<SEC-DOCUMENT>0000950123-11-063520.txt : 20110701
<SEC-HEADER>0000950123-11-063520.hdr.sgml : 20110701
<ACCEPTANCE-DATETIME>20110701090740
ACCESSION NUMBER:		0000950123-11-063520
CONFORMED SUBMISSION TYPE:	424B5
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20110701
DATE AS OF CHANGE:		20110701

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Cyclacel Pharmaceuticals, Inc.
		CENTRAL INDEX KEY:			0001130166
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				911766850
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B5
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-173291
		FILM NUMBER:		11944349

	BUSINESS ADDRESS:	
		STREET 1:		200 CONNELL DRIVE
		STREET 2:		SUITE 1500
		CITY:			BERKELEY HEIGHTS
		STATE:			NJ
		ZIP:			07922
		BUSINESS PHONE:		908-517-7330

	MAIL ADDRESS:	
		STREET 1:		200 CONNELL DRIVE
		STREET 2:		SUITE 1500
		CITY:			BERKELEY HEIGHTS
		STATE:			NJ
		ZIP:			07922

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	XCYTE THERAPIES INC
		DATE OF NAME CHANGE:	20001218
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B5
<SEQUENCE>1
<FILENAME>c19543e424b5.htm
<DESCRIPTION>424(B)(5)
<TEXT>
<HTML>
<HEAD>
<TITLE>424(b)(5)</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#C19543tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Filed Pursuant to Rule&nbsp;424(b)(5)<BR>
Registration No.&nbsp;333-173291</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Prospectus Supplement</B><BR><B>
(to Prospectus dated April&nbsp;26, 2011)</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>7,617,646 Shares of Common Stock<BR>
Warrants to Purchase 3,808,821 Shares of Common Stock</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CYCLACEL PHARMACEUTICALS, INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are offering up to 7,617,646 shares of our common stock and warrants to purchase up to 3,808,821
shares of our common stock (and the shares of common stock issuable from time to time upon exercise
of these warrants). The common stock and warrants will be sold in units, with each unit consisting
of one share of common stock and a warrant to purchase 0.5 of a share of common stock at an
exercise price of $1.36 per share of common stock. Each unit will be sold at a negotiated price of
$1.36 per unit. Units will not be issued or certificated. The shares of common stock and warrants
are immediately separable and will be issued separately. For a more detailed description of our
common stock and warrants, see the section entitled &#147;Description of the Securities We are Offering&#148;
beginning on page S-18 of this prospectus supplement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our common stock is listed on The NASDAQ Global Market under the symbol &#147;CYCC.&#148; On June&nbsp;30, 2011,
the last reported sale price of our common stock on The NASDAQ Global Market was $1.36 per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The warrants being sold in this offering will not be listed on The NASDAQ Global Market and a
trading market for the warrants is not expected to develop. In addition, we do not intend to apply
for listing of the warrants on any national securities exchange or other nationally recognized
trading system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Investing in our securities involves a high degree of risk. Please read &#147;Risk Factors&#148; beginning
on page S-12 of this prospectus supplement, page 9 of the accompanying prospectus and the
documents incorporated by reference into this prospectus supplement.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="72%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>

