Cyclacel Pharmaceuticals, Inc.

Good afternoon and welcome to the CycloCell Pharmaceuticals second quarter 2023 results conference call and webcast. At this time, all participants are in a listen-only mode. After today's calls, members of the financial community will have the 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 questions, we ask that you please pick up your handset to allow optimal sound quality. 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. Please go ahead.

Good afternoon, everyone, and thank you for joining today's conference call to discuss cyclical financial results and business highlights for the second quarter of 2023. 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 and 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 filing with the Securities and Exchange Commission, which include, among other things, our forms 10-Q and 10-K. All of our projections and other forward-looking statements represent our judgments as of today, and TycoSales does not take any responsibility to update such information. With us today, Vice-President and Chief Executive Officer. Paul McFerrin, Executive Vice President, Finance and Chief Operating Officer. And Dr. Mark Kirschbaum, Senior Vice President and Chief Medical Officer. Biro will begin with an overview of our business strategy in progress. Mark will provide details on CycloSelf clinical programs. And Paul will provide financial highlights for the second quarter of 2023, which will be followed by a Q&A session. At this time, I would like to turn the call over to Cyril.

Thank you, Grace, and thank you, everyone, for joining us today for our quarterly business update. Both clinical programs with Fadracyclib, or FADRA, and Plogocertib, or Plogo, are progressing well, and we are on track to deliver key data readouts over the coming months. We expect to report complete dose escalation data with FADRA and determination of the recommended phase 2 dose, or RP2D, and in the PLOGO study, dose escalation data and further elucidation of its novel epigenetic mechanism. In the FADRA 065-101 study in patients with solid tumors and lymphoma, our immediate task is to determine the recommended phase 2 dose, or RP2D, and we're very close to achieving this goal. Pharmacokinetic and pharmacodynamic data from the initial patients at this dose level suggest that we are achieving level above the predicted target engagement levels on our daily dosing. In addition to choosing RP2D, another parameter that may increase the chance of success in Phase II is the selection of the histologies in which we may expect to see anti-cancer activity. As previously reported, we have seen PRs and stable disease in patients with T-cell lymphoma, women's cancers, including cervical, endometrial, and ovarian, and also pancreatic cancer, all on FADRA monotherapy. Our Phase II sites have been selected with this in mind, and they are ready to participate once we declare RP2D and elect to start the Phase II proof of concept, or POC, stage of the study. Clinical data from this open-label POC stage will be reported as they become available. Based on the totality of data collected to date, we believe that FADRA's CDK2-9 profile is differentiated from other molecules in its class in terms of safety and anti-cancer activity reported thus far. Of note, a competitor recently disclosed that after a strategic portfolio prioritization, they have discontinued three clinical trials of their AZD4573 candidate. AZD4573 is a CDK9 inhibitor administered intravenously once a week. We believe that continuous pressure on CDK2 and CDK9 targets is required to enable apoptosis. Accordingly, FADRA is a CDK2-9 inhibitor administered by oral tablets on a daily schedule. Let us now turn to PLOGO. We are very excited that PLOGO could emerge as a PLK1 inhibitor with novel epigenetic activity. In our 140-101 study, we are evaluating PLOGO in escalating doses, now at dose level 5, as a treatment for patients with advanced solid tumors and lymphoma. PLOGO has shown early signals of anti-cancer activity at low concentrations in patients with adenoid cystic carcinoma, biliary tract, non-small cell lung, and ovarian cancer. Our preclinical program aiming to elucidate PLOGO's differentiated biological profile has revealed novel epigenetic activity at low concentrations. If further data corroborate these findings, we may enroll in the future one or more patient cohorts selected on the basis of specific biomarkers. I will now turn the call over to Dr. Mark Kirschbaum, our Chief Medical Officer, to provide details on recent clinical data. Mark?

