Cyclacel Pharmaceuticals, Inc.

Good afternoon and welcome to the CycloCell Pharmaceuticals Third Quarter 2022 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 star 2. 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 cyclacel.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 of 2022. 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 Form 10-Q. This filing is available from the SEC or our website. All of our projections and other forward-looking statements represent our judgment as of today, and CycloSol 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 Psychocell's clinical programs, and Paul will provide financial highlights for the third quarter of 2022, 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 quarterly business updates. We have made excellent progress in our ongoing Phase 1-2 clinical programs with oral fadracycline, or FADRA, and CYC140, or 140, in patients with solid tumors and lymphoma. We were excited to provide new data with oral FADRA at last month's ENA 2022, or triple meeting, which exceeded our expectations for a Phase 1 study primarily designed to study safety and optimal dosing. Last week, we also reviewed FADRA and 140 clinical and preclinical data in our R&D day. In addition to the clinical data, which will be reviewed later on by Mark Kirschbaum, two of our principal investigators summarized the treatment landscape for T-cell lymphoma and hepatobiliary cancers. Each of these challenging indications has its own dedicated cohort in our Phase II study and are cancers of interest for FADRA for several reasons. One of these reasons was presented by the investigator from Seoul National University Hospital who shared preclinical data from her lab showing sensitivity to FADRA in biliary tract cancer cells, which suggests important potential for our drug, in this cancer type. The cells were obtained from patients in her clinic, one of the largest in the world specializing in biliary tract cancers. As for lymphoma, we were excited to see monotherapy PRs in patients with both cutaneous and peripheral T cell lymphoma. These included a PR in the angioimmunoblastic type of PTCL which is, as explained by the investigator from City of Hope, very difficult to treat. We also reported on exciting new findings from our 140 program, including early signals of clinical activity and further evidence of its differentiated biological profile. For those of you who were unable to join our R&D day, a replay of the event, including the key opinion leader presentations, is available on our website. Over the next 12 months, we expect multiple data readouts from the registration-directed Phase I-II studies for FADRA and 140. The dose escalation part of the FADRA study is approaching completion and will soon enter Phase II proof-of-concept stage Initial data from this stage with multiple cohorts by histology are expected around the middle of 2023. Dose escalation in the 140 study is a bit earlier as the sites are currently submitting patients for slots in dose level three. We expect initial data from this 140 study in mid 2023 as well. Before handing over to Mark, I would like to recognize the tremendous talent pool of skilled drug developers within the company and at our collaborating institutions. The CycloCell team is committed to our strategy of bringing our two molecules to proof of concept stage and creating shareholder value. We are well on our way to achieving that with FADRA and will soon be in a position to potentially do the same for 140. We believe that our medicines are differentiated from other kinase inhibitors in their respective classes with properties which may be best in class. I will now turn the call over to our Chief Medical Officer, Dr. Mark Kirschbaum, to provide details on our recent clinical data. Mark?