    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Per Unit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Maximum Offering Amount</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Price to the public</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&nbsp;&nbsp;10,359,999</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Underwriting discounts and commissions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&nbsp;&nbsp;0.0884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">673,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds, before expenses, to us</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.2716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,686,599</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The underwriters expect to deliver the units on or about July&nbsp;7, 2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">You should carefully read this prospectus supplement and the accompanying prospectus, together with
the documents we incorporate by reference, before you invest in our securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 18pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><B>Leerink Swann</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><B>Lazard Capital Markets</B></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><I>Joint Book-Running Managers</I>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">The date of this prospectus supplement is June&nbsp;30, 2011.
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="C19543tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>Table of Contents</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>Prospectus Supplement</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543201"><B>About This Prospectus Supplement</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543202"><B>Prospectus Supplement Summary</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543203"><B>The Offering</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543204"><B>Risk Factors</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" nowrap>S-12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543205"><B>Special Note Regarding Forward-Looking Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543206"><B>Use of Proceeds</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543207"><B>Dilution</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543208"><B>Underwriting</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543209"><B>Description of the Securities We are Offering</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543210"><B>Legal Matters</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543211"><B>Experts</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543212"><B>Where You Can Find More Information</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543213"><B>Incorporation of Certain Information by Reference</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">S-21</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>Prospectus</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543101">ABOUT THIS PROSPECTUS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543102">PROSPECTUS SUMMARY</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543103">RISK FACTORS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543104">SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543105">USE OF PROCEEDS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543106">PLAN OF DISTRIBUTION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543107">THE SECURITIES WE MAY OFFER</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543108">DESCRIPTION OF COMMON STOCK</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543109">DESCRIPTION OF PREFERRED STOCK</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543110">DESCRIPTION OF WARRANTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543111">DESCRIPTION OF DEBT SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543112">DESCRIPTION OF UNITS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543113">LEGAL MATTERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543114">EXPERTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543115">WHERE YOU CAN FIND MORE INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543116">INCORPORATION OF DOCUMENTS BY REFERENCE</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">You should only rely on the information contained in, or incorporated by reference in, this
prospectus supplement and the accompanying prospectus. We and the underwriters have not authorized
anyone to provide you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We and the underwriters are not making an
offer of these securities in any state where the offer is not permitted. You should not assume
that the information contained in this prospectus supplement, the accompanying prospectus and the
documents incorporated by reference herein and therein is accurate as of any date other than the
dates of the specific information. Our business, financial condition, results of operations and
prospectus may have changed since then.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C19543tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C19543201"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>ABOUT THIS PROSPECTUS SUPPLEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">This document is in two parts. The first part is this prospectus supplement, which describes the
terms of this offering and also adds to and updates information contained in the accompanying
prospectus and the documents incorporated by reference into this prospectus supplement and the
accompanying prospectus. The second part, the accompanying prospectus dated April&nbsp;26, 2011,
including the documents incorporated by reference therein, provides more general information.
Generally, when we refer to &#147;this prospectus,&#148; we are referring to both parts of this document
combined.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">To the extent there is a conflict between the information contained in this prospectus supplement
or any &#147;free writing prospectus&#148; we may authorize to be delivered to you, on the one hand, and the
information contained in the accompanying prospectus or in any document incorporated by reference
that was filed with the Securities and Exchange Commission, or SEC, before the date of this
prospectus supplement, on the other hand, you should rely on the information in this prospectus
supplement or such free writing prospectus, as the case may be. If any statement in one of these
documents is inconsistent with a statement in another document having a later date, the statement
in the document having the later date modifies or supersedes the earlier statement. You should
also read and consider the information in the documents to which we refer you in &#147;Where You Can
Find More Information&#148; on page S-21
of this prospectus supplement and any &#147;free writing
prospectus&#148; we may authorize to be delivered to you. The information incorporated by reference is
considered to be part of this prospectus supplement, and information that we file later with the
SEC will automatically update and supersede this information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We further note that the representations, warranties and covenants made by us in any agreement that
is filed as an exhibit to any document that is incorporated by reference herein were made solely
for the benefit of the parties to such agreement, including, in some cases, for the purpose of
allocating risk among the parties to such agreements, and should not be deemed to be a
representation, warranty or covenant to you. Moreover, such representations, warranties or
covenants were accurate only as of the date when made. Accordingly, such representations,
warranties and covenants should not be relied on as accurately representing the current state of
our affairs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">This prospectus supplement, the accompanying prospectus, and the information incorporated herein
and therein by reference include trademarks, service marks and trade names owned by us or other
companies. All trademarks, service marks and trade names included or incorporated by reference
into this prospectus supplement or the accompanying prospectus are the property of their respective
owners.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are offering to sell, and seeking offers to buy, units only in jurisdictions where offers and
sales are permitted. The distribution of this prospectus supplement and the accompanying prospectus
and the offering of the units in certain jurisdictions may be restricted by law. Persons outside
the United States who come into possession of this prospectus supplement and the accompanying
prospectus must inform themselves about, and observe any restrictions relating to, the offering of
the units and the distribution of this prospectus supplement and the accompanying prospectus
outside the United States. This prospectus supplement and the accompanying prospectus do not
constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer
to buy, any securities offered by this prospectus supplement and the accompanying prospectus by any
person in any jurisdiction in which it is unlawful for such person to make such an offer or
solicitation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The terms &#147;Cyclacel,&#148; the &#147;Company,&#148; &#147;we&#148; and &#147;us&#148; in this prospectus supplement refer to Cyclacel
Pharmaceuticals, Inc. and its subsidiaries, unless the context otherwise requires.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C19543202"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PROSPECTUS SUPPLEMENT SUMMARY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">This summary may not contain all of the information that may be important to you. You should read
this prospectus supplement, the accompanying prospectus, the information incorporated by reference
in each, and any related free writing prospectus before making an investment decision. You should
pay special attention to the &#147;Risk Factors&#148; section
beginning on page S-12 of this prospectus
supplement, as well as to any &#147;Risk Factor&#148; included in the accompanying prospectus and in any
document incorporated into this prospectus supplement or the accompanying prospectus by reference,
to determine whether an investment in our common stock is appropriate for you.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>General</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are a biopharmaceutical company dedicated to the development and commercialization of novel,
mechanism-targeted drugs to treat human cancers and other serious diseases. We are focused on
delivering leading edge therapeutic management of cancer patients based on a clinical development
pipeline of novel drug candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Clinical programs</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our clinical development priorities are focused on orally-available sapacitabine in the following
indications:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Acute myeloid leukemia, or AML, in the elderly;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Myelodysplastic syndromes, or MDS; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Non-small cell lung cancer, or NSCLC.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are conducting a pivotal Phase 3 trial for our sapacitabine oral capsules, the SEAMLESS trial,
as a front-line treatment in elderly patients aged 70&nbsp;years or older with newly diagnosed AML who
are not candidates for intensive induction chemotherapy. SEAMLESS is a registration-directed,
clinical trial and its conducted under a Special Protocol Assessment, or SPA, agreement with the
U.S. Food and Drug Administration, or FDA. SEAMLESS is a randomized study against an active
control drug with the primary objective of demonstrating an improvement in overall survival.
SEAMLESS has two parts. The first part is a pilot study of a single arm of the trial. The study&#146;s
Data Safety Monitoring Board or DSMB will review the data from the pilot study before we are
allowed to enroll patients in the second part in which patients will be randomized either to active
or control treatment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have additional ongoing programs in clinical development which are currently pending the
availability of clinical data and/or financial resources. Once these data become available and are
reviewed, we will determine the feasibility of pursuing further development and/or partnering of
these assets including sapacitabine in combination with seliciclib, seliciclib in nasopharyngeal
cancer, or NPC, and NSCLC and CYC116.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We were founded by Professor Sir David Lane, a recognized leader in the field of tumor suppressor
biology who discovered the p53 protein, which operates as one of the body&#146;s own anticancer agents
by regulating cell cycle targets. Our Chief Scientist, Professor David Glover, is a recognized
leader in the biology of mitosis or cell division. Professor Glover discovered, among other cell
cycle targets, the mitotic kinases, Polo and Aurora, enzymes that act in the mitosis phase of the
cell cycle.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Although our resources are primarily directed towards advancing our anticancer drug candidate
sapacitabine through in-house development activities we are also progressing, but with lower levels
of investment than in previous years, our other novel drug series which are at earlier stages.
Taken together, our pipeline covers all four phases of the cell cycle, which we believe will
improve the chances of successfully developing and commercializing novel drugs that work on their
own or in combination with approved conventional chemotherapies or with other targeted drugs to
treat human cancers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Market opportunity in oncology</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Cancer remains a major life-threatening disease in the United States with approximately 11.7
million people, according to the National Cancer Institute, afflicted by cancer and approximately
1.6&nbsp;million new cases of cancer diagnosed every year. Five common solid cancer types: non-small
cell lung, breast, ovarian, prostate and colorectal cancers, represent over 50% of all new cases of
cancer in the United States each year and account for more than 50% of all cancer deaths in the
United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Acute myeloid leukemia is one of the most common types of leukemia or cancer in the blood and bone
marrow. According to the American Cancer Society approximately 45,000 cases of leukemia are
diagnosed annually in the United States of which about 13,000 are classified as AML. Leukemia is a
deadly disease with an estimated 9,000 deaths annually in the United States, almost all in adults.
The average age of a patient with AML is 67 and about two-thirds of AML patients are above 60&nbsp;years
old. The prognosis of AML in the elderly is poor.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The American Cancer Society estimates that approximately 10,000 to 15,000 new cases of
myelodysplastic syndromes are diagnosed annually in the United States. Patients currently receive
hypomethylating agents as first-line treatment. There is no approved therapy for second-line
treatment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Lung cancer is a cancer starting in the lungs that often takes many years to develop. About 85% to
90% of all lung cancers are non-small cell or NSCLC type. According to the American Cancer Society,
an estimated 222,520 patients are diagnosed annually with NSCLC in the United States. An estimated
418,000 new cases are diagnosed annually in the European Union. NSCLC is a deadly disease with an
estimated 157,300 deaths annually in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">NPC develops in the nasopharynx, an area in the back of the nose toward the base of the skull.
Although it is sometimes considered a head and neck or an oral cancer, nasopharyngeal cancer is
different from these cancers. It is frequently fatal, once the disease recurs after initial
chemotherapy and radiotherapy, spreads widely and has different risk factors such as Epstein-Barr
virus, or EBV infection. High EBV viral titers are considered an indicator of poor prognosis.
According to the American Cancer Society, an estimated 2,750 patients are diagnosed annually with
nasopharyngeal cancer in the United States. An estimated 5,000 are diagnosed annually in the
European Union, but an estimated 65,000 new cases are diagnosed annually in the Asia Pacific
region.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Lymphoma is a cancer of lymphoid tissue, a part of the lymphatic system. Lymphoid tissue is formed
by several types of immune system cells that work together mainly to resist infections. About 5% of
all lymphomas start in the skin often staying there without spreading to internal organs and are
called cutaneous lymphomas. The main cell types found in lymphoid tissue are B lymphocytes and T
lymphocytes resulting in B-cell or T-cell lymphoma, or CTCL. CTCL causes disfiguring skin lesions
and severe itching. According to the American Cancer Society, an estimated 3,000 patients are
diagnosed annually with lymphoma in the skin in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Sapacitabine</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our lead candidate, sapacitabine, is an orally-available prodrug of CNDAC, which is a novel
nucleoside analog, or a compound with a structure similar to a nucleoside. A prodrug is a compound
that has a therapeutic effect after it is metabolized within the body. CNDAC has a significantly
longer residence time in the blood when it is produced in the body through metabolism of
sapacitabine than when it is given directly. Sapacitabine acts through a dual mechanism whereby
the compound interferes with DNA synthesis and repair by causing single-strand DNA breaks and
induces arrest of the cell division cycle at G2/M checkpoint. A number of nucleoside drugs, such
as gemcitabine, or Gemzar<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, from Eli Lilly, and cytarabine, also known as Ara-C, a
generic drug, are in wide use as conventional chemotherapies. Both sapacitabine and its major
metabolite, CNDAC, have demonstrated potent anti-tumor activity in both blood and solid tumors in
preclinical studies. In a liver metastatic mouse model, sapacitabine was shown to be superior to
gemcitabine and 5-FU, two widely used nucleoside analogs, in delaying the onset and growth of liver
metastasis. We have retained worldwide rights to commercialize sapacitabine, except for Japan, for
which Daiichi-Sankyo Co., Ltd., or Daiichi-Sankyo, has a right of first negotiation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are currently exploring sapacitabine in both hematological cancers and solid tumors. To date,
sapacitabine has been evaluated in approximately 400 patients in several Phase 1 and 2 studies and
has shown signs of anti-cancer activity. In January&nbsp;2011, we opened enrollment of the SEAMLESS
pivotal Phase 3 trial, which will evaluate sapacitabine oral capsules as a front-line treatment in
elderly patients aged 70&nbsp;years or older with newly-diagnosed AML who are not candidates for
intensive induction chemotherapy. The study will be conducted under an SPA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Hematological Cancers</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 1 clinical trial in patients with advanced leukemias and myelodysplastic syndromes</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In December&nbsp;2007, at the ASH annual meeting, we reported interim results from a Phase 1 clinical
trial of oral sapacitabine in patients with advanced leukemias and MDS. The data demonstrated that
sapacitabine had a favorable safety profile and promising anti-leukemic activity in patients with
relapsed and refractory AML and MDS when administered by two different dosing schedules. The
primary objective of the study is to determine the maximum tolerated dose, or MTD, of sapacitabine
administered twice daily for seven consecutive days every 21&nbsp;days or three consecutive days per
week for two weeks every 21&nbsp;days. The MTD was reached at 375 mg on the seven-day schedule and 475
mg on the three-day schedule. Dose-limiting toxicity was gastrointestinal which included abdominal
pain, diarrhea, small bowel obstruction and neutropenic colitis. One patient treated at the MTD of
375 mg on the seven-day schedule died of complications from neutropenic colitis. Among 46 patients,
42 with AML and 4 with MDS, in this dose escalating study, the best responses were complete
remission, or CR, or complete remission without platelet recovery, or CRp, in six patients for an
Overall Response Rate of 13%. In addition, 15 patients had a significant decrease in bone marrow
blasts including seven with blast reduction to 5% or less. The study was conducted at The
University of Texas M. D. Anderson Cancer Center and is led by Hagop Kantarjian, M.D., Professor of
Medicine and Chairman of the Leukemia Department and Dr.&nbsp;William Plunkett, Professor and Chief,
Section of Molecular and Cellular Oncology, Department of Experimental Therapeutics.
</DIV>
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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 2 randomized clinical trial in elderly patients with AML previously untreated or in first
relapse</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In December&nbsp;2007, we initiated an open-label, multicenter, randomized Phase 2 clinical trial of
oral sapacitabine in 60 elderly patients with AML aged 70 or older who are previously untreated or
in first relapse. The Phase 2 study, led by Dr.&nbsp;Kantarjian, has a primary endpoint of 1-year
survival rate of three dosing schedules of sapacitabine in elderly patients with previously
untreated or first relapsed AML. Secondary objectives are to assess CR or CRp, partial remission,
or PR, duration of CR or CRp, or major hematological improvement and their corresponding durations,
transfusion requirements, number of hospitalized days and safety. The study uses a selection design
with the objective of identifying a dosing schedule among three different arms, A. 200 mg twice
daily for seven days every 3-4&nbsp;weeks, B. 300 mg twice daily for seven days every 3-4&nbsp;weeks, and C.
400 mg twice daily for three days per week for two weeks every 3-4&nbsp;weeks, which produces a better
1-year survival rate in the event that all three dosing schedules are active. Each arm enrolled and
treated 20 patients. Approximately 55% of patients had AML de novo and the rest had AML preceded by
antecedent hematological disorder, or AHD, such as MDS, or myeloproliferative disease. Eighty
percent of the patients were untreated and 20% in first relapse. We completed enrollment of 60 AML
patients in this study in October&nbsp;2008. In December&nbsp;2009, at the 51<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> Annual Meeting of
ASH we reported 1-year survival data.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The primary endpoint of 1-year survival was 35% on Arm A, 30% on Arm C and 10% on Arm B. The median
overall survival was 212&nbsp;days on Arm C (range of 13 to over 654&nbsp;days), 197&nbsp;days on Arm A (range of
26 to over 610&nbsp;days) and 100&nbsp;days on Arm B (range of 6 to over 646&nbsp;days). Overall response rate, or
ORR, a secondary endpoint, was 45% on Arm A, 35% on Arm C and 25% on Arm B with CR rate of 25% on
Arm C and 10% on Arms A and B. Thirty-day mortality was 10% on Arm C and Arm A and 20% on Arm B.
Approximately 30% of all patients received sapacitabine for at least 6 cycles. Fifteen patients who
survived one year or more received an average of 12 treatment cycles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Exploratory subgroup analysis suggests that (i)&nbsp;Arm C may be more effective for de novo AML and
(ii)&nbsp;Arm A may be more effective for AML preceded by AHD, such as MDS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The 3-day dosing schedule in Arm C was selected for further clinical development in elderly
patients with de novo AML based on a 1-year survival rate of 30%, ORR of 35% with durable CRs. The
7-day dosing schedule in Arm A was selected for further clinical development in elderly patients
with AML preceded by AHD based on a 1-year survival rate of 35%, ORR of 45% with durable
hematological improvement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Randomized Phase 2 clinical trial in older patients with MDS as a second-line treatment</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In September&nbsp;2008, we advanced sapacitabine into Phase 2 development as a second-line treatment in
patients aged 60 or older with MDS who are previously treated with hypomethylating agents. The MDS
stratum of the study is designed as a protocol amendment expanding the ongoing Phase 2 trial of
sapacitabine in AML described above, to include a cohort of patients with MDS. Patients with MDS
often progress to AML. The primary objective of the MDS stratum is to evaluate the 1-year survival
rate of three dosing schedules of sapacitabine. Secondary objectives are to assess the number of
patients who have achieved CR or CRp, PR, hematological improvement and their corresponding
durations, transfusion requirements, number of hospitalization days and safety. The study uses a
selection design with the objective of identifying a dosing schedule which produces a better 1-year
survival rate for each stratum in the event that all three dosing schedules are active.
In December&nbsp;2010, at the ASH annual meeting, we reported 1-year survival data from a Phase 2
randomized trial of oral sapacitabine capsules, a novel nucleoside analogue, in older patients with
MDS refractory to hypomethylating agents, such as azacitidine and decitabine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The study uses a selection design with the objective of identifying a dosing schedule that produces
a better 1-year survival rate in the event that all three dosing schedules are active. The study
enrolled 61 patients aged 60 or older with MDS refractory to hypomethylating agents randomized
across three dosing schedules of sapacitabine: 21 patients in Arm A, a 7-day low dose regimen (200
mg b.i.d.); 20 patients in Arm B, a 7-day high dose regimen (300 mg b.i.d.) and 20 patients in Arm
C, a 3-day high dose regimen (400 mg b.i.d.). Approximately 77% of patients were aged 70&nbsp;years or
older and 84% were scored as intermediate-2 or high risk by IPSS, the International Prognostic
Scoring System. Baseline blast counts were between 11% and 29% in 51% of the patients. All patients
were previously treated with hypomethylating agents: 43% with azacitidine, 34% with decitabine and
23% were double refractory patients as they were treated with both azacitidine and decitabine (7 on
Arm A, 4 on Arm B and 3 on Arm C). Approximately 16% were previously treated with lenalidomide in
addition to hypomethylating agents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The primary endpoint of 1-year survival was achieved in 29% of the patients on Arm A, 30% of the
patients on Arm B and 35% of the patients on Arm C. The median overall survival was 217&nbsp;days on Arm
A (range of 15 to 663&nbsp;days), 232&nbsp;days on Arm B (range of 37 to over 811&nbsp;days) and 236&nbsp;days on Arm C
(range of 16 to over 672&nbsp;days). Overall response rate, a secondary endpoint consisting of the rate
of CR, CRp, PR, CRi or hematological improvement, was 24% for patients on Arm A, 35% for patients
on Arm B and 15% for patients on Arm C. Two patients achieved a CR both on Arm A. Approximately 20%
of all patients received sapacitabine for 4 to 6 cycles and 15% for 7 or more cycles. The mortality
rate from all causes within thirty days of randomization was 6.6%.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Randomized Phase 3 pivotal trial, SEAMLESS, as a front-line treatment in elderly patients aged 70
years or older with newly diagnosed AML who are not candidates for intensive induction chemotherapy</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On January&nbsp;11, 2011, we opened enrollment of the SEAMLESS pivotal Phase 3 trial for the Company&#146;s
sapacitabine oral capsules as a front-line treatment of elderly patients aged 70&nbsp;years or older
with newly diagnosed AML who are not candidates for intensive induction chemotherapy. The study is
being conducted under an SPA agreement that Cyclacel reached with the FDA. SEAMLESS builds on
promising 1-year survival observed in elderly patients aged 70&nbsp;years or older with newly diagnosed
AML or AML in first relapse enrolled in a Phase 2 study of single agent sapacitabine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The SEAMLESS study is chaired by Hagop M. Kantarjian, M.D., Chairman and Professor, Department of
Leukemia, The University of Texas MD Anderson Cancer Center, Houston, Texas. SEAMLESS is a
multicenter, randomized, Phase 3 study comparing three treatment arms. In Arm A sapacitabine is
administered in alternating cycles with decitabine, in Arm B sapacitabine is administered alone and
in Arm C decitabine is administered alone. The primary efficacy endpoint is overall survival. The
study is designed to demonstrate an improvement in overall survival of either of two pairwise
comparisons: (1)&nbsp;Arm A versus Arm C or (2)&nbsp;Arm B versus Arm C. Approximately 150 patients per arm
or a total of 450 patients from approximately 50 centers will be enrolled. SEAMLESS will be
monitored by a Data Safety Monitoring Board (DSMB). A prespecified interim analysis for futility
will be performed and reviewed by the DSMB.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On September&nbsp;13, 2010, we reached agreement with the FDA regarding the SPA, on the design of a
pivotal Phase 3 trial, the SEAMLESS trial. An SPA provides trial sponsors with an FDA agreement
that the design and analysis of the trial adequately address objectives in support of a submission
for a marketing application if the trial is performed according to the SPA. The SPA may only be
changed through a written agreement between the sponsor and the FDA, or if the FDA becomes aware of
a substantial scientific issue essential to product efficacy or safety. However, an SPA does not
provide any assurance that a marketing application would be approved by the FDA. Furthermore, Phase
3 clinical trials are time-consuming and expensive, and because we have limited resources, we may
be required to collaborate with a third party or raise additional funds. However, there is no
assurance that we will be able to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Recent Developments</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On June&nbsp;6, 2011, we announced interim results from an ongoing, multicenter, Phase 1/2 clinical
trial examining the safety and effectiveness of oral sapacitabine, our lead product candidate,
administered sequentially with decitabine. Thirty-day mortality from all causes was 4.5%; 60-day
mortality from all causes was 9.5%. The overall response rate was 34.8%. An additional 26.1% of
patients stayed on study for more than 4 cycles with a decrease in bone marrow blast counts despite
not meeting criteria of response. Approximately 60.9% of patients received 4 or more cycles of the
regimen.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The data was reported during a poster session at the 2011 American Society of Clinical Oncology, or
ASCO, Annual Meeting in Chicago, Illinois. As reported at ASCO, no dose-limiting toxicities were
observed in 21 patients treated with the regimen who have had at least 60&nbsp;days of follow-up. The
median age in the group is 76&nbsp;years (range 72-88). Common adverse events regardless of cause
included anemia, anorexia, dehydration, diarrhea, dyspnea, edema, hypocalcemia, nausea, febrile
neutropenia, neutropenia, pneumonia, thrombocytopenia, and weakness, which were mostly moderate in
intensity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We believe, based on the interim results reported at ASCO that the sequential administration of
sapacitabine and decitabine appears safe and active in elderly patients with newly diagnosed acute
myeloid leukemia, or AML.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The treatment regimen under evaluation in this pilot study is being used as one of the arms in
SEAMLESS, the registration-directed, Phase 3 study of sapacitabine in elderly patients with newly
diagnosed AML who are not candidates for or have refused induction chemotherapy. SEAMLESS is being
conducted under a Special Protocol Assessment agreement that Cyclacel reached with the US Food and
Drug Administration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Solid Tumors</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 1 clinical trials in patients with refractory solid tumors or lymphomas</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Two Phase 1 studies of sapacitabine were completed by Daiichi-Sankyo, from which we in-licensed
sapacitabine, evaluating 87 patients in refractory solid tumors. In addition, we conducted a Phase
1b dose escalation clinical trial in patients with refractory solid tumors or lymphomas.
Preliminary results of the Phase 1b study were reported at the EORTC-NCI-AACR Molecular Targets and
Cancer Therapeutics meeting in November&nbsp;2006. The primary objective of the study was to evaluate
the safety profile of sapacitabine administered twice daily for 14 consecutive days or 7
consecutive days every 21&nbsp;days. Of the 37 treated patients, 28 received the drug twice daily for 14
days and 9 received the drug twice daily for 7&nbsp;days. The dose-limiting toxicity was reversible
myelosuppression. One patient treated at the maximum tolerated dose died of candida sepsis in the
setting of grade 4 neutropenia and thrombocytopenia. Non-hematological toxicities were mostly mild
to moderate. The best response by investigator assessment was stable disease in 13 patients, five
with non-small cell lung cancer, two with breast cancer, two with ovarian cancer and one each with
colorectal cancer, adenocarcinoma of unknown primary, gastrointestinal stromal tumor, and parotid
acinar carcinoma.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 2 clinical trial in patients with non-small cell lung cancer</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In January&nbsp;2009, we began treating patients in a Phase 2, open label, single arm, multicenter,
clinical trial in patients with NSCLC who have had one prior chemotherapy. This study builds on the
observation of prolonged stable disease of four months or longer experienced by heavily pretreated
NSCLC patients involved in two Phase 1 studies of sapacitabine. The multicenter Phase 2 trial is
led by Philip D. Bonomi, M.D., at Rush University Medical Center, Chicago. The primary objective of
the study is to evaluate the rate of response and stable disease in patients with previously
treated NSCLC. Secondary objectives are to assess progression-free survival, duration of response,
duration of stable disease, 1-year survival, overall survival and safety. The study will enroll
approximately 40 patients and has a lead-in phase for dose escalation with the objective of
defining a recommended dose followed by a second stage in which patients will be treated at the
recommended dose.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 2 clinical trial in patients with cutaneous T-cell lymphoma, or CTCL</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In April&nbsp;2007, we initiated a Phase 2 clinical trial in patients with advanced CTCL, a cancer of
T-lymphocytes, or white blood cells, which causes disfiguring skin lesions and severe itching. The
primary objective of the study is to evaluate tolerability and response rate of 50 mg and 100 mg
regimens of sapacitabine both twice a day for three days per week for two weeks in a three week
cycle in patients with progressive, recurrent, or persistent CTCL on or following two systemic
therapies. The study uses a selection design to choose an optimal dose if both are active.
Secondary objectives are to assess response duration, time to response, time to progression and
relief of pruritus or itching. Non-hematological toxicities were mostly mild to moderate. The best
response by investigator assessment was partial response in 3 patients out of 16 enrolled. We
stopped the trial in order to re-direct our resources to sapacitabine clinical trials with a higher
priority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Orphan Designation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>European Union</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During May&nbsp;2008, we received designation from the European Medicines Evaluation Agency, or EMEA,
for sapacitabine as an orphan medicine in two separate indications: AML and MDS. The EMEA&#146;s
Committee for Orphan Medicinal Products, or COMP, adopted a positive opinion on the Company&#146;s
application to designate sapacitabine as an orphan medicinal product for the indications of AML and
MDS. The objective of European orphan medicines legislation is to stimulate research and
development of medicinal products for rare diseases by providing incentives to industry. An orphan
designation in the European Union confers a range of benefits to sponsor companies including market
exclusivity for a period of 10&nbsp;years, EMEA scientific advice on protocol development, direct access
to the centralized procedure for review of marketing authorizations, EMEA fee reductions and
eligibility for grant support from European agencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>United States</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In July&nbsp;2010, we announced that the FDA granted orphan drug designation to our sapacitabine product
candidate for the treatment of both AML and MDS. An orphan designation in the United States confers
a range of benefits to sponsor companies, including market exclusivity for a period of seven years
from the date of drug approval, the opportunity to apply for grant funding from the United States
government to defray costs of clinical trial expenses, tax credits for clinical research expenses
and a potential waiver of the FDA&#146;s application user fee. Orphan status is granted by the FDA to
promote the development of new drug therapies for the treatment of diseases that affect fewer than
200,000 individuals in the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Seliciclib</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Although our current clinical development priorities are focused on sapacitabine only, our second
drug candidate, seliciclib, is a novel, first-in-class, orally-available, CDK inhibitor. The
compound selectively inhibits a spectrum of enzyme targets -CDK2, CDK7 and CDK9- that are central
to the process of cell division and cell cycle control. The target profile of seliciclib is
differentiated from the published target profile of other CDK inhibitors. Its selectivity is
differentiated by recent publications by independent investigators which showed that seliciclib (i)
is more<U> </U>active against NSCLC cells with K-Ras or N-Ras mutations than those with wild type
Ras and (ii)&nbsp;overcomes resistance to letrozole (Femara<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>) in breast cancer cells caused
by a particular form of cyclin E in complex with CDK2. Preclinical studies have shown that the drug
works by inducing cell apoptosis, or cell suicide, in multiple phases of the cell cycle. To date,
seliciclib has been evaluated in approximately 450 patients in several Phase 1 and 2 studies and
has shown signs of anti-cancer activity. We have retained worldwide rights to commercialize
seliciclib.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 1 clinical trials in patients with refractory solid tumors</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have completed two Phase 1 trials that enrolled 24 healthy volunteers and three Phase 1 trials
that enrolled a total of 84 cancer patients testing different doses and schedules. The primary
toxicities observed were of a non-hematological nature, including asthenia or weakness, elevation
of liver enzymes, hypokalemia or decreased potassium levels, nausea and vomiting and elevation in
creatinine.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Although these trials were designed to test safety rather than efficacy of seliciclib given alone
as monotherapy in patients with solid tumors who failed multiple previous treatments, several of
these patients appeared to have benefited from seliciclib treatment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Seliciclib was shown in a further Phase 1 study sponsored and conducted by independent
investigators to have clinical antitumor activity in patients with nasopharyngeal cancer, measured
as a decrease in the size of primary tumor and involved lymph nodes, as well as an increase in
tumor cell deaths by biomarker analyses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 2 clinical trials in patients with NSCLC or breast cancer</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Four Phase 2 trials have been conducted in cancer patients to evaluate the tolerability and
antitumor activities of seliciclib alone or in combination with standard chemotherapies used in the
treatment of advanced NSCLC or breast cancer. Interim data from two Phase 2 open-label studies of a
total of 52 patients with NSCLC, suggest that seliciclib treatment did not aggravate the known
toxicities of standard first and second-line chemotherapies nor appear to cause unexpected
toxicities, although these trials were not designed to provide statistically significant
comparisons. The combination of seliciclib with a standard dose of capecitabine (Xeloda<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>) was not
well tolerated in patients with advanced breast cancer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On December&nbsp;21, 2010, we announced topline results from APPRAISE, our Phase 2b, randomized
discontinuation, double-blinded, placebo-controlled, study of oral seliciclib capsules as a third
line or later treatment in patients with NSCLC. Topline results, after unblinding the treatment
assignment among randomized patients, showed that there was no difference between the seliciclib
and placebo arms in terms of progression free survival, or PFS, (48 versus 53&nbsp;days respectively)
but an increase in median overall survival was observed favoring the seliciclib arm over the
placebo arm (388 versus 218&nbsp;days respectively). A total of 187 patients from 21 centers in the
United States were entered in the study after having progressed on at least two prior therapeutic
regimens for their NSCLC. Of these, 53 (28%) were randomized, 27 on seliciclib and 26 on placebo.
Forty-five out of 53 randomized patients (85%) received 3 or more prior therapies and 45 out of 53
randomized patients (85%) previously received at least one EGFR inhibitor drug (22 on seliciclib
and 23 on placebo). Fourteen patients were crossed-over to the seliciclib arm after their cancer
progressed while they were receiving placebo. Study data demonstrated seliciclib to be safe at the
administered dose.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are currently conducting a biopsy analysis of samples obtained from patients who participated in
APPRAISE with the objective of identifying any biomarkers of drug activity correlating with
clinical benefit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">APPRAISE was a double-blinded, randomized study of single agent seliciclib versus best supportive
care in patients with NSCLC treated with at least two prior systemic therapies. APPRAISE was led by
Chandra P. Belani, M.D. at Milton S. Hershey Medical Center, Penn State University. The study&#146;s
main objective was to learn the anti-tumor activity of seliciclib as a single agent in refractory
NSCLC and help determine further development strategies. The study design was randomized
discontinuation. All patients received seliciclib at a dose of 1200 mg twice a day for three days
for at least three cycles of two weeks each. Patients who achieved stable disease after three
cycles were randomized to continue on seliciclib or receive placebo with best supportive care.
Patients in the placebo arm who progressed were given the option to cross-over and again receive
seliciclib. The primary efficacy endpoint of APPRAISE was doubling progression free survival, or
PFS, measured in the randomized portion of the study.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In August&nbsp;2008, we announced that an independent data review committee, or IDRC, completed a review
of the first interim analysis data from the study. The IDRC assessed the safety profile of
seliciclib and recommended that the study continue after reviewing data from 173 patients with
previously-treated NSCLC, of whom 45 proceeded into the blinded portion of the study and were
randomized to receive either seliciclib or best supportive care. Based on the interim data, the
IDRC reached the following main conclusions: there were no safety concerns that would warrant
stopping the study; there was no trend favoring the seliciclib treatment arm; and as a definitive
conclusion could not be reached because of the low number of events, it was recommended that the
study be continued. Based on our cost versus benefit analysis, we decided not to enroll additional
patients. The APPRAISE trial continued with the 191 patients already enrolled until the last
enrolled patient had completed follow-up. In accordance with the protocol, we remain blinded to the
study data during the whole process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Phase 2 clinical trials in patients with NPC</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In November&nbsp;2007, we commenced a Phase 2 multicenter, international, blinded randomized study of
oral seliciclib as a single agent in patients with NPC. The primary objective is to evaluate
6-month progression free survival, or PFS, of two dosing schedules of seliciclib in approximately
75 patients with previously treated NPC. Secondary objectives are overall survival, response rate,
response duration, safety and tolerability. The first part of the study is designed to confirm
safety and tolerability of 400 mg twice a day for four days per week or 800 mg once a day for four
days per week of seliciclib. It is open to approximately 12 to 24 patients with advanced solid
tumors as well as patients with NPC. The second part of the study is designed to detect major
differences between the two dosing schedules of seliciclib and a placebo group in terms of 6-month
PFS in approximately 51 patients. The start of the second part of the study is dependent on
clinical data from the lead-in phase and available resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In May&nbsp;2009, at the ASCO annual meeting, we reported interim data from the lead-in portion of the
Phase 2 study which demonstrated that oral seliciclib could be safely administered in two dosing
schedules which were well tolerated and met the criteria for proceeding
to the randomized stage of the study. Seliciclib treatment resulted in prolonged stable disease in
70% of previously-treated NPC patients, including 3 with stable disease lasting longer than 8
months, suggesting seliciclib inhibits tumor growth in NPC. The data support further clinical
development of oral seliciclib in NPC.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>CYC116</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In June&nbsp;2007, we initiated a multicenter Phase 1 pharmacologic clinical trial of CYC116, an
orally-available inhibitor of Aurora kinase A and B and VEGFR2, in patients with advanced solid
tumors. The multicenter Phase 1 trial, now completed, is designed to examine the safety and
tolerability of CYC116 in patients with advanced solid tumors. The primary objective of the study
is to determine the maximum tolerated dose. Secondary objectives are to evaluate pharmacokinetic
and pharmacodynamic effects of the drug and document anti-tumor activity. Aurora kinases, or AK,
are a family of serine/threonine protein kinases discovered by Professor David Glover, our Chief
Scientist, which are only expressed in actively dividing cells and are crucial for the process of
cell division or mitosis. These proteins, which have been found to be over-expressed in many types
of cancer, have generated significant scientific and commercial interest as cancer drug targets.
VEGFR2 is a receptor protein that plays a key regulatory role in the angiogenesis pathway, or blood
vessel formation. VEGFR is targeted by recently approved drugs such as bevacizumab and sorafenib
indicated for the treatment of several solid cancers, such as breast, colorectal, kidney, liver and
lung. We have retained worldwide rights to commercialize CYC116. Further work on CYC116 will be
undertaken when appropriate levels of resource are available to direct to the program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>CYC065</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In December&nbsp;2010, at the ASH conference, we announced the presentation of new preclinical data for
CYC065, a novel, orally-available, cell cycle kinase inhibitor currently in IND-directed
development. CYC065 and other compounds in a related series target the same key CDK/cyclin
complexes which are targeted by seliciclib. CYC065 retains the specificity and mechanism of action
of seliciclib, but has increased anti-proliferative potency and improved pharmaceutical properties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The data was presented by Noopur Raje, M.D., Director of the Center for Multiple Myeloma at
Massachusetts General Hospital Cancer Center in Boston and Associate Professor of Medicine at
Harvard Medical School. Dr.&nbsp;Raje and colleagues presented results of a study entitled, &#147;CYC065, a
Potent Derivative of Seliciclib Is Active In Multiple Myeloma In Preclinical Studies&#148;. The data
demonstrate that CYC065 is cytotoxic at sub-micromolar concentrations against myeloma cell lines
and CD138&#043; myeloma cells derived from patients. CYC065 demonstrated antiproliferative activity even
in the presence of the growth stimulatory effects of both cytokines and bone marrow stromal cells.
CYC065 induced apoptosis in myeloma cells as evidenced by the appearance of cleaved PARP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Cyclacel discovered CYC065 and other novel CDK inhibitors in collaboration with the Cancer Research
UK Centre for Cancer Therapeutics at The Institute of Cancer Research (ICR), London, UK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Other programs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have allocated limited resources to other programs allowing us to maintain and build on our core
competency in cell cycle biology and related drug discovery. In our second generation CDK inhibitor
program, we have discovered several series of CDK inhibitors that we believe may prove to be more
potent anticancer agents than seliciclib based on preclinical observations. In our polo-like kinase
or Plk inhibitor program we have discovered potent and selective small molecule inhibitors of Plk1,
a kinase active during cell division, targeting the mitotic phase of the cell cycle. Plk was
discovered by Professor David Glover, our Chief Scientist. The Company has a number of earlier
stage programs for which limited or no resources will be allocated. For example, extensive
preclinical data published by independent investigators evidence activity by our CDK inhibitors,
including seliciclib, in various autoimmune and inflammatory diseases and conditions associated
with aberrant cell proliferation including glaucoma, graft-versus-host disease, idiopathic
pulmonary fibrosis, lupus nephritis, polycystic kidney disease and rheumatoid arthritis. In our
GSK-3 inhibitor program we have demonstrated evidence of activity in preclinical models of Type 2
Diabetes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Where appropriate we intend to progress such programs through collaboration with groups that
specialize in the particular disease area until such times that these programs can be partnered
and/or progressed should funding become available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Hdm2 Inhibitors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">One of the key cell cycle regulatory proteins is p53, a protein discovered by our founder,
Professor Sir David Lane. When active, p53 causes cell arrest at the G1/S checkpoint, inducing
apoptosis in cancer cells. Under normal circumstances, p53 is held in an inactive form by binding
to another regulatory protein, Hdm2. In this program, we have investigated ways of disrupting the
interaction between Hdm2 and p53, thus activating p53. Through virtual screening technologies, we
have identified two small molecule classes capable of breaking the binding between p53 and Hdm2.
</DIV>
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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Cyclin Binding Groove Inhibitors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The activity of CDK can be inhibited by various methods, such as by blocking the ATP site, as is
the case with seliciclib, or by inhibiting the substrate binding site on the associated cyclin
protein. Preventing cyclin A from binding to its substrates results in cell cycle arrest and
induces apoptosis in cancer cells. This was the subject of a two-year collaboration with
AstraZeneca that concluded in mid-2003. We have retained all intellectual property rights
associated with this program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Non-oncology Programs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Cell Cycle Inhibitors in Autoimmune &#038; Inflammatory Diseases</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Preclinical results from several independent investigators suggest that cell cycle inhibitors such
as seliciclib and its backup molecules arrest the progress of the cell cycle and may have
therapeutic benefit in the treatment of patients with autoimmune and inflammatory diseases as well
as in diseases characterized by uncontrolled cell proliferation. Published data indicate potential
benefit in graft-versus-host disease, idiopathic pulmonary fibrosis, glomerulonephritis, lupus
nephritis, polycystic kidney disease and rheumatoid arthritis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>CDK Inhibitors in Virology</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Cell cycle inhibitors may be useful in the treatment of viral diseases to the extent that drugs can
be developed that prevent the replication of virus in infected host cells while sparing most
uninfected cells. If this is proven in humans, cell cycle inhibitors may have significant potential
in this area, as they do not rely on viral targets and are less likely to induce viral resistance,
a major cause of failure of currently available antiviral drugs. We have investigated a number of
compounds in this program, some of which appear to reduce HIV levels in biological tests with
antiviral potency equivalent to some existing HIV/AIDS therapeutic agents. We intend to progress
this program through collaboration with groups that specialize in virology research.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>GSK-3 Inhibitors in Type 2 Diabetes</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Inhibition of Glycogen Synthase Kinase-3 or GSK-3, downstream of insulin action, is an essential
element in the body&#146;s regulation of blood sugar, and is a recognized target for the treatment of
Type 2 diabetes. GSK-3 is a serine/threonine protein kinase that is structurally very similar to
CDK. We have identified four chemical families of GSK-3 inhibitors some of which are potent at
picomolar concentrations which we believe are among the most potent GSK-3 inhibitors disclosed in
relevant research literature. We have selected two lead compounds from the series, both of which
have achieved proof-of-concept in the standard obese Zucker rat model of diabetes, demonstrating
stimulation of glycogen synthase, improvement in glucose tolerance and regulation of triglycerides.
We intend to progress this program through collaboration with groups that specialize in diabetes
research.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Commercial Products</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have exclusive rights to sell and distribute three products in the United States and Canada used
primarily to manage the effects of radiation or chemotherapy in cancer patients: Xclair<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Cream,
Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges. All three products are approved in the United States under
FDA 510 (k)&nbsp;or medical device registrations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Xclair</I></B><B><I><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Cream</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Xclair<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> is an aqueous cream containing sodium hyaluronate, or hyaluronic acid, and glycyrrhetinic
acid that is formulated to relieve symptoms associated with radiation dermatitis. Sodium
hyaluronate is the key water-regulating substance in human skin. Sodium hyaluronate has high
viscoelasticity and lubricity. When sodium hyaluronate solution is applied on the surface of skin,
it forms an air permeable layer that keeps skin moist and smooth. Small molecular weight sodium
hyaluronate can penetrate into the dermis where it combines with water to promote microcirculation,
nutrient absorption, and metabolism. Glycyrrhetinic acid reduces inflammation and is believed to
have immunomodulatory properties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Numoisyn</I></B><B><I><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid is an oral solution used to replace natural saliva when salivary glands are
damaged. The viscosity of Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid is similar to that of natural saliva. Linseed extract in
Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid contains mucins that provide superior viscosity and reduced friction compared to
water or carboxymethylcellulose or CMC solutions. Linseed extract significantly reduces the
symptoms of dry mouth with increasing effect over time while Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid is used.
</DIV>
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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Numoisyn</I></B><B><I><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges dissolve slowly while moved around in the mouth. They contain sorbitol and malic
acid to stimulate normal salivation and provide temporary relief of dry mouth in patients who have
some residual secretory function and taste perception. Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges support saliva&#146;s natural
protection of teeth so that teeth are not damaged with repeated use of the lozenges. They are sugar
free and buffered with calcium to protect teeth. Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges have been demonstrated to be
safe and effective
for long-term use and are well tolerated by patients. Use of Numoisyn<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges improves subjective
symptoms of dry mouth and does not cause bacteria or plaque formation or loss of tooth enamel
hardness.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Corporate Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our corporate headquarters are located at 200 Connell Drive, Suite&nbsp;1500, Berkeley Heights, New
Jersey, 07922, and our telephone number is (908)&nbsp;517-7330. This is also where our marketing,
medical and regulatory functions are located. Our research facility is located in Dundee,
Scotland, which is also the center of our translational work and development programs. Our
Internet address is www.cyclacel.com. The information on our website is not part of this
prospectus supplement.
</DIV>
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<A name="C19543203"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>THE OFFERING</B>
</DIV>

