What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-12 compared with 2021-05-14 · 43 added, 38 removed, 96 unchanged (46% of the section changed)

16 unchanged sentences

In this report, “Cyclacel,” the “Company,” “we,” “us,” and “our” refer to Cyclacel Pharmaceuticals, Inc.

Through March 31, 2021, our primary focus has been on our transcriptional regulation program which is evaluating fadraciclib as a single agent in solid tumors and in combination with venetoclax in patients with relapsed or refractory AML/MDS and CLL.

The anti-mitotic program is evaluating CYC140, a PLK1 inhibitor, in advanced leukemia/MDS patients.

The DNA damage response program is evaluating an oral combination of sapacitabine and venetoclax in patients with relapsed or refractory AML/MDS and an investigator sponsored trial is evaluating an oral combination of sapacitabine and olaparib in patients with BRCA mutant breast cancer.

Cyclacel currently retains virtually all marketing rights worldwide to the compounds associated with the Company’s drug programs.

Consistent with our mission of developing medicines that expand available options for patients, we have three orally-available programs in clinical development:

● Fadraciclib (formerly CYC065), a cyclin dependent kinase (CDK) inhibitor selectively targeting CDK2 and CDK9.

Oral fadraciclib is currently being evaluated in mid-stage clinical trials in both patients with solid cancers and hematological malignancies.

● CYC140 is a novel, small molecule, selective and potent PLK-centric inhibitor, primarily targeting PLK1.

We are currently planning a streamlined study with oral CYC140 in a broad range of solid tumors in multiple cohorts defined by cancer histology.

● Sapacitabine is a nucleoside analogue with a DNA damage response (DDR) mechanism .

It is being evaluated as a combination therapy with venetoclax in patients with relapsed/refractory acute myeloid leukemia (AML).

Cyclacel retains virtually all marketing rights worldwide to the compounds associated with the Company’s drug programs.

Results of Operations

Three Months Ended March 31, 2020 and 2021

Three And Six Months Ended June 30, 2020 and 2021

Results of Continuing Operations

Revenues for each of the three months ended March 31, 2020 and 2021 were $0.

Revenues for each of the three and six months ended June 30, 2020 and 2021 were $0.

There are no active collaboration, licensing, or clinical supply agreements and there will be no revenues for the foreseeable future.

10 unchanged sentences

● Rent and facility expenses for our offices and laboratories.

The following table provides information with respect to our research and development expenditures for the three months ended March 31, 2020 and 2021 (in $000s except percentages):

The following table provides information with respect to our research and development expenditures for the three and six months ended June 30, 2020 and 2021 (in $000s except percentages):

Three Months Ended

Six Months Ended

Transcriptional Regulation (fadraciclib)

Anti-mitotic (CYC140)

Mitosis Regulation (CYC140)

DNA Damage Response (sapacitabine)

1 unchanged sentence

Total research and development expenses

Total research and development expenses represented 46% and 60% of our operating expenses for the three months ended March 31, 2020 and 2021, respectively.

Research and development expenses increased by $1.5 million from $1.1 million for the three months ended March 31, 2020 to $2.6 million for the three months ended March 31, 2021.

Research and development expenses relating to transcriptional regulation increased by $0.8 million from $0.9 million for the three months ended March 31, 2020 to $1.7 million for the three months ended March 31, 2021, as the clinical evaluation of fadraciclib progressed.

Research and development expenses relating to CYC140 increased by $0.5 million from $0.2 million for the three months ended March 31, 2020 to $0.7 million for the three months ended March 31, 2021, as the pre-clinical evaluation and clinical trial supply manufacture of CYC140 progressed.

Total research and development expenses for the three and six months ended June 30, 2021 represented 67% and 64% of our operating expenses respectively, an increase over respective comparative periods.

During both the three and six months ended June 30, 2021, the increase in expenditure for the transcriptional regulation program relative to the respective comparative periods was due to clinical supply manufacturing and opening of clinical trial sites for the evaluation of fadraciclib in a Phase 1/2 solid tumor study.

Research and development expenses relating to CYC140 increased during both the three and six months ended June 30, 2021 as the pre-clinical evaluation and clinical trial supply manufacturing of CYC140 progressed.

