Cyclacel Pharmaceuticals, Inc. (NASDAQ:CYCC) Q4 2018 Earnings Conference Call March 27, 2019 4:30 PM ET
Alexander Fudukidis - IR
Spiro Rombotis - President, CEO & Executive Director
Paul McBarron - EVP, Finance, CFO, COO, Secretary & Executive Director
Judy Chiao - VP, Clinical Development & Regulatory Affairs
Conference Call Participants
Jotin Marango - Roth Capital Partners
Wangzhi Li - Ladenburg Thalmann & Co.
Good afternoon, and welcome to the Cyclacel Pharmaceuticals Fourth Quarter and Full Year 2018 Results Conference Call and Webcast. [Operator Instructions]. The company will also be accepting a limited number of questions submitted via e-mail to the address, email@example.com. [Operator Instructions]. Please note that today's call is being recorded.
I would now like to turn the conference call over to Alex. Please go ahead.
Good afternoon, everyone, and thank you for joining today's conference call to discuss Cyclacel's financial results and business highlights for the fourth quarter and full year ending December 31, 2018. Before turning the call over to management, I would 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 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. Spiro?
Thank you, Alex, and thank you, everyone, for joining us today for our fourth quarter and full year 2018 business update call. Cyclacel is proud to report a year of progress in its targeted oncology strategy with achievement of significant milestones in 2018. These include an important alliance with MD Anderson Cancer Center, involving testing our 3 clinical stage drugs across 4 protocols in patients with hematological malignancies.
On today's call, I will begin with an overview of our business strategy and accomplishments on Cyclacel's multiple clinical programs. I will then turn the call over to Paul to provide financial highlights for the fourth quarter and full year ending December 31, 2018, which will be followed by a Q&A session.
A key pillar of our business strategy is to target patients with overexpression of cancer-resistant proteins. These proteins are central to the ability of cancer to evade the treatment effect of anticancer drugs, which eventually lose their effectiveness. They're often referred to as prosurvival proteins as they help cancer cells survive with the cancer therapy and gain an advantage over normal cells. Suppressing prosurvival proteins is, therefore, a promising therapeutic strategy to address the growing problem of resistance. This is particularly true for recently approved drugs as emergence of resistance is a major concern in new treatment plans for patients. As new drugs stop working against cancer after early effectiveness, risk of disease progression, relapse and death increase undermining society's return on investments.
Cyclacel's main strategy to overcome this problem is by targeting proteins whose overexpression correlates with increased resistance, such as members of the Bcl-2 protein family, including Mcl-1 and also overexpression of the MYC and cyclin E cancer proteins. Mcl-1, in particular, received wide attention during 2018 medical conferences. Multiple studies show that suppression of Bcl-2 and Mcl-1 restore sensitivity of cancer cells to the drugs that previously stopped working. One such drug, venetoclax, has been approved for second line chronic lymphocytic leukemia, or CLL.
More recently, a hallmark study identified cyclin E as a key resistance pathway to breast cancer treated by CDK 4/6 inhibitors, a blockbuster class of new medicines for a major type of breast cancer.
A further strategy is to target inherited mutations in DNA-damaged pathways, such as BRCA, or BRCA. The modest duration of clinical benefit to PARP inhibitors, the standard of care approved for BRCA-mutant gynecological cancers, suggest the need for novel drugs used in combination to extend the durability of response, and ultimately, survival.
In execution of our strategy, we have opened for enrollment in 2 -- first patients in 2 out of 4 studies under our MD Anderson collaboration. These are the Phase I study of the combination of CYC065 and venetoclax in relapsed/refractory CLL and the first-in-human Phase I study of CYC140 in advanced leukemias. Protocols for the other 2 Phase I studies have been finalized and will be submitted to IRB shortly. These are a combination of CYC065 of venetoclax and a combination of sapacitabine and venetoclax, both in patients with relapsed/refractory AML or MDS.
Also the first patients with BRCA-mutant breast cancer were treated in the investigator-sponsored study, or IST being connected at the Dana-Farber Cancer Institute with a combination regimen of sapacitabine and the PARP inhibitor, olaparib. Dual targeting of the DNA Damage Response pathway with the addition sapacitabine to olaparib may enhance the efficacy of the current standard of care for such patients.