<DIV align="center">
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<!-- Begin Table Head --><TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Units offered by us
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">7,617,646 shares of our common stock and
warrants to purchase up to 3,808,821 shares
of our common stock. The common stock and
warrants will be sold in units, with each
unit consisting of one share of common
stock and a warrant to purchase 0.5 of a
share of common stock at an exercise price
of $1.36 per share. Each unit will be sold
at a negotiated price of $1.36 per unit.
Units will not be issued or certificated.
The shares of common stock and warrants are
immediately separable and will be issued
separately.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The warrants will be exercisable beginning
on the date that is six months after the
date of issuance and may be exercised until
the date that is five years from the date
of issuance. This prospectus also relates
to the offering of the shares of common
stock issuable upon exercise of the
warrants.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Offering price per share
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$1.36&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Common stock outstanding <BR>
immediately after this <BR>
offering (1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">54,222,530 shares of common stock.&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Use of proceeds
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">We intend to use the net proceeds from the
sale of our common stock offered hereby for
funding our SEAMLESS pivotal Phase 3 trial
of our leading drug, sapacitabine, and
general corporate purposes.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Risk factors
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">You should read the description of risks
set in the &#147;Risk Factors&#148; sections on Page
S-12 of this prospectus supplement and
page 9 of the accompanying prospectus or
otherwise incorporated by reference in this
prospectus supplement and the accompany
prospectus for a discussion of material
risks that prospective purchasers of shares
of our common stock should consider.</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">NASDAQ Symbol
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CYCC</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Based on 46,604,884 shares of our common stock outstanding as of June&nbsp;30, 2011 and assumes
that all of the shares offered hereby are sold.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-11<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C19543204"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Investing in our securities involves a high degree of risk. Before purchasing our securities, you
should carefully consider the following risk factors and those set forth in the accompanying
prospectus, together with those risk factors set forth in our most recent Annual Report on Form
10-K for the year ended December&nbsp;31, 2010 and in our Quarterly Report on Form 10-Q for the
three-month period ended March&nbsp;31, 2011, both of which are incorporated by reference into this
prospectus supplement. You should also carefully consider all of the other information in this
prospectus supplement, the accompanying prospectus, or incorporated by reference into this
prospectus supplement and the accompanying prospectus. Any of these risks could have a material
adverse impact on our business, prospects, results of operations and financial condition and could
therefore have a negative effect on the trading price of our common stock and you might lose all or
part of your investment in our securities. Additionally, risks not currently known to us or that
we now deem immaterial may also harm us and negatively affect your investment. The following risks
are presented as of the date of this prospectus supplement and we expect that these will be updated
from time to time in our periodic and current reports filed with the SEC, which will be
incorporated herein by reference. Please refer to these subsequent reports for additional
information relating to the risks associated with investing in our common stock. See &#147;Where You
Can Find More Information&#148; and &#147;Incorporation of Certain Information by Reference.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Risks Related to This Offering</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Management will have broad discretion as to the use of the proceeds from this offering, and we may
not use the proceeds effectively.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our management will have broad discretion in the application of the net proceeds from this offering
and could spend the proceeds in ways that do not improve our results of operations or enhance the
value of our common stock. Our failure to apply these funds effectively could have a material
adverse effect on our business and cause the price of our common stock to decline.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>You will experience immediate and substantial dilution in the net tangible book value per share of
the common stock you purchase.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Since the price per share of our common stock being offered is substantially higher than the net
tangible book value per share of our common stock, you will suffer immediate dilution in the net
tangible book value of the common stock you purchase in this offering. After giving effect to the
sale of 7,617,646 shares of our common stock included in the units in this offering at the offering
price of $1.36 per share, and after deducting the underwriting discounts and commissions and
estimated offering expenses payable by us, you will experience immediate dilution of $0.81 per
share, representing the difference between our as adjusted net tangible book value per share as of
March&nbsp;31, 2011 after giving effect to this offering and the offering price. See the section
entitled &#147;Dilution&#148; below for a more detailed discussion of the dilution you will incur if you
purchase common stock in this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>You may experience future dilution as a result of future equity offerings.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In order to raise additional capital, we may in the future offer additional shares of our common
stock or other securities convertible into or exchangeable for our common stock. We cannot assure
you that we will be able to sell shares or other securities in any other offering at a price per
share that is equal to or greater than the price per share paid by investors in this offering, and
investors purchasing shares or other securities in the future could have rights superior to
existing stockholders. The price per share at which we sell additional shares of our common stock
or other securities convertible into or exchangeable for our common stock in future transactions
may be higher or lower than the price per share in this offering.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-12<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C19543205"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Certain statements contained or incorporated by reference into this prospectus supplement, the
accompanying prospectus and any related free writing prospectus constitute forward-looking
statements within the meaning of Section&nbsp;27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section&nbsp;21E of the Exchange Act, including statements, other than statements of
historical facts, included or incorporated in this prospectus supplement, the accompanying
prospectus and any related free writing prospectus regarding our strategy, anticipated agreements
with marketing partners, progress and timing of research and product development results,
anticipated clinical trial timelines or results, projected regulatory timelines, future operations,
financial position, future revenues, projected costs, prospects, plans, and objectives of
management. The words &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;would,&#148; &#147;expect,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;anticipate,&#148;
&#147;believe,&#148; &#147;estimate,&#148; &#147;predict,&#148; &#147;potential,&#148; &#147;continue,&#148; or &#147;appear&#148; or the negative of these
terms or similar expressions are intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. We cannot guarantee that we actually
will achieve the plans, intentions or expectations disclosed in our forward-looking statements and
you should not place undue reliance on our forward-looking statements. Actual results or events
could differ materially from the plans, intentions and expectations disclosed in the
forward-looking statements we make. In evaluating such forward-looking statements, you should
specifically consider various factors, including the risks outlined under the heading &#147;Risk
Factors&#148; contained in any related free writing prospectus and in this prospectus supplement and the
accompanying prospectus, and in our most recent annual report on Form 10-K and any subsequent
filings with the SEC. The discussion of risks and uncertainties set forth in those filings is not
necessarily a complete or exhaustive list of all risks facing the Company at any particular point
in time. We operate in a highly competitive, highly regulated and rapidly changing environment,
and our business is in a state of evolution. Therefore, it is likely that new risks will emerge,
and that the nature and elements of existing risks will change, over time. It is not possible for
management to predict all such risk factors or changes therein, or to assess either the impact of
all such risk factors on our business or the extent to which any individual risk factor,
combination of factors, or new or altered factors, may cause results to differ materially from
those contained in any forward-looking statement. Also, these forward-looking statements represent
our estimates and assumptions only as of the date such forward-looking statements are made. We are
not under any obligation, and we expressly disclaim any obligation, to update or alter any
forward-looking statements, whether as a result of new information, future events or otherwise.
All subsequent forward-looking statements attributable to Cyclacel or to any person acting on its
behalf are expressly qualified in their entirety by the cautionary statements contained or referred
to in this section.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We cannot assure you that the forward-looking statements in this prospectus supplement, the
accompanying prospectus, any related free writing prospectus and the documents incorporated by
reference herein and therein will prove to be accurate. In addition, if our forward-looking
statements prove to be inaccurate, the inaccuracy may be material. In light of the significant
uncertainties in these forward-looking statements, you should not regard these statements as a
representation or warranty by us or any other person that we will achieve our objectives and plans
in any specified time frame, if at all. We may not update these forward-looking statements, even
though our situation may change in the future.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C19543206"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We estimate that the net proceeds from this offering will be approximately $9.3&nbsp;million after
deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
This amount does not include the proceeds which we may receive in connection with the exercise of
the warrants. We intend to use the net proceeds of this offering for funding our SEAMLESS pivotal
Phase 3 trial of our leading drug, sapacitabine, and general corporate purposes and general
corporate purposes. Pending use of the net proceeds, we intend to invest these net proceeds in
interest bearing investment grade securities.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-14<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C19543207"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DILUTION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our net tangible book value as of March&nbsp;31, 2011, was approximately $20.4&nbsp;million, or $0.44 per
share of common stock. Net tangible book value per share is calculated by subtracting our total
liabilities from our total tangible assets, which is total assets less intangible assets, and
dividing this amount by the number of shares of common stock outstanding. After giving effect to
the sale by us of the 7,617,646 shares of common stock included in the units offered in this
offering, at an offering price of $1.36 per share and after deducting the underwriting discounts
and commissions and estimated offering expenses payable by us, our net tangible book value as of
March&nbsp;31, 2011, would have been approximately $29.7&nbsp;million, or $0.55 per share of common stock.
This represents an immediate increase in net tangible book value of $0.11 per share to our existing
stockholders and an immediate and substantial dilution of $0.81 per share to new investors. The
following table illustrates this per share dilution:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Offering price per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net tangible book value per share as of March&nbsp;31, 2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase per share after the offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net tangible book value per share after this offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.55</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dilution per share to new investors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.81</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The foregoing table does not take into account further dilution to new investors that could occur
upon the exercise of outstanding options and warrants having a per share exercise price less than
the per share offering price to the public in this offering, including the warrants to purchase
3,808,821 shares of common stock offered hereby. As of March&nbsp;31, 2011, there were 46,577,860
shares of common stock outstanding, which does not include the following (each as of March&nbsp;31,
2011):
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>3,808,821 shares of common stock issuable upon the exercise of the warrants offered
hereby;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>3,347,033 shares of common stock issuable upon the exercise of outstanding options at a
weighted-average exercise price of $3.87 per share;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>52,070 shares of common stock issuable upon restricted stock and restricted common stock
units;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>1,501,662 shares of common stock available for issuance under our 2006 Equity Incentive
Plan;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>10,005,192 shares of common stock issuable upon the exercise of outstanding warrants at
a weighted-average exercise price of $4.01 per share;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>6,242,398 shares of common stock issuable upon the options to purchase common stock and
common stock warrants issued in connection with the October&nbsp;2010 financing at a
weighted-average exercise price of $1.75 per share; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>516,228 shares of common stock, subject to adjustment, that are issuable upon the
conversion of 1,213,142 shares of convertible preferred stock that are issued and
outstanding.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-15<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C19543tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>
<DIV align="left">
<A name="C19543208"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>UNDERWRITING</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Subject to the terms and conditions set forth in an underwriting agreement, the underwriters named
below have agreed to purchase from us the aggregate number of shares of common stock set forth
opposite their names below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Underwriters</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Number of Units</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leerink Swan LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,027,647</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lazard Capital Markets LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,589,999</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,617,646</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The underwriting agreement provides that the obligations of the underwriters are subject to various
conditions, including approval of legal matters by counsel. The nature of the underwriters&#146;
obligations commits each underwriter to purchase and pay for all of the units next to such
underwriter&#146;s name in the table above if any are purchased.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The underwriting agreement provides that we will indemnify the underwriters against liabilities
specified in the underwriting agreement under the Securities Act, or will contribute to payments
that the underwriters may be required to make relating to these liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The underwriters expect to deliver the units on or about July&nbsp;7, 2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Commissions and Discounts</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following table shows the per unit and total underwriting discounts and commissions to be paid
by us to the underwriters.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Per Unit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Public offering price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,359,999</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Underwriting discount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.0884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">673,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds, before expenses, to us</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.2716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,686,599</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have also agreed to pay ROTH Capital Partners, LLC a financial advisory fee in the amount of
$10,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The expenses of the offering that are payable by us are estimated to be $350,000 (excluding
underwriting discounts and commissions), which includes $75,000 that we have agreed to pay to
reimburse the underwriters for fees and expenses of their counsel incurred in connection with the
offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In compliance with the guidelines of the Financial Industry Regulatory Authority, Inc., or FINRA,
the maximum discount or commission to be received by any FINRA member or independent broker-dealer
may not exceed 8% of the aggregate offering price of the units offered hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Lock-Up Agreements</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Each of our directors and executive officers has entered into a lock-up agreement with the
underwriters, which. subject to certain exceptions, prohibits such director or executive officer
from disposing of or hedging any of his or her common stock or securities convertible into or
exchangeable for shares of common stock during the period from the date of this prospectus
supplement continuing through the date that is 90&nbsp;days after the date of this prospectus
supplement, except with the prior written consent of Leerink Swann. The exceptions to the
restrictions on transfer includes transfers made (i)&nbsp;as a bona fide gift or gifts, (ii)&nbsp;to any
trust or other investment vehicle for the direct or indirect benefit of the respective director or
executive officer, or his or her immediate family, or (iii)&nbsp;by will or intestate succession;
provided, that each donee, transferee or distributee executes and delivers a letter agreeing to be
bound by terms substantially similar to those in the lock-up agreements and provided that neither
the director or executive officer, nor any other party to the applicable transaction, is required
to file, or voluntarily file, a report under Section 16(a) of the Exchange Act, other than a filing
on Form&nbsp;5 made after the expiration of the 90-day period. Also, the restriction on transfer does
not apply to the establishment of a trading plan that complies with Rule&nbsp;10-b5-1 under the Exchange
Act but does apply to sales pursuant to the trading plan during the 90-day period. In addition,
this transfer restriction does not apply to the exercise of any of the respective director&#146;s or
executive officer&#146;s rights to acquire any beneficially owned shares issued pursuant to any
effective equity incentive plan disclosed in this prospectus supplement or the accompanying
prospectus.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have agreed that for a period of 90&nbsp;days after the date of this prospectus supplement, we will
not, without the prior written consent of Leerink Swann and Lazard Capital Markets, offer, sell or
otherwise dispose of or enter into any hedging arrangements related to
any shares of common stock or any other securities of ours convertible into or exchangeable or
exercisable for our common stock, except for the securities to be sold pursuant to the underwriting
agreement, (ii)&nbsp;the issuance by us of such securities upon the exercise of an option or warrant or
the conversion of a security outstanding on the date of the underwriting agreement and as described
in this prospectus supplement, the accompanying prospectus, the related registration statement and
any related free writing prospectus, (iii)&nbsp;the issuance by us of such securities upon the
conversion of our preferred stock outstanding on the date of the underwriting agreement and as
described in this prospectus supplement, the accompanying prospectus, the related registration
statement and any related free writing prospectus or (iv)&nbsp;the issuance of stock options and other
stock-based awards (or the issuance of shares of our common stock upon exercise thereof) to
eligible participants pursuant to our stock incentive plans and as described in this prospectus
supplement, the accompanying prospectus, the related registration statement or any related free
writing prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The 90-day restricted period in all of the agreements is subject to extension if (i)&nbsp;during the
last 17&nbsp;days of the initial restricted period we issue an earnings release or material news or a
material event relating to us occurs or (ii)&nbsp;prior to the expiration of the restricted period, we
announce that we will release earnings results during the 16-day period beginning on the last day
of the lock-up period, in which case the lock-up restrictions shall continue until the expiration
of the 18-day period beginning on the issuance of the earnings release or the occurrence of the
material news or material event.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>NASDAQ Global Market Listing</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our common stock is listed on The NASDAQ Global Market under the symbol &#147;CYCC&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Passive Market Making</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In connection with the offering, the underwriters may engage in passive market making transactions
in the common stock on The NASDAQ Global Market in accordance with Rule&nbsp;103 of Regulation&nbsp;M under
the Exchange Act during the period before the commencement of offers or sales of common stock and
extending through the completion and distribution. A passive market-maker must display its bids at
a price not in excess of the highest independent bid of the security. However, if all independent
bids are lowered below the passive market-maker&#146;s bid, that bid must be lowered when specified
purchase limits are exceeded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Short Sales, Stabilizing Transactions and Penalty Bids</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In order to facilitate this offering, persons participating in this offering may engage in
transactions that stabilize, maintain, or otherwise affect the price of our common stock during and
after this offering. Specifically, the underwriters may engage in the following activities in
accordance with the rules of the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Short sales. </I>Short sales involve the sales by the underwriters of a greater number of shares
than they are required to purchase in the offering. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked short position is more likely to be
created if the underwriters are concerned that there may be downward pressure on the price of the
common stock in the open market after pricing that could adversely affect investors who purchase in
this offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Stabilizing transactions. </I>The underwriters may make bids for or purchases of the shares for
the purpose of pegging, fixing, or maintaining the price of the shares, so long as stabilizing bids
do not exceed a specified maximum.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Penalty bids. </I>If the underwriters purchase shares in the open market in a stabilizing
transaction or syndicate covering transaction, they may reclaim a selling concession from the
underwriters and selling group members who sold those shares as part of this offering.
Stabilization and syndicate covering transactions may cause the price of the shares to be higher
than it would be in the absence of these transactions. The imposition of a penalty bid might also
have an effect on the price of the shares if it discourages presales of the shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The transactions above may occur on The NASDAQ Global Market or otherwise. Neither we nor the
underwriters make any representation or prediction as to the effect that the transactions described
above may have on the price of the shares. If these transactions are commenced, they may be
discontinued without notice at any time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Other Relationships</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Underwriters and their respective affiliates are full service financial institutions engaged in
various activities, which may include securities trading, commercial and investment banking,
financial advisory, investment management, principal investment, hedging, financing and brokerage
activities. Certain of the underwriters and their respective affiliates have, from time to time,
performed, and may in the future perform, various financial advisory and investment banking
services for us, for which they received or will receive customary fees and expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In the ordinary course of their various business activities, the underwriters and their respective
affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including
bank loans) for their own account and for the accounts of their customers and may at any time hold
long and short positions in such securities and instruments. Such investment and securities
activities may involve securities and instruments of Cyclacel.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Transfer Agent</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The transfer agent and registrar for our common stock is American Stock Transfer &#038; Trust Company,
LLC. Its address is 59 Maiden Lane, Plaza Level, New York, NY 10038, and their telephone number is
(800)&nbsp;937-5449.
</DIV>
<DIV align="left">
<A name="C19543209"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>DESCRIPTION OF THE SECURITIES WE ARE OFFERING</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In this offering, we are offering a maximum of 7,617,646 units, consisting of 7,617,646 shares of
common stock and warrants to purchase an additional 3,808,821 shares of common stock. Each unit
consists of one share of common stock and a warrant to purchase 0.5 of a share of common stock at
an exercise price of $1.36 per share. Units will not be issued or certificated. The shares of
common stock and warrants are immediately separable and will be issued separately.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Common Stock</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are authorized to issue 100,000,000 shares of common stock, $0.001 par value per share. As of
June&nbsp;30, 2011, 46,604,884 shares of common stock were issued and outstanding. The following
descriptions of our common stock and provisions of our amended and restated certificate of
incorporation and amended and restated by-laws are only summaries, and we encourage you to review
complete copies of these documents, which have been filed as exhibits to our periodic reports with
the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Dividends, Voting Rights and Liquidation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Holders of common stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders, and do not have cumulative voting rights. Subject to
preferences that may be applicable to any outstanding shares of preferred stock, holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared from time to time
by our board of directors out of funds legally available for dividend payments. All outstanding
shares of common stock are fully paid and non-assessable, and the shares of common stock to be
issued upon completion of this offering will be fully paid and non-assessable. The holders of
common stock have no preferences or rights of conversion, exchange, pre-emption or other
subscription rights. There are no redemption or sinking fund provisions applicable to the common
stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders of
common stock will be entitled to share ratably in our assets that are remaining after payment or
provision for payment of all of our debts and obligations and after liquidation payments to holders
of outstanding shares of preferred stock, if any.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Delaware Law and Certain Charter and By-law Provisions</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The provisions of (1)&nbsp;Delaware law, (2)&nbsp;our amended and restated certificate of incorporation, and
(3)&nbsp;our amended and restated bylaws discussed below could discourage or make it more difficult to
accomplish a proxy contest or other change in our management or the acquisition of control by a
holder of a substantial amount of our voting stock. It is possible that these provisions could
make it more difficult to accomplish, or could deter, transactions that stockholders may otherwise
consider to be in their best interests or in our best interests. These provisions are intended to
enhance the likelihood of continuity and stability in the composition of our board of directors and
in the policies formulated by the board of directors and to discourage certain types of
transactions that may involve an actual or threatened change of control of us. These provisions
are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions
also are intended to discourage certain tactics that may be used in proxy fights. Such provisions
also may have the effect of preventing changes in our management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Delaware Statutory Business Combinations Provision. </I>We are subject to the anti-takeover provisions
of Section&nbsp;203 of the Delaware General Corporation Law. In general, Section&nbsp;203 prohibits a
publicly-held Delaware corporation from engaging in a &#147;business combination&#148; with an &#147;interested
stockholder&#148; for a period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is, or the transaction in which
the person became an interested stockholder was, approved in a prescribed manner or another
prescribed exception applies. For purposes of Section&nbsp;203, a &#147;business combination&#148; is defined
broadly to include a merger, asset sale or other transaction resulting in a financial benefit to
the interested stockholder, and, subject to certain exceptions, an &#147;interested stockholder&#148; is a
person who, together with his or her affiliates and associates, owns (or within three years prior,
did own) 15% or more of the corporation&#146;s voting stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Classified Board of Directors. </I>Our amended and restated certificate of incorporation and amended
and restated bylaws provide that our board of directors is divided into three classes, each serving
staggered three-year terms ending at the annual meeting of our stockholders. All directors elected
to our classified board of directors will serve until the election and qualification of their
respective successors or their earlier resignation or removal. The board of directors is
authorized to create new directorships and to fill such positions so created and is permitted to
specify the class to which any such new position is assigned. The person filling such position
would serve for the term applicable to that class. The board of directors (or its remaining
members, even if less than a quorum) is also empowered to fill vacancies on the board of directors
occurring for any reason for the remainder of the term of the class of directors in
which the vacancy occurred. These provisions are likely to increase the time required for
stockholders to change the composition of the board of directors. For example, in general, at
least two annual meetings will be necessary for stockholders to effect a change in a majority of
the members of the board of directors.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Advance Notice Provisions for Stockholder Proposals and Stockholder Nominations of Directors. </I>Our
amended and restated bylaws provide that, for nominations to the board of directors or for other
business to be properly brought by a stockholder before a meeting of stockholders, the stockholder
must first have given timely notice of the proposal in writing to our Secretary. For an annual
meeting, a stockholder&#146;s notice generally must be delivered not less than 90&nbsp;days nor more than 120
days prior to the anniversary of the mailing date of the proxy statement for the previous year&#146;s
annual meeting. Detailed requirements as to the form of the notice and information required in the
notice are specified in the amended and restated bylaws. If it is determined that business was not
properly brought before a meeting in accordance with our bylaw provisions, such business will not
be conducted at the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Special Meetings of Stockholders. </I>Special meetings of the stockholders may be called only by our
board of directors pursuant to a resolution adopted by a majority of the total number of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>No Stockholder Action by Written Consent. </I>Our amended and restated certificate of incorporation
and amended and restated bylaws do not permit our stockholders to act by written consent. As a
result, any action to be effected by our stockholders must be effected at a duly called annual or
special meeting of the stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Super-Majority Stockholder Vote Required for Certain Actions. </I>The Delaware General Corporation Law
provides generally that the affirmative vote of a majority of the shares entitled to vote on any
matter is required to amend a corporation&#146;s certificate of incorporation or bylaws, unless the
corporation&#146;s certificate of incorporation or bylaws, as the case may be, requires a greater
percentage. Our amended and restated certificate of incorporation requires the affirmative vote of
the holders of at least 66 2/3% of our outstanding voting stock to amend or repeal any of the
provisions inconsistent with the provisions discussed in the section of this prospectus entitled
&#147;Classified Board of Directors&#148;. This 66 2/3% stockholder vote would be in addition to any
separate class vote that might in the future be required pursuant to the terms of any preferred
stock that might then be outstanding. In addition, a 66 2/3% vote is also required for any
amendment to, or repeal of, our amended and restated bylaws by the stockholders. Our amended and
restated bylaws may be amended or repealed by a simple majority vote of the board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><U>Warrants</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">There is no established public trading market for the warrants, and we do not expect a market to
develop. We do not intend to apply to list the warrants on The NASDAQ Global Market or any other
securities exchange. Without an active market, the liquidity of the warrants will be limited. In
addition, in the event our common stock price does not exceed the per share exercise price of the
warrants during the period when the warrants are exercisable, the warrants will not have any value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Exercisability</I>. The warrants will be exercisable commencing on the date that is six months after
the date of issuance and may be exercised until the date that is five years from such date of
issuance, unless sooner terminated. The warrants will be exercisable, at the option of each
holder, in whole or in part by delivering to us a duly executed exercise notice accompanied by
payment in full for the number of shares of our common stock purchased upon such exercise and the
warrant or a facsimile copy thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Cashless Exercise</I>. If at any time during the warrant exercisability period the fair market value
of our common stock exceeds the exercise price of the warrants and a registration statement
covering the shares that are issuable upon the exercise of the warrants, or an exemption from
registration is not available for the resale of such shares, the holders may effect a cashless
exercise of the warrants (in whole or in part) by surrendering the warrants to us together with
delivery to us of a duly executed exercise notice, by canceling a portion of the warrant in payment
of the purchase price payable in respect of the number of shares of our common stock purchased upon
such exercise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Exercise Price. </I>The exercise price per share of common stock purchasable upon exercise of the
warrants is $1.36 per share of common stock being purchased. The exercise price and number of
shares issuable upon exercise are subject to adjustment in the event of stock dividends and stock
splits and fundamental transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Transferability</I>. Subject to compliance with any applicable securities laws, the warrants may be
transferred at the option of the holders upon surrender of the warrants to us together with the
appropriate instruments of transfer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Exchange Listing. </I>We do not plan on making an application to list the warrants on The NASDAQ
Global Market, any other national securities exchange or other nationally recognized trading
system.
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Fundamental Transactions</I>. In the event of any fundamental transaction, as described in the
warrants, which includes any capital reorganization, reclassification of our capital stock,
consolidation or merger with another entity in which we are not the survivor, or the sale, transfer
or other disposition of all or substantially all of our assets to another entity, then we will use
our commercially reasonable efforts to ensure that lawful and adequate provision shall be made
whereby the holders of the warrants will thereafter have
the right to purchase and receive upon exercise of the warrants such shares of stock, securities or
assets as would have been issuable or payable with respect to or in exchange for a number of shares
of our common stock equal to the number of shares of our common stock issuable upon exercise of the
warrants immediately prior to the fundamental transaction, had the fundamental transaction not
taken place, and appropriate provision will be made so that the provisions of the warrants
(including, for example, provisions relating to the adjustment of the exercise price for purposes
of such fundamental transaction) will thereafter be applicable, as nearly equivalent as may be
practicable in relation to any share of stock, securities or assets deliverable upon the exercise
of the warrants after the fundamental transaction. In addition, in the event of a fundamental
transaction, at the request of the holder delivered within 30&nbsp;days after consummation of the
fundamental transaction, we (or our successor) would be required to purchase the warrant from the
holder by paying to the holder cash in an amount equal to the Black Scholes value of the remaining
unexercised portion of the warrant on the date of the consummation of such fundamental transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Rights as a Stockholder. </I>Except as otherwise provided in the warrants or by virtue of such
holder&#146;s ownership of shares of our common stock, the holders of the warrants do not have the
rights or privileges of holders of our common stock, including any voting rights, until they
exercise their warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Waivers and Amendments</I>. Any term of the warrants may be amended or waived with the written consent
each holder of a warrant and us.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-20<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C19543210"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>LEGAL MATTERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The validity of the securities offered hereby will be passed upon for us by Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., New York, New York. Godwin Procter LLP, Boston, Massachusetts is
representing the underwriters in this offering.
</DIV>
<DIV align="left">
<A name="C19543211"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXPERTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The consolidated financial statements of Cyclacel Pharmaceuticals, Inc. appearing in Cyclacel
Pharmaceuticals, Inc.&#146;s Annual Report on Form 10-K for the year ended December&nbsp;31, 2010, filed with
the SEC on March&nbsp;31, 2011 have been audited by Ernst &#038; Young LLP, independent registered public
accounting firm, as set forth in its report thereon, included therein, and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by reference in reliance
upon such report given on the authority of such firm as experts in accounting and auditing.
</DIV>
<DIV align="left">
<A name="C19543212"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>WHERE YOU CAN FIND MORE INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have filed with the SEC a registration statement on Form S-3 (File No.&nbsp;333-173291), of
which this prospectus supplement and the accompanying prospectus are a part, under the Securities
Act, to register the shares of common stock and warrants to purchase common stock offered by this
prospectus supplement. However, this prospectus supplement and the accompanying prospectus do not
contain all of the information contained in the registration statement and the exhibits and
schedules to the registration statement. We encourage you to carefully read the registration
statement and the exhibits and schedules to the registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As a public company, we are required to file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any of our materials on file
with the SEC at the SEC&#146;s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Our
filings are available to the public over the Internet at the SEC&#146;s website at http://www.sec.gov.
Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.
</DIV>
<DIV align="left">
<A name="C19543213"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>INCORPORATION OF CERTAIN INFORMATION BY REFERENCE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In this document, we &#147;incorporate by reference&#148; certain information we file with the SEC, which
means that we can disclose important information to you by referring to that information. The
information incorporated by reference is considered to be a part of this prospectus supplement.
Any statement contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for all purposes to the extent that a statement contained in this prospectus
supplement or in any other subsequently filed document that is also incorporated or deemed to be
incorporated by reference, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to constitute a part of this
prospectus supplement. We incorporate by reference the documents listed below (other than any
portions thereof that are not deemed &#147;filed&#148; with the SEC):
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our definitive proxy statement on Schedule&nbsp;14A for the Annual Meeting of Stockholders
filed with the Securities and Exchange Commission on April&nbsp;27, 2011;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Annual Report on Form 10-K for the year ended December&nbsp;31, 2010 filed on March&nbsp;31,
2011;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Quarterly Report on Form 10-Q for the quarter ended March&nbsp;31, 2011 filed on May&nbsp;16,
2011;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Current Reports on Form 8-K filed on January&nbsp;13, 2011, February&nbsp;1, 2011, April&nbsp;1,
2011, April&nbsp;21, 2011 and May&nbsp;26, 2011;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of our common stock contained in our Registration Statement on Form 8-A,
filed on March&nbsp;8, 2004 (File No.&nbsp;000-50626), which incorporates by reference the
description of the shares of our common stock contained in our Registration Statement on
Form S-1 (File No.&nbsp;333-109653) filed on December&nbsp;22, 2003 and declared effective by the SEC
on March&nbsp;17, 2004, and any amendment or reports filed with the SEC for purposes of updating
such description; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of our preferred stock contained in our Registration Statement on Form
8-A, filed on October&nbsp;27, 2004 (File No.&nbsp;000-50626), which incorporates by reference the
description of the shares of our preferred stock contained in our Registration Statement on
Form S-1 (File No.&nbsp;333-119585) filed on October&nbsp;7, 2004 and declared effective by the SEC
on November&nbsp;1, 2004, and any amendment or reports filed with the SEC for purposes of
updating such description.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">All reports and other documents subsequently filed by us pursuant to Sections&nbsp;13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, (other than Current
Reports furnished under Item&nbsp;2.02 or Item&nbsp;7.01 (including any financial statements or other
exhibits relating thereto furnished pursuant to Item&nbsp;9.01) of Form 8-K unless we otherwise state
therein) after the date of this prospectus supplement shall be deemed to be incorporated by
reference in this prospectus supplement and to be part hereof from the date of filing of such
reports and other documents.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-21<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We hereby undertake to provide without charge to each person, including any beneficial owner, to
whom a copy of this prospectus supplement is delivered, upon written or oral request of any such
person, a copy of any and all of the information that has been or may be incorporated by reference
in this prospectus supplement, including any exhibits that are specifically incorporated by
reference in such documents. Requests for such copies should be directed as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Cyclacel Pharmaceuticals, Inc.<BR>
200 Connell Drive, Suite&nbsp;1500<BR>
Berkeley Heights, NJ 07922<BR>
(908)&nbsp;517-7330
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->S-22<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">


