Bio Green Med Solution, Inc. (BGMS) Q4 2017 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Cyclacel Pharmaceuticals' Fourth Quarter and Full Year 2017 Results Conference Call and Webcast. Today's call is being recorded. [Operator Instructions]. The company will also be accepting a limited number of questions submitted via e-mail to the address ir@cyclacel.com. It is now my pleasure to turn the floor over to the company.

Good afternoon, everyone, and thank you for joining the conference call to discuss Cyclacel's fourth quarter and full year results and business highlights for the quarter ended December 31, 2017. Before turning the call over to 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 the 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 judgments 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, Cyclacel President and CEO. Spiro?

Thank you, Alex, and good afternoon, everyone. On today's call, we will provide our fourth quarter and full year business update and review progress with our clinical development priorities. In our transcriptional regulation program with CYC065, we have achieved clinical proof of mechanism in terms of durable suppression of the Mcl-1 biomarker. We look forward to reporting further details from the ongoing Phase I study with CYC065 in mid-April at an oral presentation during the American Association for Cancer Research, or AACR, 2018 Annual Meeting. We believe that the Phase I results provide a strong rationale for evaluating CYC065 in combination with venetoclax in patients with chronic lymphocytic leukemia or CLL. We have recently submitted the protocol for this study to FDA and expect to start enrolling soon after IRB approval. In addition, we have been in discussions with investigators about evaluating CYC065 in neuroblastoma, a predominantly pediatric cancer with poor prognosis. In another important development we have jointly developed in collaboration with an academic center and a pharmaceutical company, a protocol for a clinical study that will evaluate a combination regimen of sapacitabine and an approved PARP inhibitor. Finally, we have completed analysis over the results from the SEAMLESS Phase III study of sapacitabine in AML and plan to discuss the data with regulatory authorities. During the year, we also strengthened our balance sheet by adding approximately $14.9 million net of expenses. We estimate our capital resources to be sufficient to fund currently planned programs through the first quarter of 2020. Let me now provide some more details on our transcriptional regulation program with CYC065, our cyclin-dependent kinase inhibitor. As many of you know, Cyclacel's founding scientist, Professor David Lane, is an internationally recognized authority in cell cycle biology. He discovered p53, a key tumor suppressor gene that malfunctions in about 2/3 of human cancers. Under his guidance, Cyclacel's drug discovery and development programs concentrated on CDK inhibitors, and in particular, the CDK 2/9 isoform, which is a key component of the p53 pathway. CDK 4/6 inhibitors, such as palbociclib, are approved for a type of breast cancer in combination with standard-of-care hormonal chemotherapy. Although this represents a major therapeutic advance, it may be worthwhile to point out that the first clinical trials of palbociclib reported mostly stable disease and almost no partial responses. Only in combination with letrozole did palbociclib achieve a dramatic improvement in progression-free survival and went on to a breakthrough designation and FDA approval. CDK 2/9 inhibitors are designed to lower the threshold of killing cancer cells, which have become resistant to current treatment. Resistant cancer cells often over express BCL family proteins, such as Bcl-2 and Mcl-1, which are implicated in the survival and ultimate immortalization of these malignant cells. Although venetoclax, a drug that suppresses Bcl-2, was recently approved by FDA for CLL, there are no drugs that have demonstrated durable suppression of Mcl-1 in the clinic. Consequently, an intense competitive race is ongoing amongst several biopharmaceutical companies to address this major challenge in oncology therapeutics. We are excited to have discovered in Part 1 of our ongoing Phase I clinical study that CYC065 demonstrated durable reduction of Mcl-1 expression for at least 24 hours. This was observed