Thank you, Spiro. As you heard, both the FADRA and PLOGO clinical programs are accruing well. and are at important stages in their respective studies. Regarding FADRA, we are completing enrollment at dose level 6A and expect to shortly select the RP2D. Of note, we are now dosing all patients using the oral tablet form of FADRA, which may eventually support a commercial launch. I would like to summarize what we have seen recently in the 065101 study. A patient with heavily pre-treated endometrial cancer, in this level 6A, has documented tumor shrinkage after one cycle and is ongoing. We previously reported that two out of three patients with T cell lymphoma achieved PR, including a patient with a very aggressive angioimmunoblastic form of peripheral T cell lymphoma. Thirteen of 19 patients with cervical, endometrial, liver, and 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 for this phase of clinical testing and may predict deeper responses in phase two. The major toxicities we have seen thus far continue to be nausea and hyperglycemia, which were manageable and reversible. The primary objective of the Phase II stage to follow the determination of RP2D is to assess fibrous activity and safety in relevant tumor types. The design of this registration-directed study allows us to recruit different tumor types in discrete cohorts, each running in parallel and independently of each other. Let's now turn to PLOGO, our oral PLK1 inhibitor. In the 140-101 study of PLOGO in patients with advanced solid tumors and lymphoma, we have observed intriguing clinical activity at these early low-dose concentrations given continuously. These included stable disease at dose level one in two patients with non-small cell lung cancer for eight cycles and ovarian cancer for five cycles at dose level two in a patient with biliary tract cancer for three cycles and at dose level four in a patient with adenoid cystic carcinoma for three cycles. We are currently enrolling dose level five. No SAEs have been reported thus far. Preclinical data have shown that Plogo has an epigenetic mechanism. The term epigenetics refers to the way cells control gene activity without changing DNA sequence. Approved drugs with epigenetic mechanisms, such as histone deacetylase inhibitors or hypomethylating agents, typically work at low concentrations, as opposed to chemotherapy and other traditional forms of cancer therapeutics. We are actively investigating this potential epigenetic mechanism in the preclinical setting as well as in our clinical correlative studies. The 140-101 study is designed to target several important tumor types where preclinical models and biology suggest possible single agent activity. These include colon, lung cancer, and lymphoma. Our study is designed to efficiently evaluate both dose and schedule to optimize RP2D for the proof of concept or cohort stage of the study. Look forward to updating you as we progress our evaluation of FADRA and PLOGO. I will now turn the call over to Paul to review our second quarter and financial results.

Thank you, Mark. As of June 30th, 2023, cash equivalents totaled $10.2 million compared to $18.3 million as of December 31st, 2022. Net cash used in operating activities was $8.2 million for the six months ended June 30th, 2023, compared to $8.7 million for the same period of 2022. The company estimates that its available cash will fund currently planned programs through the end of 2023. However, the operating plan includes discretionary expenditures which if not incurred could extend our liquidity requirements into the second quarter of 2024. Research and development or R&D expenses were 4.7 million for the three months ended June 30th, 2023, as compared to 4.2 million for the same period in 2022. R&D expenses relating to FADRA were 3 million for the three months ended June 30th, 2023, as compared to $2.6 million for the same period in 2022 due to increased non-clinical expenditures. R&D expenses related to PLOGO were $1.4 million for the three months ended June 30th, 2023, as compared to $1.5 million for the same period in 2022 due to clinical trial costs associated with the progression of the 140-101 study. General and administrative expenses for the three months ended June 30th, 2023 and 2022 remained relatively flat at 1.6 million. Total other expense net for the three months ended June 30th, 2023 was 0.1 million compared to an income of 0.2 million for the same period of the previous year. United Kingdom research and development tax credits for the three months ended June 30th, 2023 were 0.6 million compared to 1 million for the same period of the previous year due to a decrease in the tax credit rate that took effect in April of this year. Research and development tax credits are directly correlated to qualifying research and development expenditure. Net loss for the three months ended June 30th, 2023 was 5.4 million compared to $4.6 million for the same period in 2022.

Operator, we are now ready to take questions. At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We will pause for a moment to allow questions to queue. Our first question comes from Ahu Demir, Landenburg.

Hello. Thank you very much for taking my questions. Three on our side. First one would be, given the recent developments and needs in the PLK1 field this week, could you elaborate more on the differential profile of PLOGO compared to other PLK1 inhibitors? I know mechanism of action will be disclosed later in time, but just curious however much you can disclose and mention some details to us.

