What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-12 compared with 2021-11-12 · 84 added, 69 removed, 83 unchanged (65% of the section changed)

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Forward-looking statements necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in the forward looking statements due to a number of factors, including those set forth in Part I, Item 1A, entitled “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2021, as updated and supplemented by Part II, Item 1A, entitled “Risk Factors,” of our Quarterly Reports on Form 10-Q, and elsewhere in this report.

In addition, while we expect the coronavirus pandemic to have an impact on our business operations and financial results, the extent of the impact on our clinical development and regulatory efforts, our corporate development objectives, our financial position and the value of and market for our common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, the emergence of new geographic hotspots, the re-emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States and in other countries, and the effectiveness of actions taken globally to contain and treat the disease.

These factors as well as other cautionary statements made in this Quarterly Report on Form 10-Q, should be read and understood as being applicable to all related forward-looking statements wherever they appear herein.

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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 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.

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 to be followed by a similar study in patients with hematological malignancies .

● 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.

We are a clinical-stage biopharmaceutical company working to develop innovative cancer medicines based on cell cycle, transcriptional regulation and mitosis control biology.

We are a pioneer company in the field of cancer cell cycle biology with a vision to improve patient healthcare by translating insights in cancer biology into medicines that can overcome resistance and ultimately increase a patient’s overall survival.

Our primary focus has been on our transcriptional regulation program which is evaluating fadraciclib, a CDK2/9 inhibitor, in solid tumors and hematological malignancies .

The anti-mitotic program is evaluating CYC140, a PLK1 inhibitor, in advanced cancers.

We are evaluating oral fadraciclib and CYC140 in our Phase1/2 streamlined studies the aim of which is to assess safety and identify signals of clinical activity which may lead to registration-enabling outcomes.

Fadraciclib Phase 1/2 Study in Advanced Solid Tumors and Lymphomas (065-101;

NCT#04983810 )

In this ongoing study, thirteen patients have been treated in five dose escalation levels so far.

The proof-of-concept stage includes 7 histologically defined cohorts thought to be sensitive to the drug’s mechanism:

breast, colorectal (including KRAS mutant), endometrial/ uterine, hepatobiliary, ovarian cancers and lymphomas.

An additional basket cohort will enroll patients regardless of histology with biomarkers relevant to the drug’s mechanism, including MCL1, MYC and/or cyclin E amplified.

Fadraciclib Phase 1/2 Study in Hematological Malignancies (065-102;

NCT#05168904 )

In this ongoing study three patients have been treated in the first dose escalation level.

The proof-of-concept stage, where fadraciclib will be administered both as a single agent as well as in combination, includes 7 histologically defined cohorts which will include patients with acute myeloid leukemia (AML) or myelodysplastic syndromes (MDS) who have an inadequate response or have progressed on venetoclax combinations with hypomethylating agent (HMA) or low dose Ara C;

relapsed/refractory AML or MDS patients.

The trial will also include patients with CLL who have progressed after at least two lines of therapy including a BTK inhibitor and/or venetoclax.

CYC140 Phase 1/2 Study in Hematological Malignancies (140-101;

NCT# 05358379 )

The first patient was dosed in this study in April 2022.

Similar to fadraciclib this Phase 1/2 registration-directed trial uses a streamlined design and will first determine in a dose escalation stage the recommended Phase 2 dose (RP2D) for single-agent CYC140.

Once RP2D has been established, the trial will immediately enter into proof-of-concept, cohort stage, using a Simon 2-stage design.

In this stage CYC140 will be administered to patients in up to 7 mechanistically-relevant cohorts including patients with bladder, breast, colorectal (including KRAS mutant), hepatocellular and biliary tract, and lung cancers (both small cell and non-small cell), as well as lymphomas.

An additional basket cohort will enroll patients with biomarkers relevant to the drug’s mechanism, including MYC amplified tumors.

The protocol allows for expansion of individual cohorts based on response which may allow acceleration of the clinical development and registration plan for CYC140.

We currently retain virtually all marketing rights worldwide to the compounds associated with our drug programs.

Results of Operations

Three And Nine months Ended September 30, 2020 and 2021

Results of Continuing Operations

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.

