Good afternoon and welcome to the Cyclacel Pharmaceuticals Fourth Quarter and Full Year 2022 Results Conference Call and Webcast. [Operator Instructions] Please note, today’s call is being recorded. I would now like to turn the call over to the company..

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 of 2022.

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 Form 10-K. This filing is 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.

Mark Kirschbaum, Senior Vice President and Chief Medical Officer. Spiro will begin with an overview of our business strategy and progress, Mark will provide details on Cyclacel’s clinical programs, and Paul will provide financial highlights for the fourth quarter and full year of 2022, which will be followed by a Q&A session.

At this time, I would like to turn the call over to Spiro..

Thank you, Irina and thank you everyone for joining us today for our quarterly business update. In 2022, we made excellent progress in our ongoing Phase 1/2 clinical programs with oral fadraciclib or fadra and oral plogosertib or plogo, in patients with solid tumors and lymphoma.

Both programs are registration-directed and are well-positioned to deliver on key milestones during 2023. In the fadra study, in patients with solid tumors and lymphoma, we have enrolled 3 patients at dose level 6A.

Recent pharmacokinetic and pharmacodynamic data from this dose level suggests that we are achieving target engagement levels on continuous dosing, which are commensurate or better than those observed in dose level 5 patients.

We will enroll 3 more patients at dose level 6A per protocol with the objective of determining the recommended Phase 2 dose, or RP2D. At our R&D Day in October 2022, we reviewed clinical activity observed in the first 5 dose levels of the study.

We were excited to see monotherapy partial responses or PRs, after the first treatment cycle in lymphoma patients with both cutaneous T-cell lymphoma, or CTCL; and peripheral T-cell lymphoma or PTCL. This included a PR with a difficult-to-treat type of PTCL.

In addition, 11 patients with various solid tumors achieved stable disease with target lesion reductions and a pancreatic patient’s maintain stable disease for 5 cycles of treatment. As we approach the completion of the Phase 1 dose escalation stage of the fadra study, we look forward to starting the Phase 2 proof-of-concept, or POC stage.

This will consist of multiple cohorts defined by histology, which are designed to be recruited in parallel, thus avoiding the delays inherent in sequentially designed studies. We expect that cohorts may enroll at different rates.

It is possible that the fastest ones will be those in which we have already seen anticancer activity during the dose escalation stage. Clinical data from this open-label POC stage will be reported as they become available.

At the R&D Day, we also reported exciting new findings from our plogo program, which focuses on PLK1 inhibition for the treatment of advanced solid tumors and lymphoma. Plogo has already shown early signals of anticancer activity at the first dose level in patients with non-small cell lung and ovarian cancer.

We also have evidence demonstrating plogo’s differentiated biological profile. Dose escalation in the plogo study has advanced, and sites are currently submitting patients for dose level 4. Over the course of this year, we expect key data readouts from the Phase 1/2 studies for fadra and plogo.

We expect to report complete dose escalation data with fadra around the middle of the year. Initial data from the fadra Phase 2 POC stage are expected in the second half of 2023. Dose escalation in the plogo study continues, and we expect initial data in mid- to late 2023.

Before handing over to Mark, I would like to reiterate that the Cyclacel team is concentrating our efforts on bringing our two molecules to proof-of-concept stage and creating shareholder value. We are well on our way to achieving that with fadra, and we will soon be in a position to potentially do the same for plogo.

We are fortunate to be working with world-class institutions across the globe who are participating in our studies. We believe that our medicines are differentiated from other molecules in their respective class with properties which may be best in class. I will now turn the call over to Dr.

Mark Kirschbaum, our Chief Medical Officer, to provide details on recent clinical data.

Mark?.

Thank you, Spiro. We are pleased with the single-agent activity and molecular profile of oral fadra and the encouraging progress of oral plogo in our Phase 1 studies.

Once the recommended Phase 2 dose is determined in the ongoing 065-101 study with oral fadra, we will immediately move into Phase 2 proof-of-concept stage, in which the primary objective is to assess activity and safety of the drug in relevant tumor types. At ENA 2022 and our R&D Day in October, we reported on the dose escalation part of the study.