Thank you for your question, Nahu. That's an excellent question. There are two clinical stage PLK1 inhibitors, as you mentioned. The difference between PLOGO and the other candidate is that we have an epigenetic mechanism, as evidenced by cross-reactivity with BRD4, a validated epigenetic target, whereas the other molecule does not. Very importantly, our molecule has presumed single-aging activity, which we have seen in several patients. At the same time, we believe that the etymology has never been tested in a single agent protocol. It's always been tested in combinations. Lastly, the developments of this week relates to a change in clinical trial plans for the etymology in the front line of colorectal cancer. This is certainly a cancer of interest to us, as is the potential KRAS mutation, but that is only a part of the story that will emerge when we disclose the full details of PLOGO's epigenetic mechanism. Last point that I have for you to consider here is that both of these drugs are given orally. We have a potential best-in-class half-life around 11 hours versus about 24 without the molecule. We believe both molecules have a chance to make it to market, but we believe on different indications based on the very different biological functions.

Thank you, Spiro. And a follow-up question would be, are there any indications that you see a greater efficacy of Flogel when you're trying in the clinical trial?

Well, it's still early days. I think Mark reported we have seen activity in four different tumor types. in about a dozen or so patients so far. These are adenomyotis cystic hushed synoma, obviously non-small cell lung cancer, which is very exciting given the importance of this market to any oncology new drug, and also in ovarian and biliary tract cancers. So women's cancers remain of great interest to us for the reasons that we have seen before in this class, as is the potential for activity in lung. We have not had any corrective patients enrolled so far. That may change, and that, of course, will change our picture. We believe also bladder cancer is sensitive to PRK1 inhibition and possibly triple negative breast. So it remains a story to unfold, but, of course, what may matter here is that if the epigenetic mechanism PROGO is fully corroborated, we could be able to enroll mutationally selected patients. In other words, choose patients based on the mutation that is driving the tumor and enroll a specific cohort with this type of patient profile that can sometimes be tumor agnostic, regardless of the tumor tissue in which the tumor originated, and put the involved patients only because of the mutation. More on that in the next quarters as the story fully unfolds.

Makes sense, Spiro. And my last question will be, when should we expect any efficacy data from any of the programs, FADRA or PLOGO? What does the timeline look like?

Well, the first report that we mentioned would be the full phase one results for FADRA in the 065-101 study. This should come by the end of this year, possibly a bit sooner. You should be aware that there are extensive clinical data being worked on by collaborators of Cyclocell and the company itself that will complete the story of FADRA as it unfolds in the clinic. prior to us beginning phase two, which we're ready to go at this moment as soon as the last patient's complete follow-up. In the case of Plogo, we will disclose the mechanism toward the end of this year. We expect data by the end of December, but of course we need to have additional confirmation by a set of sponsor studies, which are in progress. and expect to have the first clinical results for Plogger early next year, conservatively assuming we'll take at least two or three more cohorts before we complete dose escalation. So both of these products will have a data flow over the next three to four quarters.

Sounds good. Thank you very much for answering my question.

Thank you, Ahu. Our next question comes from Jeff Jones, Oppenheimer.

Good afternoon, guys, and thanks for taking the questions. Just a couple of follow-ups to Austin's on Spadra. I just wanted to confirm for the dose level 6A that you need to call your RP2D, do you have six patients enrolled at this point, and how long – Does it take from enrollment to be able to call RP2D? And then from there, what does timing look like to start the Phase II POC study?

Thank you for your question, Jeff. Let me ask Dr. Kirschbaum to answer the first part of the question, Mark, and then I'll come back and talk about Phase II when Mark completes his response to your question.

Sure. We have the last two patients are consented and are expected to start any day now.

So the time to achieve RP2D mark? What is the time of follow-up protocol that Jeff asked?

So technically, the DLP period is one cycle. If they get through one month, in terms of safety, we could declare it. We'll still be following them for activity. Obviously, one month would be early for that. But the safety part of it is 28 days. Great. Thanks.

