Cyclacel Pharmaceuticals, Inc.

Good afternoon and welcome to the CycloCell Pharmaceuticals third quarter 2021 results conference call and webcast. At this time, all participants are in a listen-only mode. After today's call, members of the financial community will have an opportunity to ask questions. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. In posing your question, we ask that you please pick up your handset to allow optimal sound quality. The company will also be accepting a limited number of questions submitted via email to the address ir at cyclocell.com. Lastly, if at any time during the call you should require operator assistance, please press star zero. Please note, today's call is being recorded. I would now like to turn the conference call over to the company.

Good afternoon, everyone, and thank you for joining today's conference call to discuss Cyclocell's financial results and business highlights for the third quarter ending September 30th, 2021. Before turning the call over to management, I would like to remind everyone that during this conference call, forward-looking statements made by management are intended to fall within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended. As set forth in our press release, forward-looking statements involve risks and uncertainties that may affect the company's business and prospects, including those discussed in our filings with the SEC, which include, among other things, our Forms 10-Q and 10-K. These filings are available from the SEC or our website. All of our projections and other forward-looking statements represent our judgment as of today, and CycloCell does not take any responsibility to update such information. With us today are Spiro Rombatis, President and Chief Executive Officer, Paul McBaron, Executive Vice President, Finance and Chief Operating Officer, and Dr. Mark Kirschbaum, Senior Vice President and Chief Medical Officer. Spiro will begin with an overview of our business strategy and progress on CycloCell's clinical program, and Paul will provide financial highlights for the third quarter of 2021, which will be followed by a Q&A session. At this time, I would like to turn the call over to Spiro.

