Bio Green Med Solution, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, including, without limitation, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking statements” within the meaning of Section 27A of the Securities Exchange Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend that the forward-looking statements be covered by the safe harbor for forward-looking statements in the Exchange Act. The forward-looking information is based on various factors and was derived using numerous assumptions. All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are usually accompanied by words such as “believe,” “anticipate,” “plan,” “seek,” “expect,” “intend” and similar expressions. 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, 2022, 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. 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. The forward-looking statements contained in this Quarterly Report on Form 10-Q represent our judgment as of the date hereof. We encourage you to read those descriptions carefully. We caution you not to place undue reliance on the forward-looking statements contained in this report. These statements, like all statements in this report, speak only as of the date of this report (unless an earlier date is indicated) and we undertake no obligation to update or revise the statements except as required by law. Such forward-looking statements are not guarantees of future performance and actual results will likely differ, perhaps materially, from those suggested by such forward-looking statements. In this report, “Cyclacel,” the “Company,” “we,” “us,” and “our” refer to Cyclacel Pharmaceuticals, Inc. Overview We are a clinical-stage biopharmaceutical company developing 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 . Separately, our anti-mitotic program is evaluating plogosertib, a PLK1 inhibitor, in solid tumors and lymphoma. We are evaluating oral fadraciclib and plogosertib 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 Lymphoma (065-101; NCT#04983810 ) In this ongoing study, twenty-four patients have been treated in six dose escalation levels so far. The proof-of-concept stage includes seven 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. ​ 19 Table of Contents Fadraciclib is also being evaluated in a Phase 1/2 study in hematological malignancies (065-102; NCT#05168904) which is currently in the dose escalation stage. Plogosertib Phase 1/2 Study in Advanced Solid Tumors and Lymphoma (140-101; NCT# 05358379 ) Similar to fadraciclib, this ongoing open-label Phase 1/2 registration-directed trial uses a streamlined design and seeks to first determine in a dose escalation stage the recommended Phase 2 dose (or RP2D) for single-agent plogosertib. 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 plogosertib will be administered to patients in up to seven 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 plogosertib. The first patient was dosed in this study in April 2022 and nine patients have been treated at the first three dose escalation levels with no dose limiting toxicities observed. We currently retain all marketing rights worldwide to the compounds associated with our drug programs. Going Concern For the three months ended March 31, 2023, we used net cash of $6.9 million to fund our operating activities. We have cash and cash equivalents of $11.4 million as of March 31, 2023 together with $4.7 million research and development tax credits received in April 2023. This cash will allow us to meet our liquidity requirements through the remainder of 2023. These factors raise substantial doubt about our ability to continue as a going concern. We are currently investigating ways to raise additional capital through a combination of public or private equity, debt financing or by entering into partnership agreements for further development of our drug candidates. Please refer to the Liquidity and Capital Resources section for additional information. ​ Results of Operations Three Months Ended March 31, 2023 and 2022 Revenues Revenues for each of the three months ended March 31, 2023 and 2022 were $0. The future There are no active collaboration, licensing, or clinical supply agreements. Until and unless we enter into such agreement, 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 and plogosertib . 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. Research and development expenses primarily include: ● Clinical trial and regulatory-related costs; 20 Table of Contents ● Payroll and personnel-related expenses, including consultants and contract research organizations; ● Preclinical studies, supplies and materials; ● Technology license costs; ● Stock-based compensation; and ● 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, 2023 and 2022 (in $000s except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, ​ Difference ​ 2023 2022 $ % Transcriptional Regulation (fadraciclib) $ 4,087 ​ $ 3,645 ​ $ 442 ​ 12 Anti-mitotic (plogosertib) ​ 1,351 ​ ​ 1,122 ​ ​ 229 ​ 20 Other research and development expenses ​ 236 ​ ​ 187 ​ ​ 49 ​ 26 Total research and development expenses $ 5,674 ​ $ 4,954 ​ $ 720 ​ 15 ​ Total research and development expenses represented 78% and 76% of our operating expenses for the three months ended March 31, 2023 and 2022, respectively. Research