What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-12 · 49 added, 36 removed, 103 unchanged (45% of the section changed)

16 unchanged sentences

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

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

Consistent with our mission of developing medicines that expand available treatment options for patients with unmet medical needs, we have three orally-available candidates in clinical development:

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

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● 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.

We are currently planning a streamlined study with oral CYC140 in a broad range of solid tumors in multiple cohorts defined by cancer histology to be followed by a similar study in patients with hematological malignancies .

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

2 unchanged sentences

Results of Operations

Three And Six Months Ended June 30, 2020 and 2021

Three And Nine months Ended September 30, 2020 and 2021

Results of Continuing Operations

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.

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

There are no active collaboration, licensing, or clinical supply agreements and consequently no revenues are expected in the foreseeable future.

Research and development expenses

From our inception, we have focused on drug discovery and development programs, with a particular emphasis on orally-available anticancer agents, and our research and development expenses have represented costs incurred to discover and develop novel small molecule therapeutics, including clinical trial costs for fadraciclib, CYC140, sapacitabine, and seliciclib.

We have also incurred costs in the advancement of product candidates toward clinical and preclinical trials and the development of in-house research to advance our biomarker program and technology platforms.

From our inception, we have focused on drug discovery and development programs, with a particular emphasis on orally-available anticancer agents.

Our research and development expenses have represented costs incurred to discover and develop novel small molecule therapeutics, including clinical trial costs for fadraciclib, CYC140, and sapacitabine.

We have also incurred costs related to the advancement of product candidates through preclinical and clinical stages of development and in-house research to advance our biomarker program and technology platforms.

We expense all research and development costs as they are incurred.

6 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 and six months ended June 30, 2020 and 2021 (in $000s except percentages):

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Transcriptional Regulation (fadraciclib)

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Total research and development expenses

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.

Total research and development expenses for the three and nine months ended September 30, 2021 represented 70% and 66% of our operating expenses respectively, an increase over respective comparative periods.

During both the three and nine months ended September 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 studies.

Research and development expenses relating to CYC140 increased during both the three and nine months ended September 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 both of our clinical development programs.

General and administrative expenses

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 and six months ended June 30, 2020 and 2021 (in $000s except percentages):

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total general and administrative expenses

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.

Total general and administration expenses for the three and nine months ended September 30, 2021 represented 30% and 34% of our operating expenses respectively, a decrease over respective comparative periods.

During both the three and nine months ended September 30, 2021, the increase in general and administrative expenses was primarily due to a $0.4 million reverse premium in relation to assignation of 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 20% 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 and six months ended June 30, 2020 and 2021 (in $000 except percentages):

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Foreign exchange gains (losses)

2 unchanged sentences

Total other income

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 decrease in total other income for the nine months ended September 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 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.

Accordingly, the company recognized $0 and $144,000 of other income arising from sales related to this transaction during the three and nine months ended September 30, 2021, respectively.

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

4 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 and six months ended June 30, 2020 and 2021 (in $000s except percentages):

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Total income tax benefit

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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 UK taxation authorities.

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 or other restrictions or modifications 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 June 30, 2020 and 2021 (in $000s):

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

September 30,

Cash and cash equivalents

6 unchanged sentences

We have incurred significant losses since our inception.

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,

As of September 30, 2021, we had an accumulated deficit of $379.7 million.

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

Nine Months Ended September 30,

Net cash used in operating activities

2 unchanged sentences

Operating activities

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.

Net cash used in operating activities increased by $7.2 million, from $6.8 million for the nine months ended September 30, 2020 to $14.0 million for the nine months ended September 30, 2021.

The increase in cash used by operating activities was primarily the result of an increase in net loss of $7.9 million, a change in working capital of $0.1 million, offset by an increase of stock compensation expense of $0.6 million and change in lease liability of $0.2 million.

Investing activities

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.

Net cash used by investing activities decreased by $29,000 for the nine months ended September 30, 2021, predominantly due to decreased capital expenditures on IT equipment.

Financing activities

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, 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.

Net cash provided by financing activities was $20.9 million for the nine months ended September 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.

● $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, and

● $3.0 million from the issuance of common stock under a controlled equity offering sales agreement with Cantor Fitzgerald & Co.,

● offset by dividend payments of approximately $0.2 million to the holders of our 6% Preferred Stock.

Net cash provided by financing activities was $18.2 million for the nine months ended September 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.

20 unchanged sentences

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.

Management continues to evaluate the impact of the COVID-19 pandemic on its current operations and future plans and takes appropriate measures to address any such impact, but there can be no assurance that these efforts will be successful and that the pandemic will not have negative effect on the Company’s financial position and results of operations, but it could materially affect the ability of the Company to raise future capital or to conduct clinical studies on a timely basis.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

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