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Cyclacel Pharmaceuticals (NASDAQ:CYCC)

Q1 2013 Earnings Call

May 13, 2013 4:30 pm ET

Executives

Corey Sohmer - Director of Corporate Finance

Spiro Rombotis - Chief Executive Officer, President and Executive Director

Judy H. Chiao - Chief Medical Officer and Vice President of Clinical Development & Regulatory Affairs

Paul McBarron - Chief Operating Officer, Chief Financial Officer, Principal Accounting Officer, Executive Vice President of Finance, Secretary and Executive Director

Operator

Good afternoon. My name is Bridget, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cyclacel Pharmaceuticals Q1 2013 Earnings Conference Call. [Operator Instructions] Thank you.

Mr. Corey Sohmer, you may -- Director of Corporate Finance, 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 financial performance and business highlights for the first quarter ended March 31, 2013.

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 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 are -- 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 our pleasure to update you this afternoon on our corporate progress and financial results for the first quarter ended March 31, 2013.

First, we are pleased to make progress in our SEAMLESS pivotal Phase III study of sapacitabine as frontline treatment in elderly patients with acute myeloid leukemia or AML having surpassed during the quarter 1/3 of the required enrollment. All SEAMLESS patients were enrolled in the United States. We are encouraged by the continued investigator interest in SEAMLESS and plan to open additional sites during 2013.

We recently reported promising survival data supporting the SEAMLESS study in AML from the pilot and lead-in stage of SEAMLESS. Median overall survival was approximately 8.5 months. Approximately 72% of patients were aged 75 years or older. In this group, median overall survival was approximately 9.4 months. In a recently published pivotal study of decitabine versus the treatment choice of low-dose chemotherapy or best supportive care, approximately 38% of patients were aged 75 years or older. In this group, median overall survival for the decitabine arm was approximately 6.3 months. The literature indicates that if left untreated, elderly patients with AML aged 70 years or older can expect median overall survival of around 3.6 months. 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 in the United States for this group of patients.

In April, we were excited to report updated Phase II median survival data in patients with myelodysplastic syndromes or MDS who failed front-line treatment with either one or both of hypomethylating agents, HMAs, azacitidine and/or decitabine.

Unlike SEAMLESS, in this study, patients were treated with sapacitabine as a single agent. The updated survival data continued to be impressive and demonstrated that patients achieve nearly double the expected survival reported in the literature for patients with MDS who are refractory to a single HMA. We plan to report updated survival data from our ongoing MDS program as soon as mature follow-up is reached.

In addition to our work in liquid cancers, we are studying sapacitabine in patients with solid tumors. At an oral presentation during the American Association of Cancer Research or AACR Annual Meeting, Dr. Geoffrey Shapiro, Director, Early Drug Development Center, Dana-Farber Cancer Institute and Associate Professor of Department of Medicine, Harvard Medical School, reported updated data from an open-label, single-arm Phase I dose escalation trial of sapacitabine alternating with seliciclib, our CDK inhibitor, as an orally administered sequential dose escalation regimen in heavily treated patients with solid tumors. The data confirmed earlier evidence that the regimen achieved durable partial responses and prolonged stable disease in patients with multiple cancer types, including breast, ovarian and pancreatic cancers, and in particular, in patients carrying BRCA mutations.

The AACR Annual Meeting Program Committee selected this study for inclusion at a press conference, highlighting major developments in cancer research reported during the AACR's 104th Annual Meeting.

We believe this clinical observation may be directly related to the drug's mechanism acting on the ability of cancer cells to undergo DNA repair through the homologous recombination pathway or HR. If confirmed, this could be an exciting finding suggesting that a clinical development plan could be targeted to treat cancer patients with HR defects such as BRCA. Such cancers, including BRCA-deficient cancers, are considered by clinicians to be incurable. It is also very encouraging that data is emerging that suggest line extension opportunities or sapacitabine and its potential as a pipeline within a drug.

I will now turn the call over to Judy who will provide further details on our most recent clinical data. Judy?

Judy H. Chiao

Thank you, Spiro.

In addition to AML, we are exploring sapacitabine in older patients with intermediate-2 or high-risk myelodysplastic syndromes or MDS. In April, we reported updated Phase II survival data in such MDS patients who failed front-line treatment with of either one or both hypomethylating agents, azacitidine or decitabine. Unlike SEAMLESS, these patients were treated with sapacitabine as a single agent and achieved nearly double the expected median survival of 4.3 to 5.6 months reported in a literature for those with MDS who are refractory to a single hypomethylating agent.

The updated median overall survival for all 63 patients in the 3 arms is 259 days or approximately 9 months. The median overall survival for each arm was 291 days or approximately 10 months for Arm G, 290 days or approximately 10 months for Arm H and 227 days or approximately 8 months for Arm I. The 30-day mortality for all patients is 5%. Median number of cycles was 3, approximately 43% of patients received 4 or more cycles. Median follow-up is 524 days, and 13 patients are still alive.

Longer follow-up is needed to assess 1-year survival and overall survival of each arm. We're planning to report updated survival data from ongoing MDS program after mature follow-up is reached.