Three Months Ended March 31, 2022 and 2021

Revenues for each of the three months ended March 31, 2022 and 2021 were $0.

There are no active collaboration, licensing, or clinical supply agreements and we do not anticipate any revenues for 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.

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.

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.

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

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● Payroll and personnel-related expenses, including consultants and contract research organizations;

● Preclinical studies and laboratory supplies and materials;

● Preclinical studies, supplies and materials;

● Technology license costs;

● Stock-based compensation;

● 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 nine months ended September 30, 2020 and 2021 (in $000s except percentages):

● Rent and facility expenses for our offices.

The following table provides information with respect to our research and development expenditures for the three months ended March 31, 2022 and 2021 (in $000s except percentages):

Three Months Ended

Nine Months Ended

September 30,

Transcriptional Regulation (fadraciclib)

Mitosis Regulation (CYC140)

Anti-mitotic (CYC140)

DNA Damage Response (sapacitabine)

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Total research and development expenses

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.

Total research and development expenses represented 76% and 60% of our operating expenses for the three months ended March 31, 2022 and 2021, respectively.

Research and development expenses increased by $2.4 million from $2.6 million for the three months ended March 31, 2021 to $5.0 million for the three months ended March 31, 2022.

Expenditure for the transcriptional regulation program increased by $2.0 million relative to the respective comparative period.

This was due to an increase in clinical trial costs of $1.7 million associated with the progression of clinical trials for the evaluation of fadraciclib in Phase 1/2 studies and an increase in non-clinical expenditure of $0.3 million.

Research and development expenses relating to CYC140 increased by $0.4 million relative to the respective comparative period due to clinical trial costs associated with the opening of clinical trial sites for the evaluation of CYC140 in Phase 1/2 studies.

We continue to anticipate that overall research and development expenses for the year ended December 31, 2022 will increase compared to the year ended December 31, 2021 as we progress 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 nine months ended September 30, 2020 and 2021 (in $000s except percentages):

The following table summarizes the general and administrative expenses for the three months ended March 31, 2022 and 2021 (in $000s except percentages):

Three Months Ended

Nine Months Ended

September 30,

Total general and administrative expenses

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.

Total general and administration expenses represented 24% and 40% of our operating expenses for the three months ended March 31, 2022 and 2021, respectively.

General and administrative expenses decreased by $0.1 million from $1.7 million for the three months ended March 31, 2021 to $1.6 million for the three months ended March 31, 2022 as a result of lower professional and recruitment costs.

We expect general and administrative expenditures for the year ended December 31, 2022 to reduce slightly compared to our expenditures for the year ended December 31, 2021, due to lower recruitment and professional costs.

Other income (expense), net

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

The following table summarizes other income for the three months ended March 31, 2022 and 2021 (in $000 except percentages):

Three Months Ended

Nine Months Ended

September 30,

Foreign exchange gains (losses)

Foreign exchange gains

Interest income

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Total other income

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 $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.

Total other income increased by $1.2 million from $140,000 for the three months ended March 31, 2021 to $1.3 million for the three months ended March 31, 2022.

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 us 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 our product development plan following the transaction between Xcyte and Cyclacel in March 2006.

Accordingly, we presented $1.3 million and $126,000 as other income arising from sales related to this transaction during the three months ended March 31, 2022 and 2021 respectively.

Foreign exchange gains (losses)

Foreign exchange gains increased by $19,000, from $10,000 for the three months ended March 31, 2021, to $29,000 for the three months ended March 31, 2022.

Other income (expense), net for the year ended December 31, 2022, will continue to be impacted by changes in foreign exchange rates and the receipt of income under the APA.

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

The following table summarizes total income tax benefit for the three months ended March 31, 2022 and 2021 (in $000s except percentages):

Three Months Ended

Nine Months Ended

September 30,

Total income tax benefit

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

The total income tax benefit, which comprised of research and development tax credits recoverable, increased significantly by approximately $0.5 million from $0.7 million for the three months ended March 31, 2021 to $1.1 million for the three months ended March 31, 2022.

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 or other restrictions or modifications 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 introduced by HMRC.