Thank you, Irina, and thank you, everyone, for joining us today. for our third quarter and business update call. I would like to begin the call by providing an update on the progress we are making across our two programs, our oral CDK2-9 inhibitor, Fadracycline or FADRA, and our oral PLK1 inhibitor, CYC140 or 140. The third quarter was characterized by continued execution of our operating plan with opening of two Phase I-II studies for oral FADRA and filing an IND for a Phase I-II study of R140. We have now enrolled a total of six patients across two dosing levels in our FADRA study designated 065-101 in patients with solid tumors and lymphomas. More recently, we announced dosing the first patient in our 065-102 study of FADRA in patients with leukemia. We have also filed with FDA an IND submission for an oral 140 phase 1-2 study in patients with solid tumors. While waiting for FDA review of the IND, we are preparing to open this study, which is supported by ongoing preclinical experiments, supporting our choice of certain cancer histologies for the proof of concept part of this study. It has been a busy year for the company, but we are pleased to be on track to deliver as many as 15 outcomes, or shots on goal, from different cohorts in the two FADRA studies next year. And we are funded to deliver on these potential outcomes with cash projected through early 2023. Let me now review the FADRA program. We are building a specialized global network of world-renowned cancer treatment centers for both the solid tumor and leukemia studies. In addition, multiple preclinical collaborations are providing strong evidence in support of our choice of treatment cohorts in the proof-of-concept stages of the two Phase I-II FADRA studies. Both of these studies are registration-directed and use a streamlined design with an initial stage to determine the recommended Phase II dose, or RP2D, of oral FADRA in solid tumors and separately in leukemias. Once RP2D has been established, the studies will immediately enter into proof-of-concept cohort stage. using a SIMON2 statistical rule to assess efficacy in individual cohorts. If sufficient efficacy at tolerable doses is observed, the relevant cohort will enter an expansion prior to possible presentation of the data to regulatory authorities. In addition to seven solid tumor in 065-101 and six leukemia cohorts in 065-102, the FADRA studies contain a basket cohort in which patients can enroll based on biomarkers relevant to FADRA's mechanism of action. Initial cohorts will receive FADRA as a single agent, with subsequent cohorts designed to treat FADRA in combination with available or emerging standard of care. In total, we expect to report outcomes from 15 cohorts, or 15 shots on goal, 8 in solid tumors and lymphoma, and 7 in leukemia. In the 065-101 solid tumor and lymphoma study, we have dosed orally administered FADRA to six patients in the first two dosing levels, or DLs. Three patients were treated at the starting DL1 level at 50 milligrams BID for three days a week. In DL2, patients are being dosed at 50 milligrams BID for five days a week. We believe that daily dosing is important for drugs enabling apoptosis, like FADRA. Oral FADRA is well-tolerated thus far, and patients are being followed up for initial assessment of efficacy. As a reminder, durable partial response was observed with intravenously administered FADRA at 200 mg two days a week. We are pleased with the pace of recruitment in the 065-101 study, which is currently enrolling at City of Hope and MD Anderson Cancer Centers. Two additional internationally recognized cancer centers located in Asia and Europe, respectively, have been added to 065-101, with one already open for enrollment. Both sites were selected for their expertise with tumor types of interest to FADRA. With a total of four sites, we expect to rapidly determine RP2D and move into the cohort stage. Although expectations of clinical efficacy are low in the dose escalation stage, as specific histologies of interest are not required in the protocol, investigators are permitted to enroll patients with relevant tumor types. In the 065-102 study of oral FADRA and leukemias, we have dosed the first patient in the dose escalation part and will update our progress as dose escalation continues. Details of this study were described in our recent press release. To summarize, Similar to the solid tumor 065-101 study, the initial dose escalation stage of the leukemia trial will determine the recommended phase 2 dose, followed by a proof of concept or cohort stage. Oral FADRA will be evaluated in patients with various hematological malignancies and leukemia subtypes. These include AML, CLL, MDS, and also specific leukemia subtypes dependent on the FLT3, KIT, or MAPK pathways. In 065-102, three cohorts will receive oral FADRA as a single agent, and the rest in combination with venetoclax, or hypomethylating agent, or low-dose RSD. The basket cohort can enroll patients with biomarkers relevant to FADRA's mechanism, but diagnosed with different hematological malignancies or benign hematological conditions characterized by uncontrolled proliferation. The protocol allows for expansion of the cohort based on efficacy, which may allow for acceleration of the clinical development and registration plan for FADRA. As a reminder, encouraging anti-leukemic activity and good tolerability in AML and CLL patients were observed with the IV formulation of FADRA dosed intermittently in combination with venetoclax. Let us now turn to 140, our novel, orally available PLK1 inhibitor. Having filed the IND with the FDA, we expect to open a Phase I-II study for the treatment of solid tumors in early 2022. We will provide details of the cohorts to be included in the study at that time, along with our dosing strategy for 140 as a single agent. This strategy is strongly supported by preclinical data, which show that 140 is biologically differentiated from the other PLK1 inhibitor in development. Specifically, preclinical studies by Cyclacel and collaborating investigators have demonstrated sensitivity of certain tumor types in patient-derived specimens to 140 monotherapy given as daily oral dosing. If these findings are reproduced in the upcoming clinical studies, 140 could emerge as a promising alternative in multiple solid and liquid cancers. The expansion of clinical programs for our two lead candidates is building up to a very exciting period for CycloCell. By the end of the first quarter of 2022, we expect to have three ongoing Phase 1-2 clinical trials, which taken together should result in one of the most data-rich periods in our company's history. As these data sets begin to mature, the positioning of FADRA relative to other development stage CDK inhibitors, is worth considering. The success of first-generation CDK drugs, such as Pfizer's Ibrans, have attracted the attention of both drug developers and investors. Several new therapies are now in clinical development, targeting a variety of CDK enzymes. We thought it was important to discuss on today's call how FADRA is differentiated. effective anti-cancer drugs must be capable of durable target engagement. While our previous intravenous formulation of FADRA clearly demonstrated strong single-agent activity, we also recognized that intermittent or weekly dosing of an IV-administered drug would not be convenient for patients, especially in the midst of an ongoing pandemic. We therefore invested a considerable time and resource studying the pharmacogenetic relationship between oral and intravenous FADRA. These data were presented in October 2020 and showed that our oral formulation had similar bioavailability to the AV formulation, including half-life, maximal concentration, and area under the curve. This led us to conclude that FADRA could be optimally dosed as an oral daily schedule therapy. With a four-hour half-life and once or twice daily dosing, we believe oral FADRA is capable of durable target engagement, but with the added benefit of oral dosing convenience for patients. As a highly selective inhibitor of both CDK2 and CDK9, FADRA can help restore apoptosis within a cancer cell in two important ways. By targeting CDK9, FADRA inhibits the transcriptional regulation of anti-apoptotic proteins such as MCL1 and MYC. By targeting CDK2, FADRA addresses an escape mechanism when CDK9 is inhibited and also directly inhibits self-proliferation by preventing overexpression of cyclin E. When it is abnormally elevated, sactin E contributes to resistance of several tumor types, mostly in the women's cancers, to various anticancer therapies. We believe that FADRA's dual targeting, both within the cell cycle pathway, may confer a competitive advantage in the clinic. In the months ahead, we hope to formally present many of these exciting findings featuring our two lead drug candidates. Having reviewed the progress with our clinical programs and ongoing research activities, I would like now to turn the call over to Paul McMarron for a review of Cyclocell's third quarter financials. Paul?