in 11 out of 13 patients treated at the recommended Phase II dose, following a single dose of CYC065, which was generally well tolerated. We believe that this is the first time that such a clinical finding has been reported, and we are keen to build on our lead in this important field. Part 2 of the Phase I translational study would enroll patients with advanced solid tumors, in particularly those with amplifications of Mcl-1, MYCN or cyclin E. Part 2 will also evaluate CYC065 in a more intensive schedule dosed on 2 days per week for two weeks of a three-week cycle and will open for enrollment upon IRB approval, which we believe is imminent. Patient specimens will be collected for assessment of biomarkers related to CYC065's mechanism of action. In our view, similarly to CDK 4/6 inhibitors, CYC065 may be the most useful in combination with other anticancer agents. We are, therefore, planning to initiate shortly a Phase I study of CYC065 in combination with venetoclax in patients with relapsed or refractory CLL, where we believe Mcl-1 suppression may be beneficial. The protocol for this study has been submitted to the FDA. The study will evaluate safety, pharmacokinetics and pharmacodynamics of the combination, including biomarkers related to the mechanism of action of CYC065. Discussions with principal investigators and/or corporate groups have progressed with the objective of evaluating CYC065 in both pediatric and adult patients with solid tumors. The company is discussing with an investigator corporative group, a potential evaluation of CYC065 in patients with neuroblastoma in mostly pediatric, life-threatening malignancy, frequently associated with MYCN amplification. Pediatric neuroblastoma with MYCN amplification has a poor prognosis, and there is a desperate need for new treatments for these children. CYC065 may work in neuroblastoma because inhibition of CDK 2/9 is synthetically lethal with MYCN amplification. In other words, MYCN-amplified cancers are very sensitive to the drug's mechanism. There is a strong preclinical rationale for the evaluation of CYC065 in neuroblastoma, including improved survival in MYCN-amplified animal models. In another study to be conducted as an IST, CYC065 will be evaluated in adult and pediatric patients with leukemias, including acute myeloid leukemia, or AML, acute lymphocytic leukemia, or ALL, and in particular, those with mixed lineage leukemia rearrangements or MLL-r. This IST is undergoing institutional review and is expected to open later this year. Once again, Cyclacel will provide CYC065 but will not be paying for the costs of patient enrollment. Let us now turn to our DNA Damage Response, or DDR program with sapacitabine, and the combination study we mentioned at the beginning. This will be a Phase Ib/II investigator-sponsored trial, or IST, administering the combination regimen to patients with BRCA mutant breast cancer. Cyclacel will provide sapacitabine investigational drug products, but will not be paying for patient equipment costs. This IST is expected to start in the immediate future, and more details will be provided at that time. PARP inhibitors, given as single agents, are standard of care in homologous recombination deficient, or HRD, breast and ovarian cancers. HRD cancers include those that are positive for BRCA mutations. Preclinical evidence and early clinical data also support investigational use of PARP inhibitors in HRD, pancreatic and prostate cancers. There are no other approved drugs for HRD cancers, and that unmet medical need exists to improved on standard-of-care therapy in breast and ovarian cancer. Sapacitabine works by an HRD-relevant mechanism of action and has shown promising and durable clinical activity in BRCA mutation-positive patients with breast, ovarian and pancreatic cancers. In parallel, as part of our DNA Damage Response, or DDR program, we are also studying a sapacitabine and seliciclib regimen to disrupt the ability of cancer cells to repair damage to the DNA and thus restore their sensitivity to anticancer therapy. We completed enrollment of Parts 1 and 2 of the Phase I study with a combination of sapacitabine and seliciclib, our first-generation CDK 2/9 inhibitor in patients with advanced solid cancers. Interim data from the study represented at the 2016 American Society of Clinical Oncology, or ASCO, Annual Meeting, which demonstrated promising