We anticipate that overall research and development expenses for the year ended December 31, 2021 will increase compared to the year ended December 31, 2020 as we progress our clinical development programs.

1 unchanged sentence

General and administrative expenses include costs for administrative personnel, legal and other professional expenses and general corporate expenses.

The following table summarizes the general and administrative expenses for the three months ended March 31, 2020 and 2021 (in $000s except percentages):

The following table summarizes the general and administrative expenses for the three and six months ended June 30, 2020 and 2021 (in $000s except percentages):

Three Months Ended

Six Months Ended

Total general and administrative expenses

Total general and administration expenses represented 54% and 40% of our operating expenses for the three months ended March 31, 2020 and 2021, respectively.

General and administrative expenses increased by $0.4 million for the three months ended March 31, 2021 due to an increase in legal, professional and recruitment costs relating to expansion of the clinical team.

We expect general and administrative expenditures for the year ended December 31, 2021 to reduce slightly compared to our expenditures for the year ended December 31, 2020, due to lower recruitment and professional costs.

Total general and administration expenses for the three and six months ended June 30, 2021 represented 33% and 36% of our operating expenses respectively, a decrease over respective comparative periods.

During both the three and six months ended June 30, 2021, the increase in general and administrative expenses was primarily due to a $0.4 million reverse premium in relation to assignation of the our lease facility in Dundee, Scotland and an increase in legal, professional and recruitment costs relating to expansion of the clinical team.

We expect general and administrative expenditures for the year ended December 31, 2021 to increase by approximately 12% compared to our expenditures for the year ended December 31, 2020 due to lease assignation premium, legal, professional and recruitment costs.

Other income (expense), net

The following table summarizes other income for the three months ended March 31, 2020 and 2021 (in $000 except percentages):

The following table summarizes other income for the three and six months ended June 30, 2020 and 2021 (in $000 except percentages):

Three Months Ended

Six Months Ended

Foreign exchange gains (losses)

2 unchanged sentences

Total other income

Total other income decreased by $774,000 from $914,000 for the three months ended March 31, 2020 to $140,000 for the three months ended March 31, 2021.

Other income relates to royalties receivable under a December 2005 Asset Purchase Agreement, or APA, whereby Xcyte Therapies, Inc., or Xcyte (a business acquired by the Company in March 2006) sold certain assets and intellectual property to ThermoFisher Scientific Company, or TSC (formerly Invitrogen Corporation) through the APA and other related agreements.

The decrease in total other income for the six months ended June 30, 2021 is related to royalties receivable under a December 2005 Asset Purchase Agreement, or APA, whereby Xcyte Therapies, Inc., or Xcyte (a business acquired by the Company in March 2006) sold certain assets and intellectual property to ThermoFisher Scientific Company, or TSC (formerly Invitrogen Corporation) through the APA and other related agreements.

The assets and technology were not part of the Company’s product development plan following the transaction between Xcyte and Cyclacel in March 2006.

Accordingly, the company presented $817,000 and $126,000 as other income arising from sales related to this transaction during the three months ended March 31, 2020 and 2021 respectively.

Foreign exchange gains (losses)

Foreign exchange gains decreased by $59,000, from a gain of $69,000 for the three months ended March 31, 2020, to a gain of $10,000 for the three months ended March 31, 2021.

Accordingly, the company recognized $18,000 and $144,000 of other income arising from sales related to this transaction during the three and six months ended June 30, 2021, respectively.

We have no knowledge of TSC’s activities and cannot predict when we may receive income under the APA, if any.

Other income (expense), net for the year ended December 31, 2021, will continue to be impacted by changes in foreign exchange rates and the receipt of income under the APA.

3 unchanged sentences

Credit is taken for research and development tax credits, which are claimed from the United Kingdom’s revenue and customs authority, or HMRC, in respect of qualifying research and development costs incurred.

The following table summarizes total income tax benefit for the three months ended March 31, 2020 and 2021 (in $000s except percentages):

The following table summarizes total income tax benefit for the three and six months ended June 30, 2020 and 2021 (in $000s except percentages):

Three Months Ended

Six Months Ended

Total income tax benefit

The total income tax benefit, which comprised of research and development tax credits recoverable, increased by $400,000 from $290,000 for the three months ended March 31, 2020 to $687,000 for the three months ended March 31, 2021.

