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, 2023, 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, 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, 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 21 Table of Contents 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. 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 ) ​ 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. ​ 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 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. 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 March 31, 2024 and 2023 (in $000s): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ 2024 2023 Cash and cash equivalents ​ $ 2,798 ​ $ 11,435 Working capital: ​ ​ ​ ​ ​ ​ Current assets ​ $ 4,835 ​ $ 19,676 Current liabilities ​ (8,350) ​ (8,040) Total working capital ​ $ (3,515) ​ $ 11,636 ​ 22 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, 2024, we had an accumulated deficit of $431.2 million. Cash Flows 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, ​ 2024 2023 Net cash used in operating activities ​ $ (483) ​ $ (6,861) Net cash used in investing activities ​ — ​ (6) Net cash provided by financing activities ​ (79) ​ (50) ​ Operating activities 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 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 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 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 Food and Drug Administration (“FDA”) or European Medicines Agency (“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. ​ ​ ​ ​ ​ ​ 23 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. 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. ​ ​ 24 Table of Contents Results of Operations Three Months Ended March 31, 2024 and 2023 Revenues 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. The future 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. 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; 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, 2024 and 2023 (in $000s except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ Difference ​ ​ ​ 2024 2023 $ % ​ Transcriptional Regulation (fadraciclib) ​ $ 1,752 ​ $ 4,087 ​ $ (2,335) ​ (57) ​ Epigenetic/anti-mitotic (plogosertib) ​ ​ 963 ​ ​ 1,351 ​ ​ (388) ​ (29) ​ Other research and development expenses ​ ​ 87 ​ ​ 236 ​ ​ (149) ​ (63) ​ Total research and development expenses ​ $ 2,802 ​ $ 5,674 ​ $ (2,872) ​ (51) ​ ​ Total research and development expenses represented 64% and 78% of our operating expenses for the three months ended March 31, 2024 and 2023, respectively. 25 Table of Contents 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. The future 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 months ended March 31, 2024 and 2023 (in $000s except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ Difference ​ ​ 2024 2023 $ % Total general and administrative expenses $ 1,582 ​ $ 1,645 ​ $ (63) ​ (4) ​ ​ 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. The future 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 months ended March 31, 2024 and 2023 (in $000 except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ Difference ​ ​ 2024 2023 $ % ​ Foreign exchange gains (losses) $ 1 ​ $ (87) ​ $ 88 ​ (101) ​ Interest income 2 ​ 116 ​ (114) ​ (98) ​ Other income (expense), net 52 ​ 166 ​ (114) ​ (69) ​ Total other income (expense), net $ 55 ​ ​ 195 ​ $ (140) ​ (72) ​ ​ 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 26 Table of Contents 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 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. The future 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 the 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 months ended March 31, 2024 and 2023 (in $000s except percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ Difference ​ ​ 2024 2023 $ % ​ Total income tax benefit $ 1,354 ​ $ 1,320 ​ $ 34 ​ 3 ​ ​ 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. The future We expect to continue to be eligible to receive United Kingdom research and development tax credits for the year ended December 31, 2024 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 2024, 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 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, 2023 and Note 2 to our unaudited consolidated financial statements included elsewhere in this Quarterly 27 Table of Contents Report on Form 10-Q. There have been no material changes to our critical accounting policies during the three months ended March 31, 2024. ​ ​ 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.