Thank you, Spiro.

As of September 30th, 2021, cash and cash equivalents totaled $40.2 million compared to $43.6 million as of June 30th, 2021. The decrease of 3.4 million was primarily due to 6.3 million net cash used in operating activities, offset by 2.9 million cash provided by financing activities. Research and development expenses were 4.2 million for the three months ended September 30th, 2021, as compared to 1.1 million for the same period in 2020. R&D expenses relating to FADRA increased by approximately $2.5 million for the three months ended September 30, 2021, due to the opening of the two Phase I and II clinical studies and clinical supply manufacturing. Additionally, R&D expenses related to CYC 140 increased $0.5 million per quarter as the preclinical evaluation and clinical trial supply manufacturing of CYC 140 progressed. General and administrative expenses for the three months ended September 30th, 2021 were 1.8 million compared to 1.5 million for the same period of the previous year due to increased legal and professional expenses and recruitment costs relating to the expansion of the clinical team. United Kingdom research and development tax credits were 1 million for the three months ended September 30th, 2021. as compared to $2.3 million for the same period in 2020 due to the increase in R&D expenditure eligible for the tax credit. Net loss for the three months end of September 30th, 2021 was $5 million compared to $2.3 million for the same period in 2020. The company estimates that the cash resources will fund currently planned programs through early 2023. Operator, we are now ready to take questions.

At this time, if you would like to ask a question, press star 1 now on your telephone keypad. Again, that is star 1 on your telephone keypad. To remove yourself from the queue, you may press the pound key.

One moment while we queue. We'll take a question from Jonathan Ashoff of Roth Capital.

Hi, guys. Congrats on the clinical progress. And I have a couple questions. What must you first learn in the phagociclib solid tumor and leukemia programs to know if the pivotal trials must be randomized or single arm? And would that, you know, just be something entirely learned from your own trials, or could there be something from competing drugs, something they could deliver that would influence an FDA opinion on that?

Jonathan, thank you for your question. I think, Mark, you'll be the best person to answer that, single-person randomized study signals. Please.

It's the kind of question that I'm looking forward to having to deal with. Essentially, that means that we have enough activity in a given tumor type to go for a pivotal trial, which I believe is possible. I think it really, the answer to your question really depends on which tumor responds. So it depends on the type. We are kind of biasing the trial towards relapsed defractory disease. So for most of these situations, we believe that a single-harm trial will be adequate to go for rapid breakthrough designation. If it is a space where going earlier or more upfront in terms of lines of therapy, then we would probably be required to do a randomized trial. But right now our focus is on a number of potential areas where it would be a single arm study.

Okay. And I'm guessing the answer is going to be the same if I were to ask the same question for 140. I guess this makes sense. Guys, any better sense other than first half of 2022, which was as per your last slide deck for when we might see the first solid tumor data for oil phagra?

Yes, I think we can speculate on that. Obviously, we'll be keen to report responses with durability, which needs a certain time to follow up. We're very optimistic about that in the proof of concept study, but we may be surprised to the upside if this were to occur in the dose escalation phase. As I mentioned in my prepared remarks, it is not our expectation, since 80% of the patients in dose escalation get the drug below our P2D typically, to see response. And it also hinges on the physicians enrolling patients with tumors of interest. Should that happen and we see a response, of course, that would be very exciting for both the company and the drug, and we would certainly wish to announce that at the appropriate time.

