What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-11 compared with 2022-05-12 · 51 added, 48 removed, 119 unchanged (45% of the section changed)

8 unchanged sentences

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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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.

In addition, the anti-mitotic program is evaluating CYC140, a PLK1 inhibitor, in advanced cancers.

We are evaluating oral fadraciclib and CYC140 in 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.

In this ongoing study, seventeen 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.

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.

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NCT#05168904 )

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

In this ongoing study six 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;

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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;

CYC140 Phase 1/2 Study in Advanced Solid Tumors and Lymphomas (140-101;

NCT# 05358379 )

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

The first patient was dosed in this study in April 2022, with a total of three patients treated in the first dose escalation level .

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.

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Results of Operations

Three Months Ended March 31, 2022 and 2021

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

Three and Six Months Ended June 30, 2021 and 2022

Revenues for each of the three and six months ended June 30, 2021 and 2022 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, 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.

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● 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):

The following table provides information with respect to our research and development expenditures for the three and six months ended June 30, 2021 and 2022 (in $000s except percentages):

Three Months Ended

Six Months Ended

Transcriptional Regulation (fadraciclib)

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DNA Damage Response (sapacitabine)

Other research and development programs and expenses

Other research and development expenses

Total research and development expenses

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.

Total research and development expenses for the three and six months ended June 30, 2022 represented 73% and 74% of our operating expenses respectively, representing an increase over the respective prior periods.

Research and development expenses increased by $2.5 million from $6.7 million for the six months ended June 30, 2021 to $9.2 million for the six months ended June 30, 2022.

Expenditure for the transcriptional regulation program increased by $1.8 million for the six months ended June 30, 2022, relative to the respective comparative period.

This was due to an increase in clinical trial costs of $2.2 million associated with the progression of clinical trials for the evaluation of fadraciclib in Phase 1/2 studies, offset by a decrease in non-clinical expenditure of $0.4 million.

Research and development expenses relating to CYC140 increased by $0.8 million for the six months ended June 30, 2022, relative to the respective comparative period.

This was due to an increase in clinical trial costs of $1.4 million associated with the progression of clinical trials for the evaluation of CYC140 in Phase 1/2 studies, offset by a decrease in non-clinical expenditure of $0.6 million.

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.

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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, 2022 and 2021 (in $000s except percentages):

The following table summarizes the general and administrative expenses for the three and six months ended June 30, 2021 and 2022 (in $000s except percentages):

Three Months Ended

Six Months Ended

Total general and administrative expenses

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.

Total general and administration expenses for the three and six months ended June 30, 2022 represented 27% and 26% of our operating expenses respectively representing a decrease over the respective prior periods.

During both the three and six months ended June 30, 2022, the decrease in general and administrative expenses was primarily due to a $0.4 million reverse premium in relation to assignation of the lease facility in Dundee, Scotland which was recognized during the second quarter of 2021.

The decrease in general and administrative expenses during the six months ended June 30, 2022 relative to the corresponding prior year period was also a result of reductions in legal, professional and recruitment costs relating to expansion of the clinical team that were incurred in the first half of 2021.

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 months ended March 31, 2022 and 2021 (in $000 except percentages):

The following table summarizes other income for the three and six months ended June 30, 2021 and 2022 (in $000 except percentages):

Three Months Ended

Six Months Ended

Foreign exchange gains

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Total other income

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.

Total other income increased by $1.4 million from $0.1 million for the six months ended June 30, 2021 to $1.5 million for the six months ended June 30, 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 through the APA and other related agreements certain assets and intellectual property which are not related to our product development plans to ThermoFisher Scientific Company, or TSC .

Accordingly, we presented $1.3 million and $144,000 as other income received from TSC during the six months ended June 30, 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.

Foreign exchange gains increased by $0.2 million, from a loss of $3,000 for the six months ended June 30, 2021, to a gain of $0.2 million for the six months ended June 30, 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.

As we are not in control of sales made by TSC, we are unable to estimate the level and timing of income under the APA, if any.

Because the nature of funding advanced through intercompany loans is that of a long-term investment, unrealized foreign exchange gains and losses on such funding will be recognized in other comprehensive income until repayment of the intercompany loan becomes foreseeable.

Income tax benefit

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, 2022 and 2021 (in $000s except percentages):

The following table summarizes total income tax benefit for the three and six months ended June 30, 2022 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 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 total income tax benefit, which comprised of research and development tax credits recoverable, increased by approximately $0.5 million from $1.6 million for the six months ended June 30, 2021 to $2.1 million for the six months ended June 30, 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.

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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.

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 prior year.

Liquidity and Capital Resources

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

The following is a summary of our key liquidity measures as of June 30, 2021 and 2022 (in $000s):

Cash and cash equivalents

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We have incurred significant losses since our inception.

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,

As of June 30, 2022, we had an accumulated deficit of $393.6 million.

Cash from operating, investing and financing activities for the six months ended June 30, 2022 and 2021 is summarized as follows (in $000s):

Six Months Ended June 30,

Net cash used in operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by financing activities

Operating activities

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.

Net cash used in operating activities increased by $0.9 million, from $7.8 million for the six months ended June 30, 2021 to $8.7 million for the six months ended June 30, 2022.

The increase in cash used by operating activities was primarily the result of a change in working capital of $0.9 million, a change in lease liability of $0.1 million, and an increase in net loss of $0.1 million, offset by an increase of stock compensation expense of $0.2 million.

Investing activities

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

Net cash used by investing activities decreased by $9,000 for the six months ended June 30, 2022 due to capital expenditures on information technology (IT) during the respective comparative period.

Financing activities

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.

Net cash provided by financing activities was $1.4 million for the six months ended June 30, 2022 as a direct result of receiving approximately $1.5 million, net of expenses, from the issuance of common stock under the Sales Agreement with Cantor Fitzgerald & Co., offset by dividend payments of approximately $0.1 million to the holders of our 6% Preferred Stock.

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.

This was partially offset by payment of preferred dividends.

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

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

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 June 30, 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 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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● the economic and other terms and timing of any collaboration, licensing or other arrangements into which we may enter;

Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings or strategic collaborations.

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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.

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 June 30, 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