What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-29 compared with 2023-08-10 · 62 added, 52 removed, 121 unchanged (49% of the section changed)

17 unchanged sentences

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 .

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

Separately, our epigenetic/anti-mitotic program is evaluating plogosertib, a PLK1 inhibitor, in solid tumors and lymphoma.

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NCT#04983810 )

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

In this ongoing study, twenty-six evaluable 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:

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NCT# 05358379 )

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

In this ongoing study, fourteen evaluable patients have been treated at 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.

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Going Concern

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.

For the three months ended September 30, 2023, we used net cash of $4.2 million to fund our operating activities.

We have cash and cash equivalents of $5.9 million as of September 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 and taken together with the anticipated receipt of research & development tax credits of approximately $3.1 million in the first quarter of 2024 could extend liquidity requirements into the second quarter of 2024.

Nonetheless, 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.

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

Liquidity and Capital Resources

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

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

September 30,

Cash and cash equivalents

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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.

Additional funding has come through research and development tax credits, government grants, the sale of product rights, interest on investments and a limited amount of revenue.

We have incurred significant losses since our inception.

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,

As of September 30, 2023, we had an accumulated deficit of $423.0 million.

Cash from operating, investing and financing activities for the nine months ended September 30, 2023 and 2022 is summarized as follows (in $000s):

Nine Months Ended September 30,

Net cash used in operating activities

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Operating activities

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.

Net cash used in operating activities decreased by $3.5 million, from $15.7 million for the nine months ended September 30, 2022 to $12.2 million for the nine months ended September 30, 2023.

The decrease in cash used by operating activities was primarily the result of a change in working capital of $7.1 million, offset by an increase in net loss of $3.6 million.

The $7.1 million change in working capital was due to increased balances in clinical trial deposits and receivables for research and development tax credits.

A cash receipt of approximately $4.8 million in research and development tax credit was received during the nine months ended September 30, 2023.

Investing activities

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.

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

Financing activities

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.

Net cash used in financing activities was $0.2 million for the nine months ended September 30, 2023 as a result of dividend payments of approximately $0.2 million to the holders of our 6% Preferred Stock.

Net cash provided by financing activities was $2.9 million for the nine months ended September 30, 2022 as a direct result of receiving approximately $3.1 million, net of expenses, from the issuance of common stock under the Sales Agreement, offset by dividend payments of approximately $0.2 million to the holders of our 6% Preferred Stock.

Funding Requirements and Going Concern

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.

As of September 30, 2023, we had cash and cash equivalents of $5.9 million.

We have incurred losses since our inception and as of September 30, 2023, we had an accumulated deficit of $423.0 million.

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

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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.

Our future funding requirements will depend on many factors, including but not limited to:

Any such transaction would likely increase our funding needs in the future.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;

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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.

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.

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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 $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.

Based on our current operating plan, we anticipate that our cash and cash equivalents of $5.9 million as of September 30, 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.

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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.

Three and Nine Months Ended September 30, 2023 and 2022

We recognized $16,000 and $389,000 of revenue for the three and nine months ended September 30, 2023.

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

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

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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 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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● 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):

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Transcriptional Regulation (fadraciclib)

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Total research and development expenses

Total research and development expenses 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.

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

Research and development expenses increased by approximately $2.0 million from $13.6 million for the nine months ended September 30, 2022 to $15.6 million for the nine months ended September 30, 2023.

Expenditure for the transcriptional regulation program increased by $1.9 million for the nine months ended September 30, 2023, relative to the respective comparative period.

This was due to an increase in non-clinical expenditure of $3.0 million, offset by reduction in clinical trial costs of $1.1 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.

Research and development expenses relating to plogosertib remained flat for each of the nine months ended September 30, 2023 and 2022.

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.

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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 and six months ended June 30, 2023 and 2022 (in $000s except percentages):

The following table summarizes the general and administrative expenses for the three and nine months ended September 30, 2023 and 2022 (in $000s except percentages):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

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.

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

General and administrative expenses decreased by approximately $0.4 million for both the three and nine months ended September 30, 2023 due to a non-recurring $0.4 million cost associated with the Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

(the “Sales Agreement”) in the comparative prior periods.

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 and six months ended June 30, 2023 and 2022 (in $000 except percentages):

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Foreign exchange gains (losses)

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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.

Total other income decreased by approximately $1.7 million from $1.9 million for the nine months ended September 30, 2022 to $0.2 million for the nine months ended September 30, 2023.

Other income for the nine months ended September 30, 2022 relates largely to royalties receivable under a December 2005 Asset Purchase Agreement (“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.

Accordingly, we presented $0.1 million and $1.3 million as other income arising from sales related to this transaction during the nine months ended September 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.

Foreign exchange gains decreased by $0.6 million, from a gain of $0.5 million for the nine months ended September 30, 2022, to a loss of $0.1 million for the nine months ended September 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.

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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 six months ended June 30, 2023 and 2022 (in $000s except percentages):

The following table summarizes total income tax benefit for the three and nine months ended September 30, 2023 and 2022 (in $000s except percentages):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

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 total income tax benefit, which comprised of research and development tax credits recoverable, decreased by approximately $0.6 million from $3.1 million for the nine months ended September 30, 2022 to $2.5 million for the nine months ended September 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.

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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 3 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, 2023.

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

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