Thank you, Spiro. As Spiro mentioned, we are very pleased with the single-agent activity we are seeing with our ALFADRA and the encouraging progress of 140 in our Phase I studies. Let me briefly review the ongoing O65-101 Phase 1-2 study with oral FADRA. The primary objective of this study is determination of recommended Phase 2 dose, or RP2D, and safety. Once RP2D is determined, the study is designed to immediately move into Phase 2, or proof-of-concept stage, in which activity of the drug in relevant tumor types will be the primary objective. The Phase I part will determine whether FADRA is tolerated with the objective of choosing an optimal dosing schedule. Patients recruited into this stage generally have advanced disease and are no longer responding to standard treatments. They are thus referred to specialized Phase I centers, such as the ones participating in our study, which are among the top Phase I sites in the world. In this difficult-to-treat Phase I population, it has been exciting to see early indications of broad anti-cancer activity. Two out of three patients with T cell lymphoma achieved partial response, or PR, including a patient with a very aggressive angioimmunoblastic form of T cell lymphoma. Eleven of 15 patients with cervical endometrial liver ovarian cancers achieved stable disease with target lesion reductions as their best response. A pancreatic patient maintained stable disease for five cycles of treatment. These are promising responses to this phase of development and predict deeper responses in the Phase II study where subjects will be treated earlier in the course of their illness. We are pleased to report that FADRA is well-tolerated thus far and that we are able to escalate quickly from dose levels 1 to 5, which is 100 milligrams BID, Monday through Friday, for four weeks out of four. This 100 milligram twice-daily dose on the four-week schedule is completed and can be considered safe. Based on data collected from completed dose levels, including dose level 5, there have been no dose-limiting toxicities related to study drug. Overall, we see primarily nausea at a manageable level as the only consistent side effect of the drug. We have also reported at ENA 2022 results from pharmacokinetic studies and preliminary results of molecular correlative studies from patients in 065-101. The plasma concentrations of fadrocyclib are dose proportional and cross the target engagement threshold levels for CDK2 and CDK9 at the higher dose levels, 4 and 5, for approximately 5 to 7 hours per dose on continuous dosing. We call that fadroid dose twice daily, so we achieve good coverage of the targets per day. Correlative molecular studies, such as RNA-seq, while still preliminary, show results consistent with the predicted activity of the drugs. As we are near the end of the dose escalation part of the trial, we expect to identify RP2D and initiate Phase II proof of concept in early 2023 to evaluate tumors in interest. Tumor types believed to be sensitive to the activity of FADRA, including breast, colorectal, endometrial, hepatobiliary, ovarian, uterine cancers, and lymphomas. With regard to our second oral FADRA study, 065102, in patients with acute myeloid leukemia and myelodysplastic syndromes, We are enrolling patients with dose level 4, which is 100 milligrams BID, Monday through Friday on weeks 1 through 3 on a 28-day cycle. We look forward to providing an update on the 065102 trial in 2023. At our recent R&D day, we also reported initial encouraging results from 140101, our phase 1-2 study of 140, an oral PLK1 integrator. The 140-101 study has currently enrolled six patients with advanced solid tumors and lymphoma at dose levels 1 and 2. As this is a first in human study for oral 140, as is traditional, we have started at lower doses. We were therefore pleasantly surprised in this early stage in the study to observe stable disease at dose level 1 in two patients, one with metastatic non-small cell lung cancer for six cycles, and one with metastatic ovarian cancer who went for five cycles. Published preclinical evidence suggests that low-dose continuous administration may be an effective strategy for PLK1 inhibitors, as well as the more documented higher-dose pulse-type strategy. This is particularly true for 140, given that it has a favorable PLK inhibitory profile and a shorter half-life. thus potentially minimizing toxicities, as well as low nanomolar level inhibition of BRD4. Now, BRD4 is a central epigenetic target, which plays an important role in the regulation of many oncogenes involved in the cancer process. Our ongoing Phase I-II trial of 140 is designed to target several important tumor types where the drug's activity may show broad single agent activity. This was observed across multiple preclinical models, including breast, esophageal, gastric, non-small cell lung, ovarian, and squamous cell carcinoma. Our study efficiently evaluates both dose and schedule so that the best dose and schedule can be chosen for the efficacy or cohort stage of the study in these tumor types. I will now turn the call over to Paul to review our third quarter financial results.