The total income tax benefit comprises research and development tax credits recoverable.

The level of tax credits recoverable is linked directly to qualifying research and development expenditure incurred in any one year and the availability of trading losses.

We expect to continue to be eligible to receive United Kingdom research and development tax credits for the foreseeable future and will continue to elect to receive payment of the tax credit.

The amount of tax credits we will receive is entirely dependent on the amount of eligible expenses we incur and could be restricted by any future cap introduced by HMRC.

The amount of tax credits we will receive is entirely dependent on the amount of eligible expenses we incur and could be restricted by any future cap introduced by UK taxation authorities.

As we expect our eligible expenses to be higher in the fiscal year ended December 31, 2021, the level of tax credits recoverable is anticipated to be higher in 2021 compared to the fiscal year ended December 31, 2020.

Liquidity and Capital Resources

The following is a summary of our key liquidity measures as of March 31, 2020 and 2021 (in $000s):

The following is a summary of our key liquidity measures as of June 30, 2020 and 2021 (in $000s):

Cash and cash equivalents

6 unchanged sentences

We have incurred significant losses since our inception.

As of March 31, 2021, we had an accumulated deficit of $ 369.6 million.

Cash used in operating, investing and financing activities for the three months ended March 31, 2020 and 2021 is summarized as follows (in $000s):

Three Months Ended March 31,

As of June 30, 2021, we had an accumulated deficit of $374.7 million.

Cash used in operating, investing and financing activities for the six months ended June 30, 2020 and 2021 is summarized as follows (in $000s):

Six Months Ended June 30,

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash (used in) investing activities

Net cash provided by financing activities

Operating activities

Net cash used in operating activities increased by $0.8 million, from $2.8 million for the three months ended March 31, 2020 to $3.6 million for the three months ended March 31, 2021.

The increase in cash used by operating activities was primarily the result of an increase in net loss of $2.2 million, offset by a change in working capital of $1.4 million.

Net cash used in operating activities increased by $3.1 million, from $4.7 million for the six months ended June 30, 2020 to $7.8 million for the six months ended June 30, 2021.

The increase in cash used by operating activities was primarily the result of an increase in net loss of $5.1 million, offset by a change in working capital of $1.5 million, increase of stock compensation expense of $0.4 million and change in lease liability of $0.2 million.

Investing activities

Net cash used by investing activities increased by $74,000 for the three months ended March 31, 2021 predominantly due to increased capital expenditures on scientific software.

Net cash used by investing activities increased by $12,000 for the six months ended June 30, 2021 predominantly due to increased capital expenditures on IT.

Financing activities

Net cash provided by financing activities increased by approximately $18.0 million for the three months ended March 31, 2021 as a direct result of receiving approximately $13.5 million in net proceeds from the issuance of common stock under an underwriting agreement with Oppenheimer & Co.

Net cash provided by financing activities was $17.9 million for the six months ended June 30, 2021 as a direct result of receiving approximately $13.5 million in net proceeds from the issuance of common stock under an underwriting agreement with Oppenheimer & Co.

Inc., and approximately $4.5 million from warrant exercises associated with a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co.

Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC.

The increase was partially offset by payment of preferred dividends.

Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC, offset by dividend payments of approximately $0.1 million to the holders of our 6% Preferred Stock.

Net cash provided by financing activities was $18.2 million for the six months ended June 30, 2020 as a direct result of receiving approximately $18.3 million in net proceeds from the issuance of common stock and accompanying common stock warrants under a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co.

Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC, offset by dividend payments of approximately $0.1 million to the holders of our 6% Preferred Stock.

Operating Capital and Capital Expenditure Requirements

18 unchanged sentences

If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or make changes to our operating plan.

In addition, we may have to partner one or more of our product candidates at an earlier stage of development, which would

lower the economic value of those programs to us.

In addition, we may have to partner one or more of our product candidates at an earlier stage of development, which would lower the economic value of those programs to us.

At this time, the Company is unable to estimate the impact of the COVID-19 pandemic on its financial condition or operations, but it could materially affect the ability of the Company to raise future capital or to conduct clinical studies on a timely basis.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis