Bio Green Med Solution, Inc. (BGMS) Q1 2015 Earnings Report, Transcript and Summary

Good afternoon and welcome to the Cyclacel Pharmaceutical’s First Quarter 2015 Earnings Conference Call and Webcast. Today’s call is being recorded. At this time, all participants have been placed in a listen-only mode and the floor will be opened for questions following the presentation. [Operator Instructions]. It is now my pleasure to turn the floor over to Bill Harris, Cyclacel’s Corporate Controller. Sir, you may begin.

Thank you. Good afternoon and welcome to our quarterly conference call. During today’s call, members of our senior management team will review Cyclacel’s financial performance and business highlights for the first quarter ended March 31, 2015. Before turning the call over to senior management, I would like to remind everyone that during this conference call, any 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-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 Cyclacel does not take any responsibility to update such information. With us today are Spiro Rombotis, President and Chief Executive Officer; Paul McBarron, Executive Vice President, Finance and Chief Operating Officer; and Dr. Judy Chiao, Vice President of Clinical Development and Regulatory Affairs. At this time, I would like to turn the call over to Spiro Rombotis, our President and CEO.

Thank you, Bill, and thank you all for joining our quarterly call. As many of you know, we have completed enrollment in SEAMLESS, our Phase 3 trial of oral sapacitabine capsules as a frontline treatment of patients aged 70 years or older with acute myeloid leukemia or AML who have refused or aren’t fit for intensive chemotherapy. The study is in the firm-out [ph] phase and we’re encouraged that investigators continue to treat and/or follow-up patients as appropriate. The primary end-point of this trial is overall survival. SEAMLESS were sized for approximately 485 patients and was powered at 90% to detect an improvement of survival against an active controller arm of intravenous decitabine. The trial design re-specifies that 424 events need to be observed in order to unblind the data. Approximately 20% of these events remain to be observed before mature data becomes available for analysis. Overall reliable estimation of when data maturity will be reached is difficult. We continue to conservatively estimate that we will reach the specified number of events between the second half of 2015 and the first half of 2016. At that point we will break the randomization code and evaluate the data. As a reminder, on previous calls, we have discussed the outcome of the interim analysis for futility. We believe it is important not to judge the final outcome of clinical studies based on interim data. Our view remains that the decision to submit a dossier for regulatory approval will depend on the totality of the data and their clinical relevance in this patient population. We believe that decitabine’s European approval is a frontline treatment in AML maybe relevant to our assessment of submissibility of the SEAMLESS data. Planning for potential regulatory submissions, we’re in the process of preparing a pediatric investigational plan for sapacitabine for submission to the European Medicines Agency. A pediatric investigational plan is required before a marketing authorization application or MAA can be accepted or validated by EMA. Let us now turn to the other exciting developments with regard to our Cyclin Dependent Kinase or CDK inhibitor program. A decade and half since the award of a Nobel Prize for medicine and physiology for the discovery of CDKs and checkpoint control of cancer cells, they’re finally emerging as a major therapeutic class of anti-cancer agents. Because of their function, and cell-cycle checkpoint inhibitors, drug targeting CDK enzymes have been recently elevated through a high priority by clinical investigators and the pharmaceutical industry. We have also witnessed this base on the number of incoming requests regarding our CDK program and in particular the high awareness of the properties of CYC065. The FDA approval earlier this year of Pfizer’s palbociclib or Ibrance which is the first CDK inhibitor through which the market has reaffirmed the importance of the CDK class. Two other CDK inhibitors are abemaciclib from Lilly and ribociclib from Novartis are in Phase 3 developments. All three of these molecules target CDK4/6 enzymes. Pfizer and Novartis have highlighted their CDK programs as major value drivers in investor presentations. It took a while but CDKs are now validated targets. We believe that our CDK inhibitor program and in particular CYC065 may also become an important value driver for Cyclacel. Although in our public communications, we have concentrated on our most advanced programs related to sapacitabine, we have been quietly advancing our CDK portfolio with the objective of bringing to patients in need a novel treatment option. To this end, we are happy to report that we have been cleared by the FDA to begin first insulin [ph] Phase 1 clinical trial of CYC065 under a company IND in patients with advanced solid cancers and lymphomas. This Phase 1 study will commence as soon as possible following Institutional Review Board or IRB approval. Of note, development of the preclinical package supporting our IND submission for CYC065 has been mostly financed by non-dilutive stockholder friendly grants awarded to Cyclacel by the United Kingdom government. As a historical reminder, Cyclacel has been investing in the biology of cell cycle control and initial addition of CDK enzymes with small molecules since the founding of the company some 