As we expect our eligible expenses to be higher in the fiscal year ended December 31, 2022, the level of tax credits recoverable is anticipated to be higher in 2022 compared to the fiscal year ended December 31, 2021.

Liquidity and Capital Resources

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

September 30,

The following is a summary of our key liquidity measures as of March 31, 2022 and 2021 (in $000s):

Cash and cash equivalents

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We have incurred significant losses since our inception.

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,

As of March 31, 2022, we had an accumulated deficit of $ 389.1 million.

Cash used in operating, investing and financing activities for the three months ended March 31, 2022 and 2021 is summarized as follows (in $000s):

Three Months Ended March 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Operating activities

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.

Net cash used in operating activities increased by $3.2 million, from $3.6 million for the three months ended March 31, 2021 to $6.8 million for the three months ended March 31, 2022.

The increase in cash used by operating activities was primarily the result of an increase in net loss of $0.6 million due to increased clinical activities and a change in working capital of $2.6 million.

Investing activities

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.

Net cash used by investing activities decreased by $74,000 for the three months ended March 31, 2022 predominantly due to decreased capital expenditures.

Financing activities

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.

Net cash from financing activities decreased by approximately $18.0 million for the three months ended March 31, 2022.

Financing activities for the three months ended March 31, 2021 comprised 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.

This was partially offset by payment of preferred dividends.

There were no similar capital raising activities in the three months ended March 31, 2022.

Operating Capital and Capital Expenditure Requirements

We expect to continue to incur substantial operating losses in the future and cannot guarantee that we will generate any significant product revenues until a product candidate has been approved by the Food and Drug Administration (“FDA”) or European Medicines Agency (“EMA”) in other countries and successfully commercialized.

We believe that existing funds together with cash generated from operations, such as recent financing activities and the R&D tax credit, are sufficient to satisfy our planned working capital, capital expenditures and other financial commitments through to early 2023.

However, we do not currently have sufficient funds to complete development and commercialization of any of our drug candidates.

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● the costs associated with establishing manufacturing and commercialization capabilities;

● the extent to which the coronavirus impacts the Company’s financial condition and operations, which will depend on future developments that are highly uncertain and cannot be predicted with confidence, including the ultimate duration of the pandemic, the emergence of new geographic hotspots, the re-emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States and in other countries, and the effectiveness of actions taken globally to contain and treat the disease;

● the extent to which the coronavirus impacts our financial condition and operations, which will depend on future developments that are highly uncertain and cannot be predicted with confidence, including the ultimate duration of the pandemic, the emergence of new geographic hotspots, the re-emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States and in other countries, and the effectiveness of actions taken globally to contain and treat the disease;

● the costs of acquiring or investing in businesses, product candidates and technologies;

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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.

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.

Impact of COVID-19

The COVID-19 pandemic has led to global supply chain challenges, which have negatively impacted the availability and cost of materials.

The global outbreak of COVID-19 has also adversely affected our clinical trials with regards to the pace of patient enrollment as a result of restrictions on travel and/or transport of clinical materials, as well as diversion of hospital staff and resources to COVID-19 infected patients.

The extent to which COVID-19 will continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, the severity of COVID-19 or new variants or the effectiveness of actions to contain and treat COVID-19 and its variants, particularly in the geographies where we or our third-party suppliers, contract manufacturers, or contract research organizations operate.

At this time, we are unable to fully estimate the impact of the pandemic or current geopolitical turmoil on its financial condition or operations, but either or both could materially affect our ability to raise future capital or to conduct clinical studies on a timely basis.

Critical Accounting Policies and Estimates

Our critical accounting policies are those policies which require the most significant judgments and estimates in the preparation of our consolidated financial statements.

We evaluate our estimates, judgments, and assumptions on an ongoing basis.

Actual results may differ from these estimates under different assumptions or conditions.

A summary of our critical accounting policies is presented in Part II, Item 7, of our Annual Report on Form 10-K for the year ended

December 31, 2021 and Note 2 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

There have been no material changes to our critical accounting policies during the three months ended March 31, 2022.

Quantitative and Qualitative Disclosures about Market Risk

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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