<DIV align="right" style="font-size: 10pt; margin-top: 6pt"><B>Filed Pursuant to Rule&nbsp;424(b)(3)<BR>
Registration File No.&nbsp;333-173291</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 18pt"><B>PROSPECTUS</B>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>$75,000,000</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 18pt"><B>CYCLACEL PHARMACEUTICALS, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Common Stock<BR>
Preferred Stock<BR>
Warrants<BR>
Debt Securities<BR>
Units</B>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, from time to time at prices and on terms to be determined at or prior to the time
of one or more offerings, issue up to $75,000,000 of any combination of the securities described in
this prospectus, either individually or in units. We may also offer common stock or preferred stock
upon conversion of the debt securities, common stock upon conversion of the preferred stock, or
common stock, preferred stock or debt securities upon the exercise of warrants.
</DIV>


<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will provide you with specific terms of any offering in one or more supplements to this
prospectus. You should read this prospectus and any prospectus supplement, as well as any documents
incorporated by reference into this prospectus or any prospectus supplement, carefully before you
invest.
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
common stock is listed on the NASDAQ Global Market under the symbol &#147;CYCC.&#148;
As of February 15, 2011, the aggregate market value of our outstanding common stock held
by non-affiliates was approximately $68,243,087.70 based
on 46,595,562 shares of outstanding common stock, of which
approximately 45,800,730 shares were held by non-affiliates,
and a per share price of $1.49 based on the closing sale
price of our common stock on February 15, 2011. As of the date hereof, we have
not offered any securities pursuant to General Instruction I.B.6 of Form S-3 during
the prior 12-calendar month period that ends on and includes the date hereof.
</DIV>


<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing in our securities involves a high degree of risk. Before deciding whether to invest
in our securities, you should consider carefully the risks that we
have described on page 9 of
this prospectus under the caption &#147;Risk Factors.&#148; We may include specific risk factors in
supplements to this prospectus under the caption &#147;Risk Factors.&#148; This prospectus may not be used by
us to offer or sell our securities unless accompanied by a prospectus supplement.</B>
</DIV>


<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our securities may be sold directly by us to investors, through agents designated from time to
time or to or through underwriters or dealers. For additional information on the methods of sale,
you should refer to the section entitled &#147;Plan of Distribution&#148; in this prospectus. If any
underwriters are involved in the sale of our securities with respect to which this prospectus is
being delivered, the names of such underwriters and any applicable commissions or discounts and
over-allotment options will be set forth in a prospectus supplement. The price to the public of
such securities and the net proceeds that we expect to receive from such sale will also be set
forth in a prospectus supplement.
</DIV>


<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">The date of this prospectus is April&nbsp;26, 2011.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="C19543tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543101">ABOUT THIS PROSPECTUS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543102">PROSPECTUS SUMMARY</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543103">RISK FACTORS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543104">SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543105">USE OF PROCEEDS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543106">PLAN OF DISTRIBUTION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543107">THE SECURITIES WE MAY OFFER</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543108">DESCRIPTION OF COMMON STOCK</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543109">DESCRIPTION OF PREFERRED STOCK</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543110">DESCRIPTION OF WARRANTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543111">DESCRIPTION OF DEBT SECURITIES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543112">DESCRIPTION OF UNITS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543113">LEGAL MATTERS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543114">EXPERTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543115">WHERE YOU CAN FIND MORE INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C19543116">INCORPORATION OF DOCUMENTS BY REFERENCE</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read this prospectus and the documents incorporated by reference
carefully before you invest. Such documents contain important information you should consider when
making your investment decision. See &#147;Incorporation of Documents
by Reference&#148; on page 47. You
should rely only on the information provided in this prospectus or documents incorporated by
reference in this prospectus. We have not authorized anyone to provide you with different
information. The information contained in this prospectus is accurate only as of the date of this
prospectus and any information we have incorporated by reference is accurate only as of the date of
the document incorporated by reference, regardless of the time of delivery of this prospectus or of
any sale of our common stock. Our business, financial condition, results of operations and
prospects may have changed since that date.
</DIV>






<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C19543tocpage">Table of Contents</A></H5><P>

<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left">
<A name="C19543101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ABOUT THIS PROSPECTUS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or SEC, utilizing a &#147;shelf&#148; registration process. Under this
shelf registration process, we may offer shares of our common stock, preferred stock, warrants to
purchase common stock, and/or debt securities, either individually or in units, in one or more
offerings, with a total value of up to $75,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we offer a type or series of securities under
this prospectus, we will provide a prospectus supplement that will contain specific information
about the terms of that offering.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus does not contain all of the information included in the
registration statement. For a more complete understanding of the offering of the securities, you
should refer to the registration statement, including its exhibits. The prospectus supplement may
also add, update or change information contained or incorporated by reference in this prospectus.
However, no prospectus supplement will fundamentally change the terms that are set forth in this
prospectus or offer a security that is not registered and described in this prospectus at the time
of its effectiveness. This prospectus, together with the applicable prospectus supplements and the
documents incorporated by reference into this prospectus, includes all material information
relating to this offering. You should carefully read this prospectus, the applicable prospectus
supplement, the information and documents incorporated herein by reference and the additional
information under the heading &#147;Where You Can Find More Information&#148; before making an investment
decision.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should rely only on the information we have provided or incorporated by
reference in this prospectus or any prospectus supplement. We have not authorized anyone to provide
you with information different from that contained or incorporated by reference in this prospectus.
No dealer, salesperson or other person is authorized to give any information or to represent
anything not contained or incorporated by reference in this prospectus. You must not rely on any
unauthorized information or representation. This prospectus is an offer to sell only the securities
offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should assume that the information in this prospectus or any prospectus supplement is
accurate only as of the date on the front of the document and that any information we have
incorporated herein by reference is accurate only as of the date of the document incorporated by
reference, regardless of the time of delivery of this prospectus or any sale of a security. To the
extent there is a conflict between the information contained in this prospectus and the prospectus
supplement, you should rely on the information in the prospectus supplement, provided that if any
statement in one of these documents is inconsistent with a statement in another document having a
later date &#151; for example, a document incorporated by reference in this prospectus or any
prospectus supplement &#151; the statement in the document having the later date modifies or supersedes
the earlier statement.
</DIV>

<DIV align="left">
<A name="C19543102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROSPECTUS SUMMARY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of what we believe to be the most important aspects of our business
and the offering of our securities under this prospectus. We urge you to read this entire
prospectus, including the more detailed consolidated financial statements, notes to the
consolidated financial statements and other information incorporated by reference from our other
filings with the SEC or included in any applicable prospectus supplement. Investing in our
securities involves risks. Therefore, carefully consider the risk
factors on page 9 of this
prospectus and in any prospectus supplements and in our most recent annual and quarterly filings
with the SEC, as well as other information in this prospectus and any prospectus supplements and
the documents incorporated by reference herein or therein, before purchasing our securities. Each
of the risk factors could adversely affect our business, operating results and financial condition,
as well as adversely affect the value of an investment in our securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Business</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a biopharmaceutical company dedicated to the development and commercialization of
novel, mechanism-targeted drugs to treat human cancers and other serious diseases. We are focused
on delivering leading edge therapeutic management of cancer patients based on a clinical
development pipeline of novel drug candidates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Clinical programs</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our clinical development priorities are focused on orally-available sapacitabine in the
following indications:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>AML in the elderly;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Myelodysplastic syndromes, or MDS; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Non-small cell lung cancer, or NSCLC.</TD>
</TR>