With capital on hand estimated until the end of 2020, we have the resources to take us through key clinical milestones in our ongoing clinical studies. Having reviewed our strategy and summary of activities, we will next provide a review of our programs starting with our lead candidate, CYC065, an inhibitor of CDK2 and CDK9.
We believe that CYC065 is the first investigational drug to have consistently demonstrated durable suppression of Mcl-1 in patients at tolerable dosing. At the 2018 AACR Annual Meeting, investigators presented results demonstrating proof of mechanism in durable Mcl-1 suppression after a single administration of CYC065. In Part 1 of the study, 11 out of 13 patients treated at the recommended Phase 2 dose experienced sustained suppression of Mcl-1 for at least 24 hours. Anticancer activity was observed in six patients. Cyclacel is now enrolling Part 2 of the study, which is evaluating CYC065 monotherapy with a more intensive dosing schedule of two days per week for 2 weeks of a 3-week cycle. The study will provide the important safe [Technical Difficulty] and pharmacodynamic data to inform combination trials, including assessment of biomarkers related to CYC065's mechanism, such as overexpression or amplification of Mcl-1, MYC or cyclin E. Part 3 of this study to be initiated shortly will evaluate bioavailability of an oral CYC065 formulation.
A paper recently published in the Journal of Clinical Oncology identified overexpression of cyclin E as a mechanism by which estrogen-receptor positive, HER-2 negative breast cancer escapes the effects of combination treatment with palbociclib, a CDK 4/6 inhibitor and hormone therapy. These data from the successful randomized Phase 3 PALOMA-3 study also identified cyclin E as the predictor of sensitivity to palbociclib regimens. Incubation of the CDK2 cyclin E complex, the target of CYC065, was proposed as a potential therapeutic approach to prevent early progression on CDK 4/6 inhibitors.
These findings support and extend previous preclinical data. For example, CYC065 activity was demonstrated in cyclin E-amplified models of palbociclib-resistant breast cancer. Further data showed that cyclin E is a resistance mechanism to HER-2 positive breast and uterine cancers treated with trastuzumab or Roche's Herceptin. Cyclin E-amplified tumors are found in the patients with gynecological and other cancers and represent a large unmet medical need. The findings support CYC065's broad therapeutic potential and unique target profile among CDK inhibitors.
We recently enrolled the first patient with CLL in our Phase I combination study of CYC065 and venetoclax, a drug approved for CLL and AML. This patient has been treated without dose-limiting toxicity with the approved dose of venetoclax and CYC065 at 64 milligrams per meter squared.
Venetoclax works by inhibiting the prosurvival proteins Bcl-2, but has no significant activity against Mcl-1. We believe that a double-hit strategy of simultaneously lowering both Bcl-2 and Mcl-1 may have synergistic effects. The biological rationale for this strategy is supported by preclinical data at the 2018 AACR showing enhanced benefit of the CYC065-venetoclax combination in CLL models and induction of prolonged suppression of both Bcl-2 and Mcl-1. Importantly, the combination showed activity in certain 17p deleted CLL samples that were not sensitive to either compound on its own.
The protocols for the combination studies in relapsed/refractory AML or MDS evaluating CYC065 and venetoclax and also sapacitabine and venetoclax are ready for submission to the IRB. These combination studies are being run as part of our collaboration with MD Anderson announced in October 2018. We are proud to have established this 3-year risk-sharing alliance, enabling clinical evaluation of 3 Cyclacel candidates in patients with hematological malignancies, including CLL, AML, MDS and other advanced leukemias.
As part of the collaboration, MD Anderson will conduct 4 clinical studies enrolling up to 170 patients, investigating CYC065, CYC140 and sapacitabine in combination with approved therapies. The MD Anderson alliance allows Cyclacel to advance our clinical pipeline in a cash-sparing manner, while leveraging MD Anderson's expertise to recruit eligible patients. Importantly, Cyclacel remains the sponsor for all studies.
In our DNA Damage Response program, 2 patients with BRCA-mutant breast cancer have been dosed in a Phase Ib/2 study evaluating sapacitabine in combination with the approved PARP inhibitor, olaparib or AstraZeneca's LYNPARZA. According to the investigators at Dana-Farber, both patients achieved tumor shrinkage. This IST is planned to enroll approximately 64 patients with Cyclacel and AstraZeneca providing clinical supplies.