18 years ago. Out of the approximately dozen CDKs known to science our founder Professor Sir David Lane, chose to focus on CDK2/9 enzyme inhibition as a promising anti-cancer strategy. This was because this isoform profile results in death of cancer cells by apoptosis and disruption of their ability to copy errors in DNA by a process called transcription. This is a different anti-cancer mechanism to event of CDK4/6 inhibitors. Targeting CDK4/6 may result in cancer cells entering into a non-lethal dormant condition called senescence which is implicated in the evolution of resistance. Senescent non-proliferating cancer cells learned to bypass the effect of therapy by developing resistance mechanisms but ultimately make them immortal or impossible to kill. While the cancer relapses after the cells resume proliferating, patient prognosis is usually poor. The rationale of our strategy to target CDK2/9 is to endure cell death via cell-cycle checkpoint control. Obviously, dead cells cannot adapt to develop resistance and become immortalized. In addition, our preclinical data show that CYC065 reverses sensitivity of cancer cells that have already become resistant to the effect of widely used targeted anti-cancer drugs like trastuzumab or Herceptin. Even these benefits are also observed in clinical trials CYC065 may represent an important therapeutic alternative addressing a large market opportunity. CYC065 targets CDK2/9 with nanomolar potency. Conveniently, it can be administered by both the intravenous and/or routes. Data from clinical IND-enabling studies with 065 represented last month at the American Association of Cancer Research or AACR meeting. In these studies, CYC065 demonstrated inhibition of key cancer and leukemia survival mechanisms and cause death by apoptosis in cancer cells. Cyclacel data showed that CYC065 was effective against acute myeloid leukemia or AML in particular AML with genetic abnormalities such as mixed lineage leukemia rearrangements MLLR which confer a very poor prognosis. Data from the Yale University showed that CYC065 was also effective against uterine cancer cells including resistant to chemotherapy and was especially potent in uterine cancer cells in which cyclin E, the partner protein of CDK2, was amplified or over-expressed. These latter findings reproduced previously published data with breast cancer cells resistant trastuzumab and provide the rationale for development of CYC065 in the multiple-gynecological cancers. At AACR this year, we witnessed a high level of interest by both investigator and company attendees in CYC065 data. Our take away from this observation is that our differentiated strategy of inhibiting CDK2/9 is attracting a lot of attention by the oncology community. Assuming our Phase 1 program with CYC065 is successful, potential indications under consideration for future clinical evaluation based on mechanism and preclinical data include hematological malignancies including AML, ALL, CLL and certain lymphomas and solid tumors, including HER2 Positive breast cancer, resistant to trastuzumab or Herceptin, Triple-Negative breast cancer and/or Homologous Recombination or HR deficient gynecological tumors including BRCA positive breast, ovarian and uterine cancers. With the latter indication, potentially in a combination of CYC065 with sapacitabine aiming to reproduce previously reported clinical anti-cancer activity of Seliciclib and sapacitabine combination. As a reminder, we are currently studying a combination regimen of seliciclib and sapacitabine at the Dana Farber Cancer Institute. Initial data from this Phase 1 study showing confirmed endurable partial responses or PRs in germline BRCA positive patients with breast, ovarian and pancreatic cancers who were reported at the 2013 AACR. We believe that there is relative scarcity of isoform selective CDK2/9 inhibitors and that CYC065 may offer a competitive advantage to Cyclacel or potential partners. In addition to CYC065 we have acquired extensive scientific and clinical experience with our first generation CDK2/9 inhibitor seliciclib. This drug has been administered orally to over 400 patients with evidence of anti-cancer activity in non-small cell lung, Nasopharyngeal and other cancers as both monotherapy and combination therapy. Seliciclib is approximately 40 times less potent against CDK2/9 than CYC065. However, as seliciclib is sparing to bone marrow cells, certain investigator-sponsored trials or ISTs are evaluating seliciclib in endocrinologic and inflammatory indications in patients who have failed prior treatments. As is common with ISTs, Cyclacel is providing drug clinical supplies but is not responsible for these studies operationally or financially. Before turning the call over to Paul, let me summarize our key upcoming milestones. For sapacitabine continued to follow-up in raw patients in SEAMLESS until the specified number of events expected to occur between the second half of 2015 and the first half of 2016. Submit a pediatric investigation plan to EMA. Make a decision on Phase 2b randomized control trial in MDS following review of all relevant clinical data with mature follow-up. Report updated data from the Phase 1 study of sapacitabine in combination with seliciclib in solid tumor patients, in particular those carrying BRCA mutations. For CYC065 our second generation CDK inhibitor, initiate the Phase 1 clinical trial in patients with advanced solid tumors and lymphomas subject to IRB approval. For seliciclib our first generation CDK inhibitor, support academic collaborators in ISPs of seliciclib in patients with Cushing’s Disease and Rheumatoid Arthritis who have failed prior treatments. Paul?