Okay. Thank you, guys. Thank you, Jonathan. Thank you, Jonathan.

And once again, that is Star 1 on your telephone keypad. We'll move next to Kumar Raja of Brookline Capital.

Thanks for taking my questions and also congratulations on all the progress. With regard to the sites, looks like you have four sites on board. So will some of these additional sites be participating in the dose escalation phase? and also how quickly you think you can start enrolling patients in the proof of concepts once you have a sense of the effective dose.

Thanks for your question. Mark, would you like to take that as well, please?

Yeah, sure. So these four sites are actually for the Phase I portion of the trial. There will be additional sites added to increase the numbers and speed for the Phase II studies. We anticipate this to move along very quickly. There is very high investigative enthusiasm. As you can see from the timelines here, all of our cohorts accrue pretty much the moment they open. Things are looking very good. Depending on how well the drug is tolerated, that will determine the number of dose levels that we have. But the way the trial is designed is that immediately when we reach our Phase II dose, we will roll right into the various Phase II trials. As we said, we have four sites now that are in the United States and global, and we'll be adding a number more for when we get to the Phase II component of the study. Also, high-level sites like these.

Okay. And also in the proof-of-concept trial, if one of the indications there are more patients showing up for some of the indications you will continue to enroll them and follow them, or is there a cutoff in terms of how many patients you are going to enroll in terms of each of these indications?

Well, I think that's the beauty of this design. You know, we'll also see that information as we accrue. So, in a sense, they will vote with their feet. I think some arms will obviously accrue better than others. Certainly areas where responses are seen, and, of course, you know, part of the advantage of this is that the investigators already know in the phase one what we're thinking about in the phase two. So we already will get some preliminary proof of concept in the phase one because some of those types of tumors will be accrued. So I think, you know, that will, the responses, will drive the accrual. So we have that flexibility to add other arms if we need to, if things respond in the basket, for example. And we'll go from there.

Okay. Let me add some color, if I may, to Mark's reply so that the audience, I know you are more familiar, but the audience needs to understand some of the dynamics driving enrollment, which is obviously critical. First of all, it's not just four sites. Actually, six groups pursuing the few available slots in the dose escalation study for which we're about halfway through now. There are the two Phase I units at City of Hope and MD Anderson, as well as the two lymphoma departments who are part of this study. These are all open. We have just mentioned that we opened a fifth group in our third site, Phase I unit as well, as well as a final site, a final study. There's one group who will join toward the end of the year. The last two non-US centers were picked because of their expertise in specific cancer types that are part of the Phase II design. So in some ways, the way I would like to answer your question was that we're already jumping ahead to starting, in a way, enrolling tumors of interest by definition of who these people typically get to see in their practices. The reason we took him into the phase one portion is with a strong desire to get into the study early, which I think underlines Mark's remark about excitement from the investigators. We typically assume half a patient per center per month in the industry is a typical benchmark. Here we enrolled six patients since July, which suggests to us that this is going to go quite faster than the typical benchmark. So for all these reasons, we feel that once we know the recommended phase two dose, things will move very fast into the middle stage where proof of concept can be expected. Very exciting times.

Yeah, that's great. And in terms of CYC 140, you are just waiting for the 30 days to pass. What else needs to be done to start the trials there?

That's essentially correct, Kumar. I think the FDA would review the file. If they have no questions at 30 days, we will then open the study for enrollment. We already have the sites lined up. I believe there are already patients being proposed for the study, which means that once we open, we should be able to enroll. We have a lot to learn about 140, but it was a similar experience with FADRA. Both INDs went through the FDA review with no questions. So if we have a similar experience, we should expect toward the turn of the year to start enrollment.

Okay, great. Thanks so much. Thank you, Kumar. And once again, to ask a question, that is star 1 on your telephone keypad. One moment while we queue. And we'll move next to Kevin DeGieter of Oppenheimer.

