Q4 2019 Cyclacel Pharmaceuticals Inc Earnings Call on February 26

THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT CYCC - Q4 2019 Cyclacel Pharmaceuticals Inc Earnings Call

EVENT DATE/TIME: FEBRUARY 26, 2020 / 9:30PM GMT

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©2020 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 26, 2020 / 9:30PM, CYCC - Q4 2019 Cyclacel Pharmaceuticals Inc Earnings Call

CORPORATE PARTICIPANTS Judy H. Chiao Cyclacel Pharmaceuticals, Inc. - VP of Clinical Development & Regulatory Affairs Paul McBarron Cyclacel Pharmaceuticals, Inc. - Executive VP of Finance, CFO, COO, Secretary & Executive Director Spiro George Rombotis Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director

CONFERENCE CALL PARTICIPANTS Wangzhi Li Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology Jan Medina

PRESENTATION Operator Good afternoon, and welcome to the Cyclacel Pharmaceuticals Fourth Quarter and Full Year 2019 Results Conference Call and Webcast. (Operator Instructions) Please note today's call is being recorded. I would now like to turn the conference over to the company.

Jan Medina 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, 2019.

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. Spiro will begin with an overview of our business strategy and accomplishments on Cyclacel's multiple clinical programs, and Paul will provide financial highlights for the fourth quarter and year -- full year 2019, which will be followed by a Q&A session.

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

Spiro George Rombotis - Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director Thank you, Jan, and thank you, everyone, for joining us today for our fourth quarter and full year 2019 business update call. We made excellent progress in the quarter and full year 2019 as total enrollment to date in our company-sponsored studies had exceeded 75 patients, of which over 60 were treated with fadraciclib, the new international nonproprietary name from the World Health Organization for CYC065.

Our vision at Cyclacel is to translate our understanding of cell cycle control biology into medicines that can improve the life of cancer patients. Our science strategy is to use insights into transcriptional regulation and DNA damage response pathways in order to discover and develop novel drugs that can suppress the ability of cancer cells to become resistant to treatment.

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Our business strategy is to realize stockholder value by demonstrating safety, efficacy and cost-effectiveness of our pipeline assets. Overexpression of cancer resistance proteins or amplification of oncoproteins to which cancer cells become addicted such as MCL1 or cyclin E, respectively, increases the survival and/or growth rate of cancer cells.

Cyclacel's therapeutic strategy is to inhibit transcription of such labile proteins, meaning that they are susceptible to pharmaceutical intervention. We believe that our pipeline of innovative medicines, led by fadraciclib, is well positioned to address the problem of cancer resistance through a precision medicine strategy.

Fadraciclib is a novel CDK inhibitor targeting the CDK2 and CDK9 isoforms, which act as key components of the p53 pathway. Activity against CDK9 results in suppression of MCL1 and against CDK2 in reducing cyclin E amplification. Cyclacel is evaluating fadraciclib as a single agent in patients with solid tumors and in combination in patients with hematological malignancies. MCL1 is a cancer survival protein and a member of the BCL2 family. BCL2 proteins help cancer cells survive anti-cancer therapy gain an advantage over normal cells and ultimately confer resistance to cancer treatments.

The strategy of suppressing MCL1 has attracted a lot of attention in the scientific and pharmaceutical communities. An intensely competitive race is in progress to bring to market drugs that suppress MCL1. We believe that Cyclacel is a leader in this race because fadraciclib has demonstrated durable suppression of MCL1 and anti-cancer activity as monotherapy at tolerable doses in patients with solid tumors.

These previously reported MCL1 results were observed in the majority of patients enrolled at the recommended Phase II dose of 192 milligrams meter squared in part 1 of our 065-01 dose escalation study using a partially administered schedule. In this part of the study, which enrolled 26 patients, fadraciclib was given as a single 4-hour intravenous administration every 3 weeks.

We have enrolled a further 20 patients in the ongoing part 2 of the study with a more frequent dosing schedule. In this part, fadraciclib is given by 1-hour infusion on days 1, 2, 8 and 9 every 3 weeks. Dose escalation in part 2 has reached the fourth level at 213 milligrams flat dose.

On our third quarter call, we were excited to report that a patient with heavily pretreated MCL1-amplified endometrial cancer has achieved a partial response or PR. After 2 cycles of fadraciclib monotherapy at 213 milligrams, this patient achieved stable disease with tumor shrinkage of 16%. In the confirmatory scan, after 4 cycles on the same dose, shrinkage of our target tumor lesions had reached 48%. We are pleased to report that the patient is continuing on study after 10 cycles on the same dose, and the investigators have recently assessed a tumor shrinkage at 73%.