Thank you, Spiro. As you saw from today’s press release regarding our consolidated financial statements for the quarters ended March 31, 2015 and March 31, 2014, our cash position was $29.4 million as of March 31, 2015 compared to $24.2 million at the end of 2014. The increase in the cash position was primarily due to approximately $9.2 million of net proceeds from the sale of common stock in this quarter, partially offset by net cash utilized in operating activities. We have no debt. Revenue for the three months ended March 31, 2015 was $0.5 million compared to $0.4 million for the same period of the previous year. The revenue is related to previously awarded grants from the United Kingdom government being recognized over the period to progress CYC065, our CDK inhibitor, to IND and to complete IND-directed preclinical development of CYC140, a Polo-Like Kinase 1 or PLK 1 inhibitor. Research and development expenses were $4.3 million for each of the three months ended March 31, 2015 and March 31, 2014. Research and development expenses related to SEAMLESS were $0.4 million lower during the three months ended March 31, 2015 compared to the same period in the previous year due to certain SEAMLESS site start-up costs not being required in this quarter. And this reduction was partially offset by increases in spending primarily related to grant-funded research and development programs. General and administrative expenses for each of the three months ended March 31, 2015 and March 31, 2014 were $1.5 million. Based on current plans, the company estimates that it has capital resources to reach beyond the availability of mature data, the final analysis of SEAMLESS and to continue existing programs through late 2017. Spiro?

Thank you, Paul. Operator, we are now ready to take questions.

[Operator Instructions]. You have a question from the line of Mike King of JMP Securities.

Good afternoon, thanks for taking my question. I wanted to ask about 065 and just trying to square the clinical development strategy, the initial clinical development strategy I guess I should say with the some of the preclinical findings that you mentioned Spiro. And just to ask if there are some key biologic or physiologic indicators of where you should go in terms of development, why you wouldn’t go into a rich Phase 1 study rather than sort of an all comer, solid tumor and liquid tumor study?

