What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 93 added, 93 removed, 80 unchanged (70% of the section changed)

18 unchanged sentences

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.

Separately, our epigenetic/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.

1 unchanged sentence

NCT#04983810 )

In this ongoing study, twenty-four patients have been treated in six dose escalation levels so far.

In this ongoing study, twenty-eight 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:

1 unchanged sentence

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 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.

In this ongoing study, fourteen patients have been treated at the five dose escalation levels with no dose limiting toxicities observed.

The proof-of-concept stage includes 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.

For the three months ended June 30, 2023, we used net cash of $1.8 million to fund our operating activities.

We have cash and cash equivalents of $10.2 million as of June 30, 2023, which will allow us to meet our liquidity requirements through the remainder of 2023.

However, the current operating plan includes discretionary expenditures, which if not incurred could extend liquidity requirements into the second quarter of 2024.

These factors raise substantial doubt about our ability to continue as a going concern.

1 unchanged sentence

Please refer to the Liquidity and Capital Resources section for additional information.

Results of Operations

Three Months Ended March 31, 2023 and 2022

Revenues for each of the three months ended March 31, 2023 and 2022 were $0.

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;

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

● Preclinical studies, supplies and materials;

● Technology license costs;

● Stock-based compensation;

● 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

Transcriptional Regulation (fadraciclib)

Anti-mitotic (plogosertib)

Other research and development expenses

Total research and development expenses

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.

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.

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

Total general and administrative expenses

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.

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

Foreign exchange gains

Interest income

Other income, net

Total other income

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.

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.

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

Income tax benefit

Total income tax benefit

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.

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):

The following is a summary of our key liquidity measures as of June 30, 2023 and 2022 (in $000s):

Cash and cash equivalents

6 unchanged sentences

We have incurred significant losses since our inception.

As of March 31, 2023, we had an accumulated deficit of $412.0 million.

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,

As of June 30, 2023, we had an accumulated deficit of $417.4 million.

Cash from operating, investing and financing activities for the six months ended June 30, 2023 and 2022 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 provided by financing activities

Net cash (used in) provided by financing activities

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.

Net cash used in operating activities decreased by $0.5 million, from $8.7 million for the six months ended June 30, 2022 to $8.2 million for the six months ended June 30, 2023.

The decrease in cash used by operating activities was

primarily the result of a change in working capital of $3.1 million, offset by an increase in net loss of $2.6 million.

The $3.1 million change in working capital was due to increased balances in clinical trial deposits and research and development tax credits.

The cash receipt of approximately $4.8 million in research and development tax credit was received during the six months ended June 30, 2023.

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.

Net cash used by investing activities decreased by $1,000 for the six months ended June 30, 2023 due to slightly higher capital expenditures on information technology (IT) during the respective comparative period.

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.

Net cash used in financing activities was $0.1 million for the six months ended June 30, 2023 as a result of dividend payments of approximately $0.1 million to the holders of our 6% Preferred Stock.

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.

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.

As of June 30, 2023, we had cash and cash equivalents of $10.2 million.

We have incurred losses since our inception and as of June 30, 2023, we had an accumulated deficit of $417.5 million.

We expect to continue to incur substantial operating losses in the future.

20 unchanged sentences

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.

Based on our current operating plan, we anticipate that our cash and cash equivalents of $10.2 million as of June 30, 2023 will allow us to meet our liquidity requirements through the end of 2023.

However, the current operating plan includes discretionary expenditures, which if not incurred could extend liquidity requirements into the second quarter of 2024.

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.

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.

Results of Operations

Three and Six Months Ended June 30, 2023 and 2022

We recognized $373,000 of revenue for the three and six months ended June 30, 2023.

This related to recovery of clinical manufacturing costs associated with an investigator sponsored study managed by Cedar-Sinai Medical Center.

There were no revenues recognized for the comparative periods in 2022.

We expect to completely fulfill our obligations under this agreement by the fourth quarter of 2023.

The associated clinical manufacturing costs are presented as a component of research & development.

Research and Development Expenses

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

Research and development expenses primarily include:

● Clinical trial and regulatory-related costs;

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

● Preclinical studies, supplies and materials;

● Technology license costs;

● Stock-based compensation;

● Rent and facility expenses for our offices.

The following table provides information with respect to our research and development expenditures for the three and six months ended June 30, 2023 and 2022 (in $000s except percentages):

Three Months Ended

Six Months Ended

Transcriptional Regulation (fadraciclib)

Epigenetic/anti-mitotic (plogosertib)

Other research and development expenses

Total research and development expenses

Total research and development expenses represented 75% and 76% of our operating expenses for the three and six months ended June 30, 2023 respectively.

Research and development expenses increased by approximately $1.2 million from $9.2 million for the six months ended June 30, 2022 to $10.4 million for the six months ended June 30, 2023.

Expenditure for the transcriptional regulation program increased by $0.9 million for the six months ended June 30, 2023, relative to the respective comparative period.

This was due to an increase in non-clinical expenditure of $1.9 million, offset by reduction in clinical trial costs of $1.0 million associated with the progression of clinical trials for the evaluation of fadraciclib in Phase 1/2 studies.

Research and development expenses relating to plogosertib increased by $0.1 million for the six months ended June 30, 2023, relative to the respective comparative period, due to an increase in non-clinical expenditure.

We continue to 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 temporarily halt our Phase 1/2 study in hematological malignancies and progress clinical development of our Phase 1/2 studies in advanced solid tumors and lymphomas.

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, 2023 and 2022 (in $000s except percentages):

Three Months Ended

Six Months Ended

Total general and administrative expenses

Total general and administrative expenses represented 25% and 24% of our operating expenses for the three and six months ended June 30, 2023 respectively.

General and administrative expenses remained relatively consistent at $1.6 million for each of the three months ended June 30, 2023 and 2022 and $3.2 million for each of the six months ended June 30, 2023 and 2022.

Other income (expense), net

The following table summarizes other income for the three and six months ended June 30, 2023 and 2022 (in $000 except percentages):

Three Months Ended

Six Months Ended

Foreign exchange gains (losses)

Interest income

Other income (expense), net

Total other income (expense), net

Total other income decreased by approximately $1.4 million from $1.5 million for the six months ended June 30, 2022 to $0.1 million for the six months ended June 30, 2023.

Other income for the six months ended June 30, 2022 relates largely 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 $0.1 million and $1.3 million as other income arising from sales related to this transaction during the six months ended June 30, 2023 and 2022 respectively.

Foreign exchange gains (losses)

Foreign exchange gains decreased by $0.4 million, from a gain of $0.2 million for the six months ended June 30, 2022, to a loss of $0.2 million for the six months ended June 30, 2023.

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.

Income Tax Benefit

The following table summarizes total income tax benefit for the three and six months ended June 30, 2023 and 2022 (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, decreased by approximately $0.2 million from $2.1 million for the six months ended June 30, 2022 to $1.9 million for the six months ended June 30, 2023 due to legislative changes that took effect in April 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 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 eligibility to receive this tax credit or if eligible, the amount that may be received, due to proposed changes by HMRC to the eligibility criteria.

Critical Accounting Policies and Estimates

3 unchanged sentences

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.

There have been no material changes to our critical accounting policies during the three months ended June 30, 2023.

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