On April 4, 2013, Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) settled its longstanding litigation battle with Celgene Corporation (NASDAQ:CELG) by agreeing to sell them the four disputed Cyclacel-owned patents related to Istodax for a one-time payment of $5.5 million. The announcement was highly anticipated by investors after the judge imposed a Stay of Court on March 6, 2013, which many believed encouraged a settlement to the two-year litigation battle within the 30-day period. The investment community, however, received the news to mixed reactions as the settlement amount came in lower than the expected low double digit millions. Despite the lower-than-expected settlement amount, the agreement can be considered a win for Cyclacel. They secured $5.5 million of non-dilutive capital while eliminating the high cost and uncertainty of pursuing a legal trial over the next two years. The remaining funds of the $3 million secured by the company on March 22, 2012 to finance the cost of litigation can now be used in addition to the $20 million common stock purchase agreement from Aspire Capital to finance the multiple trials for sapacitabine in AML and MDS.
Looking Ahead - The Need For Funding Could Now Be Behind Them
More importantly, the update on patient enrollment provided during the company's Fourth Quarter and Full Year 2012 earnings call provides a clearer timeframe to the trial's completion. Not given much attention was the fact that the pace of enrollment (43 patients 4Q12 vs. two-year quarterly average of ~20 patients) quarter-over-quarter was up over 100%. With no slack or reduction in the rate of enrollment and plans to open additional sites, Cyclacel expects to complete enrollment faster than previously anticipated. They ended 2012 with $16.4 million in cash, enough to secure operations through year end. And based on the new rate of enrollment, the Seamless trial can be completed six-months earlier than anticipated, which is now likely to take place in mid-2014.
With cash at hand plus the additional cash settlement, the remaining balance of the $3 million saved from legal costs and the $20 million from Aspire, Cyclacel will most likely be funded to complete the trial without the need for more capital. The cloud of uncertainty of the litigation behind it, Cyclacel can now concentrate on the development of its pipeline as up-coming events and milestones approach including a DSMB futility review of the Seamless trial, Phase 2 updated survival data as well as the announcement of a registration-directed development plan for sapacitabine in MDS, and the presentation of multiple abstracts at the American Association for Cancer Research (AACR) Annual Meeting between April 6-10, 2013. Most importantly, the overhang of litigation now lifted clears the way for partners including Celgene to entertain collaboration for reasons expressed in our previous article. It is evident by today's announcement that management sacrificed small short-term gains for the bigger long-term interests of the company.