Thank you, Mark. As of September 30th, 2022, cash and cash equivalents totaled $23.7 million compared to $36.6 million as of December 31st, 2021. Net cash used in operating activities was $15.7 million for the nine months ended September 30th, 2022, compared to $14 million for the same period of 2021. The company estimates that its available cash will fund currently planned programs to the end of 2023. Research and development or R&D expenses were $4.4 million for the three months ended September 30th, 2022, as compared to $4.2 million for the same period in 2021. R&D expenses relating to phagocycline were $2.5 million for the three months ended September 30th, 2022, as compared to $3.3 million for the same period in 2021 due to a decrease in clinical trial costs of $0.3 million associated with the ongoing Phase 1-2 studies and a reduction of $0.5 million in non-clinical expenditures. R&D expenses related to CYC 140 were $1.7 million for the three months ended September 30, 2022, as compared to $0.7 million for the same period in 2021 due to clinical trial costs associated with the 140-101 Phase 1 study. General and administrative expenses for the three months ended September 30, 2022 were $2.1 million, compared to $1.8 million for the same period of the previous year, due to an increase in professional and legal costs. Total other income net for the three months ended September 30, 2022 was $0.4 million, compared to $13,000 for the same period of the previous year. The increase of $0.3 million for the three months ended September 30, 2022 is primarily related to foreign exchange gains. United Kingdom research and development tax credits were $1 million for each of the three months ended September 30, 2022 and September 30, 2021, and are directly correlated to qualifying research and development expenditure. Net loss for the three months ended September 30th, 2022 was 5.1 million compared to 5 million for the same period in 2021. Operator, we are now ready to take questions.

If you would like to ask a question at this time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. In posing your question, we ask that you please pick up your handset to allow optimal sound quality. And our first question comes from , from .

Good evening. Thank you so much for taking my questions. And also, congrats on the progress you have made over the course of six months. My first question will be on the FADRA program. Given that there are multiple combinations and indications you plan to pursue for the proof of concept stage, are there any indications that you are particularly interested or you will be prioritizing for the first half of 2023?

Thank you, Ahu, for your question. We are not prioritizing any one indication because they all come at the same time. However, it is obvious that investigators have highest interest based on initial dialogue with phase 2 sites about lymphoma and women's cancers. The two indicates you have seen clinical activity so far. But obviously, as the study starts to enroll, we will get people voting with their feet and reflecting both on that medical need as well as relevance of the drug for the disease state.

My second question will be on the 140 program. The BRD4 inhibition is a new information to the public. I would be curious to know what potential combinations and indications you'll pursue and when you will disclose. I know it's not yet publicly known, but any information you'll provide and the timeline for it.

Yes, let me ask Mark to address the scientific and medical aspects of the question. I'll come back when the time lands. Mark, over to you.

Yeah, hi. You know, we're very early in the study, and we're still ascertaining the dose and schedule, so it's hard to really predict what kind of combinations we're going to go at. But there are a number of tumor types in the past have been responsive to single-agent therapy, and we're hoping to replicate that kind of activity as our first step.

Thank you, Mark. So on the question of timing, this is a phase one dose escalation study. Normally, we would not expect to see activity at the first dose level, which typically is below the expected therapeutic window. It's clear that we're wrong in that assumption. The drug is active at a low level, and Mark has provided an explanation for that in the R&D day, which some of you may have already heard. Essentially, we need to complete the escalation. We need to go up perhaps three, four, five, possibly more levels before we know the answer. We expect this to happen within the first half of 2023. We need to continue to see activity that, of course, that would speed up things and entry into phase two. In addition to BRD4 activity, which you highlighted, Ahu, I would like to turn people's attention to the KRAS G12V mutation. that we have recently discovered was registered with a patient who had non-sponsored lung cancer. It's still on study after six cycles, so very encouraging at the first dose level, as we know that PLK inhibitors are sensitive to KRAS mutations. As many of you know, there is one approved drug for KRAS G12C inhibitors, but there is no approved drug and a huge medical need for other mutations, including G12V, which is the one that our patient has. So this is going to be a very exciting avenue of investigation, and I would expect to see patients with lung, potentially colon, and other KRAS-relevant tumors like pancreatic wishing to earn slots in our study as we move forward with dose escalation.

Very helpful. Thank you so much for taking my question.

Thank you, Ahu.

Our next question comes from Shubhendu Sunray from Brooklyn Capital Markets.

Hi. Thank you for taking my question. So with regards to the FADRA trial, how many patients have been dosed in dose level 6? And are you planning, are you also enrolling for dose level 7? How are you thinking about it?

Thank you. Shubhendu, I think this is a question for Mark.