antitumor activity in a subgroup of 45 patients who tested positive for BRCA mutations. Durable responses with this regimen included one confirmed complete response, or CR, and five confirmed partial responses, or PRs, in patients with breast, ovarian and pancreatic cancers, all of whom tested positive for BRCA mutations. Of note, two responders with BRCA-positive breast cancer achieved 1.5 and over five years of treatment, respectively. Long duration of therapy in such heavily-pretreated patients is rare. Several other patients who tested positive for BRCA at baseline also showed durable, stable disease. No PRs were observed in BRCA wild-type patients, i.e., those testing negative for BRCA mutations. Based on these results and investigator encouragement, we are currently enrolling a Part 3 of this study to evaluate alternative dosing schedules and collect more data in BRCA-positive patients with other solid tumors, including ovarian and pancreatic cancer. Let me briefly address sapacitabine in AML and the data from the SEAMLESS study, which were the subject of an oral presentation at the American Society of Hematology, or ASH, Annual Meeting in December 2017. Although the study did not reach its primary endpoint of statistically significant superiority in overall survival, we're encouraged by the higher complete remission rate on the sapacitabine-decitabine arm, especially in the subgroup with the low white blood cell count, which comprised approximately 2/3 of the study's population. The presentation included additional data from prespecified and exploratory analysis of subgroups that may benefit from treatments with the sapacitabine-decitabine alternating regimen. The company believes that the subgroup results have defined a patient population for whom the sapacitabine regimen may represent an improvement over low-intensity treatment by decitabine alone. We have recently completed exploratory analysis of SEAMLESS subgroups, including interaction tests to test the likelihood that subgroup findings are due to chance. In preparation for discussing the totality of SEAMLESS data with regulators, we are preparing briefing documents for submission to EU and U.S. regulatory authorities with the objective of determining a potential regulatory pathway for sapacitabine in AML. Let me now turn to ISTs of seliciclib conducted by our collaborators. In the IST, also called the TRAFIC trial, sponsored by the U.K. Medical Research Council, which is evaluating seliciclib in rheumatoid arthritis, the Independent Data Monitoring Committee, or IDMC, determined that Part 1 of this study was successfully completed as per protocol. The IDMC recommended continuation of the trial into Part 2 to assess potential efficacy of seliciclib as an addition to existing anti-TNF therapy based on a composite outcome of response in patients with moderate to severe rheumatoid arthritis. The Phase II IST in patients with Cushing's disease and a Phase II study of seliciclib in patients with cystic fibrosis are continuing enrollment. As these programs are not funded by us, we will report progress when the respective investigators provide updates. We are looking forward to an exciting future for the company. We are advancing our clinical programs led by CYC065 in selected patient populations relevant to the drug's mechanism and informed by our scientific expertise in cell cycle biology. Before handing the call over to Paul for a review of the financials, let me review our goals for the rest of 2018, report updated CYC065 Phase I data in patients with advanced cancers; initiate CYC065 Phase Ib in relapsed, refractory CLL in combination with venetoclax; start enrollment in the Phase Ib/II IST of the combination regimen of an approved PARP inhibitor and sapacitabine in patients with BRCA-mutant breast cancer; start enrollment in the Phase Ib/II IST of CYC065 in pediatric patients with neuroblastoma; update mature data from the Part 1 extension of the sapacitabine and seliciclib combination in patients with BRCA-positive advanced breast cancer; and complete Part 3 enrollment of the sapacitabine and seliciclib combination in patients with BRCA-positive breast, ovarian and pancreatic cancers; submit CYC140 PLK 1 inhibitor IND application and conduct regulatory authority meetings regarding the SEAMLESS study of sapacitabine in AML. We will now review our financials. Paul?