Fadra was well tolerated and escalated from dose levels 1 to 5, which is 100 milligrams twice daily, Monday through Friday for 4 weeks out of 4. Dose Level 5 is completed and can be considered safe. There have been no dose-limiting toxicities related to study drug.

In dose levels up to 5, the only consistent side effect of the drug is nausea at manageable levels, typically grade 1 to 2. As per protocol, we escalated to dose level 6, which is 150 milligrams twice daily, Monday through Friday for 4 weeks out of 4.

At that dose level, we observed 2 Grade 3 dose-limiting toxicities at dose level 6, hyperglycemia in 1 patient and nausea in a second patient. Both were reversible after holding drug.

In accordance with the protocol, we have enrolled 3 of the planned 6 patients at dose level 6A, which is 125 milligrams twice daily, Monday through Friday for 4 weeks out of 4. At this stage of the study, we seek to optimize the dose and schedule and then commence the Phase 2 stage.

As reported, we have seen anticancer activity in the dose escalation up to Level 5. 2 out of 3 patients with T-cell lymphoma achieved PR, including a patient with a very aggressive angioimmunoblastic form of peripheral T-cell lymphoma.

11 of 15 patients with cervical endometrial liver and ovarian cancer achieved stable disease with target lesion reductions as their best response. A pancreatic patient maintains stable disease for 5 cycles of treatment. These are promising responses for this earlier phase of clinical testing and may predict deeper responses in the Phase 2 stage.

With regard to our second oral fadra study, 065-102, in patients with acute myeloid leukemia and myelodysplastic syndrome, we are enrolling patients at dose level 5, which is 100 milligrams twice daily, Monday through Friday for 4 weeks out of 4. We look forward to providing an update on the 065-102 trial during the year.

Let’s now turn to our second program with plogosertib, our oral PLK1 inhibitor. We have reported initial encouraging results from 140-101 our Phase 1/2 study of plogo in patients with advanced solid tumors and lymphoma. This study is currently enrolling in dose level 4, which is 15 milligrams once a day, Monday through Friday for weeks 1 and 3.

This is a first-in-human study for oral plogo. And as is traditional, we have started at lower doses.

We were, therefore, pleasantly surprised at this early stage of the study to observe stable disease at dose level 1 in two patients with non-small cell lung cancer for eight cycles and ovarian cancer for five cycles, respectively; and a dose level 2 in a patient with biliary tract cancer for three cycles.

Published preclinical evidence suggests that low dose continuous administration may be an effective strategy for PLK1 inhibitors, as well as the more documented higher dose pulse type strategy. This is particularly true for plogo given that it has a favorable PLK inhibitory profile and a shorter half-life, thus potentially minimizing toxicities.

Our ongoing Phase 1/2 trial of plogo is designed to target several important tumor types, where the drug may show broad single-agent activity. This was observed across multiple preclinical models, and in particular, colon cancer, lymphoma and small cell lung cancer.

Our study efficiently evaluates both dose and schedule so as to optimize the recommended Phase 2 dose for the proof-of-concept or cohort stage of the study. I will now turn the call over to Paul to review our fourth quarter and full year financial results..

Thank you, Mark. As of December 31, 2022, cash and cash equivalents totaled $18.3 million compared to $36.6 million as of December 31, 2021. Net cash used in operating activities was $20.8 million for the 12 months ended December 31, 2022, compared to $18.5 million for the same period of 2021.

On a pro forma basis, cash and cash equivalents totaled $23 million, which includes $4.7 million of R&D tax credits receivable in the second quarter of 2023. The company estimates that its available cash will fund currently planned programs into the fourth quarter of 2023.

Research and development or R&D expenses was $6.7 million for the 3 months ended December 31, 2022, as compared to $4.6 million for the same period in 2021.

R&D expenses related to fadra were $5.3 million for the 3 months ended December 31, 2022, as compared to $3.4 million for the same period in 2021 due to the increase in clinical trial costs of $0.3 million, associated with ongoing clinical trials evaluating fadra in the Phase 1/2 study, an increase of $1.6 million in non-clinical expenditures.