PARP inhibitors are currently approved standard of care for homologous recombination deficient or HIV-positive patients with breast and ovarian cancer, which includes those with BRCA mutations. Sapacitabine works by an HRD-relevant mechanism that is distinct from the mechanism of action of PARP inhibitors. Sapacitabine has also demonstrated activity in BRCA-positive breast cancer with 1 patient still on drug after 6 years of therapy.
The two therapies administered in combination could thus provide additional benefit to these patients for whom limited treatment options exist. We have continued enrollment in Part 3 of the Phase I study evaluating a revised dosing schedule of sequential sapacitabine and seliciclib, our first-generation CDK inhibitor, in BRCA-positive patients with advanced breast, ovarian or pancreatic cancer. Data from an expansion cohort from this study will be presented next week at the 2019 AACR.
As an update on our work with sapacitabine in AML, we completed stratified and exploratory subgroup analysis and defined a subgroup of patients for whom the sapacitabine regimen may represent an improvement of a low-intensity treatment by decitabine alone. Following consultation with 3 EU regulatory authorities regarding a potential approval pathway for sapacitabine, we intend to submit a request for scientific advice through the Scientific Advice Working Party of the European Medicines Agency.
In our CYC140 Polo-Like Kinase, or PLK 1 inhibitor program, the first patient has been dosed in a Phase 1 first-in-human study in patients with advanced leukemias. CYC140 is a small molecule, selective PLK 1 inhibitor that has demonstrated potent and selective target inhibition and high anticancer activity in xenograft models of human cancers. This study is also part of the MD Anderson alliance.
On the corporate front, we would also highlight the addition of Dr. Robert J. Spiegel to the company's Board of Directors. Dr. Spiegel brings over 30 years of medical, R&D and operational experience in the biopharmaceutical industry.
In summary, as we continue to execute on our strategy to advance our clinical development plans, our key milestones for the next 12 months would include: Report expansion cohorts Phase I data with an oral sequential regimen of sapacitabine and seliciclib in patients with BRCA-mutant metastatic breast cancer at the 2019 AACR; initiate CYC065 venetoclax Phase I study in patients with relapsed/refractory AML or MDS; initiate sapacitabine venetoclax Phase I study in patients with relapsed/refractory AML or MDS; report initial data from the CYC065 venetoclax Phase I studies in leukemias; report initial data from the CYC140 Phase 1 first-in-human study; report initial data and bioavailability from the Phase I study of an oral formulation of CYC065; report updated CYC065 Phase I data in patients with advanced solid cancers; report data from the Phase Ib/2 IST of sapacitabine-olaparib combination in patients with BRCA-mutant metastatic breast cancer when reported by the investigators; and determine regulatory pathway and submissibility of sapacitabine in elderly AML.
I would now like to turn the call over to Paul to review our fourth quarter and full year 2018 financials. Paul?
Thank you, Spiro. As outlined in today's press release for the quarter ended and year ended December 31, 2018, our cash and cash equivalents totaled $17.5 million compared to $23.9 million as of December 31, 2017. The decrease of $6.4 million was primarily due to net cash used in operating activities of $6.7 million, net cash used in investing activities of $0.1 million, offset by $0.4 million of net cash provided by financing activities.
Revenues for both the three months and year ended, 31st of December 2018 amounted to $0.2 million compared to nil for the same periods in 2017. The revenue is related to a collaboration, licensing and supply agreement with ManRos Therapeutics entered into in June 2015. Research and development expenses were $1.1 million and $4.3 million for the 3 months and year ended December 31, 2018, as compared to $0.7 million and $4.2 million for the same periods in 2017. R&D expenses relating to our transcriptional regulation program, CYC065, increased by $1.5 million from $1.1 million for the year ended December 31, 2017, to $2.5 million for the year ended December 31, 2018, as clinical evaluation of CYC065 progressed. Expenses related to sapacitabine decreased by $1.7 million from $2.5 million for the year ended December 31, 2017, to $0.8 million for the year ended December 31, 2018, primarily as a result of reduction in expenditures associated with the SEAMLESS Phase III trial and related costs.
General and administrative expenses for the 3 months and year ended December 31, 2018, were $1.5 million and $5.3 million, respectively, compared to $1.5 million and $5.3 million for the same period of the previous year. The company has raised net proceeds of approximately $4.7 million from its common stock sales agreement with H.C. Wainwright of which $4.1 million was received in 2019. Together with cash resources of $17.5 million as of December 31, 2018, and the proceeds from the common stock sales agreement received this year, pro forma cash is approximately $21.6 million, and the company estimates cash resources will fund currently planned programs through the end of 2020.
