up is needed to access one year survival and overall survival of each arm.

I will now turn the call back to Spiro.

Spiro Rombotis

Thank you, Judy. In addition to our own studies, we look forward to hear from academic collaborators of progress in two investigator-sponsored trials or ISTs evaluating sapacitabine. We typically supply drug products at no charge for such ISTs. The cost of these studies are borne by the cooperating investigators who design the protocol, monitor conduct of the trial and perform analysis of the data.

The first IST is a Phase 2/3 study earlier called Pick a Winner or recently LI-1 run by an international corporative leukemia group based in the UK. In the Phase 2 stage, patients randomized at different times on either [or five] investigational drugs are compared with an equal number of patients receiving low-dose [RSV] chemotherapy has controlled.

Each of the six arms, including low-dose RSV is to enroll about 50 patients. Patients are aged 60 years or older with either previously treated AML or high-risk MDS whom doctors wish to treat with less intensive chemotherapy. Phase 2 endpoints vary between response rates or survival depending on the drug tested. Sapacitabine is being evaluated in one of these five arms with an endpoint of survival.

The investigators have indicated that over 50 sapacitabine patients have been enrolled in either the PAW, Pick a Winner or the LI-1 protocols with [equal] number on low dose RSV. Once an adequate number of events have been observed on each arm, the studies data monitoring committee will decide whether or not to recommend continuing enrollment of patients in the Phase 3 stage.

The second IST is a Phase 2 study evaluating sapacitabine in combination with cyclophosphamide and rituximab and is being conducted by the Department of Leukemia at the University of Texas and the Anderson Cancer Center. This study is enrolling patients with previously treated chronic lymphocytic leukemia or CLL or small lymphocytic lymphoma who carry the 11q22-23 deletion. Deletion of chromosome 11q22-23 is associated with the ATM mutation, an important regulator of the homologous recombination repair, DNA repair pathway.

The purpose of this study is to evaluate whether sapacitabine has promise as a personalized medicine in a group of CLL or SLL patients that can targeted via a specific chromosomal abnormality.

Turning to our recent events, the personalized medicine potential of our innovative oncology pipeline was highlighted at the 8th National Cancer Research Institute Cancer Conference. Multiple posters were presented on sapacitabine and an earlier stage program Cyclacel's Polo-Like Kinase 1 or Plk1 inhibitors. These included translational findings demonstrating the combination potential of sapacitabine in patients with breast cancer, susceptibility proteins BRCA1 or BRCA2 or homologous recombination repair, HRR, pathway defects.

We also recently announced that we received a grant of approximately $1.9 million from the UK Government's Biomedical Catalyst to complete IND-directed preclinical development of CYC065, our novel, orally available, second generation, cyclindependent kinase or CDK inhibitor which selectively inhibits CDK's 2, 5 and 9. The grant will allow us to explore CYC065 promising anti-cancer activity in a translational biology program targeting specific leukemia and other cancer disease pathways with the ultimate goal of filing for regulatory approval to begin clinical trials.

Strong preclinical and pre-cancer efficacy for CYC065 in multiple myeloma, CLL and mixed-lineage leukemia or MLL have been presented at the 2010 annual meetings of the American Society of Hematology and the American Association of Cancer Research. If successful, the program will provide the basis for stratified clinical development of CYC065 or treating patients with cancers that match the genetic mechanism targeted by the drug.

I will now turn the call over to Paul who will review the Company's financials.

Paul McBarron

Thank you, Spiro. As you saw from today's press release regarding our consolidated financial statements for the three months ended September 30, 2012, we reported a net loss from continuing operations of $3.2 million compared to a net loss from continuing operations of $3.3 million for the three months ended September 30, 2011.

From nine months ending September 30, 2012, we reported a net loss from continuing operations of $9.3 million as compared to a net loss of $11.1 million for the nine months ending September 30, 2011. The Company's net loss applicable to common stockholders for the third quarter of 2012 was $2.1 million or $0.25 per basic and diluted share compared to a net loss applicable to common stockholders of $3.6 million or $0.40 per basic and diluted share for the third quarter of 2011.

These results include the discontinued operations of the ALIGN business following the termination of our distribution agreements with Sinclair Pharmaceuticals Limited effective September 30, 2012.

Research and development expenses decreased from $2.1 million for the three months ended September 30, 2011 to $1.5 million for the three months ended September 30, 2012. R&D expenses decreased from $7 million for the nine months ended September 30, 2011 to $4.6 million for the nine months ended September 30, 2012.

The nine months decrease in costs was mainly due to $1.6 million of contractual payment to Daiichi Sankyo during the first quarter of 2011 which was related to a milestone payment triggered by the opening of enrollment in the SEAMLESS Phase 3 trial.

Selling, general and administrative expenses for the third quarter of 2012 were $2 million as compared to $1.8 million for the third quarter of 2011. SG&A for the nine months ended September 30, 2012 were $5.9 million as compared to $5.1 million for the nine months ended September 30, 2011.

As I mentioned, in August 2012, the Company entered into an agreement with Sinclair to terminate the distribution agreements of ALIGN relating to the promotion and sale of Xclair, Numoisyn Lozenges and Numoisyn Liquid. The termination was effective September 30, 2012 and the Company will receive a minimal royalty payment of approximately $1 million. The termination has been accounted for as a discontinuing operation in our financial statements.

In August 2012, the Company implemented a 1-for-7 reverse stock split of shares of common stock in order to satisfy the $1 minimum bid price requirement for continued listing on the NASDAQ Global Market. And in November 2012, we were pleased to announce the grant received of approximately $1.9 million from the UK Government's Biomedical Catalyst to fund the development of CYC065 into first in-man studies.

As of September 30, 2012, our cash and cash equivalents was $17.8 compared to $24.4 million as of December 31, 2011. We expect our cash resources are sufficient to meet anticipated working capital needs and fund ongoing sapacitabine clinical trials for at least the next 12 months.

Let me now turn the call back over to Spiro.

Spiro Rombotis

Thank you, Paul. Before opening up the call for questions, I would like to briefly review our objectives for the rest of 2012 into 2013. Continue enrollment in the SEAMLESS pivotal Phase 3 study of sapacitabine in AML; report updated survival from the pilot/lead-in stage of SEAMLESS at ASH; report updated Phase 2 sapacitabine data in second line MDS following HMA treatment failure; report updated Phase 2 sapacitabine data in AML preceded by MDS following previous HMA treatment for the preceding MDS; report updated Phase 1 sapacitabine and seliciclib combination data in patients with solid tumors; report updated Phase 2 sapacitabine data in non-small cell lung cancer; and report updates from the Pick a Winner/LI-1 IST in AML and MDS and other IST studies as they become available.

I will now turn the call back to the operator to open up the lines for your questions.

Question-and-Answer Session


(Operator Instructions). At this time, there are no questions. I would now like to turn the floor back over to management for any closing remarks.

Spiro Rombotis

Thank you, operator. In closing, if the SEAMLESS trial is successful, sapacitabine will address a major unmet 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. This does conclude today's conference. You may now disconnect.

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