What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-14 compared with 2023-11-29 · 70 added, 78 removed, 105 unchanged (58% of the section changed)

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In this report, “Cyclacel,” the “Company,” “we,” “us,” and “our” refer to Cyclacel Pharmaceuticals, Inc.

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 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 Phase 1/2 streamlined studies, the aim of which is to assess safety and identify signals of clinical activity which may lead to registration-enabling outcomes.

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

We reported revenue of $29,000 for the three months ended March 31, 2024 and no revenues for the comparable quarter ended March 31, 2023.

We do not expect to report a significant amount of revenue for the foreseeable future.

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 epigenetic/anti-mitotic program is evaluating plogosertib, a PLK1 inhibitor, in advanced cancers.

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

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

NCT#04983810 )

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

In this ongoing study, a total of 47 patients have been dosed to date in the 065-101 study through eight dose levels, of which 33 are evaluable for efficacy.

Dose limiting toxicities of nausea and hyperglycemia were observed, which were controlled after dose interruption, with blood glucose levels returning to normal range.

Dose level 5 (100mg twice daily for 5 days per week, 4 out of 4 weeks) has been determined as the recommended Phase 2 dose.

To date, single agent activity, including complete response, partial response and stable disease, has been observed in certain patients with advanced endometrial, squamous non-small cell lung cancer and T-cell lymphoma.

Several pretreated patients who benefitted from fadraciclib monotherapy , were retrospectively found to harbor

CDKN2A/CDKN2B alterations, including loss of function or deep deletion.

These included patients with T-cell lymphoma and also gynecological, hepatobiliary, lung, pancreatic and testicular cancers .

We plan to enroll patients in the Phase 2 proof-of-concept stage beginning with the basket cohort which will enroll patients with mechanistically relevant biomarkers, including CDKN2A and/or CDKN2B mutation or deletion.

Additional cohorts will be enrolled as resources allow.

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.

The basket cohort will enroll patients regardless of histology with biomarkers relevant to the drug’s mechanism, including CDKN2A/B, MCL1, MYC and/or cyclin E amplified.

Fadraciclib tablets can be given orally with repeat dosing which has led to transient suppression of anti-apoptosis proteins with generally good tolerability and no Grade 3 or higher hematological toxicity in the first cycle.

We believe that fadraciclib’s inhibition of CDK2 and CDK9 may be superior to inhibiting either CDK2 or CDK9 alone.

Plogosertib Phase 1/2 Study in Advanced Solid Tumors and Lymphoma (140-101;

NCT# 05358379 )

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.

This ongoing open-label Phase 1/2 registration-directed study uses a streamlined design and initially seeks to determine the RP2D for single-agent oral plogosertib in a dose escalation stage.

Once RP2D has been established, the study will 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.

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

Fifteen patients have been treated at the first five dose escalation levels with no dose limiting toxicities observed.

Stable disease has been observed in pretreated patients with gastrointestinal, lung, and ovarian cancers.

A new, alternative salt, oral formulation of plogosertib with improved bioavailability is under development.

We plan to recruit further patients to the 140-101 study after the new formulation becomes available.

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.

For the three months ended March 31, 2024, we used net cash of $0.6 million to fund our operating activities.

We have cash and cash equivalents of $2.8 million as of March 31, 2024, which together with the $8.0 million gross proceeds from equity financing received in May 2024 will allow it to meet our liquidity requirements into the fourth quarter of 2024.

However, there remains 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.

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Liquidity and Capital Resources

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

September 30,

The following is a summary of our key liquidity measures as of March 31, 2024 and 2023 (in $000s):

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 a limited amount of revenue.

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 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,

As of March 31, 2024, we had an accumulated deficit of $431.2 million.

Cash used in operating, investing and financing activities for the three months ended March 31, 2024 and 2023 is summarized as follows (in $000s):

Three Months Ended March 31,

Net cash used in operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by financing activities

Operating activities

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.

Net cash used in operating activities decreased by $6.4 million, from $6.9 million for the three months ended March 31, 2023 to $0.5 million for the three months ended March 31, 2024.