Operator, we are now ready to take questions.
[Operator Instructions]. Your first question comes from the line of Jotin Marango with Roth Capital.
I have a few about several of the programs. First, the combo of 065 with venetoclax, quite interesting when thinking about targeting the anti-apoptotic pathways in the tumor cell on multiple fronts. So you mentioned that the first patient has been treated without DLTs, so just wanted a little more granularity on that. Does that mean that the patient was in a full dose of venetoclax, had they had full successful titration and then they got 065? And then as you accrue more patients, is there any more titration or is it now at fixed dose?
Thank you for your questions, Jotin. That is a question for Judy.
This is Judy Chiao. To answer your questions, as the protocol requires patients to be on a stable doses after the ramp-up phase before they enter into the combination with 065. So they are at a full dose after the ramp-up phase.
And Spiro and Judy, what should we expect about the timetable here for a reasonable group of patients, I suppose, from a Phase I, let's say, 6 to 8 patients? Would that be around ASH 2019 or sooner or later?
Well that's difficult to predict as, of course, we are enrolling at this point in MD Anderson as part of our alliance. However, from an abundance of caution, we are interested in opening additional sites, also planning for success. If we see activity, we'd like to broaden our enrollment options to additional centers. So we are discussing with a number of centers right now and depend on when they start, we should be able to accelerate things. But I would say that toward the end of the year is a reasonable estimate we still might be able to respond to first indications of activity. This is also based on the fact that we are correlating or hope to correlate signs of clinical activity to levels of Mcl-1 suppression. And I will remind you and the audience that we have seen suppression at 128 milligrams and 1 and 2 mgs per meter square in the previous Phase I study in patients with solid tumors. If this findings were to be replicated in the current CLL study and AML studies that follow, then we should see activity relatively quickly as we escalate to those levels.
Understood. And later, what could you tell us at this point about the oral formulation for 065? What are the next stages in advancing that?
Well the first thing to say is that this is a drug which is, fortunately for us, wonderfully soluble and highly permeable. In 2 species, the solubility coefficient is around 90%. So this makes it relatively straightforward as far as the chemistry and manufacturing section is concerned to scale up. We have successfully done that and reached the point now that we are in the process of filing for IRB approval in the short and immediate future to allow us to begin the Phase I study, most likely at Dana-Farber who have also experience with the IV. So we think that early in 2020, we should have a full PK and PD profile of the oral formulation. We expect that this is going to be fairly close to the IV, but of course, data is what is needed and it's an important prerequisite for us to consider future studies, especially in patients with solid tumors, such as those that have overexpression or amplification of Cyclin E, as clearly, an oral drug in this population will be of particular advantage. Meanwhile, we are interested in amending the current protocols at MD Anderson and perhaps other centers to include the oral formulation in our leukemia patient studies as well. That's clearly a benefit, particularly as we look at a median age in the late 60s or early 70s with most patients with CLL and AML.
And, lastly, the data from the expansion cohort of the combo, sapacitabine and seliciclib, sounds it's coming next week -- this weekend at AACR. Could you just help frame for us what we should focus when we look at the data on that poster? So what the -- without getting away, what would be the relevant parameters of activities there that could help us integrate the mechanism and the activity when received?
Yes, so I'll ask Judy to give you some more clinical perspective on that study. It is really a continuum of studies that originated with the announcement of the original 76 patient series of whom 45 were found retroactively to have BRCA mutations at ASCO 2016. Essentially, the investigators that referred patients to the early drug development center at Dana-Farber, and in particular, those in the breast cancer department became interested in this data set and wished to enroll and expand the population. This time, all BRCA-positive and all, of course, with breast cancer. So it's the data from this population that is the subject of the abstract that will be presented next Monday, April 1, at AACR. I think it's important to frame the expectation with the context of an embargoed abstract, which the AACR would release closer to the time, and of course, the company will put out a press release. And perhaps I could ask Judy to explain the context of why this data is important in light of the sapacitabine-olaparib study was that recently it began enrollment as a IST from Dana-Farber group. Judy?
I think that it's in line with the investigation in the DNA Damage Response and programming related to the specific mechanism of actions of sapacitabine. And I think one should focus on, when you look at the data, in which patient population that actually are pretty clear evidence of clinical benefit, and how does one think about that, for the future development, in order to improve the current standard of care.