Thank you, Spiro. As you saw from our press release, for the quarter ended December 31, 2017, our cash and cash equivalents totaled $23.9 million compared to $26 million as of September 30, 2017. The decrease is primarily due to $1.9 million of net cash used in operating activities. Revenue for the three months ended December 31, 2017, were zero compared to $0.3 million for the same period of the previous year. Research and development expenses were $0.7 million compared to $1.9 million for the same period in 2016. General and administrative expenses for the 3 months ended December 31, 2017 and 2016 were $1.5 million. The U.K. government research and development tax credit for the quarter was $0.2 million. The net loss for the three months December 31, 2017 was $1.9 million compared to $2.8 million for the same period in 2016. As of March 27, we had 11,997,447 shares of common stock outstanding and 264 or 3% of the Series A preferred stock remaining from the original issue. We expect our current cash to be able to fund the company's operations and planned clinical activities through the first quarter of 2020. Operator, we are now ready to take questions.

[Operator Instructions]. Your first question comes from the line of Jotin Marango with Roth Capital.

I have two questions, both about the CLL side of the program. So thinking about CDK and CLL, Merck's Dinaciclib got discontinued quite deep into the program. So could you just briefly, I guess, place 065 and then what we know about the Merck drug side-to-side for us? Are there lessons from their program which help how you view CLL?

Thank you for the question, Jotin. I think it's very well stated. There's clearly a class effect of CDK 2/9 inhibitors and CLL. Not only was the Merck Dinaciclib compound active in this indication, but so was an earlier precursor compound called Flavopiridol, also a CDK 2/9 inhibitor, developed by the NCI and licensed to the Sanofi-Aventis at the time. So we note that there was class activity in CLL, but both of these precursor compounds had substantial issues with toxicity, more so with the case of Flavopiridol. In particular, Dinaciclib from Merck progressed through Phase II in CLL with encouraging clinical activity, and the company launched a Phase III study over three years ago, seeking to enroll approximately 400 patients. For the reasons that are not entirely clear and not entirely -- accurately portrayed in the publication at the end of last year, the company only enrolled 44 patients and decided to terminate the program due to pipeline prioritization. We do not view this discontinuation as relevant to the class but rather specific to the compound and some of the challenges that I mentioned earlier. In contrast, in our Phase I experience with CYC065 and a few hundred patients enrolled with our earlier stage CDK 2/9 inhibitor, seliciclib, we have not seen, for example, the extensive myelosuppressive and diarrheal activity of early-stage inhibitors. We think the main reason for that is cell activity. Some of these early dugs were pan-CDKs and also hid CDK enzymes that are more associated with toxicity than adding to efficacy.

Got you. And one more on the CLL front. So the prospect for this study in combo is venetoclax. So that sounds like an interesting idea. As you know, venetoclax, I mean, I think it's a great drug. But it's also not easy to titrate it up to the effective dose. In fact, a lot of the time, it -- that doesn't work. So I'm curious, if in your protocol, as you've conceived it, maybe early for the question, but are you taking patients already on venetoclax and then adding your drug? Or you're titrating the two drugs together? Because, I guess, the bar for an accepted response here maybe different in each case.

Jotin, that's an excellent question, again. We would not be able to give details of the protocol until after the study get underway for competitive reasons. But let us state, as I think was clear from our prepared remarks, that the population we used to test are those that have experience in CLL with frontline use of BDK inhibitors, such as ibrutinib or acalabrutinib. The reason for this is that the patients who progress on BDK inhibitors have explosive disease. And there is an urgent medical need, of course, to contain the expansion of leukemia cells. We will discuss in more detail how we are dosing CYC065 at the later time, but we think this is an opportunity given that, as we mentioned, venetoclax does not suppress adequately Mcl-1 and that provides an escape route for CLL cells. So the rationale for combining a Bcl-2 inhibitor, like venetoclax and an Mcl-1 inhibitor, like CYC065 is to give them together or at least in some close proximity to each other.

[Operator Instructions]. And at this time, there are no further questions. I would like to turn the call back over to the company.

I think we had an e-mail question, operator, which says, can you tell us what is the size of the neuroblastoma market opportunity? Our view on that is based on estimated U.S. incidents for neuroblastoma of 750 patients a year. We know that these patients are children between the ages of 2 and 10. Few children go beyond 10, as this is a very poor prognosis disease with usually fatal outcome. We approximately estimate that 40% to 50% of neuroblastoma patients have MYCN amplification based on citations in the literature. So this is an ultra-orphan indication that the company will approach with caution as we would need the large number of centers to be able to enroll adequate numbers. This is the reason that we are interested in this cooperative group approach. We have solicited from Cyclacel the possibility of working together in what is a consortium of U.S. clinical centers to whom neuroblastoma children are referred to work with Cyclacel to find a protocol that is working for both parties and test the use of the drug in this setting.

And there are no further audio questions.

Thank you, operator, and thank to all of you for participating in our quarterly update 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 upcoming conferences. Operator, at this time, you may end the call.