Hi Mike, thank you for your question. I think this has two parts, one is, that the clinical signals and whether that leads our clinical development plan or CDP, and another one is clinical rationale which I will defer to Judy to answer. So, our entire preclinical dataset supported by clinical observations in patients with our seliciclib first generation CDK program suggest that certain and rich strategy is possible. The bow market to use for that will be Mcl-1 which is one of those pro-survivor proteins that cancer cells over express and by way of doing that evade the activity of treatment and ultimately becoming immortal. We know we can down regulate Mcl-1 in patients by the application of seliciclib. So if we’re able to show that by the application of 065 in the Phase 1 program perhaps then we could in junction with investigators consider the possibilities of enriching as we suggest with patients with higher available bow market. And perhaps more opportunistic approach the one that would require intensive interaction with clinical experts is identification of patients who are addicted to certain oncogene targets of the drug actually inhibits. And that apparently is the case with CDK9 driven cancers, which may relate to among others the effects that we see with oncogene addiction and other phenomena as we see mix for example our expression, DNA repair pathway of resistance for cancer cells. So, both of the comments that you made are in our thoughts, I would need to define a therapeutic window of course to probably go through such enriched studies. Let me ask for Judy for her thoughts on your question.

Mike, that’s a great question that you asked. You know that it’s crucial to have thought of how to rationally develop CDK inhibitor which is not easy. Anyway, so I think Spiro has addressed the preclinical aspects of it. But I think I’ll just share some thoughts from the clinical arena where CDK inhibitors that hit 9 where we think the activities might light. And I think what’s the first thing coming in my mind is the CLL area, which we clearly have see CDK inhibitor that hits 9 actually has real clinical activities. I would say the second line of thoughts, were coming from our Phase 1 studies with sapacitabine and seliciclib that we have observed that durable partial emission. So, I think that one can, looking at as a single agent in areas that perhaps tumors, cancers addicted to certain oncogenes as Spiro has said, or thinking about that is the combination drug which will affect DNA repair pathway particularly in combination with sapacitabine. The last but not the least is to modulating the resistance of approach of note inhibitors like Herceptin which I think will be very worthwhile because Herceptin is a very active drug in the patient population.

Okay, thank you. And can you maybe then talk Judy about Phase 2 expansion type of studies what would that be, where you would do more defined patient population? And if so, would they follow some of the early either preclinical findings that you described?

Mike, I think one of the things that will decide which one and what schedule to use from a clinical point of view is a very careful characterization of the toxicities of the drug in a pharmacokinetic behavior. So I think having said that, I would imagine the Phase 2 studies will narrow down to the combination as well as the appropriate patient population which might include the hematological cancers and solid tumor with a particularly rational. This is not a drug that we should develop blanket of everything. I think we have leads, we have seen how CDK inhibitors have behaved. I think our Phase 2 programs really should be of rational combinations. The only thing that we don’t know yet and we will and very soon find out is the PKs and tolerability of the molecules in a clinic.

And perhaps Mike, I’ll add a couple of points and added color to Judy’s remarks. At AACR we had a number of discussions with experts in the field. And what appears to be emerging as a key scene in the class of CDK inhibitors is that if you look at the CDK4/6 subgroup in any case, that they always get developed as combinations. There is apparently no publication that shows robust clinical benefit as single agent, which tells us that these drugs are most likely adding or working as modulators, which means that either as you pointed out, we find the population of patients who are highly sensitive to those mechanisms or rely on combinations which are of course a more challenging clinical development plan. We’re a conservative company and we’ve been in this field for a decade and half plus. And therefore we feel that it’s our duty to preserve the value of this class to move cautiously, understand the mechanism, finding out what the drugs PK and PD profile is. And then the conjunction with the investigators who are anxious to enrich as we suggested in your first question, cautiously but intelligently possession of the data move to Phase 2 studies, there expansion of the Phase 1 experience hopefully give us a more robust signal. Hope this gives you a sense of where we are at this stage.

[Operator Instructions]. At this time we have no further questions. I would now like to turn the floor back over to Spiro Rombotis for any closing remarks.

Thank you, operator. And thank you all for listening to our call and your support of Cyclacel’s efforts to serve patients in need. We look forward to updating you on our progress and meeting some of you at forthcoming investor conference. Operator; at this time please end the call.

Thank you. This does conclude today’s conference. You may now disconnect.