and development expenses increased by $0.7 million from $5.0 million for the three months ended March 31, 2022 to $5.7 million for the three months ended March 31, 2023. Expenditure for the transcriptional regulation program increased by $0.4 million relative to the respective comparative period, primarily due to increases in non-clinical expenditure. Research and development expenses relating to plogosertib increased by $0.2 million relative to the respective comparative period due to increase in clinical trial costs associated with the progression of clinical trials for the evaluation of plogosertib in Phase 1/2 studies. The future We anticipate that overall research and development expenses for the year ended December 31, 2023 will decrease compared to the year ended December 31, 2022 as we progress our clinical development programs. ​ 21 Table of Contents 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 months ended March 31, 2023 and 2022 (in $000s except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, ​ Difference ​ 2023 2022 $ % Total general and administrative expenses $ 1,645 ​ $ 1,605 ​ $ 40 ​ 2 ​ Total general and administrative expenses represented 22% and 24% of our operating expenses for the three months ended March 31, 2023 and 2022, respectively. General and administrative expenses remained relatively consistent at $1.6 million for each of the three months ended March 31, 2023 and 2022. The future We expect general and administrative expenditures for the year ended December 31, 2023 to be lower than our expenditures for the year ended December 31, 2022, due to management efforts to lower professional costs. Other income (expense), net The following table summarizes other income for the three months ended March 31, 2023 and 2022 (in $000 except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, ​ Difference ​ 2023 2022 $ % Foreign exchange gains $ (87) ​ $ 29 ​ $ (116) ​ (400) Interest income 116 ​ 4 ​ 112 ​ 2,800 Other income, net 166 ​ 1,280 ​ (1,114) ​ (87) Total other income $ 195 ​ ​ 1,313 ​ $ (1,118) ​ (85) ​ Total other income decreased by $1.1 million from $1.3 million for the three months ended March 31, 2022 to $0.2 million for the three months ended March 31, 2023. 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 $0 as other income arising from sales related to this transaction during the three months ended March 31, 2023 and 2022 respectively. Other income for the three months ended March 31, 2023 related to recovery of clinical manufacturing costs associated with an investigator sponsored study managed by Cedar-Sinai Medical Center. 22 Table of Contents Foreign exchange gains (losses) Foreign exchange gains decreased by $116,000, from a gain of $29,000 for the three months ended March 31, 2022, to a loss of $87,000 for the three months ended March 31, 2023. The future Other income (expense), net for the year ended December 31, 2023, 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, 2023 and 2022 (in $000s except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, ​ Difference ​ 2023 2022 $ % Income tax benefit $ 1,320 ​ $ 1,138 ​ $ 182 ​ 16 Total income tax benefit $ 1,320 ​ $ 1,138 ​ $ 182 ​ 16 ​ The total income tax benefit, which comprised of research and development tax credits recoverable, increased by approximately $0.2 million from $1.1 million for the three months ended March 31, 2022 to $1.3 million for the three months ended March 31, 2023. 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. The future We expect to continue to be eligible to receive United Kingdom research and development tax credits for the year ended December 31, 2023 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. Beyond 2023, we cannot be certain of our eligibilty to receive this tax credit or if eligible, the amount that may be received, due to proposed changes by HMRC to the eligibility criteria. Liquidity and Capital Resources The following is a summary of our key liquidity measures as of March 31, 2023 and 2022 (in $000s): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ 2023 2022 Cash and cash equivalents ​ $ 11,435 ​ $ 29,639 Working capital: ​ ​ ​ ​ ​ ​ Current assets ​ $ 19,676 ​ $ 36,577 Current liabilities ​ (8,040) ​ (6,204) Total working capital ​ $ 11,636 ​ $ 30,373 23 Table of Contents ​ Since our inception, we have relied primarily on the proceeds from sales of common and preferred equity securities to finance our operations and internal growth. Additional funding has come through research and development tax credits, government grants, the sale of product rights, interest on investments and licensing revenue. We have incurred significant losses since our inception. As of March 31, 2023, we had an accumulated deficit of $412.0 million. Cash Flows Cash used in operating, investing and financing activities for the three months ended March 31, 2023 and 2022 is summarized as follows (in $000s): ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2023 2022 Net cash used in operating activities ​ $ (6,861) ​ $ (6,775) Net cash used in investing activities ​ (6) ​ (4) Net cash provided by financing activities ​ (50) ​ (50) ​ Operating activities Net cash used in operating activities increased by $0.1 million, from $6.8 million for the three months ended March 31, 2022 to $6.9 million for the three months ended March 31, 2023. The increase in cash used by operating activities was primarily the result of an increase in net loss of $1.7 million, brought about due to increased manufacturing activities and reduced royalty income. This was offset by a change in working capital of $1.6 million, caused by an increase in clinical trial deposits. Investing activities Net cash used by investing activities remained at a relatively flat for each of the three months ended March 31, 2023 and 2022 and consisted of IT-related capital expenditure. Financing activities Net cash from financing activities remained at the same level for each of the three months ended March 31, 2023 and 2022, consisting of the payment of the preferred stock dividend. Funding Requirements and Going Concern As of March 31, 2023, we had cash and cash equivalents of $11.4 million, with a further $4.7 million research and development tax credit received in April 2023. We have incurred losses since our inception and as of March 31, 2023, we had an accumulated deficit of $412.0 million. We expect to continue to incur substantial operating losses in the future. We do not currently have sufficient funds to complete development and commercialization of any of our drug candidates. Current business and capital market risks could have a detrimental effect on the availability of sources of funding and our ability to access them in the future, which may delay or impede our progress of advancing our drugs currently in the clinical pipeline to approval by the FDA or EMA for commercialization. Additionally, we plan to continue to evaluate in-licensing and acquisition opportunities to gain access to new drugs or drug targets that would fit with our strategy. Any such transaction would likely increase our funding needs in the future. ​ ​ ​ ​ ​ ​ 24 Table of Contents Our future funding requirements will depend on many factors, including but not limited to: ● the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities; ● the costs associated with establishing manufacturing and commercialization capabilities; ● the costs of acquiring or investing in businesses, product candidates and technologies; ● the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; ● the costs and timing of seeking and obtaining FDA and EMA approvals; ● the effect of competing technological and market developments; and ​ ● 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. Although we are not reliant on institutional credit finance and therefore not subject to debt covenant compliance requirements or potential withdrawal of credit by banks, we are reliant on the availability of funds and activity in equity markets. We do not know whether additional funding will be available on acceptable terms, or at all. 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 candidate programs at an earlier stage of development, which would lower the economic value of those programs to us. Since our inception, we have relied primarily on the proceeds from sales of common and preferred equity securities to finance our operations and internal growth. Additional funding has come through research and development tax credits, government grants, the sale of product rights, interest on investments, licensing revenue, royalty income, and a limited amount of product revenue from operations discontinued in September 2012. As discussed in Note 2 of the Notes to the Consolidated Financial Statements accompanying this Quarterly Report on Form 10-Q, under ASC Topic 205-40, Presentation of Financial Statements - Going Concern , management is required at each reporting period to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. Based on our current operating plan, we anticipate that our cash and cash equivalents of $11.4 million as of March 31, 2023, together with the $4.7 million research and development tax credits received in April 2023 will allow us to meet our liquidity requirements through the end of 2023. Our history of losses, our negative cash flows from operations, our liquidity resources currently on hand, and our dependence on the ability to obtain additional financing to fund our operations after the current resources are exhausted, about which there can be no certainty, have resulted in our assessment that there is substantial doubt about our ability to continue as a going concern for a period of at least twelve months from the issuance date of this Quarterly Report on Form 10-Q. While we have plans in place to mitigate this risk, which primarily consist of raising additional capital through a combination of public or private equity or debt financings or by entering into partnership agreements for further development of our drug candidates, there is no guarantee that we will be successful in these mitigation efforts. ​ ​ 25 Table of Contents 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 uncertain and cannot be predicted with confidence. At this time, we are unable to fully estimate the impact of the pandemic or current geopolitical turmoil on our 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, 2022 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, 2023. ​ ​ Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, we are not required to provide information in response to this item.