R&D expense related to plogo were $1.3 million for the 3 months ended December 31, 2022 as compared to $1.1 million for the same period in 2021 due to clinical trial costs associated with the plogo Phase 1/2 study.

General and administrative expenses for the 3 months ended December 31, 2022, were $2.1 million compared to $1.9 million for the same period of the previous year due to an increase in employment and professional costs.

Total other expense net for the 3 months ended December 31, 2022, was $0.2 million compared to an income of $43,000 for the same period of the previous year. The decrease of $0.2 million for the 3 months ended December 31, 2022, is primarily related to foreign exchange adjustments.

United Kingdom research and development tax credits were $1.6 million for the 3 months ended December 31, 2022, compared to $1.2 million for the same period of the previous year and are directly correlated to qualifying research and development expenditure.

Net loss for the 3 months ended December 31, 2022, was $7.4 million compared to $5.3 million for the same period in 2021. Operator, we are now ready to take questions..

[Operator Instructions] We will take a question from Jonathan Aschoff of ROTH MKM. Your line is open..

Thank you, guys. Hi.

Just a brief first question, is that R&D rate kind of a minimum new quarterly rate such that the 4Q that will be at least a level in each of the 2023 quarters?.

Jonathan, thanks for the question. It will be for the first quarter. But in the United Kingdom, they are changing the tax rate. So it will drop from the 4.7%, probably down to about 2% a quarter going forward..

You are saying that R&D is only going to be 2% a quarter going forward?.

No, I thought you asked for the R&D tax credit..

No, no, no, no. I’m asking for your GAAP reported R&D..

So the R&D will be consistent with the fourth quarter going forward into 2023, yes..

Okay. Thank you.

The second question is, what can you say about the indications in which fadra and plogo are already looking the most effective?.

Well, this is Spiro. Thank you, Jonathan. I think we can say that the lymphoma indication is the one that we feel the most encouraged, having seen early single-agent responses without toxicity in patients.

Obviously, as we open the Phase 2 this indication, may be together with women’s cancers like endometrial and ovarian are the ones that would likely enroll the fastest. And the reason, of course, is that physicians will find it easier to persuade patients to go on these protocols given the indication of previous activity.

Going beyond that, we think that the other type of lymphoma, B-cell is also a likely candidate. We know that other drugs in this space have reported recently at ASH, activity in B-cell lymphoma, but they had enormous toxicities such as tumor lysis syndrome that has not been reported for fadraciclib in these studies.

And also, we expect some other women’s cancers and possibly colorectal and liver cancer might be of interest given early indication of activity. So I think that lymphoma and women’s cancers are the ones that we feel most comfortable. For plogo, I think it’s early days.

We’ve obviously seen prolonged stable disease in the very first dose level, which is almost at homeopathic levels, in lung and also ovarian and biliary. But I just think that we need to wait for one or two more dose levels before we can suggest that we are comfortable, let alone, enthusiastic for any specific indication at this point..

Okay. Thank you.

And are you contemplating any kind of combination therapy or just running for the single agent approval goal as fast as you can?.

Well, that is certainly our primary objective in the event that we continue to see single-agent activity. As we all know, the combination strategy, although producing substantial revenue opportunity, does take more time and more capital. The protocol that’s written for both fadra and plogo allows for combinations.

And the work is underway not only to prepare for that but also to do the clinical work to assess combinability and safety for fadra, for example, with other agents that are suitable depending on the tumor type.

But it’s fair to say, as you correctly pointed out, that our primary goal is to see if we can get a monotherapy indication developed up until POC and then approach regulators..

Okay.

And lastly, just a quick one, what can you say about enrollment numbers between your last call and this call versus the second and third quarter call?.

I think this is a question for Mark..

Yes. Enrollment is going very quick in both studies. We pretty much fill all the slots the day we open. So we don’t see any problem there..

Yes. I mean it seems to actually be fairly quick, whereas a lot of companies on those things kind of like they still have this COVID hangover or something..

We didn’t have any of that. Fortunately, we – yes, I think partly because we’re oral and because the drug is very well tolerated. So the investigators have been very eager to put patients on..

Thank you very much..