</TABLE>
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a Special Protocol Assessment, or SPA, agreement with the U.S. Food and Drug
Administration, or FDA, on the design of a pivotal Phase 3 trial for our sapacitabine oral
capsules, the SEAMLESS trial, as a front-line treatment in elderly patients aged 70&nbsp;years or older
with newly diagnosed AML who are not candidates for intensive induction chemotherapy. SEAMLESS is a
registration-directed, clinical trial of sapacitabine oral capsules to be conducted under the SPA
and will be a randomized study against an active control drug with the primary objective of
demonstrating an improvement in overall survival.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have additional ongoing programs in clinical development which are currently pending the
availability of clinical data. Once these data become available and are reviewed, we will determine
the feasibility of pursuing further development and/or partnering of these assets including
sapacitabine in combination with seliciclib, seliciclib in nasopharyngeal cancer, or NPC, and NSCLC
and CYC116.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were founded by Professor Sir David Lane, a recognized leader in the field of tumor
suppressor biology who discovered the p53 protein, which operates as one of the body&#146;s own
anticancer agents by regulating cell cycle targets. Our Chief Scientist, Professor David Glover, is
a recognized leader in the biology of mitosis or cell division. Professor Glover discovered, among
other cell cycle targets, the mitotic kinases, Polo and Aurora, enzymes that act in the mitosis
phase of the cell cycle.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although our resources are primarily directed towards advancing our anticancer drug candidate
sapacitabine through in-house development activities we are also progressing, but with lower levels
of investment than in previous years, our other novel drug series which are at earlier stages.
Taken together, our pipeline covers all four phases of the cell cycle, which we believe will
improve the chances of successfully developing and commercializing novel drugs that work on their
own or in combination with approved conventional chemotherapies or with other targeted drugs to
treat human cancers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Sapacitabine</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our lead candidate, sapacitabine, is an orally-available prodrug of CNDAC, which is a novel
nucleoside analog, or a compound with a structure similar to a nucleoside. A prodrug is a compound
that has a therapeutic effect after it is metabolized within the body. CNDAC has a significantly
longer residence time in the blood when it is produced in the body through metabolism of
sapacitabine than when it is given directly. Sapacitabine acts through a dual mechanism whereby the
compound interferes with DNA synthesis and repair by causing single-strand DNA breaks and induces
arrest of the cell division cycle at G2/M checkpoint. A number of nucleoside drugs, such as
gemcitabine, or Gemzar<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP>, from Eli Lilly, and cytarabine, also known as Ara-C, a generic drug, are
in wide use as conventional chemotherapies. Both sapacitabine and its major metabolite, CNDAC, have
demonstrated potent anti-tumor activity in both blood and solid tumors in preclinical studies. In a
liver metastatic mouse model, sapacitabine was shown to be superior to gemcitabine and 5-FU, two
widely used nucleoside analogs, in delaying the onset and growth of liver metastasis. We have
retained worldwide rights to commercialize sapacitabine, except for Japan, for which Daiichi-Sankyo
Co., Ltd., or Daiichi-Sankyo, has a right of first negotiation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are currently exploring sapacitabine in both hematological cancers and solid tumors. To
date, sapacitabine has been evaluated in approximately 400 patients in several Phase 1 and 2
studies and has shown signs of anti-cancer activity. In January&nbsp;2011, we opened enrollment of the
SEAMLESS pivotal Phase 3 trial, which will evaluate sapacitabine oral capsules as a front-line
treatment in elderly patients aged 70&nbsp;years or older with newly-diagnosed AML who are not
candidates for intensive induction chemotherapy. The study will be conducted under an SPA.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Hematological Cancers</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Phase 1 clinical trial in patients with advanced leukemias and myelodysplastic syndromes</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2007, at the ASH annual meeting, we reported interim results from a Phase 1
clinical trial of oral sapacitabine in patients with advanced leukemias and MDS. The data
demonstrated that sapacitabine had a favorable safety profile and promising anti-leukemic activity
in patients with relapsed and refractory AML and MDS when administered by two different dosing
schedules. The primary objective of the study is to determine the maximum tolerated dose, or MTD,
of sapacitabine administered twice daily for seven consecutive days every 21&nbsp;days or three
consecutive days per week for two weeks every 21&nbsp;days. The MTD was reached at 375 mg on the
seven-day schedule and 475 mg on the three-day schedule. Dose-limiting toxicity was
gastrointestinal which included abdominal pain, diarrhea, small bowel obstruction and neutropenic
colitis. One patient treated at the MTD of 375 mg on the seven-day schedule died of complications
from neutropenic colitis. Among 46 patients, 42 with AML and 4 with MDS, in this dose escalating
study, the best responses were complete remission, or CR, or complete remission without platelet
recovery, or CRp, in six patients for an Overall Response Rate of 13%. In addition, 15 patients had
a significant decrease in bone marrow blasts including seven with blast reduction to 5% or less.
The study was conducted at The University of Texas M. D. Anderson Cancer Center and is led by Hagop
Kantarjian, M.D., Professor of Medicine and Chairman of the Leukemia Department and Dr.&nbsp;William
Plunkett, Professor and Chief, Section of Molecular and Cellular Oncology, Department of
Experimental Therapeutics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Phase 2 randomized clinical trial in elderly patients with AML previously untreated or in first
relapse</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2007, we initiated an open-label, multicenter, randomized Phase 2 clinical trial
of oral sapacitabine in 60 elderly patients with AML aged 70 or older who are previously untreated
or in first relapse. The Phase 2 study, led by Dr.&nbsp;Kantarjian, has a primary endpoint of 1-year
survival rate of three dosing schedules of sapacitabine in elderly patients with previously
untreated or first
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">relapsed AML. Secondary objectives are to assess CR or CRp, partial remission, or PR, duration
of CR or CRp, or major hematological improvement and their corresponding durations, transfusion
requirements, number of hospitalized days and safety. The study uses a selection design with the
objective of identifying a dosing schedule among three different arms, A. 200 mg twice daily for
seven days every 3-4&nbsp;weeks, B. 300 mg twice daily for seven days every 3-4&nbsp;weeks, and C. 400 mg
twice daily for three days per week for two weeks every 3-4&nbsp;weeks, which produces a better 1-year
survival rate in the event that all three dosing schedules are active. Each arm enrolled and
treated 20 patients. Approximately 55% of patients had AML de novo and the rest had AML preceded by
antecedent hematological disorder, or AHD, such as MDS, or myeloproliferative disease. Eighty
percent of the patients were untreated and 20% in first relapse. We completed enrollment of 60 AML
patients in this study in October&nbsp;2008. In December&nbsp;2009, at the 51<SUP style="FONT-size: 85%; vertical-align: text-top">st</SUP> Annual Meeting of
ASH we reported 1-year survival data.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary endpoint of 1-year survival was 35% on Arm A, 30% on Arm C and 10% on Arm B. The
median overall survival was 212&nbsp;days on Arm C (range of 13 to over 654&nbsp;days), 197&nbsp;days on Arm A
(range of 26 to over 610&nbsp;days) and 100&nbsp;days on Arm B (range of 6 to over 646&nbsp;days). Overall
response rate, or ORR, a secondary endpoint, was 45% on Arm A, 35% on Arm C and 25% on Arm B with
CR rate of 25% on Arm C and 10% on Arms A and B. Thirty-day mortality was 10% on Arm C and Arm A
and 20% on Arm B. Approximately 30% of all patients received sapacitabine for at least 6 cycles.
Fifteen patients who survived one year or more received an average of 12 treatment cycles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exploratory subgroup analysis suggests that (i)&nbsp;Arm C may be more effective for de novo AML
and (ii)&nbsp;Arm A may be more effective for AML preceded by AHD, such as MDS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 3-day dosing schedule in Arm C was selected for further clinical development in elderly
patients with de novo AML based on a 1-year survival rate of 30%, ORR of 35% with durable CRs. The
7-day dosing schedule in Arm A was selected for further clinical development in elderly patients
with AML preceded by AHD based on a 1-year survival rate of 35%, ORR of 45% with durable
hematological improvement.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Randomized Phase 2 clinical trial in older patients with MDS as a second-line treatment</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In September&nbsp;2008, we advanced sapacitabine into Phase 2 development as a second-line
treatment in patients aged 60 or older with MDS who are previously treated with hypomethylating
agents. The MDS stratum of the study is designed as a protocol amendment expanding the ongoing
Phase 2 trial of sapacitabine in AML described above, to include a cohort of patients with MDS.
Patients with MDS often progress to AML. The primary objective of the MDS stratum is to evaluate
the 1-year survival rate of three dosing schedules of sapacitabine. Secondary objectives are to
assess the number of patients who have achieved CR or CRp, PR, hematological improvement and their
corresponding durations, transfusion requirements, number of hospitalization days and safety. The
study uses a selection design with the objective of identifying a dosing schedule which produces a
better 1-year survival rate for each stratum in the event that all three dosing schedules are
active.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2010, at the ASH annual meeting, we reported 1-year survival data from a Phase 2
randomized trial of oral sapacitabine capsules, a novel nucleoside analogue, in older patients with
MDS refractory to hypomethylating agents, such as azacitidine and decitabine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The study uses a selection design with the objective of identifying a dosing schedule that
produces a better 1-year survival rate in the event that all three dosing schedules are active. The
study enrolled 61 patients aged 60 or older with MDS refractory to hypomethylating agents
randomized across three dosing schedules of sapacitabine: 21 patients in Arm A, a 7-day low dose
regimen (200 mg b.i.d.); 20 patients in Arm B, a 7-day high dose regimen (300 mg b.i.d.) and 20
patients in Arm C, a 3-day high dose regimen (400 mg b.i.d.). Approximately 77% of patients were
aged 70&nbsp;years or older and 84% were scored as intermediate-2 or high risk by IPSS, the
International Prognostic Scoring System. Baseline blast counts were between 11% and 29% in 51% of
the patients. All patients were previously treated with hypomethylating agents: 43% with
azacitidine, 34% with decitabine and 23% were double refractory patients as they were treated with
both azacitidine and decitabine (7 on Arm A, 4 on Arm B and 3 on Arm C). Approximately 16% were
previously treated with lenalidomide in addition to hypomethylating agents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The primary endpoint of 1-year survival was achieved in 29% of the patients on Arm A, 30% of
the patients on Arm B and 35% of the patients on Arm C. The median overall survival was 217&nbsp;days on
Arm A (range of 15 to 663&nbsp;days), 232&nbsp;days on Arm B (range of 37 to over 811&nbsp;days) and 236&nbsp;days on
Arm C (range of 16 to over 672&nbsp;days). Overall response rate, a secondary endpoint consisting of the
rate of CR, CRp, PR, CRi or hematological improvement, was 24% for patients on Arm A, 35% for
patients on Arm B and 15% for patients on Arm C. Two patients achieved a CR both on Arm A.
Approximately 20% of all patients received sapacitabine for 4 to 6 cycles and 15% for 7 or more
cycles. The mortality rate from all causes within thirty days of randomization was 6.6%.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Randomized Phase 3 pivotal trial, SEAMLESS, as a front-line treatment in elderly patients aged 70
years or older with newly diagnosed AML who are not candidates for intensive induction chemotherapy</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;11, 2011, we opened enrollment of the SEAMLESS pivotal Phase 3 trial for the
Company&#146;s sapacitabine oral capsules as a front-line treatment of elderly patients aged 70&nbsp;years or
older with newly diagnosed AML who are not candidates for intensive induction chemotherapy. The
study is being conducted under an SPA agreement that Cyclacel reached with the FDA. SEAMLESS builds
on promising 1-year survival observed in elderly patients aged 70&nbsp;years or older with newly
diagnosed AML or AML in first relapse enrolled in a Phase 2 study of single agent sapacitabine.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEAMLESS study is chaired by Hagop M. Kantarjian, M.D., Chairman and Professor, Department
of Leukemia, The University of Texas MD Anderson Cancer Center, Houston, Texas. SEAMLESS is a
multicenter, randomized, Phase 3 study comparing three treatment arms. In Arm A sapacitabine is
administered in alternating cycles with decitabine, in Arm B sapacitabine is administered alone and
in Arm C decitabine is administered alone. The primary efficacy endpoint is overall survival. The
study is designed to demonstrate an improvement in overall survival of either of two pairwise
comparisons: (1)&nbsp;Arm A versus Arm C or (2)&nbsp;Arm B versus Arm C. Approximately 150 patients per arm
or a total of 450 patients from approximately 50 centers will be enrolled. SEAMLESS will be
monitored by a Data Safety Monitoring Board (DSMB). A prespecified interim analysis for futility
will be performed and reviewed by the DSMB.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;13, 2010, we reached agreement with the FDA regarding the SPA, on the design of a
pivotal Phase 3 trial, the SEAMLESS trial. An SPA provides trial sponsors with an FDA agreement
that the design and analysis of the trial adequately address objectives in support of a submission
for a marketing application if the trial is performed according to the SPA. The SPA may only be
changed through a written agreement between the sponsor and the FDA, or if the FDA becomes aware of
a substantial scientific issue essential to product efficacy or safety. However, an SPA does not
provide any assurance that a marketing application would be approved by the FDA. Furthermore, Phase
3 clinical trials are time-consuming and expensive, and because we have limited resources, we may
be required to collaborate with a third party or raise additional funds. However, there is no
assurance that we will be able to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Solid Tumors</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Phase 1 clinical trials in patients with refractory solid tumors or lymphomas</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Two Phase 1 studies of sapacitabine were completed by Daiichi-Sankyo, from which we
in-licensed sapacitabine, evaluating 87 patients in refractory solid tumors. In addition, we
conducted a Phase 1b dose escalation clinical trial in patients with refractory solid tumors or
lymphomas. Preliminary results of the Phase 1b study were reported at the EORTC-NCI-AACR Molecular
Targets and Cancer Therapeutics meeting in November&nbsp;2006. The primary objective of the study was to
evaluate the safety profile of sapacitabine administered twice daily for 14 consecutive days or 7
consecutive days every 21&nbsp;days. Of the 37 treated patients, 28 received the drug twice daily for 14
days and 9 received the drug twice daily for 7&nbsp;days. The dose-limiting toxicity was reversible
myelosuppression. One patient treated at the maximum tolerated dose died of candida sepsis in the
setting of grade 4 neutropenia and thrombocytopenia. Non-hematological toxicities were mostly mild
to moderate. The best response by investigator assessment was stable disease in 13 patients, five
with non-small cell lung cancer, two with breast cancer, two with ovarian cancer and one each with
colorectal cancer, adenocarcinoma of unknown primary, gastrointestinal stromal tumor, and parotid
acinar carcinoma.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Phase 2 clinical trial in patients with non-small cell lung cancer</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2009, we began treating patients in a Phase 2, open label, single arm, multicenter,
clinical trial in patients with NSCLC who have had one prior chemotherapy. This study builds on the
observation of prolonged stable disease of four months or longer experienced by heavily pretreated
NSCLC patients involved in two Phase 1 studies of sapacitabine. The multicenter Phase 2 trial is
led by Philip D. Bonomi, M.D., at Rush University Medical Center, Chicago. The primary objective of
the study is to evaluate the rate of response and stable disease in patients with previously
treated NSCLC. Secondary objectives are to assess progression-free survival, duration of response,
duration of stable disease, 1-year survival, overall survival and safety. The study will enroll
approximately 40 patients and has a lead-in phase for dose escalation with the objective of
defining a recommended dose followed by a second stage in which patients will be treated at the
recommended dose.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Phase 2 clinical trial in patients with cutaneous T-cell lymphoma, or CTCL</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2007, we initiated a Phase 2 clinical trial in patients with advanced CTCL, a cancer
of T-lymphocytes, or white blood cells, which causes disfiguring skin lesions and severe itching.
The primary objective of the study is to evaluate tolerability and response rate of 50 mg and 100
mg regimens of sapacitabine both twice a day for three days per week for two weeks in a three week
cycle in patients with progressive, recurrent, or persistent CTCL on or following two systemic
therapies. The study uses a selection design to choose an optimal dose if both are active.
Secondary objectives are to assess response duration, time to response, time to progression and
relief of pruritus or itching. Non-hematological toxicities were mostly mild to moderate. The best
response by investigator assessment was partial response in 3 patients out of 16 enrolled. We
stopped the trial in order to re-direct our resources to sapacitabine clinical trials with a higher
priority.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Orphan Designation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>European Union</I>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During May&nbsp;2008, we received designation from the European Medicines Evaluation Agency, or
EMEA, for sapacitabine as an orphan medicine in two separate indications: AML and MDS. The EMEA&#146;s
Committee for Orphan Medicinal Products, or COMP, adopted a positive opinion on the Company&#146;s
application to designate sapacitabine as an orphan medicinal product for the indications of AML and
MDS. The objective of European orphan medicines legislation is to stimulate research and
development of medicinal products for rare diseases by providing incentives to industry. An orphan
designation in the European Union confers a range of benefits to sponsor companies including market
exclusivity for a period of 10&nbsp;years, EMEA scientific advice on protocol development,
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">direct access to the centralized procedure for review of marketing authorizations, EMEA fee
reductions and eligibility for grant support from European agencies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>United States</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2010, we announced that the FDA granted orphan drug designation to our sapacitabine
product candidate for the treatment of both AML and MDS. An orphan designation in the United States
confers a range of benefits to sponsor companies, including market exclusivity for a period of
seven years from the date of drug approval, the opportunity to apply for grant funding from the
United States government to defray costs of clinical trial expenses, tax credits for clinical
research expenses and a potential waiver of the FDA&#146;s application user fee. Orphan status is
granted by the FDA to promote the development of new drug therapies for the treatment of diseases
that affect fewer than 200,000 individuals in the United States.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Seliciclib</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although our current clinical development priorities are focused on sapacitabine only, our
second drug candidate, seliciclib, is a novel, first-in-class, orally-available, CDK inhibitor. The
compound selectively inhibits a spectrum of enzyme targets -CDK2, CDK7 and CDK9- that are central
to the process of cell division and cell cycle control. The target profile of seliciclib is
differentiated from the published target profile of other CDK inhibitors. Its selectivity is
differentiated by recent publications by independent investigators which showed that seliciclib (i)
is more active against NSCLC cells with K-Ras or N-Ras mutations than those with wild type
Ras and (ii)&nbsp;overcomes resistance to letrozole (Femara<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP>) in breast cancer cells caused by a
particular form of cyclin E in complex with CDK2. Preclinical studies have shown that the drug
works by inducing cell apoptosis, or cell suicide, in multiple phases of the cell cycle. To date,
seliciclib has been evaluated in approximately 450 patients in several Phase 1 and 2 studies and
has shown signs of anti-cancer activity. We have retained worldwide rights to commercialize
seliciclib.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Phase 1 clinical trials in patients with refractory solid tumors</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have completed two Phase 1 trials that enrolled 24 healthy volunteers and three Phase 1
trials that enrolled a total of 84 cancer patients testing different doses and schedules. The
primary toxicities observed were of a non-hematological nature, including asthenia or weakness,
elevation of liver enzymes, hypokalemia or decreased potassium levels, nausea and vomiting and
elevation in creatinine. Although these trials were designed to test safety rather than efficacy of
seliciclib given alone as monotherapy in patients with solid tumors who failed multiple previous
treatments, several of these patients appeared to have benefited from seliciclib treatment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seliciclib was shown in a further Phase 1 study sponsored and conducted by independent
investigators to have clinical antitumor activity in patients with nasopharyngeal cancer, measured
as a decrease in the size of primary tumor and involved lymph nodes, as well as an increase in
tumor cell deaths by biomarker analyses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Phase 2 clinical trials in patients with NSCLC or breast cancer</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Four Phase 2 trials have been conducted in cancer patients to evaluate the tolerability and
antitumor activities of seliciclib alone or in combination with standard chemotherapies used in the
treatment of advanced NSCLC or breast cancer. Interim data from two Phase 2 open-label studies of a
total of 52 patients with NSCLC, suggest that seliciclib treatment did not aggravate the known
toxicities of standard first and second-line chemotherapies nor appear to cause unexpected
toxicities, although these trials were not designed to provide statistically significant
comparisons. The combination of seliciclib with a standard dose of capecitabine (Xeloda<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP>) was not
well tolerated in patients with advanced breast cancer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;21, 2010, we announced topline results from APPRAISE, our Phase 2b, randomized
discontinuation, double-blinded, placebo-controlled, study of oral seliciclib capsules as a third
line or later treatment in patients with NSCLC. Topline results, after unblinding the treatment
assignment among randomized patients, showed that there was no difference between the seliciclib
and placebo arms in terms of progression free survival, or PFS, (48 versus 53&nbsp;days respectively)
but an increase in median overall survival was observed favoring the seliciclib arm over the
placebo arm (388 versus 218&nbsp;days respectively). A total of 187 patients from 21 centers in the
United States were entered in the study after having progressed on at least two prior therapeutic
regimens for their NSCLC. Of these, 53 (28%) were randomized, 27 on seliciclib and 26 on placebo.
Forty-five out of 53 randomized patients (85%) received 3 or more prior therapies and 45 out of 53
randomized patients (85%) previously received at least one EGFR inhibitor drug (22 on seliciclib
and 23 on placebo). Fourteen patients were crossed-over to the seliciclib arm after their cancer
progressed while they were receiving placebo. Study data demonstrated seliciclib to be safe at the
administered dose. There was no difference between the seliciclib and placebo arms in terms of PFS
of 48&nbsp;days on the seliciclib arm versus 53&nbsp;days on the placebo arm. However an increase in median
overall survival was observed of 388&nbsp;days on the seliciclib arm versus 218&nbsp;days on the placebo arm.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPRAISE was a double-blinded, randomized study of single agent seliciclib versus best
supportive care in patients with NSCLC treated with at least two prior systemic therapies. APPRAISE
was led by Chandra P. Belani, M.D. at Milton S. Hershey Medical Center, Penn State University. The
study&#146;s main objective was to learn the anti-tumor activity of seliciclib as a single agent in
refractory NSCLC and help determine further development strategies. The study design was randomized
discontinuation. All patients received seliciclib at a dose of 1200 mg twice a day for three days
for at least three cycles of two weeks each. Patients who achieved stable disease after three
cycles were randomized to continue on seliciclib or receive placebo with best supportive care.
Patients in the
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">placebo arm who progressed were given the option to cross-over and again receive seliciclib. The
primary efficacy endpoint of APPRAISE was doubling progression free survival, or PFS, measured in
the randomized portion of the study.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2008, we announced that an independent data review committee, or IDRC, completed a
review of the first interim analysis data from the study. The IDRC assessed the safety profile of
seliciclib and recommended that the study continue after reviewing data from 173 patients with
previously-treated NSCLC, of whom 45 proceeded into the blinded portion of the study and were
randomized to receive either seliciclib or best supportive care. Based on the interim data, the
IDRC reached the following main conclusions: there were no safety concerns that would warrant
stopping the study; there was no trend favoring the seliciclib treatment arm; and as a definitive
conclusion could not be reached because of the low number of events, it was recommended that the
study be continued. Based on our cost versus benefit analysis, we decided not to enroll additional
patients. The APPRAISE trial continued with the 191 patients already enrolled until the last
enrolled patient had completed follow-up. In accordance with the protocol, we remain blinded to the
study data during the whole process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Phase 2 clinical trials in patients with NPC</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2007, we commenced a Phase 2 multicenter, international, blinded randomized study
of oral seliciclib as a single agent in patients with NPC. The primary objective is to evaluate
6-month progression free survival, or PFS, of two dosing schedules of seliciclib in approximately
75 patients with previously treated NPC. Secondary objectives are overall survival, response rate,
response duration, safety and tolerability. The first part of the study is designed to confirm
safety and tolerability of 400 mg twice a day for four days per week or 800 mg once a day for four
days per week of seliciclib. It is open to approximately 12 to 24 patients with advanced solid
tumors as well as patients with NPC. The second part of the study is designed to detect major
differences between the two dosing schedules of seliciclib and a placebo group in terms of 6-month
PFS in approximately 51 patients. The start of the second part of the study is dependent on
clinical data from the lead-in phase and available resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2009, at the ASCO annual meeting, we reported interim data from the lead-in portion of
the Phase 2 study which demonstrated that oral seliciclib could be safely administered in two
dosing schedules which were well tolerated and met the criteria for proceeding to the randomized
stage of the study. Seliciclib treatment resulted in prolonged stable disease in 70% of
previously-treated NPC patients, including 3 with stable disease lasting longer than 8&nbsp;months,
suggesting seliciclib inhibits tumor growth in NPC. The data support further clinical development
of oral seliciclib in NPC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>CYC116</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2007, we initiated a multicenter Phase 1 pharmacologic clinical trial of CYC116, an
orally-available inhibitor of Aurora kinase A and B and VEGFR2, in patients with advanced solid
tumors. The multicenter Phase 1 trial, now completed, is designed to examine the safety and
tolerability of CYC116 in patients with advanced solid tumors. The primary objective of the study
is to determine the maximum tolerated dose. Secondary objectives are to evaluate pharmacokinetic
and pharmacodynamic effects of the drug and document anti-tumor activity. Aurora kinases, or AK,
are a family of serine/threonine protein kinases discovered by Professor David Glover, our Chief
Scientist, which are only expressed in actively dividing cells and are crucial for the process of
cell division or mitosis. These proteins, which have been found to be over-expressed in many types
of cancer, have generated significant scientific and commercial interest as cancer drug targets.
VEGFR2 is a receptor protein that plays a key regulatory role in the angiogenesis pathway, or blood
vessel formation. VEGFR is targeted by recently approved drugs such as bevacizumab and sorafenib
indicated for the treatment of several solid cancers, such as breast, colorectal, kidney, liver and
lung. We have retained worldwide rights to commercialize CYC116. Further work on CYC116 will be
undertaken when appropriate levels of resource are available to direct to the program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>CYC065</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2010, at the ASH conference, we announced the presentation of new preclinical data
for CYC065, a novel, orally-available, cell cycle kinase inhibitor currently in IND-directed
development. CYC065 and other compounds in a related series target the same key CDK/cyclin
complexes which are targeted by seliciclib. CYC065 retains the specificity and mechanism of action
of seliciclib, but has increased anti-proliferative potency and improved pharmaceutical properties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The data was presented by Noopur Raje, M.D., Director of the Center for Multiple Myeloma at
Massachusetts General Hospital Cancer Center in Boston and Associate Professor of Medicine at
Harvard Medical School. Dr.&nbsp;Raje and colleagues presented results of a study entitled, &#147;CYC065, a
Potent Derivative of Seliciclib Is Active In Multiple Myeloma In Preclinical Studies&#148;. The data
demonstrate that CYC065 is cytotoxic at sub-micromolar concentrations against myeloma cell lines
and CD138&#043; myeloma cells derived from patients. CYC065 demonstrated antiproliferative activity even
in the presence of the growth stimulatory effects of both cytokines and bone marrow stromal cells.
CYC065 induced apoptosis in myeloma cells as evidenced by the appearance of cleaved PARP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cyclacel discovered CYC065 and other novel CDK inhibitors in collaboration with the Cancer
Research UK Centre for Cancer Therapeutics at The Institute of Cancer Research (ICR), London, UK.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Other programs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have allocated limited resources to other programs allowing us to maintain and build on our
core competency in cell cycle biology and related drug discovery. In our second generation CDK
inhibitor program, we have discovered several series of CDK
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">inhibitors that we believe may prove to be more potent anticancer agents than seliciclib based
on preclinical observations. In our polo-like kinase or Plk inhibitor program we have discovered
potent and selective small molecule inhibitors of Plk1, a kinase active during cell division,
targeting the mitotic phase of the cell cycle. Plk was discovered by Professor David Glover, our
Chief Scientist. The Company has a number of earlier stage programs for which limited or no
resources will be allocated. For example, extensive preclinical data published by independent
investigators evidence activity by our CDK inhibitors, including seliciclib, in various autoimmune
and inflammatory diseases and conditions associated with aberrant cell proliferation including
glaucoma, graft-versus-host disease, idiopathic pulmonary fibrosis, lupus nephritis, polycystic
kidney disease and rheumatoid arthritis. In our GSK-3 inhibitor program we have demonstrated
evidence of activity in preclinical models of Type 2 Diabetes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where appropriate we intend to progress such programs through collaboration with groups that
specialize in the particular disease area until such times that these programs can be partnered
and/or progressed should funding become available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Hdm2 Inhibitors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One of the key cell cycle regulatory proteins is p53, a protein discovered by our founder,
Professor Sir David Lane. When active, p53 causes cell arrest at the G1/S checkpoint, inducing
apoptosis in cancer cells. Under normal circumstances, p53 is held in an inactive form by binding
to another regulatory protein, Hdm2. In this program, we have investigated ways of disrupting the
interaction between Hdm2 and p53, thus activating p53. Through virtual screening technologies, we
have identified two small molecule classes capable of breaking the binding between p53 and Hdm2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cyclin Binding Groove Inhibitors</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The activity of CDK can be inhibited by various methods, such as by blocking the ATP site, as
is the case with seliciclib, or by inhibiting the substrate binding site on the associated cyclin
protein. Preventing cyclin A from binding to its substrates results in cell cycle arrest and
induces apoptosis in cancer cells. This was the subject of a two-year collaboration with
AstraZeneca that concluded in mid-2003. We have retained all intellectual property rights
associated with this program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Non-oncology Programs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Cell Cycle Inhibitors in Autoimmune &#038; Inflammatory Diseases</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preclinical results from several independent investigators suggest that cell cycle inhibitors
such as seliciclib and its backup molecules arrest the progress of the cell cycle and may have
therapeutic benefit in the treatment of patients with autoimmune and inflammatory diseases as well
as in diseases characterized by uncontrolled cell proliferation. Published data indicate potential
benefit in graft-versus-host disease, idiopathic pulmonary fibrosis, glomerulonephritis, lupus
nephritis, polycystic kidney disease and rheumatoid arthritis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>CDK Inhibitors in Virology</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cell cycle inhibitors may be useful in the treatment of viral diseases to the extent that
drugs can be developed that prevent the replication of virus in infected host cells while sparing
most uninfected cells. If this is proven in humans, cell cycle inhibitors may have significant
potential in this area, as they do not rely on viral targets and are less likely to induce viral
resistance, a major cause of failure of currently available antiviral drugs. We have investigated a
number of compounds in this program, some of which appear to reduce HIV levels in biological tests
with antiviral potency equivalent to some existing HIV/AIDS therapeutic agents. We intend to
progress this program through collaboration with groups that specialize in virology research.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>GSK-3 Inhibitors in Type 2 Diabetes</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inhibition of Glycogen Synthase Kinase-3 or GSK-3, downstream of insulin action, is an
essential element in the body&#146;s regulation of blood sugar, and is a recognized target for the
treatment of Type 2 diabetes. GSK-3 is a serine/threonine protein kinase that is structurally very
similar to CDK. We have identified four chemical families of GSK-3 inhibitors some of which are
potent at picomolar concentrations which we believe are among the most potent GSK-3 inhibitors
disclosed in relevant research literature. We have selected two lead compounds from the series,
both of which have achieved proof-of-concept in the standard obese Zucker rat model of diabetes,
demonstrating stimulation of glycogen synthase, improvement in glucose tolerance and regulation of
triglycerides. We intend to progress this program through collaboration with groups that specialize
in diabetes research.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Commercial Products</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have exclusive rights to sell and distribute three products in the United States and Canada
used primarily to manage the effects of radiation or chemotherapy in cancer patients: Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP>
Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges. All three products are approved in the United
States under FDA 510 (k)&nbsp;or medical device registrations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> is an aqueous cream containing sodium hyaluronate, or hyaluronic acid, and
glycyrrhetinic acid that is formulated to relieve symptoms associated with radiation dermatitis.
Sodium hyaluronate is the key water-regulating substance in human skin. Sodium hyaluronate has high
viscoelasticity and lubricity. When sodium hyaluronate solution is applied on the surface of skin,
it forms an air permeable layer that keeps skin moist and smooth. Small molecular weight sodium
hyaluronate can penetrate into the
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">dermis where it combines with water to promote microcirculation, nutrient absorption, and
metabolism. Glycyrrhetinic acid reduces inflammation and is believed to have immunomodulatory
properties.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid is an oral solution used to replace natural saliva when salivary glands are
damaged. The viscosity of Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid is similar to that of natural saliva. Linseed extract in
Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid contains mucins that provide superior viscosity and reduced friction compared to
water or carboxymethylcellulose or CMC solutions. Linseed extract significantly reduces the
symptoms of dry mouth with increasing effect over time while Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid is used.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges dissolve slowly while moved around in the mouth. They contain sorbitol and malic
acid to stimulate normal salivation and provide temporary relief of dry mouth in patients who have
some residual secretory function and taste perception. Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges support saliva&#146;s natural
protection of teeth so that teeth are not damaged with repeated use of the lozenges. They are sugar
free and buffered with calcium to protect teeth. Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges have been demonstrated to be
safe and effective for long-term use and are well tolerated by patients. Use of Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges
improves subjective symptoms of dry mouth and does not cause bacteria or plaque formation or loss
of tooth enamel hardness.
</DIV>