Following up on these promising results, we will be preparing a registration-directed clinical development plan for sapacitabine MDS following treatment failure of hypomethylating agents after we obtained consultation with the FDA.

Turning to our work in solid tumors. At the AACR, updated data were presented from an open-label, single-arm Phase I escalation study of sapacitabine in combination with seliciclib, our CDK inhibitor. This was an orally administered sequential treatment regimen in heavily pretreated patients with advanced solid tumors. The Phase I study demonstrates that sequential treatment with sapacitabine and seliciclib is tolerable and active. The regimen showed early evidence of antitumor activity, in particular, in cancer patients found to be carriers of BRCA mutations.

To date, 38 patients with incurable solid tumors and adequate organ function have been enrolled in the Phase I trial. 16 of them found to be BRCA mutation carriers. Sapacitabine was administered twice daily for 7 days, followed by seliciclib twice daily for 3 days. 4 patients with BRCA deficient pancreatic, breast or ovarian cancers have confirmed partial responses to the drug combination. Based on available follow-ups to date, 3 patients are experiencing durable partial responses, with the longest lasting more than 78 weeks.

Researchers observed stable disease of 12 weeks or more in 8 additional patients, including 2 patients with ovarian and breast cancers who carried the BRCA mutations and whose stable diseases lasted 64 weeks and 21 weeks, respectively. Results of skin biopsies after treatment showed a 2.3-fold increase in DNA damage induced by sapacitabine, as measured by the gamma-H2AX immunohistochemistry. Additional DNA damage occurred after treatment with seliciclib with a 0.58-fold further increase in gamma-H2AX staining. Sapacitabine's activity in both hematological malignancies and solid tumors is a key differentiator for this unique oral agent.

I will now turn the call over to Paul.

Paul McBarron

Thank you, Judy.

Turning to other recent events, we were recently issued U.S. and EU patents, driving claims to method of administrating sapacitabine and its use in combination with various families of targeted anticancer agents. Both patents include claims to combination treatment of sapacitabine with histone deacetylase inhibitors or HDAC inhibitors. The combination treatment patents proved -- provide exclusivity until 2029 and 2027, respectively. These patents include claims to combinations and compositions of sapacitabine and HDAC inhibitors, and methods of treatment of proliferative diseases, including leukemias, lymphomas and lung cancer.

I will now review the company's financials. As you saw from today's press release regarding our consolidated financial statements for the 3 months ended March 31, 2013 and March 31, 2012, our net loss for the first quarters of 2013 and 2012 were $3.1 million and $3 million, respectively.

In the same periods, the net loss in 2013 applicable to common stockholders was $11.6 million, which included a onetime noncash charge of approximately $8.4 million of deemed dividend on the conversion of our exchangeable preferred shares and $3.1 million after 2012.

Research and development expenses for the 3 months ended March 31, 2013, were $1.6 million compared to $1.3 million for the 3 months ended March 31, 2012. The increase of $300,000 in expenses was primarily due to clinical trial and manufacturing costs.

Total general and administrative expenses for the first quarter of 2013 were $2.7 million as compared to $1.8 million for the first quarter of 2012. The increase is primarily related to consultancy and other professional costs, including legal fees.

In April, we received $5.5 million for the sale of 4 Cyclacel romidepsin-related patents to Celgene and dismissal of all claims in the patent litigation.

During the first quarter of 2013, we issued an aggregate 1,513,653 common shares in exchange for an aggregate of 792,460 preferred shares. In accounting for these exchanges, deemed dividends totaling approximately $8.4 million were charged to consolidated statement of operations as a onetime noncash expense. Also during the first quarter of 2013, we received aggregate proceeds of approximately $3.4 million from an institutional investor through the issuance of 650,000 common shares.

As of March 31, 2013, our cash and cash equivalents were $14.1 million compared to $16.4 million as of December 31, 2012. The company's cash and cash equivalents do not include the subsequent receipt of $5.5 million in April for the sale of the 4 Cyclacel romidepsin-related patents to Celgene.

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 to Spiro.

Spiro Rombotis

Thank you, Paul. Before opening the call for your questions, I would like to briefly review our objectives for the remainder of 2013: Continue enrollment in the SEAMLESS pivotal Phase III study of sapacitabine in AML; report upcoming DSMB reviews of SEAMLESS; report updated Phase II sapacitabine data in MDS after treatment failure of hypomethylating agents; announce registration-directed clinical development plan for sapacitabine in MDS after treatment failure of hypomethylating agents; and report updated data from the Phase I study of all sapacitabine and seliciclib in patients with advanced solid tumors, including BRCA carriers.

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

Question-and-Answer Session

Operator

[Operator Instructions] I would now like to turn the call back over to management.

Spiro Rombotis

Thank you. In closing, if the SEAMLESS trial is successful, sapacitabine will address a major unmet need for patients as a frontline treatment with newly diagnosed AML who are not candidates for or refused intensive induction chemotherapy. The results of the Phase II study in MDS following treatment failure after hypomethylating agents are also very encouraging. 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.

Operator

Thank you. This does conclude today's conference call. You may now disconnect.

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