Yeah, hi. You know, we're just ongoing with those level six, so it's way too early to really disclose any of the information. But it's occurring now. I mean, that's in process in real time now. So we'll update that, you know, in a short while.

Okay, thanks. I'm moving to the 140 trial. Currently you are in dose level two and enrolling for dose level three. So how are we planning to escalate? Could you please elaborate on the dosing schedule there?

Yeah, sure. Mark? Yeah, so certainly. So it's pretty straight ahead. You know, it's a 5-milligram increase essentially for each dose level. We have scientific evidence that shows that low dose in a continuous dosing schedule and then higher doses in a pulse-type schedule both have – activity pre-clinically. So we're looking at both of these dosing regimens and schedules as we go along. So we started with five milligrams three weeks continuously. So it's Monday through Friday, five days a week for three weeks out of four. Now that we're at 10 milligrams, it's week on, week off. And then the next dose level will be three weeks continuously as this is tolerated. So That's kind of how the drug will go along. We're doing it slow and safely because these drugs have a history in the past, so fortunately we're not seeing any of this kind of toxicity at this point in time. And as you heard, to our great joy, actually, two out of the first three patients showed clinical activity. So we think there's this alternate schedule kind of story may give us multiple ways to treat patients as we go forward. Yeah, great. Well, it's opening to various combinations.

Okay. Thanks for the additional color. Finally, if I may, with 140, what are your thoughts about, you know, possible combinations with maybe targeted therapies like CRAS, RAP inhibition, or even immunotherapies? How are you thinking about that?

Mark?

Think about it a lot. You know, again, the major thing that we have to do is see where we are. Now, you know, obviously if this low-dose kind of approach holds up, that will allow a lot of these kind of combinations in a very simple fashion because it will be a non-toxic active regimen. But it's really too early to really predict exactly where we would go with this. I think, you know, we're just getting going.

This may be a good time to in support of Mark's explanation to also remind the audience that we are going for single agent activity as our default strategy. Although combinations are an important part of the molecular profile of this drug, as you correctly asked, we think that it has an enhanced chance compared to other PLK inhibitors in the clinic to show a single agent activity. To this end, the BRD4 discovery is very important. It gives us a higher chance of single-agent response. So from the business perspective, allocating capital to test it in Phase I as a single agent is very important. They provide access to early registration opportunities. And, of course, if we have a safe and combinable drug, as Mark pointed out, we will certainly be exploring combinations where it's mechanistically rational. But our bias is to look for single-agent activity if we can't.

Excellent. Thank you so much for taking my question.

Thank you, Subandhu.

Once again, that is darn one to ask a question. We'll take our next question from Jonathan Ascroft from Ross Capital Partners.

Thank you, guys. Just a brief housekeeping. Should we grow G&A from this roughly $2 million number, or is that a little bit of an outlier?

Paul? It's a bit of an out and out, Jonathan, so I would stay with the trend that we've had in the prior quarter.

That sounds great. Thank you very much, guys. You're welcome.

Thank you, Jonathan.

And it appears we have no further questions at this time. I will now turn the call back over to the company for any additional or closing remarks.

Thank you, Gretchen, and thanks to all of you for joining Cyclocell's third quarter earnings call. We began 2022 with tremendous promise, largely based on the earlier clinical work with IV FADRA. The new clinical data we recently reported for oral FADRA are highly promising and may translate into clinical success as we execute our clinical development plan. Our second pipeline asset, 140, is following a similar clinical trajectory to Oral-FADRA by means of early signs of single-agent activity at low doses in heavily pretreated patients with solid tumors and lymphoma. The key takeaway is that as momentum builds with our two clinical programs, their potential of becoming important anti-cancer therapeutics in solid tumors and lymphoma is becoming apparent in medical and industry circles. We look forward to providing further updates on our clinical progress throughout 2023 and hope to meet some of you at upcoming conferences. Operator, at this time, you may end the call.

Thank you, ladies and gentlemen. This concludes today's conference. You may now disconnect.