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<DIV align="left">
<A name="C19543103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investing in our securities involves risk. The prospectus supplement applicable to each
offering of our securities will contain a discussion of the risks applicable to an investment in
Cyclacel. Prior to making a decision about investing in our securities, you should carefully
consider the specific factors set forth below as well as the specific factors discussed under the
heading &#147;Risk Factors&#148; in the applicable prospectus supplement, together with all of the other
information contained or incorporated by reference in the prospectus supplement or appearing or
incorporated by reference in this prospectus. You should also consider the risks, uncertainties and
assumptions discussed under the heading &#147;Risk Factors&#148; included in our most recent Annual Report on
Form&nbsp;10-K, which is on file with the SEC and is incorporated herein by reference, and which may be
amended, supplemented or superseded from time to time by other reports we file with the SEC in the
future.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Associated with Development and Commercialization of our Drug Candidates</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Clinical trial designs that were discussed with the authorities prior to their commencement may
subsequently be considered insufficient for approval at the time of application for regulatory
approval. Thus, our SPA regarding our SEAMLESS trial does not guarantee marketing approval or
approval of our sapacitabine oral capsules for the treatment of acute myeloid leukemia.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;13, 2010, we reached agreement with the FDA regarding an SPA on the design of a
pivotal Phase 3 trial for our sapacitabine oral capsules as a front-line treatment in elderly
patients aged 70&nbsp;years or older with newly diagnosed acute myeloid leukemia, or AML, who are not
candidates for intensive induction chemotherapy, or the SEAMLESS trial. An SPA provides trial
sponsors with an agreement from the FDA that the design and analysis of the trial adequately
address objectives in support of a submission for a marketing application if the trial is performed
according to the SPA. The SPA may only be changed through a written agreement between the sponsor
and the FDA or if the FDA becomes aware of a substantial scientific issue essential to product
efficacy or safety. On January&nbsp;11, 2011, we opened enrollment of the SEAMLESS trial.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An SPA, however, neither guarantees approval nor provides any assurance that a marketing
application would be approved by the FDA. There are companies that have been granted SPAs but have
ultimately failed to obtain final approval to market their drugs. The FDA may revise previous
guidance or decide to ignore previous guidance at any time during the course of clinical activities
or after the completion of clinical trials. The FDA may raise issues relating to, among other
things, safety, study conduct, bias, deviation from the protocol, statistical power, patient
completion rates, changes in scientific or medical parameters or internal inconsistencies in the
data prior to making its final decision. The FDA may also seek the guidance of an outside advisory
committee prior to making its final decision. Even with successful clinical safety and efficacy
data, including such data from a clinical trial conducted pursuant to an SPA, we may be required to
conduct additional, expensive clinical trials to obtain regulatory approval.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The development program for our lead drug candidate sapacitabine is based, in part, on intellectual
property rights we license from others and any termination of this license could seriously harm our
business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Daiichi-Sankyo license under which we license certain patent rights for
sapacitabine, our lead drug candidate, we are required to use commercially reasonable efforts to
commercialize products based on the licensed rights and to use reasonable efforts to obtain
regulatory approval to sell the products in at least one country by September&nbsp;2011, unless we are
prevented from doing so by virtue of an &#147;exceptional cause,&#148; which generally constitutes a
scientific or other technical cause outside of our control or arising from the activities of third
parties, difficulties outside of our reasonable control in patient recruitment into trials or any
significant, unexpected change in the regulatory requirements in a country affecting the
development of our drug candidate. If regulatory approval is not obtained by September&nbsp;2011, and
there has been no exceptional cause responsible for the delay, the agreement provides that
Daiichi-Sankyo may terminate the license. As it is unlikely that regulatory approval for the
product will be obtained by September&nbsp;2011 it is the Company&#146;s intention to negotiate an
appropriate amendment to this date on various grounds, among other things, changes that have taken
place in the regulatory environment, as provided within the agreement. If negotiation was not
successful, litigation could ensue and there would be no assurances as to the result thereof.
Termination of the license agreement could seriously harm our business. On termination, if
Daiichi-Sankyo wishes to acquire an exclusive license to sapacitabine intellectual property
developed by us during the term of the license, Daiichi-Sankyo may notify us and the parties will
meet to negotiate commercial terms in good faith. If agreement cannot be reached, the terms of the
exclusive license are to be determined by an expert.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, the license may be terminated by us for technical, scientific, efficacy, safety,
or commercial reasons on six months notice, or twelve months if after a launch of a
sapacitabine-based product, or by either party for material default.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we are currently in compliance with all of our material obligations under this
license, if we were to breach any such obligations, our counterparty may be entitled to terminate
the license. This would restrict or delay or eliminate our ability to develop and commercialize
these drug candidates, which could adversely affect our business.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If we fail to enter into and maintain successful strategic alliances for our drug candidates, we
may have to reduce or delay our drug candidate development or increase our expenditures.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An important element of our strategy for developing, manufacturing and commercializing our
drug candidates is entering into strategic alliances with pharmaceutical companies or other
industry participants to advance our programs and enable us to maintain our financial and
operational capacity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We face significant competition in seeking appropriate alliances. We may not be able to
negotiate alliances on acceptable terms, if at all. In addition, these alliances may be
unsuccessful. If we fail to create and maintain suitable alliances, we may have to limit the size
or scope of, or delay, one or more of our drug development or research programs. If we elect to
fund drug development or research programs on our own, we will have to increase our expenditures
and will need to obtain additional funding, which may be unavailable or available only on
unfavorable terms.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Clinical trials are expensive, time consuming, subject to delay and may be required to continue
beyond our available funding.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clinical trials are expensive, complex can take many years to conduct and may have uncertain
outcomes. We estimate that clinical trials of our most advanced drug candidates may be required to
continue beyond our available funding and may take several years more to complete. The designs used
in some of our trials have not been used widely by other pharmaceutical companies. Failure can
occur at any stage of the testing and we may experience numerous unforeseen events during, or as a
result of, the clinical trial process that could delay or prevent commercialization of our current
or future drug candidates, including but not limited to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays in securing clinical investigators or trial sites for our clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delays in obtaining institutional review board, or IRB, and other regulatory
approvals to commence a clinical trial;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>slower than anticipated rates of patient recruitment and enrollment, or reaching
the targeted number of patients because of competition for patients from other
trials or other reasons;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>negative or inconclusive results from clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unforeseen safety issues;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>uncertain dosing issues may or may not be related to suboptimal pharmacokinetic
and pharmacodynamic behaviors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>approval and introduction of new therapies or changes in standards of practice or
regulatory guidance that render our clinical trial endpoints or the targeting of our
proposed indications obsolete;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inability to monitor patients adequately during or after treatment or problems
with investigator or patient compliance with the trial protocols;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inability to replicate in large controlled studies safety and efficacy data
obtained from a limited number of patients in uncontrolled trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inability or unwillingness of medical investigators to follow our clinical
protocols; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unavailability of clinical trial supplies.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we suffer any significant delays, setbacks or negative results in, or termination of, our
clinical trials, we may be unable to continue development of our drug candidates or generate
revenue and our development costs could increase significantly. Adverse events have been observed
in our clinical trials and may force us to stop development of our product candidates or prevent
regulatory approval of our product candidates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adverse or inconclusive results from our clinical trials may substantially delay, or halt
entirely, any further development of our drug candidates. Many companies have failed to demonstrate
the safety or effectiveness of drug candidates in later stage clinical trials notwithstanding
favorable results in early stage clinical trials. Previously unforeseen and unacceptable side
effects could interrupt, delay or halt clinical trials of our drug candidates and could result in
the FDA or other regulatory authorities denying approval of our drug candidates. We will need to
demonstrate safety and efficacy for specific indications of use, and monitor safety and compliance
with clinical trial protocols throughout the development process. To date, long-term safety and
efficacy has not been demonstrated in clinical trials for any of our drug candidates. Toxicity and
&#147;serious adverse events&#148; as defined in trial protocols have been noted in preclinical and clinical
trials involving certain of our drug candidates. For example, neutropenia and gastro-intestinal
toxicity were observed in patients receiving sapacitabine and elevations of liver enzymes and
decrease in potassium levels have been observed in patients receiving seliciclib.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we may pursue clinical trials for sapacitabine and seliciclib in more than one
indication. There is a risk that severe toxicity observed in a trial for one indication could
result in the delay or suspension of all trials involving the same drug candidate. Even if we
believe the data collected from clinical trials of our drug candidates are promising with respect
to safety and efficacy, such
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">data may not be deemed sufficient by regulatory authorities to warrant
product approval. Clinical data can be interpreted in different ways. Regulatory officials could
interpret such data in different ways than we do which could delay, limit or prevent regulatory
approval. The FDA, other regulatory authorities or we may suspend or terminate clinical trials at
any time. Any failure or significant delay in completing clinical trials for our drug candidates,
or in receiving regulatory approval for the commercialization of our drug candidates, may severely
harm our business and reputation.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If our understanding of the role played by CDKs or AKs in regulating the cell cycle is incorrect,
this may hinder pursuit of our clinical and regulatory strategy.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our development of small molecule inhibitors of CDK and AK is based on our understanding of
the mechanisms of action of CDK and AK inhibitors and their interaction with other cellular
mechanisms. One of our drug candidates, seliciclib, is a CDK inhibitor, and CYC116 is an AK and
VEGFR2 inhibitor. Although a number of pharmaceutical and biotechnology companies are attempting to
develop CDK or AK inhibitor drugs for the treatment of cancer, no CDK or AK inhibitor has yet
reached the market. If our understanding of the role played by CDK or AK inhibitors in regulating
the cell cycle is incorrect, seliciclib and/or CYC116 may fail to produce therapeutically relevant
results hindering our ability to pursue our clinical and regulatory strategy.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We are making use of biomarkers, which are not scientifically validated, and our reliance on
biomarker data may thus lead us to direct our resources inefficiently.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are making use of biomarkers in an effort to facilitate our drug development and to
optimize our clinical trials. Biomarkers are proteins or other substances whose presence in the
blood can serve as an indicator of specific cell processes. We believe that these biological
markers serve a useful purpose in helping us to evaluate whether our drug candidates are having
their intended effects through their assumed mechanisms, and thus enable us to identify more
promising drug candidates at an early stage and to direct our resources efficiently. We also
believe that biomarkers may eventually allow us to improve patient selection in connection with
clinical trials and monitor patient compliance with trial protocols.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For most purposes, however, biomarkers have not been scientifically validated. If our
understanding and use of biomarkers is inaccurate or flawed, or if our reliance on them is
otherwise misplaced, then we will not only fail to realize any benefits from using biomarkers, but
may also be led to invest time and financial resources inefficiently in attempting to develop
inappropriate drug candidates. Moreover, although the FDA has issued for comment a draft guidance
document on the potential use of biomarker data in clinical development, such data are not
currently accepted by the FDA or other regulatory agencies in the United States, the European Union
or elsewhere in applications for regulatory approval of drug candidates and there is no guarantee
that such data will ever be accepted by the relevant authorities in this connection. Our biomarker
data should not be interpreted as evidence of efficacy.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Due to our reliance on contract research organizations or other third parties to conduct clinical
trials, we may be unable to directly control the timing, conduct and expense of our clinical
trials.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have the ability to independently conduct clinical trials required to obtain
regulatory approvals for our drug candidates. We must rely on third parties, such as contract
research organizations, data management companies, contract clinical research associates, medical
institutions, clinical investigators and contract laboratories to conduct our clinical trials. In
addition, we rely on third parties to assist with our preclinical development of drug candidates.
If these third parties do not successfully carry out their contractual duties or regulatory
obligations or meet expected deadlines, if the third parties need to be replaced or if the quality
or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical
protocols or regulatory requirements or for other reasons, our preclinical development activities
or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to
obtain regulatory approval for or successfully commercialize our drug candidates.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>To the extent we are able to enter into collaborative arrangements or strategic alliances, we will
be exposed to risks related to those collaborations and alliances.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we are not currently party to any collaboration arrangement or strategic alliance
that is material to our business, in the future we expect to be dependent upon collaborative
arrangements or strategic alliances to complete the development and commercialization of some of
our drug candidates particularly after the Phase 2 stage of clinical testing. These arrangements
may place the development of our drug candidates outside our control, may require us to relinquish
important rights or may otherwise be on terms unfavorable to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may be unable to locate and enter into favorable agreements with third parties, which could
delay or impair our ability to develop and commercialize our drug candidates and could increase our
costs of development and commercialization. Dependence on collaborative arrangements or strategic
alliances will subject us to a number of risks, including the risk that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we may not be able to control the amount and timing of resources that our
collaborators may devote to the drug candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our collaborators may experience financial difficulties;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we may be required to relinquish important rights such as marketing and
distribution rights;</TD>
</TR>

</TABLE>
</DIV>

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<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>business combinations or significant changes in a collaborator&#146;s business
strategy may also adversely affect a collaborator&#146;s willingness or ability to
complete our obligations under any arrangement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a collaborator could independently move forward with a competing drug candidate
developed either independently or in collaboration with others, including our
competitors; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>collaborative arrangements are often terminated or allowed to expire, which would
delay the development and may increase the cost of developing our drug candidates.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have no manufacturing capacity and will rely on third party manufacturers for the late stage
development and commercialization of any drugs or devices we may develop or sell.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not currently operate manufacturing facilities for clinical or commercial production of
our drug candidates under development or our currently marketed ALIGN products. We currently lack
the resources or the capacity to manufacture any of our products on a clinical or commercial scale.
We depend upon a third party, Sinclair, to manufacture the commercial products sold by our ALIGN
subsidiary and we can not rely upon Sinclair to continue to supply the products. We anticipate
future reliance on a limited number of third party manufacturers until we are able, or decide to,
expand our operations to include manufacturing capacities. Any performance failure on the part of
manufacturers could delay late stage clinical development or regulatory approval of our drug, the
commercialization of our drugs or our ability to sell our commercial products, producing additional
losses and depriving us of potential product revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the FDA or other regulatory agencies approve any of our drug candidates for commercial
sale, or if we significantly expand our clinical trials, we will need to manufacture them in larger
quantities and will be required to secure alternative third-party suppliers to our current
suppliers. To date, our drug candidates have been manufactured in small quantities for preclinical
testing and clinical trials and we may not be able to successfully increase the manufacturing
capacity, whether in collaboration with our current or future third-party manufacturers or on our
own, for any of our drug candidates in a timely or economic manner, or at all. Significant scale-up
of manufacturing may require additional validation studies, which the FDA and other regulatory
bodies must review and approve. If we are unable to successfully increase the manufacturing
capacity for a drug candidate whether for late stage clinical trials or for commercial sale or are
unable to secure alternative third-party suppliers to our current suppliers, the drug development,
regulatory approval or commercial launch of any related drugs may be delayed or blocked or there
may be a shortage in supply. Even if any third party manufacturer makes improvements in the
manufacturing process for our drug candidates, we may not own, or may have to share, the
intellectual property rights to such innovation.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>As we evolve from a company primarily involved in discovery and development to one also involved in
the commercialization of drugs and devices, we may encounter difficulties in managing our growth
and expanding our operations successfully.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to execute our business strategy, we will need to expand our development, control and
regulatory capabilities and develop financial, manufacturing, marketing and sales capabilities or
contract with third parties to provide these capabilities for us. If our operations expand, we
expect that we will need to manage additional relationships with various collaborative partners,
suppliers and other third parties. Our ability to manage our operations and any growth will require
us to make appropriate changes and upgrades, as necessary, to our operational, financial and
management controls, reporting systems and procedures wherever we may operate. Any inability to
manage growth could delay the execution of our business plan or disrupt our operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The failure to attract and retain skilled personnel and key relationships could impair our drug
development and commercialization efforts.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are highly dependent on our senior management and key scientific, technical and sales and
marketing personnel. Competition for these types of personnel is intense. The loss of the services
of any member of our senior management, scientific, technical or sales or marketing staff may
significantly delay or prevent the achievement of drug development and other business objectives
and could have a material adverse effect on our business, operating results and financial
condition. We also rely on consultants and advisors to assist us in formulating our strategy. All
of our consultants and advisors are either self-employed or employed by other organizations, and
they may have conflicts of interest or other commitments, such as consulting or advisory contracts
with other organizations, that may affect their ability to contribute to us. The success of the
commercialization of the ALIGN products depends, in large part, on our continued ability to develop
and maintain important relationships with distributors and research and medical institutions.
Failure to do that could have a material adverse effect on our ability to commercialize the ALIGN
products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to expand and develop new drug candidates. We will need to hire additional employees
in order to continue our clinical trials and market our drug candidates and medical devices. This
strategy will require us to recruit additional executive management and scientific and technical
personnel. There is currently intense competition for skilled executives and employees with
relevant scientific and technical expertise, and this competition is likely to continue. The
inability to attract and retain sufficient scientific, technical and managerial personnel could
limit or delay our product development efforts, which would adversely affect the development of our
drug candidates and commercialization of our potential drugs and growth of our business.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our drug candidates are subject to extensive regulation, which can be costly and time-consuming,
and we may not obtain approvals for the commercialization of any of our drug candidates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The clinical development, manufacturing, selling and marketing of our drug candidates are
subject to extensive regulation by the FDA and other regulatory authorities in the United States,
the European Union and elsewhere. These regulations also vary in important, meaningful ways from
country to country. We are not permitted to market a potential drug in the United States until we
receive approval of an NDA from the FDA. We have not received an NDA approval from the FDA for any
of our drug candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Obtaining an NDA approval is expensive and is a complex, lengthy and uncertain process. The
FDA approval process for a new drug involves completion of preclinical studies and the submission
of the results of these studies to the FDA, together with proposed clinical protocols,
manufacturing information, analytical data and other information in an Investigational New Drug, or
IND, which must become effective before human clinical trials may begin. Clinical development
typically involves three phases of study: Phase 1, 2 and 3. The most significant costs associated
with clinical development are the pivotal or suitable for registration late Phase 2 or Phase 3
clinical trials as they tend to be the longest and largest studies conducted during the drug
development process. After completion of clinical trials, an NDA may be submitted to the FDA. In
responding to an NDA, the FDA may refuse to file the application, or if accepted for filing, the
FDA may grant marketing approval, request additional information or deny the application if it
determines that the application does not provide an adequate basis for approval. In addition,
failure to comply with the FDA and other applicable foreign and U.S. regulatory requirements may
subject us to administrative or judicially imposed sanctions. These include warning letters, civil
and criminal penalties, injunctions, product seizure or detention, product recalls, total or
partial suspension of production and refusal to approve either pending NDAs, or supplements to
approved NDAs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite the substantial time and expense invested in preparation and submission of an NDA or
equivalents in other jurisdictions, regulatory approval is never guaranteed. The FDA and other
regulatory authorities in the United States, the European Union and elsewhere exercise substantial
discretion in the drug approval process. The number, size and design of preclinical studies and
clinical trials that will be required for FDA or other regulatory approval will vary depending on
the drug candidate, the disease or condition for which the drug candidate is intended to be used
and the regulations and guidance documents applicable to any particular drug candidate. The FDA or
other regulators can delay, limit or deny approval of a drug candidate for many reasons, including,
but not limited to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>those discussed in the risk factor which immediately follows;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the fact that the FDA or other regulatory officials may not approve our or our
third party manufacturer&#146;s processes or facilities; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the fact that new regulations may be enacted by the FDA or other regulators may
change their approval policies or adoption of new regulations requiring new or
different evidence of safety and efficacy for the intended use of a drug candidate.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>With regard to the ALIGN products, and following regulatory approval of any of our drug candidates,
we are subject to ongoing regulatory obligations and restrictions, which may result in significant
expense and limit our ability to commercialize our potential products.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With regard to our ALIGN products and our drug candidates, if any, approved by the FDA or by
another regulatory authority, we are held to extensive regulatory requirements over product
manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion and
record keeping. Regulatory approvals may also be subject to significant limitations on the
indicated uses or marketing of the drug candidates. Potentially costly follow-up or post-marketing
clinical studies may be required as a condition of approval to further substantiate safety or
efficacy, or to investigate specific issues of interest to the regulatory authority. Previously
unknown problems with the product or drug candidate, including adverse events of unanticipated
severity or frequency, may result in restrictions on the marketing of the drug or device, and could
include withdrawal of the drug or device from the market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the law or regulatory policies governing pharmaceuticals may change. New
statutory requirements may be enacted or additional regulations may be enacted that could prevent
or delay regulatory approval of our drug candidates. We cannot predict the likelihood, nature or
extent of adverse government regulation that may arise from future legislation or administrative
action, either in the United States or elsewhere. If we are not able to maintain regulatory
compliance, we might not be permitted to market our drugs and our business could suffer.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our applications for regulatory approval could be delayed or denied due to problems with studies
conducted before we in-licensed the rights to some of our product candidates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently license some of the compounds and drug candidates used in our research programs
from third parties. These include sapacitabine which was licensed from Daiichi-Sankyo. Our present
research involving these compounds relies upon previous research conducted by third parties over
whom we had no control and before we in-licensed the drug candidates. In order to receive
regulatory approval of a drug candidate, we must present all relevant data and information obtained
during our research and development, including research conducted prior to our licensure of the
drug candidate. Although we are not currently aware of any such problems, any problems that emerge
with preclinical research and testing conducted prior to our in-licensing may affect future results
or our
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ability to document prior research and to conduct clinical trials, which could delay, limit
or prevent regulatory approval for our drug candidates.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We face intense competition and our competitors may develop drugs that are less expensive, safer,
or more effective than our drug candidates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A large number of drug candidates are in development for the treatment of leukemia, lung
cancer, lymphomas and nasopharyngeal cancer. Several pharmaceutical and biotechnology companies
have nucleoside analogs or other products on the market
or in clinical trials which may be competitive to sapacitabine in both hematological and
oncology indications. These include Celgene, Cephalon, Eisai, Johnson &#038; Johnson, Eli Lilly,
Genzyme, GlaxoSmithKline, Hospira, Pfizer, Seattle Genetics, Sunesis and Vion. There are two
other-orally available CDK inhibitor in Phase 2 clinical trials. PD-0332991 (Pfizer/Onyx) and
PHA-848125 (Nerviano Medical Sciences) target different subsets of CDK enzymes and have a different
mechanism of action from seliciclib. We believe that seliciclib is currently the most advanced
orally available CDK-specific agent in Phase 2 clinical trials but that there are a number of
companies, including AstraZeneca, Bayer-Schering, Eisai, Merck , Nerviano Medical Sciences, Pfizer,
Piramal Life Sciences, and Roche that are developing CDK inhibitors in early stage clinical trials
in cancer patients. Although Aventis, a predecessor of Sanofi-Aventis, had previously announced
that it has ceased Phase 2 development of alvocidib or flavopiridol, a CDK inhibitor, we believe
that the National Cancer Institute&#146;s Cancer Therapy Evaluation Program, or CTEP, is continuing to
enroll patients in a CTEP sponsored trial in patients with chronic leukemia. A number of companies
are pursuing discovery and research activities in each of the other areas that are the subject of
our research and drug development programs. We believe that AstraZeneca, Entremed, Merck, jointly
with Vertex, Nerviano Medical Sciences, Pfizer, Rigel, Sunesis and Takeda-Millennium have commenced
Phase 1 or Phase 2 clinical trials of Aurora kinase inhibitors in patients with advanced cancers.
Several companies have reported selection of Aurora kinase inhibitor candidates for development and
may have started or are expected to start clinical trials within the next twelve months. We believe
that Boehringer Ingelheim, GlaxoSmithKline, Nerviano Medical Sciences, Onconova, Takeda-Millennium
and Tekmira Pharmaceuticals Corporation have commenced Phase 1 or Phase 2 clinical trials with Plk
inhibitor candidates for oncology indications. For our ALIGN products, we believe that Beiersdorf,
Daiichi-Sankyo, Eisai, Johnson &#038; Johnson, MPM Medical and other companies market products for
radiation dermatitis and xerostomia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our competitors, either alone or together with collaborators, may have substantially greater
financial resources and research and development staff. Our competitors may also have more
experience:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developing drug candidates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conducting preclinical and clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtaining regulatory approvals; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commercializing product candidates.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our competitors may succeed in obtaining patent protection and regulatory approval and may
market drugs before we do. If our competitors market drugs that are less expensive, safer, more
effective or more convenient to administer than our potential drugs, or that reach the market
sooner than our potential drugs, we may not achieve commercial success. Scientific, clinical or
technical developments by our competitors may render our drug candidates obsolete or
noncompetitive. We anticipate that we will face increased competition in the future as new
companies enter the markets and as scientific developments progress. If our drug candidates obtain
regulatory approvals, but do not compete effectively in the marketplace, our business will suffer.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The commercial success of the ALIGN products and our drug candidates depends upon their market
acceptance among physicians, patients, healthcare providers and payors and the medical community.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is necessary that our and our distribution partners&#146; products, including Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream,
Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges achieve and maintain market acceptance. If our drug
candidates are approved by the FDA or by another regulatory authority, the resulting drugs, if any,
may not gain market acceptance among physicians, healthcare providers and payors, patients and the
medical community. The degree of market acceptance of any of our approved drugs or devices will
depend on a variety of factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>timing of market introduction, number and clinical profile of competitive drugs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to provide acceptable evidence of safety and efficacy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>relative convenience and ease of administration;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>cost-effectiveness;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>availability of coverage, reimbursement and adequate payment from health
maintenance organizations and other third party payors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prevalence and severity of adverse side effects; and</TD>
</TR>