[Operator Instructions]. Your next question comes from the line of Wangzhi Li with Ladenburg.
Just one question for CYC065, you're going to initiate this study in AML. Just wanted to clarify that if a part of that MD Anderson collaboration included 1 of the 4 trials or this is one different?
Hello, Wangzhi, thank you for your question. Indeed, this is one of the 4 protocols that are part of the MD Anderson Alliance, which, of course, means that it's sparing on our P&L. The rationale for combining CDK 2/9 inhibitor with venetoclax in AML is less well established in terms of the signs than in the case of CLL, but there is a class effect of CDK9 inhibitors from previous early generation compounds, such as Flavopiridol or Dinaciclib. Specifically though the ongoing not yet published enrollment of a combination study of intravenous administered Flavopiridol together with venetoclax appears to have promising early activity. This is a compound with some checkered history for over 20 years nearly in clinical development with a particularly burdensome infusion schedule. Nevertheless, it appears to have clinical activity and it is that combination which is of interest to our participating investigators. We believe there is extensive interest in the AML community for such a combination and given the evidence of Mcl-1 suppression by CYC065 with no evidence of substantial toxicity, this is clearly a strategy to try.
Got it. So any color to share about the trial design and kind of pace of enrollment you kind of think of and any guidance on time line? I guess, it would be more later this year for data read out for next year.
Let me ask Judy to discuss some color on the trail design, and I'll come back on the question of timing. Judy?
Well, I think the trial designed is similar to the CLL program. And we go in with a dosing schedule that we knew at certain levels that will have at least 24 hours suppression of Mcl-1. And we're going with venetoclax, and I think that hopefully, that we will see activity without much of a toxicity, particularly that tumor lysis that everyone is concerned about CLL.
Thank you, Judy. Wangzhi, just to build upon Judy's question, the timing for enrollment in this study is perhaps the most difficult to predict. And among others, we have, of course, the protocol of sapacitabine venetoclax, which is all oral, whereas, the 065 venetoclax will be initially intravenous plus or venetoclax later will be all oral as well. So there are, obviously, some choices for patients to make, which may relate to the morbidity or state of disease or their fitness or unfitness for more intensive therapy. The other factors though at play, as Judy mentioned, one of the major safety issues with Flavopiridol historically has been tumor lysis syndrome. In the recent study reported in ASH 2018, this is combination of Flavopiridol with Mitoxantrone and cytarabine, rate of TLS of about 20% was observed. There is a minor fear concerned with TLS with venetoclax in CLL, which on the label appears to be very modest in the low single digits around 2%. However, 0% has been reported in recent AML trials of venetoclax. So this I think sets the stage for the type of issues and potential advantages that our drug CYC065 could convert to these patients. We hope that we'll have data from this study, probably I would think in the second half of 2020 if it doesn't enroll as fast as the other 3 studies, but certainly, if we see that the venetoclax Flavopiridol study has substantial issues, maybe some of these patients will come to our protocol. So that depends on how fast we enroll additional centers to this important program.
Okay, got it. And then, the last question is, you mentioned the investigator trial on the BRCA-mutant breast cancer initiative patient who had a tumor shrinkage, any further color on how largely the shrinkage and maybe time to see tumor shrinkage? And I know it's only two patients, but any further color on kind of any difference you see with -- around what you would expect from the PARP inhibitor alone?
Now that's an important question, but to remind you and the audience, this is an IST, Investigator Sponsor Trial, which means that Cyclacel does not maintain the database. It's maintained by the Dana-Farber investigators. What we can say that these are confirmed PRs, these are reputable highly competent investigators, and we have worked with them for many years and trust in their sophistication when the report responses and clinical benefit. But beyond that, we don't have any color on detail, until such time as they choose to share additional information with those on ultimately we want to see these better report. So at this point, we are going to be -- standing by as we get more information on the investigators as it may arise.
[Operator Instructions]. And there are no further questions at this time. I will now turn the call back over to the presenters for closing remarks.
Thank you, operator. And thank all of you for your participation in Cyclacel's fourth quarter and full year 2018 earnings call and your ongoing support of our efforts to develop medicines to address cancer resistance and improve the existing treatment options. We look forward to updating you on our progress and meeting some of you at upcoming conferences. Operator, at this time, you may end the call.
Thank you for joining us today. This concludes today's conference call and you may now disconnect.