CYCC: Focus on Key Programs to Conserve Resources
Cyclacel Pharmaceuticals, Inc. (CYCC) is a clinical-stage company dedicated to the discovery, development, and commercialization of small molecule cell cycle inhibitors for the treatment of cancers and other serious disorders. The company’s expertise lies in the area of Cell Cycle Inhibition which is a mechanism-targeted approach for the treatment of cancer and other serious proliferative diseases.
Cyclacel aims to develop novel, cell-cycle-based mechanism-targeted cancer therapies that will stop the growth of cancer cells and will limit the damage caused to normal cells. The company strives to develop anticancer drug candidates in all phases of the cell cycle and multiple compounds for particular cell cycle targets.
Relatively deep pipeline, but most are in early or middle stages of development
The company’s lead development candidate, CYC682 (Sapacitabine), is an oral nucleoside analogue which is undergoing a phase II trial in elderly patients with AML and MDS. The company has recently begun a phase II study of Sapacitabine in patients with previously treated non-small cell lung cancer (NSCLC).
The second candidate is a cyclin dependent kinase (CDK) inhibitor, CYC202 (Seliciclib), which is in phase II trials for the treatment of NSCLC and also for the treatment for nasopharyngeal cancer or NPC. Recently, Cyclacel has initiated a phase I trial of oral Sapacitabine and oral Seliciclib, given in combination to patients with advanced cancers.
The company is also developing CYC116, an Aurora kinase inhibitor, for the treatment of cancer, and initiated a phase I trial in June 2007. The company has eight additional preclinical stage programs, which target cell cycle mechanisms for the treatment of cancer, type II diabetes, inflammatory kidney diseases, and viral infections (HIV/ AIDS). Following is the summary of the company’s clinical programs.
Source: company website and SEC filings
Limited financial resources force Cyclacel to focus on key programs
However, except for Sapacitabine, most of the programs are currently on hold due to financial constraints. Following the revised operating plan announced in late 2008, the company is focusing its clinical development priorities on:
- Sapacitabine in acute myeloid leukemia (AML) in the elderly (phase II randomized study in progress)
- Sapacitabine in myelodysplastic syndromes (MDS) (phase II randomized study in progress)
- Sapacitabine in NSCLC (phase II study in progress)
In addition to the above, CYCC also has ongoing programs in clinical development which are currently awaiting the availability of clinical data. These programs include Sapacitabine for CTCL, Seliciclib in NPC and NSCLC and CYC116 in solid tumors. The company intends to determine the feasibility of pursuing further development and/or partnering of these assets once data becomes available.
Financial position is still a matter of concern
Since its inception in 1996 the company has devoted substantially all its efforts and resources to its research and development activities. The company has been incurring significant losses since inception. We expect the company will continue to incur substantial losses for the next several years as it continues with the development of its clinical drug candidates.
The company currently has three marketed products — Xclair Cream, Numoisyn Liquid and Numoisyn Lozenges, which were acquired through the purchase of Align in October 2007. But sales from these products are very limited.
As of March 31, 2009, Cyclacel had $20.4 million in cash, cash equivalents and short-term investments. For the quarter ended March 31, 2009, net cash burn rate was $4.8 million. In December 2007, the company entered into a Committed Equity Financing Facility (CEFF) with Kingsbridge Capital Ltd. Kingsbridge will provide the company with up to $60 million of capital through the purchase of newly issued shares; Cyclacel, however, has retained the right to determine the timing of all CEFF financing. The company has not yet drawn from the facility which expires in December 2010.
We are still concerned about the company’s cash position. The company is working on cutting costs by reducing its workforce by 30% worldwide and focusing its resources mainly on the development of lead pipeline candidate, Sapacitabine. Therefore, management expects the research and development expenditure in 2009 to be lower than that in 2008. Research and development expenses in 1Q09 were $3.1 million as compared to $5.9 million in the comparable quarter of 2008.
Further, in April 2009, the company announced the suspension of payment of quarterly dividend on 6% convertible exchangeable preferred stock. Management expects that the current level of cash and cash equivalents will be sufficient to meet Cyclacel’s funding needs till 2Q10. However, we feel that CYCC may need to raise additional funds when it advances Sapacitabine into advanced clinical development.
We reiterate our Hold rating on CYCC shares.
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