</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other potential advantages over alternative treatment methods.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our drugs fail to achieve market acceptance, we may not be able to generate significant
revenue and our business would suffer.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to compete successfully in our market place, it will harm our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are existing products in the marketplace that compete with our products. Companies may
develop new products that compete with our products. Certain of these competitors and potential
competitors have longer operating histories, substantially greater product development capabilities
and financial, scientific, marketing and sales resources. Competitors and potential competitors may
also develop products that are safer, more effective or have other potential advantages compared to
our products. In addition, research, development and commercialization efforts by others could
render our products obsolete or non-competitive. Certain of our competitors and potential
competitors have broader product offerings and extensive customer bases allowing them to adopt
aggressive pricing policies that would enable them to gain market share. Competitive pressures
could result in price reductions, reduced margins and loss of market share. We could encounter
potential customers that, due to existing relationships with our competitors, are committed to
products offered by those competitors. As a result, those potential customers may not consider
purchasing our products.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>There is uncertainty related to coverage, reimbursement and payment by healthcare providers and
payors for the ALIGN products and newly approved drugs, if any. The inability or failure to obtain
or maintain coverage could affect our ability to market the ALIGN products and our future drugs and
decrease our ability to generate revenue.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The availability and levels of coverage and reimbursement of newly approved drugs by
healthcare providers and payors is subject to significant uncertainty. The commercial success of
the ALIGN products and our drug candidates in both the United States and international markets is
substantially dependent on whether third party coverage and reimbursement is available. The United
States Centers for Medicare and Medicaid Services, health maintenance organizations and other third
party payors in the United States, the European Union and other jurisdictions are increasingly
attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of
new drugs and, as a result, they may not cover or provide adequate payment for our potential drugs.
The ALIGN products and our drug candidates may not be considered cost-effective and reimbursement
may not be available to consumers or may not be sufficient to allow the ALIGN products or our drug
candidates to be marketed on a competitive basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In some countries, pricing of prescription drugs is subject to government control. In such
countries, pricing negotiations with governmental authorities can take three to 12&nbsp;months or longer
following application to the competent authorities. To obtain reimbursement or pricing approval in
such countries may require conducting an additional clinical trial comparing the cost-effectiveness
of the drug to other alternatives. In the United States, the Medicare Part&nbsp;D drug benefit
implemented in 2006 will limit drug coverage through formularies and other cost and utilization
management programs, while Medicare Part&nbsp;B limits drug payments to a certain percentage of average
price or through restrictive payment policies of &#147;least costly alternatives&#148; and &#147;inherent
reasonableness&#148; Our business could be materially harmed if coverage, reimbursement or pricing is
unavailable or set at unsatisfactory levels.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Intellectual property rights and distribution rights for our drug candidate seliciclib and ALIGN
products are licensed from others, and any termination of these licenses could harm our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have in-licensed certain patent rights in connection with the development program of our
drug candidate seliciclib. Pursuant to the CNRS and Institut Curie license under which we license
seliciclib, we are obligated to pay license fees, milestone payments and royalties and provide
regular progress reports. We are also obligated to use reasonable efforts to develop and
commercialize products based on the licensed patents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have in-licensed from Sinclair the distribution rights to the ALIGN products. This license
agreement imposes obligations on us and is expected to expire in 2015. Although we are currently in
compliance with all of our material obligations under this license, if we were to breach any such
obligations, Sinclair would be permitted to terminate the license. In addition, if we unable to
extend the term of the license agreement, it would prevent us from distributing the ALIGN products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we are currently in compliance with all of our material obligations under these
licenses, if we were to breach any such obligations our counterparties may be entitled to terminate
the licenses. This would restrict or delay or eliminate our ability to develop and commercialize
the seliciclib or sell the ALIGN products, which could adversely affect our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be exposed to product liability claims that may damage our reputation and we may not be able
to obtain adequate insurance.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because we conduct clinical trials in humans, we face the risk that the use of our drug
candidates will result in adverse effects. We believe that we have obtained reasonably adequate
product liability insurance coverage for our trials. We cannot predict, however, the possible harm
or side effects that may result from our clinical trials. Such claims may damage our reputation and
we may not have sufficient resources to pay for any liabilities resulting from a claim excluded
from, or beyond the limit of, our insurance coverage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we market commercialized products through our ALIGN subsidiary we are exposed to additional
risks of product liability claims. These risks exist even with respect to drugs and devices that
are approved for commercial sale by the FDA or other regulatory
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">authorities in the United States,
the European Union or elsewhere and manufactured in facilities licensed and regulated by the FDA or
other such regulatory authorities. We have secured limited product liability insurance coverage,
but may not be able to maintain such insurance on acceptable terms with adequate coverage, or at a
reasonable cost. There is also a risk that third parties that we have
agreed to indemnify could incur liability. Even if we were ultimately successful in product
liability litigation, the litigation would consume substantial amounts of our financial and
managerial resources and may exceed insurance coverage creating adverse publicity, all of which
would impair our ability to generate sales of the litigated product as well as our other potential
drugs.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be required to defend lawsuits or pay damages in connection with the alleged or actual
violation of healthcare statutes such as fraud and abuse laws, and our corporate compliance
programs can never guarantee that we are in compliance with all relevant laws and regulations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our commercialization efforts in the United States are subject to various federal and state
laws pertaining to promotion and healthcare fraud and abuse, including federal and state
anti-kickback, fraud and false claims laws. Anti-kickback laws make it illegal for a manufacturer
to offer or pay any remuneration in exchange for, or to induce, the referral of business, including
the purchase of a product. The federal government has published many regulations relating to the
anti-kickback statutes, including numerous safe harbors or exemptions for certain arrangements.
False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be
presented for payment to third-party payers including Medicare and Medicaid, claims for reimbursed
products or services that are false or fraudulent, claims for items or services not provided as
claimed, or claims for medically unnecessary items or services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our activities relating to the sale and marketing of our products will be subject to scrutiny
under these laws and regulations. It may be difficult to determine whether or not our activities,
comply with these complex legal requirements. Violations are punishable by significant criminal
and/or civil fines and other penalties, as well as the possibility of exclusion of the product from
coverage under governmental healthcare programs, including Medicare and Medicaid. If the government
were to investigate or make allegations against us or any of our employees, or sanction or convict
us or any of our employees, for violations of any of these legal requirements, this could have a
material adverse effect on our business, including our stock price. Our activities could be subject
to challenge for many reasons, including the broad scope and complexity of these laws and
regulations, the difficulties in interpreting and applying these legal requirements, and the high
degree of prosecutorial resources and attention being devoted to the biopharmaceutical industry and
health care fraud by law enforcement authorities. During the last few years, numerous
biopharmaceutical companies have paid multi-million dollar fines and entered into burdensome
settlement agreements for alleged violation of these requirements, and other companies are under
active investigation. Although we have developed and implemented corporate and field compliance
programs as part of our commercialization efforts, we cannot assure you that we or our employees,
directors or agents were, are or will be in compliance with all laws and regulations or that we
will not come under investigation, allegation or sanction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we may be required to prepare and report product pricing-related information to
federal and state governmental authorities, such as the Department of Veterans Affairs and under
the Medicaid program. The calculations used to generate the pricing-related information are complex
and require the exercise of judgment. If we fail to accurately and timely report product
pricing-related information or to comply with any of these or any other laws or regulations,
various negative consequences could result, including criminal and/or civil prosecution,
substantial criminal and/or civil penalties, exclusion of the approved product from coverage under
governmental healthcare programs including Medicare and Medicaid, costly litigation and restatement
of our financial statements. In addition, our efforts to comply with this wide range of laws and
regulations are, and will continue to be, time-consuming and expensive.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If our supplier upon whom we rely fails to produce on a timely basis the finished goods in the
volumes that we require or fails to meet quality standards and maintain necessary licensure from
regulatory authorities, we may be unable to meet demand for our products, potentially resulting in
lost revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our licensor and supplier Sinclair contracts with third party manufacturers to supply the
finished goods to us to meet our needs. If any of Sinclair&#146;s third party manufacturers service
providers do not meet our or our licensor&#146;s requirements for quality, quantity or timeliness, or do
not achieve and maintain compliance with all applicable regulations, demand for our products or our
ability to continue supplying such products could substantially decline. As the third party
manufacturers are the sole supplier of the products any delays may impact our sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In all the countries where we sell or may sell our products, governmental regulations exist to
define standards for manufacturing, packaging, labeling and storing. All of our suppliers of raw
materials and contract manufacturers must comply with these regulations. Failure to do so could
result in supply interruptions. In the United States, the FDA requires that all suppliers of
pharmaceutical bulk material and all manufacturers of pharmaceuticals for sale in or from the
United States achieve and maintain compliance with the FDA&#146;s Current Good Manufacturing Practice or
cGMP regulations and guidelines. Failure of our third-party manufacturers to comply with applicable
regulations could result in sanctions being imposed on them or us, including fines, injunctions,
civil penalties, disgorgement, suspension or withdrawal of approvals, license revocation, seizures
or recalls of products, operating restrictions and criminal prosecutions, any of which could
significantly and adversely affect supplies of our products. In addition, before any product batch
produced by our manufacturers can be shipped, it must conform to release specifications
pre-approved by regulators for the content of the pharmaceutical product. If the operations of one
or more of our manufacturers were to become unavailable for any
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reason, any required FDA review and
approval of the operations of an alternative supplier could cause a delay in the manufacture of our
products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our customer base is highly concentrated.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal customers are a small number of wholesale drug distributors. These customers
comprise a significant part of the distribution network for pharmaceutical products in the United
States. Three large wholesale distributors, AmerisourceBergen Corporation, Cardinal Health, Inc.
and McKesson Corporation, control a significant share of the market in the United States. Our
ability to distribute any product, including Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges
and to recognize revenues on a timely basis is substantially dependent on our ability to maintain
commercially reasonable agreements with each of these wholesale distributors and the extent to
which these distributors, over whom we have no control, comply with such agreements. Our agreements
with wholesaler distributors may contain terms that are not favorable, given our relative lack of
market leverage as a company with only three approved products or other factors, which could
adversely affect our commercialization of Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges.
The loss of any of these customers could materially and adversely affect our ability to distribute
our products, resulting in a negative impact on our operations and financial condition.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be unable to accurately estimate demand and monitor wholesaler inventory of Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream,
Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid or Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges. Although we attempt to monitor wholesaler inventory of
Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid or Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges, we also rely on third party information,
which is inherently uncertain and may not be accurate, to assist us in monitoring estimated
inventory levels and prescription trends. Inaccurate estimates of the demand and inventory levels
of the product may cause our revenues to fluctuate significantly from quarter to quarter and may
cause our operating results for a particular quarter to be below expectations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory levels of Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid or Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges held by wholesalers
can also cause our operating results to fluctuate unexpectedly. For the years ended December&nbsp;31,
2009 and 2010, approximately 85% and 87%, respectively, of our product sales in the United States
were to three wholesalers, Cardinal Health, Inc., McKesson Corporation and AmerisourceBergen.
Inventory levels held by those wholesalers can cause our operating results to fluctuate
unexpectedly if our sales to wholesalers do not match customer demand. We have entered into
inventory management agreements with these U.S. wholesalers under which they provide us with data
regarding inventory levels at these wholesalers. However, these wholesalers may not be completely
effective in matching inventory levels to customer demand, as they make estimates to determine
customer demand. In addition, inventory is held at retail pharmacies and other non-wholesaler
locations, for which we have no inventory management agreements and have no control in respect to
their buying patterns. Also, the non-retail sector in the United States, which includes government
institutions and large health maintenance organizations, tends to be less consistent in terms of
buying patterns, and often causes quarter-over-quarter fluctuations in inventory and ordering
patterns. We attempt to monitor inventory of Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP>, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid or Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges in the
United States through the use of internal sales forecasts and the expiration dates of product
shipped, among other factors.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The commercialization of our products is substantially dependent on our ability to develop
effective sales and marketing capabilities.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our successful commercialization of Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges in
the United States will depend on our ability to establish and maintain an effective sales and
marketing organization in the United States. We hired trained and deployed additional marketing
personnel and a small oncology specialty sales force. We may increase or decrease the size of our
sales force in the future, depending on many factors, including the effectiveness of the sales
force, the level of market acceptance of Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges and
the results of our clinical trials. Prior to our launches of these products, we had never sold or
marketed any products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For our product candidates currently under development, our strategy is to develop compounds
through the Phase 2 stage of clinical testing and market or co-promote certain of our drugs on our
own. We have limited sales, marketing or distribution capabilities. We will depend primarily on
strategic alliances with third parties, which have established distribution systems and sales
forces, to commercialize our drugs. To the extent that we are unsuccessful in commercializing any
drugs or devices ourselves or through a strategic alliance, product revenues will suffer, we will
incur significant additional losses and our share price will be negatively affected.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Defending against claims relating to improper handling, storage or disposal of hazardous chemical,
radioactive or biological materials could be time consuming and expensive.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our research and development involves the controlled use of hazardous materials, including
chemicals, radioactive and biological materials such as chemical solvents, phosphorus and bacteria.
Our operations produce hazardous waste products. We cannot eliminate the risk of accidental
contamination or discharge and any resultant injury from those materials. Various laws and
regulations govern the use, manufacture, storage, handling and disposal of hazardous materials. We
may be sued for any injury or contamination that results from our use or the use by third parties
of these materials. Compliance with environmental laws and regulations may be expensive, and
current or future environmental regulations may impair our research, development and production
efforts.
</DIV>

