The Catalysts That Will Propel Cyclacel Pharmaceuticals Higher

Cyclacel Pharmaceuticals (NASDAQ:CYCC) is trading at unrealistically low levels and hence is an amazing buy. Several recent developments and upcoming near-term catalysts are expected to propel the stock at or above $4 levels which were seen earlier this year:


Cyclacel has a novel pipeline with three clinical-stage cancer drugs that are currently in clinical development. All three drugs are administered orally. According to CYCC President and CEO Spiro Rombotis,

Ingestion of the drugs by mouth is important because these oral drugs appear to have a lower level of toxicity and do not induce many of the side effects associated with commonly used chemotherapies.

The clinical stage compounds in development include: Sapacitabine, which is designed to treat elderly patients with acute myeloid leukemia (AML) and myelodyspalstic syndromes (MDS); seliciclib for the treatment of non-small cell lung cancer (NSCLC) and nasopharyngeal cancer; and CYC116, designed to treat patients with solid tumors. While there is promising data for selicibilib, which is currently in a phase 2 trial for NSCLC, I will focus on Sapacitabine, the clear value driver which has potential to be a leader in a $2 billion market.

According to the Chairman of the Luekemia Department at the University of Texas, Hagop Kantarjian,

Sapacitabine is one of the most exciting drugs in development for AML since cytarabine, the current standard of care.

Recent positive Phase II data in elderly AML patients showed encouraging 1 year survival rates up to 35%, overall response rates up to 45% and low rates of all-cause mortality, which is common in older patients. This is amazing given the average survival rates are currently only about 3 months. Sapacitabine could offer a new alternative in being able to not only treat first line patients, but also could have the ability to treat relapse patients as well as be a maintenance therapy over the longer term.

On Monday, the FDA agreed upon a Special Protocol Assessment [SPA] for a phase 3 trial of Sapacitabine for AML, which gives CYCC a clear edge over all competitors with AML candidates. Decitabine, sponsored in part by Johnson and Johnson (NYSE:JNJ), was the only one of few competitors with an SPA, but their drug failed survival endpoints versus the current therapies. This week, Seattle Genetics’ (NASDAQ:SGEN) lintuzumab failed to prolong survival. Celgene’s (NASDAQ:CELG) Vidaza is in phase 3, but does not have an SPA and is not administered orally, thereby posing greater safety risks along with lower efficacy in elderly patients. Genzyme’s (GENZ) Clolar was rejected by the FDA due to the study design. Clearly their management could have learned a lesson in patience and foresight to agree upon an SPA as did CYCC’s management. So, not only does CYCC have the only orally-administered treatment for AML, they also offer investors great comfort in that the FDA has already agreed on the late-stage clinical trial design. And, most importantly, they have demonstrated markedly prolonged survival rates, the key endpoint in the upcoming trial.


The company’s founder, Sir David Lane, is a leading authority in cell cycle biology credited with the discovery of p53, one of the most commonly mutated tumor suppressor genes in patients with cancer. Cyclacel’s Chief Scientist, Professor David Glover, is a recognized leader in mitosis and discoverer of the aurora and polo mitotic kinase families, essential cell cycle control mechanisms that regulate cancer cell division. CYCC has built itself on the knowledge and experience of some of cell cycle biology’s foremost leaders. This leadership extends beyond the realm of research, including senior management with extensive experience in preclinical, clinical development and commercialization


Seasoned biotech investors assess funding and access to capital. Per the 2010 investor fact sheet, CYCC claims “Cash to 2012.” While I believe that cash is sufficient to fund all pending studies through 2012, I, like Roth Capital, believe CYCC will partner with a large company to ensure global, rapid market penetration of Sapacatibine. Based on sapacitabine’s differentiated profile potential in treating several tumor types, a partner could be interested in having sapacitabine as part of its portfolio. Cyclacel has entered into validating collaborations with several partners, including AstraZeneca (NYSE:AZN), Daiichi-Sankyo, GlaxoSmithKline (NYSE:GSK) and Nycomed/Altana

Analyst Ratings

The average target for CYCC is above $8 which is well over 400% upside from current levels:

Brokerage Firm

Current Rating

Price Target

Roth Capital






Piper Jaffray



Cantor Fitzgerald



Collins Stewart



Needham & Co



Lazard Capital



Near-Term Stock Catalysts

It is reasonable to expect that, as early as this week through the end of 2010, the following news will come available:

  1. Partnership Announcement on Sapacatibine – Such an announcement would give any remaining skeptics the knowledge that large pharma has recognized and is investing in CYCC’s accomplishments. The upfront payment would likely be in excess of CYCC’s current market cap ($53 million) and the ongoing royalty stream could be multiples of the current market cap.

  2. Selicilib Final Phase 2 Data – The stock soared above $4 in January following a published report by independent investigators in the Journal of Clinical Cancer Research that found that both seliciclib and a second-generation CDK inhibitor from Cyclacel reversed resistance to lung cancer cells with K-Ras or N-Ras mutations, mutations that are among the most difficult to treat and are not responsive to modern targeted drug therapy.

  3. The 1-year survival data for Sapacatibine in MDS – Interim data presented at ASCO in June resulted in a run of the stock well over 30%.

  4. Buyout Offer- Some owners of convertible preferred have moved to elect two new board members in an upcoming meeting on October 4. These will be two additional board members, not replacement members. I suspect that the board members selected, given the support of the convertible preferred owners, would be more amenable to selling the company than the current board. As mentioned previously, most AML candidates have failed, and many companies are hungry for the lead in a $2 billion market. CYCC is a prime takeover target with its pipeline, zero debt, and $19M cash on hand. I’d expect a minimum offer of $150M, which would be roughly $4.20 per share.

CYCC’s current share price is a bargain in my opinion. The stock hit a pre-market high of $2.30 per share after the recent FDA SPA announcement. It subsequently sold off primarily due to misconceptions about an SEC filing on 9/14. The company is simply filing for shares to cover warrants that were issued over the past several years in “registered direct” offerings, and therefore there is nothing new. Furthermore it should be noted that, of $3.17 M shares registered, only approximately 20% of them are in-the-money and the remaining warrants have exercise prices between $2.85 and 8.44 per share. The fact that the company is registering shares in anticipation of warrant exercise at those prices should be quite indicative of the explosive upside potential expected.

Disclosure: Long CYCC

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