We also reported that a second patient with ovarian cancer and cyclin E amplification treated with 2 cycles of fadraciclib monotherapy at 213 milligrams had also achieved stable disease and tumor shrinkage of 19% per investigator assessment. And after 4 cycles, her tumor shrinkage was assessed at 29%.

These findings suggest that a frequent pulse dosing schedule of fadraciclib may be a preferred strategy to suppress short-lived transcripts such as MCL1 and/or cyclin E. This is in contrast with the experience of historical CDK inhibitors previously reported to transiently suppress MCL1.

For example, flavopiridol, also known as alvosidib, avoided was administered as continuous infusion lasting either 72 hours or 5 hours using a loading strategy. In parallel, we have begun part 3 of an oral formulation given by mouth as fadraciclib capsules and reach dose level 2 after treating the first 2 patients at 75 and 150 milligrams flat dose. Pharmacokinetic or PK data achieved by oral fadraciclib capsules in the 2 patients demonstrated a predictable PK profile, closely overlapping that of the IV administration with encouraging exposure levels. We plan to report later this year initial safety and PK data for the oral form, along with updated safety, efficacy and mechanistic data for the i.v. form.

Let us now turn to fadraciclib studies in patients with hematological malignancies. Preclinical data have demonstrated synergistic potential for combinations suppressing both MCL1 and BCL2. In particular, the clinical data by Cyclacel scientists and external authors have demonstrated synergy of fadraciclib in combination with venetoclax.

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Venetoclax, a BCL2 inhibitor, is an important therapeutic advance and is approved for first- or second-line CLL either alone or with an anti-CD20 antibody. More recently, FDA granted accelerated approval for venetoclax in first-line AML, unfit for chemotherapy, in combination with the hypomethylating agents or a nucleoside analog.

Venetoclax-treated patients eventually stopped responding, and this is often correlated with MCL1 amplification. We have opened 2 dose escalation studies to test the hypothesis that suppressing both MCL1 and BCL2 can result in anticancer activity against relapsed or refractory leukemias. We are specifically evaluating the fadraciclib and venetoclax combination in patients with relapsed or refractory AML or MDS in the 065-03 study and relapsed or refractory CLL in 065-02.

Despite recent developments in AML, including the venetoclax accelerated approval, an unmet medical need remains in relapsed or refractory AML. A large number of investigational agents are currently in Phase I evaluation at tertiary care centers.

Unlike our historical experience with sapacitabine when AML patients would present with none or one line of previous therapy, today's relapsed or refractory AML patients present with 3 to 6 previous lines, including investigational immuno-oncology or IO combinations, which are associated with multiple toxicities. Consequently, our expectations of showing anti-leukemia activity are modest in these heavily pretreated populations with poor prognosis, low performance scores and comorbidity.

Of note, flavopiridol, treatment of leukemia, is associated with Tumor Lysis Syndrome or TLS in about 20% of patients. TLS risk with venetoclax in leukemia is lower at about 2%. TLS results from rapid lysis and death of a large number of cancer cells, which gum up circulation, increasing potassium and uric acid levels before the kidneys can remove them. Proactive management of TLS ranges from hydration to hemodialysis. TLS is evidence that the drug worked too well against the leukemia and that a shorter treatment effect can be preferable.

Reflecting the unmet need for alternative AML treatments, we have rapidly enrolled 12 patients in 065-03, the primary endpoint of which is determination of recommended Phase II dose and safety. Heavily pretreated patients received a combination of oral venetoclax and escalating doses of fadraciclib on a 4-hour infusion schedule once every 2 weeks. We have now escalated to dose level 5 with 2 patients on 200 milligrams per meter squared or approximately 300 to 400 milligrams flat dose equivalent of fadraciclib.

TLS was reported in both patients consistent with anti-leukemia activity related to the drug's mechanism. This follows previously reported reductions of leukemic blasts in the peripheral blood of patients treated on lower doses with the combination.

Based on these findings, we plan to also evaluate the 1-hour schedule associated with PR and stable disease in solid tumor patients, the 213 milligrams flat dose also in leukemia patients. The rationale for the AML study is supported by a preclinical evidence confirming synergy of fadraciclib and venetoclax in inducing apoptosis, suggesting that double-hit suppression of both MCL1 and BCL2 may be more beneficial than suppressing other protein alone.

In AML, MCL1 plays a dominant role. By contrast, in CLL, BCL2 oral expression is the main feature. In CLL, leukemia cells, especially in the lymph nodes, stop responding to venetoclax, causing eventual relapse, which is often associated with MCL1 overexpression.