The decrease in cash used by operating activities was primarily the result of a decrease in net loss of $2.9 million, brought about by a reduction in manufacturing and non-clinical activities, and a change in working capital of $3.5 million, due mainly to the receipt of research and development tax credits of $2.9 million during the three months ended March 31, 2024.

Investing activities

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.

Net cash used in investing activities remained relatively small for each of the three months ended March 31, 2024 and 2023 and consisted of IT-related capital expenditure in 2023.

Financing activities

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.

Net cash from financing activities remained relatively flat for each of the three months ended March 31, 2024 and 2023, consisting of the payment of the preferred stock dividend and costs associated with a securities purchase agreement in December 2023.

Funding Requirements and Going Concern

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.

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.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.

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 $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 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.

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

Three Months Ended March 31, 2024 and 2023

The Company recognized $29,000 of revenue for the three months ended March 31, 2024, relating to recovery of clinical manufacturing costs associated with an investigator sponsored.

There were no revenues recognized for the comparative period in 2023.

We expect to completely fulfill our obligations under this agreement by the second quarter of 2024 and further recognize a small amount of revenues at that time.

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

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

The following table provides information with respect to our research and development expenditures for the three months ended March 31, 2024 and 2023 (in $000s except percentages):

Three 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 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 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.

Total research and development expenses represented 64% and 78% of our operating expenses for the three months ended March 31, 2024 and 2023, respectively.

Research and development expenses decreased by $2.9 million from $5.7 million for the three months ended March 31, 2023 to $2.8 million for the three months ended March 31, 2024.

Expenditure for the transcriptional regulation program decreased by $2.2 million relative to the respective comparative period, primarily due to decreases in manufacturing and non-clinical expenditure.

Research and development expenses relating to plogosertib decreased by $0.4 million relative to the respective comparative period due to decreases in manufacturing and non-clinical expenditure.

We anticipate that overall research and development expenses for the year ended December 31, 2024 will decrease compared to the year ended December 31, 2023 as we focus on our Phase 1/2 programs 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 nine months ended September 30, 2023 and 2022 (in $000s except percentages):

The following table summarizes the general and administrative expenses for the three months ended March 31, 2024 and 2023 (in $000s except percentages):

Three Months Ended

Nine Months Ended

September 30,

Total general and administrative expenses

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.

Total general and administrative expenses represented 36% and 22% of our operating expenses for the three months ended March 31, 2024 and 2023, respectively.

General and administrative expenses decreased by $0.1 million relative to the respective comparative period due mainly to reduction in stock compensation costs.

We expect general and administrative expenditures for the year ended December 31, 2024 to remain relatively flat compared to the year ended December 31, 2023.

Other income (expense), net

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

The following table summarizes other income for the three months ended March 31, 2024 and 2023 (in $000 except percentages):

Three 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 $1.7 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.

Total other income decreased by $0.1 million from $0.2 million for the three months ended March 31, 2023 to $0.1 million for the three months ended March 31, 2024.

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 $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.

Accordingly, we

presented $52,000 and $0 as other income arising from royalties from the APA during the three months ended March 31, 2024 and 2023 respectively.

Foreign exchange gains (losses)

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.

Foreign exchange gains increased by $88,000, from a loss of $87,000 for the three months ended March 31, 2023, to a gain of $1,000 for the three months ended March 31, 2024.

Other income (expense), net for the year ended December 31, 2024, 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 any intercompany loan becomes foreseeable.

Foreign exchange gains and losses relating to intercompany operating expenditure, which is expected to be settled in the foreseeable future,, will be recognized within the statement of operations.

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

The following table summarizes total income tax benefit for the three months ended March 31, 2024 and 2023 (in $000s except percentages):

Three 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 $0.6 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 total income tax benefit, which comprised of research and development tax credits recoverable, remained flat at approximately $1.3 million for each of the three months ended March 31, 2024 and 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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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 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 September 30, 2023.

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, 2023 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, 2024.

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