Thank you, Jonathan..

[Operator Instructions] We will move next to Ahu Demir of Ladenburg. Your line is open..

Good afternoon. Thanks so much for taking my question. My first question is looking at the 101 and 102 studies of fadra.

Do you see similar safety profiles in the patients given the populations that are very different?.

Thank you for your question, Ahu. This is a question for Mark..

Yes. There – we haven’t seen extraordinary problems in the leukemia study, been – we actually have no SAEs reported there. In fadra, it’s the – in the solid tumor trial, it is – we’ve been clean on them all the way through to the current dose level. So yes, I don’t see any difference between the two..

Thank you. My follow-up question is on the target engagement.

Do you do any target engagement work? And are we going to see any data from those – both for fadraciclib and plogo?.

We are certainly doing target engagement work. This is central to our understanding of both drugs.

Obviously, fadra is more advanced, and I would like Mark to speak specifically of what type of studies we are doing to confirm exposure of the threshold, which is critical for such agents, but also is important for us as we build confidence about enrolling a successful Phase 2.

I think many companies rush into Phase 2 without fully understanding pharmacodynamic exposure as well as effect of pharmacodynamic markers and then try to sort of step back from Phase 2 and see if they can correct the problem, if that becomes a quagmire.

We are going to be patient and develop the target engagement information as it comes from different dose levels and therefore pick the optimal dose in Phase 2.

Mark, would you like to specifically discuss target engagement methodology?.

If you want – well, I am not sure exactly what you mean, but target engagement was done from – before the study started. So, we have an established set of values for which we know that CDK2 and CDK9 are inhibited by the drug, which has been our benchmark against which we have been looking at our current PKs and PDs as we are moving forward.

As far as PDs go, I think what you – what we are trying to get at is that we are now – particularly in these dose levels that we are at now, we are certainly seeing the targets being hit that we anticipate.

And we believe that this drug is a MYC inhibitor and MCL1 inhibitor, and we are seeing that activity in the PD samples that are drawn on the current patients that are involved.

Is that the answer to the question?.

Yes. It is. My last question is for Paul.

Paul, on the SG&A side, are we expecting a similar trend moving forward in the subsequent quarters?.

Ahu, yes, we are. It will sit around the $2 million to $2.2 million on a quarterly basis..

Thank you very much for taking my questions..

Thank you. Ahu, let me just add as a segue to Mark’s comment that we are also seeing Cyclin E levels coming down, which is also an important target part of the CDK2 target profile of fadra. So, we are very pleased that we are seeing this level of confirmatory activity in patient samples. Thank you..

Our next question is from Jeff Jones of Oppenheimer..

Good afternoon guys and thanks for taking the question. Two questions.

What do you need to see in the 6a arm to have comfort to move ahead into the proof-of-concept cohort? And over how many cycles do you need to see that? And then on the financial side, how much cash is needed to complete the three ongoing clinical studies? And how much additional are you thinking you need to do the proof-of-concept study for fadra? Thank you..

I think your first question Jeff is for Mark. Yes, please..

Yes. I can take that quickly. That’s a happy question. So, we – I mean the good news is that we already know from the PD that we have on the patients in that sample that we are hitting the targets that we want to hit. So, that looks good. 6a looks good to us. What we have to do now is just confirm tolerability.

So, we need to complete this first dose level, and that will happen very soon. If that goes through, then we will go to six patients, and call it an acceptable dose. So, that’s coming up soon. And let me turn it back to Spiro for the other questions..

Actually Paul’s questions..

Yes. So, let me – we will take that question. Thank you very much. So, as we have mentioned, we have cash that runs through to the end of this year, Q4 2023.

The way that we have budgeted that is to clearly run Phase 2 – into the Phase 2 for fadra, the oral fadra in solid tumors and lymphoma as once we get through RP2D, start the Phase 2, we are budgeted to get into PoC. And we believe with our milestones that we will be able to report out of that PoC in this current year within the current cash envelope.

The other two studies we are currently assuming we will get to dose escalation again within 2023..

Thank you..

[Operator Instructions] We will move next to Birc [ph] Dolliver of Brookline Capital Markets..