Eradicating disease in the lymph nodes and achieving minimal residual disease or MRD negativity by a combination of fadraciclib and venetoclax is therefore an attractive treatment strategy for CLL.

In the 065-02 study for relapsed or refractory CLL, enrollment has been slow, reflecting the long periods of relapse-free survival after first-line therapies. Given that eventually, a large number of patients will relapse, investigators have advised Cyclacel to persist as an unmet medical need is emerging after relapse.

To help increase enrollment rate, we have implemented certain protocol amendments, opened 2 new sites in addition to MD Anderson and are in discussions with additional sites. Three patients have been treated so far after dose level 2 for 85 milligrams per meter squared. The first 2 patients have failed ibrutinib therapy and received the combination of venetoclax and fadraciclib, dosed once every 2 weeks at 64 milligrams per meter

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In our DNA damage response clinical program with sapacitabine, we're enrolling patients with relapsed or refractory AML or MDS in part 2 of a Phase I/II study. This 682-11 study is evaluating the safety and effectiveness of an oral combination of sapacitabine, our nucleoside analog, with venetoclax.

The study design mirrors the accelerated approval of venetoclax with intravenous hypomethylating agents or a nucleoside analog as frontline therapy. However, in our protocol, we're evaluating patients with relapsed/refractory disease, and both combination drugs are dosed orally.

Pre-clinical data published at the 14th European Hematology Association Congress support the combination of sapacitabine and BCL2 inhibitors in AML. Based on prior clinical investigations, sapacitabine is active and induces complete remissions in AML and MDS, whether it's relapsed or refractory to prior therapy such as cytarabine or hypomethylating agents.

Combining sapacitabine with venetoclax may, therefore, offer an effective oral treatment regimen for patients who have failed frontline therapy where venetoclax is already approved.

In our third anti-mitotic clinical program, we're evaluating CYC140, a polo-like-kinase or PLK1 inhibitor, which like fadraciclib, were discovered in-house. Four patients with advanced leukemias have been recruited to 140-01, our first-in-human, single-agent dose escalation study. No dose-limiting toxicities have been observed thus far.

CYC140 is a small molecule, selective PLK1 inhibitor that has demonstrated potent and selective target inhibition and high activity in xenograft models of human cancers. We are proud of the company's achievements in 2019, and in particular, establishing a leadership position in MCL1 suppression.

We believe that the totality of clinical data collected to date support pursuing a precision medicine approach to overcome cancer resistance with fadraciclib as monotherapy and in combinations. As we continue executing on our strategy in advancing our clinical development programs, our upcoming key milestones include: Report updated Phase I safety, PK and efficacy data for fadraciclib, utilizing a frequent IV dosing schedule in patients with advanced solid cancers; report initial safety and proof-of-concept data from the fadraciclib-venetoclax Phase I studies in relapsed/refractory AML or MDS and CLL; report initial data from the sapacitabine-venetoclax Phase Ib/II study in patients with relapsed/refractory AML/MDS; report initial data from the CYC140 Phase I first-in-human study in relapsed/refractory leukemias; and report data from the Phase Ib/II IST of sapacitabine-olaparib combination in patients with BRCA-mutant metastatic breast cancer when reported by the investigators.

With capital on hand estimated through the first quarter of 2021, we have the resources to take us through key clinical milestones in our ongoing clinical studies. I would now like to turn the call over to Paul to review our fourth quarter and full year 2019 financials. Paul?

Paul McBarron - Cyclacel Pharmaceuticals, Inc. - Executive VP of Finance, CFO, COO, Secretary & Executive Director Thank you, Spiro. As outlined in today's press release for the quarter and year ended December 31, 2019, our cash and cash equivalents totaled $11.9 million compared to $17.5 million as of December 31, 2018. The decrease of $5.6 million was primarily due to net cash used in operating activities of $9.4 million, offset by $3.8 million of net cash provided by financing activities.

Revenues for the 3 months and year ended December 31, 2019, were $0 compared to $0.2 million for the same period in 2018. The revenue is related to a collaboration, licensing and supply agreement with ManRos Therapeutics entered into in June 2015.

Research and development or R&D expenses were $1.4 million and $4.7 million, respectively, for the 3 months and year ended December 31, 2019, as compared to $1.1 million and $4.3 million for the same period in 2018. R&D expenses relating to our transcriptional regulation program, primarily our CDK inhibitor with fadraciclib, increased by $0.5 million from $2.5 million for the year ended December 31, 2018, to $3 million for the year ended December 31, 2019, as the clinical evaluation of fadraciclib progressed.

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R&D expenses relating to sapacitabine decreased by $0.4 million from $0.9 million for the year ended December 31, 2018, to $0.5 million for the current year, primarily as a result of expenditure related to drug supply manufacturer not required in 2019.