Thank you, Mark. So that's your second question with when are we ready to start Phase 2. Obviously, one prerequisite. the declaration of RP2D, as Mark explained. The other one is corporate initiatives underway to pursue both balance sheet and strategic options available to the company right now. We obviously face a challenging capital markets environment, but there's a lot of, you know, in both of our drugs. which the companies explore to understand alternative to create stockholder value. So all of these parameters play into the decision to start phase two. And as explained in his section of the remarks, the decision that our board will make toward the end of Q3.

Great. Just one follow-up. You mentioned presenting the data on the dose escalation in the lymphoma-solid tumor patients. So the... totality of the Phase 1 data towards year-end. Are you thinking about that at a conference or a company-sponsored event to walk through all that data? How are you thinking about that?

We'd like to do both of the above. Obviously, current deadlines passed us for some conference at year-end, like Antonio or have you. Therefore, we'll have to consider a company announcement first, with con-submissions for already planned one. Great.

Thank you very much, guys, and congrats on the quarter.

Thank you. Our next question comes from Kemp Dolliver, Brookline Capital Markets.

Great. So with regard to discretionary spending, given where you are with the likely timing of data and your resources, what's the dollar amount of discretionary spending you're thinking about when you talk about extending the runway into second quarter?

I think this one is for Paul. Thank you, Kemp.

Thank you, Kemp. Thanks a lot. So I think that what we would look at clearly is uncommitted expenditure at the moment. That's what we refer to by discretionary. I think the important fact is that by limiting some of that uncommitted spend, it allows us to bring in, in the early part of 2024, about $3.5 million of the UK R&D tax credit. That's a significant cash flow into the company, which allows us to then extend into that Q2 2024 number that I mentioned in our prepared remarks.

Got it. And, you know, not to focus too much on this, but FADRA still looks like the more interesting program over PLOGO if you had to make a choice. Is that fair?

And that is a fair question, almost as fair as asking a parent which of the two children they like the most. It's certainly the most advanced and has the most clinical data, and it's an active compound with an excellent safety record. As we said in our prepared remarks, we had actually two competitors who seemed to have lost momentum, if not terminating programs. in the next generation CDK field, but in our opinion, increase FADRA scarcity value and potential exit value for stockholders. The other dimension of your question, Kemp, that we should bring to the attention of investors, that there is a lot of interest in these compounds from strategics. And that interest can manifest itself in various corporate developments as well as alignments. Obviously, we need to explore those in due course in parallel to other initiatives, and that will dictate which molecule could come forward the fastest. For example, if it were to theoretically out-license FADRA, we could develop PLOGO with non-diluted funding coming from FADRA, or the opposite. If parties became as excited as we are about the mechanism of action of PLOGO, the inverse could happen, and therefore non-diluted capital from PLOGO transactions could support FADRA. So we are committed to taking both drugs forward at this time, Given that the spend is relatively modest to get to the end of phase one for PLOGO and to get FADRA phase two ready. So I hope you understand that the company is exploring all available avenues to maximize stockholder value in this difficult time in the capital markets.

Yes, that's clear. Thank you.

Thank you for your questions, Kent.

We have no further questions in the queue at this time. I would now like to turn the call back over to today's speakers.

Thank you very much, operator, and thank you, everybody, for joining us today for our quarterly earnings call. Both of our programs are approaching important catalysts with a strong competitive profile in the therapeutic classes. As a reminder, our upcoming key milestones for 2023 are report final data from dose escalation stage, and RP2D determination on the 065-101 study of oral FADRA in patients with advanced solid tumors and lymphoma. First patient dosed with oral FADRA in Phase II proof-of-concept study of 065-101 in patients with advanced solid tumors and lymphoma. Report Phase 1 data from 141.01 study of oral PLOGO in patients with advanced solar tumor stem lymphoma, and elaborate novel mechanism of action of PLOGO. We look forward to providing you with further updates and hope to meet you at upcoming conferences. At this time, you may end.

This does conclude today's program. Thank you for your participation. You may