Hi. This is Kemp Dolliver.

Quickly, on the timing of readouts and the cadence, what’s your sense as to how they will play out during the year?.

Hello Kemp, thanks for your question. We think that, obviously, declaration of RP2D for fadra, the 101 study in solid tumors and lymphoma is probably the most important milestone for the first half of the year. The company plans to make an announcement once we reach that critical milestone. And as you already are aware, the protocol is seamless.

It moves straight into Phase 2. So, we expect the next batch of milestones for that study will come from initial cohorts that will enroll fastest. We mentioned in the previous question that we think that’s likely to be lymphoma and women’s cancers.

And so this futility study is based on X responses over Y and release in that cohort we expect to report that fairly early as other cohorts may take longer to enroll. When it comes to the leukemia study, I think that one has picked up enrollment pace.

We are able to also get FDA agreements to jump at dose level or two based on safety in the solid tumor study. That’s – as Paul just mentioned, we will probably get to the – through the dose escalation stage to the proximity of RP2D. But there may be some crosstalk between the leukemia study and the solid tumor study. That often happens.

And of course, we will always be looking to finish the Plogosertib Phase 1 dose escalation component and hopefully get as close to RP2D as we can with the important qualification. But in that program, the low dose may be sufficient to achieve target engagement in PD levels.

So, that remains to be determined, of course, but that is a potential readout as well within 2023..

That’s very helpful. Thank you. And how are you thinking about the prioritization depending on – and again, we are in an environment where the incremental dollars have been harder to get and you may get all the capital you need quickly or it may be a challenge.

But is it fair to assume that fadra going into Phase 2, if you had to focus on one priority initially that’s where you would direct the capital?.

Yes. Well, we live obviously, in risk mitigation across all programs, but you are correct. In that situation, we just portrayed fadra, the 101 study in solid tumors and lymphoma is the number one priority.

And we intend to report early readouts on that study this year as we think this is critical to strategic parties that are approaching the company to discuss interest in this program. And there are two reasons for that, in my opinion. One is that this has been a field of great interest to pharma for many years.

As many of the audience know, there have been a large number of programs in the next-generation CDK family. Fadra is one of the leading, if not the leading program in this area. So, it has obviously been on the radar of many companies. The second reason is the scarcity value of this drug.

I think that as we learned from ASH and earlier on other conferences of 2022, fadra is so far the only drug in the next-generation CDK family to have single-agent activity and a good tolerability profile, especially if we think about the unmet medical needs in lymphomas, in particular T-cell lymphoma and endometrial, ovarian and other women’s cancers.

I think it’s clear to see why, for us, this remains by far the biggest value driver for the company in the year going forward..

Very helpful. Thank you..

Thank you, Kemp..

And it does appear that we have no further questions at this time. I am happy to return the call to our host for any concluding remarks..

Thank you, operator and thanks to all of you for joining Cyclacel’s fourth quarter and full year earnings call.

The key takeaway from today’s call is that, as momentum builds with our two clinical programs, their potential of becoming important anticancer therapeutics in solid tumors and lymphoma is becoming apparent in both medical and industry circles. As a reminder, our key milestones for 2023 are.

Report final data from dose escalation stage and recommended Phase 2 dose determination from the 065-101 study of oral fadraciclib in patients with advanced solid tumors and lymphoma.

First patient dosed with oral fadra in Phase 2 proof-of-concept stage of 065-101 study in patients with advanced solid tumors and lymphoma, PORT interim Phase 1 data from 140-101 study of oral plogosertib in patients with advanced solid tumors and lymphoma, PORT interim data from initial cohorts in Phase 2 proof-of-concept study of 065-101 with oral fadraciclib in patients with advanced solid tumors and lymphoma, PORT interim data from dose escalation stage of 065-102 study with oral fadraciclib in patients with advanced leukemia.

And report final data from dose escalation stage of 140-101 study with oral plogosertib in advanced solid tumor cell lymphoma. We look forward to providing you with further updates, and hope to meet some of you at upcoming conferences. Operator, at this time you may end the call..

This does conclude today’s conference. You may now disconnect your lines and everyone, have a great day..