General and administrative expenses for the 3 months and year ended December 31, 2019, were $1.4 million and $5 million, respectively, compared to $1.5 million and $5.4 million for the same periods of the previous year.

The company raised net proceeds of approximately $4.1 million during the year from its Common Stock Sales Agreement with H.C. Wainright. The company estimates its cash resources of $11.9 million as of December 31, 2019, will fund currently planned programs through the first quarter of 2021.

Operator, we are now ready to take questions.

QUESTIONS AND ANSWERS Operator (Operator Instructions) Your first question comes from the line of Wangzhi Li.

Wangzhi Li - Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology Just one question about the Phase I trial in the solid tumor. In the previous part 1, you have few patients showed a tumor reduction. Now you show a patient with PR and another patient with tumor shrinkage. So maybe can you further elaborate the difference between the current dosing and the prior dosing? And what do you think -- you think is that indicating a dose response? Or is it because you're selecting the patient based on the biomarker?

Spiro George Rombotis - Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director I think it's a question for Judy.

Judy H. Chiao - Cyclacel Pharmaceuticals, Inc. - VP of Clinical Development & Regulatory Affairs Yes. This is Judy. So I think it's a good question, and it's a little difficult to sort it out definitively at this point. As you know, that the -- first of all, that the part 1 patients who had tumor shrinkage was treated with a variety of dose, so that's a variable. And the schedule is a little bit different than the 1-hour infusions that we have, 1-hour infusions is more frequent. So I think we're certainly very encouraged by the 1-hour infusion day 1, day 2, day 8, day 9 because that it's very clear, it's a real partial response; and second of all, it appears to be durable, and the target lesions continue to shrink. So I think on -- this -- it's very encouraging.

Spiro George Rombotis - Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director Yes. So to add a bit more color, Wangzhi, on Judy's question. We're not selecting for patients. These are all commerce studies. The investigators happen to be looking at next-generation sequencing to look for molecular correlates, but this is not an enriched study, not at this point.

Wangzhi Li - Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research of Biotechnology Okay, got it. But so far, the 2, the PR and the reduction on the high dose, right, cohort?

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Spiro George Rombotis - Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director That is correct. Both of these patients were treated to 213 milligrams. Judy, over to you.

Judy H. Chiao - Cyclacel Pharmaceuticals, Inc. - VP of Clinical Development & Regulatory Affairs I think this is the dose levels that -- the highest dose level we have treated quite a few patients so far. So I think that, certainly, it's a bit more uniformed with this group of patients, and both of them appeared in this group. So I think to that extent, I think it's very interesting. But as Spiro has said, we have not made a protocol requirement to preselect certain type of patients because it's really a Phase I trial.

So when they had responses, I think it's interesting to look at what kind of molecule and market signature are in the tumor.

Spiro George Rombotis - Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director Yes, as an afterthought Wangzhi, and thank you for your questions. So this is exactly where we are discussing in our comments, the potential for precision medicine strategy. This would involve selecting for patients, as your question anticipated, which have the molecular markers, MCL1 or cyclin E amplification and enriching from different baskets, perhaps in a tumor-agnostic context, much as we saw earlier in 2019, the FDA approval for pembrolizumab in different types of molecularly selected patients. There is now a strong regulatory precedent for such a strategy. More on that in the upcoming quarterly conference calls, but we appreciate your questions.

Operator (Operator Instructions) You have a question from the line of [Jonathan Ashkal.]

Unidentified Analyst I was wondering what clinical data support targeting cyclin E amplified cancers, especially after the failure of palbociclib CDK4/6 inhib?

Spiro George Rombotis - Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director Jonathan, thank you for your question. The perhaps most relevant recent data reported at ASCO is the PALOMA-3 study conducted by Pfizer, a sponsor of palbociclib, where after PALOMA-1 established PFS benefit and PALOMA-2 established an overall survival benefit for palbociclib in ER-positive, HER2-negative breast cancer patients, PALOMA-3 asked the question of what is the molecular correct profile of patient resistant to palbociclib. And they found that it was cyclin E, not cyclin D, which is the target of CDK4/6, but cyclin E, the target of CDK2.

So for this reason, we feel there is a very large body of data supporting cyclin E amplification as a strategy, and we expect to address that in our precision medicine plan that will come in the next few months.

Operator And there are no further questions at this time. I would now like to turn the conference call back over to the company for closing remarks.

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Spiro George Rombotis - Cyclacel Pharmaceuticals, Inc. - President, CEO & Executive Director Thank you, operator, and thank you all for participating in Cyclacel's fourth quarter and full year 2019 earnings call, and the 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.

Operator Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

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