Hi. This is actually Susan calling in for Kevin DeGieter. I have just two questions. The first question on FAD Recyclib. So, you mentioned that you will need to follow the patients for a certain period of time. potentially to show durability of response. What do you think is the minimum follow-up period to demonstrate this?

Mark, thank you for your question, Susan, first of all. Mark, this is a question that you perhaps can deal with in terms of the different histologies.

Well, you know, it's hard to say. The minimum is defined by the protocol, right? So they need to go for a month in order to fully establish, you know, the toxicity question. So the minimum cycle, the minimum amount of time is 28 days. If they have a response at that point in time, which is potentially possible for some of these disease types that we're looking at, I mean, you know, that can happen. We usually anticipate it to be a little bit longer, but either way, as long as they tolerate the drug, they can receive it. So we don't have a, there's no set time limit on the amount of drug they can get. So if it takes them, you know, several months to have a full response, we are providing drugs for that. But the minimum time for treatment to be eligible in the study is 28 days.

Got it. That makes sense. And my second question is actually on cyclotel 140. How were the histologies of interest selected for the collaborative preclinical studies? Did you guys have other evidence prior to initiating these studies?

First of all, we have not initiated the 140 oral studies. program yet. That will happen, as I said, very shortly after the A&D review, but Mark can certainly address the question of how the prospective histologies, of which only two have been disclosed publicly, this is breast and colorectal, have been or will be selected. Mark, over to you.

Yeah, you know, in very brief answer, we looked extensively through the biology. I mean, some background on me, I actually was an investigator in academia in this field back in my days at the City of Hope. So I know this area very, very well, published on it. So there are a number of tumors that are driven by PLK1. You know, it's either amplified or it is believed to be part activity pathways that drive the tumor. So looking at the known biology there, there's also preclinical data that this group has done and published in the past that suggests certain tumors are more sensitive than others. Some are very sensitive to this mode of action. So I think between that and getting – we have a very high-level team of investigators that are working with us, both preclinically and clinically. So between all of them, that's the trial design that we have that we've just submitted to the FDA. And I think that we have an optimal group of potential tumors that will respond. But most importantly, as the science develops, as it often does, We have a basket arm built into the study so that if new tumors are identified that may be sensitive to this mechanism, they can be enrolled into the basket arm, and if the response is seen in the basket, then those tumors come out as an individual cohort towards the registration pathway. So we pretty much cover all bases. I think in summary we have many in mind that we think will respond and have clinical data for, and then we are open for other ones should data in the future come out to support that pathway.

Susan, let me add a bit more color to Mark's reply to your question, which may also be helpful for the audience. As we mentioned earlier in our quarterly remarks, we believe there is a biologically different implication for how 140 works. It does hit PLK1 as its primary target, as other drugs have or had in the past, but it does work very differently, it appears. And as Mark explained just now, once this information is publicly disclosed, we will be providing additional color on the selection of tumor types, as that mechanism is quite well understood in biology as well as clinical practice, and therefore would guide us to select additional tumor types at the time that the study is open. So we're very much looking forward to that. It's only a few weeks away. If things go according to plan, we should be able to have this discussion again, if not sooner than certainly at our next quarterly call.

Again, that's very helpful. Thank you. I'll jump back in the queue.

Thank you, Susan. And at this time, I'd be happy to return the call to management for closing remarks.

Thank you, Leo, and thank you all for participating in CycleSL's third quarter 2021 call. I think it is evident that we are building significant momentum across our clinical programs. With ongoing enrollment, in our Phase 1-2 study of FADRA in solid tumors and the initiation of the Phase 1-2 trial for FADRA in leukemia, we remain on track to achieve our milestones and deliver on the 15 shots on goal over the coming quarters. In addition, we plan to initiate the Phase 1-2 study of 140 in solid tumors in early 2022, followed by 140 in leukemias. Ahead of these events, we would like to thank our shareholders for their continued support, and we look forward to updating you on our progress and meeting some of you at upcoming conferences, either virtually or in person. Operator, at this time, you may end the call. This does conclude today's conference call.

You may now disconnect your lines, and everyone, have a good day.