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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to our Business and Financial Condition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The current economic conditions and financial market turmoil could adversely affect our business
and results of operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Economic conditions remain difficult with the continuing uncertainty in the global credit
markets, the financial services industry and the United States capital markets and with the United
States economy as a whole experiencing a period of substantial turmoil and uncertainty
characterized by unprecedented intervention by the United States federal government and the
failure, bankruptcy, or sale of various financial and other institutions. We believe the current
economic conditions and financial market turmoil could adversely affect our operations, business
and prospects, as well as our ability to obtain funds. If these circumstances persist or continue
to worsen, our future operating results could be adversely affected, particularly relative to our
current expectations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We are at an early stage of development as a company and we do not have, and may never have, any
products that generate significant revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are at an early stage of development as a company and have a limited operating history on
which to evaluate our business and prospects. While we have earned modest product revenues from the
ALIGN business acquired in October&nbsp;2007, since beginning operations in 1996, we have not generated
any product revenues from our product candidates currently in development. We cannot guarantee that
any of our product candidates currently in development will ever become marketable products and we
do not anticipate material revenues from the ALIGN products in the foreseeable future. We must
demonstrate that our drug candidates satisfy rigorous standards of safety and efficacy for their
intended uses before the FDA, and other regulatory authorities in the United States, the European
Union and elsewhere. Significant additional research, preclinical testing and clinical testing is
required before we can file applications with the FDA or other regulatory authorities for premarket
approval of our drug candidates. In addition, to compete effectively, our drugs must be easy to
administer, cost-effective and economical to manufacture on a commercial scale. We may not achieve
any of these objectives. Sapacitabine, our most advanced drug candidates for the treatment of
cancer, is currently in Phase 3 for AML and Phase 2 for MDS. Seliciclib is currently in Phase 2
clinical trials. A combination trial of sapacitabine and seliciclib is currently in a Phase 1
clinical trial. We cannot be certain that the clinical development of these or any other drug
candidates in preclinical testing or clinical development will be successful, that we will receive
the regulatory approvals required to commercialize them or that any of our other research and drug
discovery programs will yield a drug candidate suitable for investigation through clinical trials.
Our commercial revenues from our product candidates currently in development, if any, will be
derived from sales of drugs that will not become marketable for several years, if at all.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have a history of operating losses and we may never become profitable. Our stock is a highly
speculative investment.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have incurred operating losses in each year since beginning operations in 1996 due to costs
incurred in connection with our research and development activities and selling, general and
administrative costs associated with our operations, and we may never achieve profitability. As of
December&nbsp;31, 2009 and 2010, our accumulated deficit was $222.3&nbsp;million and $241.8&nbsp;million,
respectively. Our net loss for the years ended December&nbsp;31, 2008, 2009 and 2010 was $40.4&nbsp;million,
$19.6&nbsp;million and $16.0&nbsp;million, respectively. Our net loss applicable to common stockholders from
inception through December&nbsp;31, 2010 was $282.9&nbsp;million. Our drug candidates are in the mid-stages
of clinical testing and we must conduct significant additional clinical trials before we can seek
the regulatory approvals necessary to begin commercial sales of our drugs. We expect to incur
continued losses for several years, as we continue our research and development of our drug
candidates, seek regulatory approvals, commercialize any approved drugs and market and promote the
ALIGN products: Xclair<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Cream, Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Liquid and
Numoisyn<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> Lozenges. If our drug candidates are unsuccessful in clinical
trials or we are unable to obtain regulatory approvals, or if our drugs are unsuccessful in the
market, we will not be profitable. If we fail to become and remain profitable, or if we are unable
to fund our continuing losses, particularly in light of the current economic conditions, you could
lose all or part of your investment.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Capital markets are currently experiencing a period of disruption and instability, which has had
and could continue to have a negative impact on the availability and cost of capital.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The general disruption in the United States capital markets has impacted the broader worldwide
financial and credit markets and reduced the availability of debt and equity capital for the market
as a whole. These global conditions could persist for a prolonged period of time or worsen in the
future. Our ability to access the capital markets may be restricted at a time when we would like,
or need, to access those markets, which could have an impact on our flexibility to react to
changing economic and business conditions. The resulting lack of available credit, lack of
confidence in the financial sector, increased volatility in the financial markets could materially
and adversely affect the cost of debt financing and the proceeds of equity financing may be
materially adversely impacted by these market conditions.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we fail to comply with the continued listing requirements of the NASDAQ Global Market our common
stock price may be delisted and the price of our common stock and our ability to access the capital
markets could be negatively impacted.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is currently listed for trading on the NASDAQ Global Market. We must satisfy
NASDAQ&#146;s continued listing requirements, including among other things, a minimum stockholders&#146;
equity of $10.0&nbsp;million and a minimum bid price for our common stock of $1.00 per share, or risk
delisting, which would have a material adverse affect on our business. A delisting of our common
stock from the NASDAQ Global Market could materially reduce the liquidity of our common stock and
result in a corresponding material reduction in the price of our common stock. In addition,
delisting could harm our ability to raise capital through alternative financing sources on terms
acceptable to us, or at all, and may result in the potential loss of confidence by
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">investors, suppliers, customers and employees and fewer business development opportunities.
During 2009, Cyclacel received notification from the NASDAQ Stock Market that the Company was not
in compliance with the minimum $10&nbsp;million stockholders&#146; equity requirement for continued listing
set forth in NASDAQ Marketplace Rule&nbsp;5450(b)(1)(A). On January&nbsp;27, 2010, NASDAQ notified the
Company that it regained compliance with the minimum $50&nbsp;million market value of listed securities
requirement and that it currently complies with all other applicable standards for continued
listing on The NASDAQ Global Market. Accordingly, the Company&#146;s shares of common and preferred
stock will continue to trade on The NASDAQ Global Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Raising additional capital in the future may not be available to us on reasonable terms, if at all,
when or as we require additional funding. If we issue additional shares of our common stock or
other securities that may be convertible into, or exercisable or exchangeable for, our common
stock, our existing stockholders would experience further dilution. If we fail to obtain additional
funding, we may be unable to complete the development and commercialization of our lead drug
candidate, sapacitabine, or continue to fund our research and development programs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have funded all of our operations and capital expenditures with proceeds from the issuance
of public equity securities, private placements of our securities, interest on investments,
licensing revenue, government grants, research and development tax credits and product revenue. In
order to conduct the lengthy and expensive research, preclinical testing and clinical trials
necessary to complete the development and marketing of our drug candidates, we will require
substantial additional funds. Based on our current operating plans of focusing on the advancement
of sapacitabine, we expect our existing resources to be sufficient to fund our planned operations
for at least the next twelve months. To meet our long-term financing requirements, we may raise
funds through public or private equity offerings, debt financings or strategic alliances. Raising
additional funds by issuing equity or convertible debt securities may cause our stockholders to
experience substantial dilution in their ownership interests and new investors may have rights
superior to the rights of our other stockholders. Raising additional funds through debt financing,
if available, may involve covenants that restrict our business activities and options. To the
extent that we raise additional funds through collaborations and licensing arrangements, we may
have to relinquish valuable rights to our drug discovery and other technologies, research programs
or drug candidates, or grant licenses on terms that may not be favorable to us. Additional funding
may not be available to us on favorable terms, or at all, particularly in light of the current
economic conditions. If we are unable to obtain additional funds, we may be forced to delay or
terminate our current clinical trials and the development and marketing of our drug candidates
including sapacitabine.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>To the extent we elect to fund the development of a drug candidate or the commercialization of a
drug at our expense, we will need substantial additional funding.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We plan to market drugs on our own, with or without a partner, that can be effectively
commercialized and sold in concentrated markets that do not require a large sales force to be
competitive. To achieve this goal, we will need to establish our own specialized sales force,
marketing organization and supporting distribution capabilities. The development and
commercialization of our drug candidates is very expensive, including our anticipated Phase 3
clinical trials for sapacitabine. To the extent we elect to fund the full development of a drug
candidate or the commercialization of a drug at our expense, we will need to raise substantial
additional funding to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fund research and development and clinical trials connected with our research;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fund clinical trials and seek regulatory approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>build or access manufacturing and commercialization capabilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>implement additional internal control systems and infrastructure;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commercialize and secure coverage, payment and reimbursement of our drug candidates,
if any such candidates receive regulatory approval;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>maintain, defend and expand the scope of our intellectual property; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>hire additional management, sales and scientific personnel.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future funding requirements will depend on many factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the scope, rate of progress and cost of our clinical trials and other research and
development activities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the costs and timing of seeking and obtaining regulatory approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the costs of filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the costs associated with establishing sales and marketing capabilities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the costs of acquiring or investing in businesses, products and technologies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the effect of competing technological and market developments; and</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the payment, other terms and timing of any strategic alliance, licensing or other
arrangements that we may establish.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are not able to secure additional funding when needed, especially in light of the
current economic conditions and financial market turmoil, we may have to delay, reduce the scope of
or eliminate one or more of our clinical trials or research and development programs or future
commercialization efforts.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Any future workforce and expense reductions may have an adverse impact on our internal programs,
strategic plans, and our ability to hire and retain key personnel, and may also be distracting to
our management.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further workforce and expense reductions in addition to those carried out in September&nbsp;2008
and June&nbsp;2009 could result in significant delays in implementing our strategic plans. In addition,
employees, whether or not directly affected by such reduction, may seek future employment with our
business partners or competitors. Although our employees are required to sign a confidentiality
agreement at the time of hire, the confidential nature of certain proprietary information may not
be maintained in the course of any such future employment. In addition, any additional workforce
reductions or restructurings would be expected to involve significant expense as a result of
contractual terms in certain of our existing agreements, including potential severance obligations
as well as any payments that may, under certain circumstances, be required under our agreement with
the Scottish Enterprise. Further, we believe that our future success will depend in large part upon
our ability to attract and retain highly skilled personnel. We may have difficulty retaining and
attracting such personnel as a result of a perceived risk of future workforce and expense
reductions. Finally, the implementation of expense reduction programs may result in the diversion
of the time and attention of our executive management team and other key employees, which could
adversely affect our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Budget constraints resulting from our restructuring plan may negatively impact our research and
development, forcing us to delay our efforts to develop certain product candidates in favor of
developing others, which may prevent us from commercializing our product candidates as quickly as
possible.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development is an expensive process. As part of our restructuring plan, we have
decided to focus our clinical development priorities on sapacitabine, while still possibly
continuing to progress additional programs pending the availability of clinical data and the
availability of funds, at which time we will determine the feasibility of pursuing, if at all,
further advanced development of seliciclib, CYC116 or additional programs. Because we have had to
prioritize our development candidates as a result of budget constraints, we may not be able to
fully realize the value of our product candidates in a timely manner, if at all.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We are exposed to risks related to foreign currency exchange rates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of our costs and expenses are denominated in foreign currencies. Most of our foreign
expenses are associated with our research and development operations of our United Kingdom-based
wholly-owned subsidiary. When the United States dollar weakens against the British pound, the
United States dollar value of the foreign currency denominated expense increases, and when the
United States dollar strengthens against the British pound, the United States dollar value of the
foreign currency denominated expense decreases. Consequently, changes in exchange rates, and in
particular a weakening of the United States dollar, may adversely affect our results of operations
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to our Intellectual Property</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be subject to damages resulting from claims that our employees or we have wrongfully used or
disclosed alleged trade secrets of their former employers.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of our employees were previously employed at universities or other biotechnology or
pharmaceutical companies, including our competitors or potential competitors. Although no claims
against us are currently pending, we may be subject to claims that these employees or we have
inadvertently or otherwise used or disclosed trade secrets or other proprietary information of
their former employers. Litigation may be necessary to defend against these claims. If we fail in
defending such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights or personnel. A loss of key research personnel or their work product could hamper
or prevent our ability to commercialize certain potential drugs, which could severely harm our
business. Even if we are successful in defending against these claims, litigation could result in
substantial costs and be a distraction to management.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we fail to enforce adequately or defend our intellectual property rights our business may be
harmed.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our commercial success depends in large part on obtaining and maintaining patent and trade
secret protection for our drug candidates, the methods used to manufacture those drug candidates
and the methods for treating patients using those drug candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specifically, sapacitabine is covered in granted, composition of matter patents that expire in
2014 in the United States and 2012 outside the United States. Sapacitabine is further protected by
additional granted, composition of matter patents claiming certain, stable crystalline forms of
sapacitabine and their pharmaceutical compositions and therapeutic uses that expire in 2022. In
early development, amorphous sapacitabine was used. We have used one of the stable, crystalline
forms of sapacitabine in nearly all our Phase 1 and in all of our Phase 2 clinical studies. We have
also chosen this form for commercialization. Additional patents claim certain medical uses and
formulations of sapacitabine which have emerged in our clinical trials. Seliciclib is protected by
granted, composition of matter patents that expire in 2016. Additional patents claim certain
medical uses which have emerged from our research programs.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure to obtain, maintain or extend the patents could adversely affect our business. We
will only be able to protect our drug candidates and our technologies from unauthorized use by
third parties to the extent that valid and enforceable patents or trade secrets cover them.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to obtain patents is uncertain because legal means afford only limited protections
and may not adequately protect our rights or permit it to gain or keep any competitive advantage.
Some legal principles remain unresolved and the breadth or interpretation of claims allowed in
patents in the United States, the European Union or elsewhere can still be difficult to ascertain
or predict. In addition, the specific content of patents and patent applications that are necessary
to support and interpret patent claims is highly uncertain due to the complex nature of the
relevant legal, scientific and factual issues. Changes in either patent laws or in interpretations
of patent laws in the United States, the European Union or elsewhere may diminish the value of our
intellectual property or narrow the scope of our patent protection. Our existing patents and any
future patents we obtain may not be sufficiently broad to prevent others from practicing our
technologies or from developing competing products and technologies. In addition, we generally do
not control the patent prosecution of subject matter that we license from others and have not
controlled the earlier stages of the patent prosecution. Accordingly, we are unable to exercise the
same degree of control over this intellectual property as we would over our own.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if patents are issued regarding our drug candidates or methods of using them, those
patents can be challenged by our competitors who may argue such patents are invalid and/or
unenforceable. Patents also will not protect our drug candidates if competitors devise ways of
making or using these product candidates without legally infringing our patents. The U.S. Federal
Food, Drug and Cosmetic, or FD&#038;C, Act and FDA regulations and policies and equivalents in other
jurisdictions provide incentives to manufacturers to challenge patent validity or create modified,
noninfringing versions of a drug in order to facilitate the approval of abbreviated new drug
applications for generic substitutes. These same types of incentives encourage manufacturers to
submit new drug applications that rely on literature and clinical data not prepared for or by the
drug sponsor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proprietary trade secrets and unpatented know-how are also very important to our business. We
rely on trade secrets to protect our technology, especially where we do not believe that patent
protection is appropriate or obtainable. However, trade secrets are difficult to protect. Our
employees, consultants, contractors, outside scientific collaborators and other advisors may
unintentionally or willfully disclose our confidential information to competitors, and
confidentiality agreements may not provide an adequate remedy in the event of unauthorized
disclosure of confidential information. Enforcing a claim that a third party obtained illegally and
is using trade secrets is expensive and time consuming, and the outcome is unpredictable. Moreover,
our competitors may independently develop equivalent knowledge, methods and know-how. Failure to
obtain or maintain trade secret protection could adversely affect our competitive business
position.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Intellectual property rights of third parties may increase our costs or delay or prevent us from
being able to commercialize our drug candidates and/or the ALIGN products.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is a risk that we are infringing or will infringe the proprietary rights of third
parties because patents and pending applications belonging to third parties exist in the United
States, the European Union and elsewhere in the world in the areas of our research and/or the ALIGN
products. Others might have been the first to make the inventions covered by each of our or our
licensors&#146; pending patent applications and issued patents and might have been the first to file
patent applications for these inventions. We are aware of several published patent applications,
and understand that others may exist, that could support claims that, if granted, could cover
various aspects of our developmental programs, including in some cases particular uses of our lead
drug candidate sapacitabine, seliciclib or other therapeutic candidates, or gene sequences and
techniques that we use in the course of our research and development. In addition, we understand
that other applications and patents exist relating to potential uses of sapacitabine and seliciclib
that are not part of our current clinical programs for these compounds. Numerous third-party United
States and foreign issued patents and pending applications exist in the area of kinases, including
CDK, AK and Plk for which we have research programs. For example, some pending patent applications
contain broad claims that could represent freedom to operate limitations for some of our kinase
programs should they be issued unchanged. Although we intend to continue to monitor these
applications, we cannot predict what claims will ultimately be allowed and if allowed what their
scope would be. In addition, because the patent application process can take several years to
complete, there may be currently pending applications, unknown to us, which may later result in
issued patents that cover the production, manufacture, commercialization or use of our drug
candidates. If we wish to use the technology or compound claimed in issued and unexpired patents
owned by others, we will need to obtain a license from the owner, enter into litigation to
challenge the validity of the patents or incur the risk of litigation in the event that the owner
asserts that we infringe its patents. In one case we have opposed a European patent relating to
human aurora kinase and the patent has been finally revoked (no appeal was filed). We are also
aware of a corresponding U.S. patent containing method of treatment claims for specific cancers
using aurora kinase modulators which, if held valid, could potentially restrict the use of our
aurora kinase inhibitors once clinical trials are completed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There has been substantial litigation and other proceedings regarding patent and other
intellectual property rights in the pharmaceutical and biotechnology industries. Defending against
third party claims, including litigation in particular, would be costly and time consuming and
would divert management&#146;s attention from our business, which could lead to delays in our
development or commercialization efforts. If third parties are successful in their claims, we might
have to pay substantial damages or take other actions that are adverse to our business. As a result
of intellectual property infringement claims, or to avoid potential claims, we might:
</DIV>

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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be prohibited from selling or licensing any product that we may develop unless
the patent holder licenses the patent to us, which it is not required to do;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be required to pay substantial royalties or grant a cross license to our patents
to another patent holder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>decide to move some of our screening work outside Europe;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be required to pay substantial damages for past infringement, which we may have
to pay if a court determines that our product candidates or technologies infringe a
competitor&#146;s patent or other proprietary rights; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be required to redesign the formulation of a drug candidate so it does not
infringe, which may not be possible or could require substantial funds and time.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Securities Regulations and Investment in our Securities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Failure to achieve and maintain internal controls is accordance with Sections&nbsp;302 and 404 of the
Sarbanes-Oxley Act of 2002 could have a material adverse affect on our business and stock price.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During March&nbsp;2011, we identified a deficiency in respect of our internal controls over
financial reporting, specifically our controls over the accounting for cumulative preferred stock
dividends, that constitutes a material weakness as described in the SEC&#146;s guidance regarding
Management&#146;s Report on Internal Control Over Financial Reporting as of December&nbsp;31, 2010. As a
result of this deficiency, the financial statements included in our Form 10-K for the year ended
December&nbsp;31, 2009, filed on March&nbsp;29, 2010, as amended by Amendment No.&nbsp;1 to our Annual Report on
Form 10-K/A for the year ended December&nbsp;31, 2009 filed on May&nbsp;17, 2010 and, as further amended by
Amendment No.&nbsp;2 to our Annual Report on Form 10-K/A for the year ended December&nbsp;31, 2009 filed on
May&nbsp;19, 2010, included errors related to the presentation and disclosure of undeclared cumulative
preferred stock dividends in the consolidated balance sheet and in the statement of stockholders&#146;
equity. Unaudited balance sheets for the each of the first three quarters of 2009 and 2010 also
contained errors. In addition, in May&nbsp;2010, we filed an amendment to our Annual Report on Form 10-K
for the year ended December&nbsp;31, 2009, to report a restatement of our financial statements and
report a material weakness in our internal control over financial reporting as of December&nbsp;31,
2009, specifically related to the operational failure of the controls in place to ensure the
correct computation of net loss per share and presentation of preferred stock dividends in the
consolidated statement of cash flows. In March&nbsp;2011, our auditors identified a further error in
respect of the accounting, presentation and disclosure of cumulative undeclared preferred stock
dividends. Specifically, the inclusion of undeclared cumulative preferred stock dividends as a
current liability in our consolidated financial statements, which resulted from the same material
weakness as described above. This has resulted in the restatement of our consolidated balance
sheets as of March&nbsp;31, 2009, June&nbsp;30, 2009, September&nbsp;30, 2009, December&nbsp;31, 2009, March&nbsp;31, 2010,
June&nbsp;30, 2010, and September&nbsp;30, 2010 and consolidated statement of stockholders&#146; equity for the
year ended December&nbsp;31, 2009 and selected financial data as of and for the year ended December&nbsp;31,
2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we fail to maintain our internal controls or fail to implement required new or improved
controls, as such control standards are modified, supplemented or amended from time to time, we may
not be able to conclude on an ongoing basis that we have effective internal controls over financial
reporting. Effective internal controls are necessary for us to produce reliable financial reports
and are important in the prevention of financial fraud. If we cannot produce reliable financial
reports or prevent fraud, our business and operating results could be harmed.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We incur increased costs and management resources as a result of being a public company, and we
still may fail to comply with public company obligations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a public company, we face and will continue to face increased legal, accounting,
administrative and other costs and expenses as a public company that we would not incur as a
private company. Compliance with the Sarbanes Oxley Act of 2002, as well as other rules of the SEC,
the Public Company Accounting Oversight Board and the NASDAQ Global Market resulted in a
significant initial cost to us as well as an ongoing compliance costs. As a public company, we are
subject to Section&nbsp;404 of the Sarbanes Oxley Act relating to internal control over financial
reporting. We have completed a formal process to evaluate our internal controls for purposes of
Section&nbsp;404, and we concluded that as of December&nbsp;31, 2010, our internal control over financial
reporting was ineffective. As our business grows and changes, there can be no assurances that we
can maintain the effectiveness of our internal controls over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective internal controls over financial reporting are necessary for us to provide reliable
financial reports and, together with adequate disclosure controls and procedures, are designed to
prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating
results could be harmed. We have completed a formal process to evaluate our internal control over
financial reporting. However, guidance from regulatory authorities in the area of internal controls
continues to evolve and substantial uncertainty exists regarding our on-going ability to comply by
applicable deadlines. Any failure to implement required new or improved controls, or difficulties
encountered in their implementation, could harm our operating results or cause us to fail to meet
our reporting obligations. Ineffective internal controls could also cause investors to lose
confidence in our reported financial information, which could have a negative effect on the trading
price of our common stock.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our common stock may have a volatile public trading price.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An active public market for our common stock has not developed. Our stock can trade in small
volumes which may make the price of our stock highly volatile. The last reported price of our stock
may not represent the price at which you would be able to buy or sell the stock. The market prices
for securities of companies comparable to us have been highly volatile. Often, these stocks have
experienced significant price and volume fluctuations for reasons that are both related and
unrelated to the operating performance of the individual companies. In addition, the stock market
as a whole and biotechnology and other life science stocks in particular have experienced
significant recent volatility. Like our common stock, these stocks have experienced significant
price and volume fluctuations for reasons unrelated to the operating performance of the individual
companies. In addition, due to our existing stock price, we may not continue to qualify for
continued listing on the NASDAQ Global Market. To maintain listing, we are required to maintain a
minimum closing bid price of $1.00 per share and, among other requirements, to maintain a minimum
stockholders equity value of $10&nbsp;million. Factors giving rise to this volatility may include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disclosure of actual or potential clinical results with respect to product
candidates we are developing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>regulatory developments in both the United States and abroad;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developments concerning proprietary rights, including patents and litigation
matters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>public concern about the safety or efficacy of our product candidates or
technology, or related technology, or new technologies generally;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>concern about the safety or efficacy of our product candidates or technology, or
related technology, or new technologies generally;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>public announcements by our competitors or others; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general market conditions and comments by securities analysts and investors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Fluctuations in our operating losses could adversely affect the price of our common stock.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating losses may fluctuate significantly on a quarterly basis. Some of the factors
that may cause our operating losses to fluctuate on a period-to-period basis include the status of
our preclinical and clinical development programs, level of expenses incurred in connection with
our preclinical and clinical development programs, implementation or termination of collaboration,
licensing, manufacturing or other material agreements with third parties, non-recurring revenue or
expenses under any such agreement, and compliance with regulatory requirements. Period-to-period
comparisons of our historical and future financial results may not be meaningful, and investors
should not rely on them as an indication of future performance. Our fluctuating losses may fail to
meet the expectations of securities analysts or investors. Our failure to meet these expectations
may cause the price of our common stock to decline.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If securities or industry analysts do not publish research or reports about us, if they change
their recommendations regarding our stock adversely or if our operating results do not meet their
expectations, our stock price and trading volume could decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The trading market for our common stock is influenced by the research and reports that
industry or securities analysts publish about us. If one or more of these analysts cease coverage
of us or fail to regularly publish reports on us, we could lose visibility in the financial
markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one
or more of the analysts who cover us downgrade our stock or if our operating results do not meet
their expectations, our stock price could decline.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Anti-takeover provisions in our charter documents and provisions of Delaware law may make an
acquisition more difficult and could result in the entrenchment of management.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are incorporated in Delaware. Anti-takeover provisions of Delaware law and our amended and
restated certificate of incorporation and amended and restated bylaws may make a change in control
or efforts to remove management more difficult. Also, under Delaware law, our Board of Directors
may adopt additional anti-takeover measures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have the authority to issue up to 5&nbsp;million shares of preferred stock and to determine the
terms of those shares of stock without any further action by our stockholders. If the Board of
Directors exercises this power to issue preferred stock, it could be more difficult for a third
party to acquire a majority of our outstanding voting stock and vote the stock they acquire to
remove management or directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our amended and restated certificate of incorporation and amended and restated bylaws also
provides staggered terms for the members of our Board of Directors. Under Section&nbsp;141 of the
Delaware General Corporation Law, our directors may be removed by stockholders only for cause and
only by vote of the holders of a majority of voting shares then outstanding. These provisions may
prevent stockholders from replacing the entire board in a single proxy contest, making it more
difficult for a third party to acquire control of us without the consent of our Board of Directors.
These provisions could also delay the removal of management by the
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Board of Directors with or without cause. In addition, our directors may only be removed for
cause and amended and restated bylaws limit the ability our stockholders to call special meetings
of stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section&nbsp;203 of the Delaware General Corporation Law, a corporation may not engage in a
business combination with any holder of 15% or more of its capital stock until the holder has held
the stock for three years unless, among other possibilities, the Board of Directors approves the
transaction. Our Board of Directors could use this provision to prevent changes in management. The
existence of the foregoing provisions could limit the price that investors might be willing to pay
in the future for shares of our common stock.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have the authority to issue up to 5&nbsp;million shares of preferred stock and to determine the terms
of those shares of stock without any further action by our stockholders. If the Board of Directors
exercises this power to issue preferred stock, it could be more difficult for a third party to
acquire a majority of our outstanding voting stock and vote the stock they acquire to remove
management or directors.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our amended and restated certificate of incorporation and amended and restated bylaws also
provides staggered terms for the members of our Board of Directors. Under Section&nbsp;141 of the
Delaware General Corporation Law, our directors may be removed by stockholders only for cause and
only by vote of the holders of a majority of voting shares then outstanding. These provisions may
prevent stockholders from replacing the entire board in a single proxy contest, making it more
difficult for a third party to acquire control of us without the consent of our Board of Directors.
These provisions could also delay the removal of management by the Board of Directors with or
without cause. In addition, our directors may only be removed for cause and amended and restated
bylaws limit the ability our stockholders to call special meetings of stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section&nbsp;203 of the Delaware General Corporation Law, a corporation may not engage in a
business combination with any holder of 15% or more of its capital stock until the holder has held
the stock for three years unless, among other possibilities, the Board of Directors approves the
transaction. Our Board of Directors could use this provision to prevent changes in management. The
existence of the foregoing provisions could limit the price that investors might be willing to pay
in the future for shares of our common stock.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Certain severance-related agreements in our executive employment agreements may make an acquisition
more difficult and could result in the entrenchment of management.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2008 (as subsequently amended, most recently as of January&nbsp;1, 2011), we entered into
employment agreements with our President and Chief Executive Officer and our Executive Vice
President, Finance, Chief Financial Officer and Chief Operating Officer, which contain severance
arrangements in the event that such executive&#146;s employment is terminated without &#147;cause&#148; or as a
result of a &#147;change of control&#148; (as each such term is defined in each agreement). The financial
obligations triggered by these provisions may prevent a business combination or acquisition that
would be attractive to stockholders and could limit the price that investors would be willing to
pay in the future for our stock.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>In the event of an acquisition of our common stock, we cannot assure our common stockholders that
we will be able to negotiate terms that would provide for a price equivalent to, or more favorable
than, the price at which our shares of common stock may be trading at such time.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not effect a consolidation or merger with another entity without the vote or consent of
the holders of at least a majority of the shares of our preferred stock (in addition to the
approval of our common stockholders), unless the preferred stock that remains outstanding and its
rights, privileges and preferences are unaffected or are converted into or exchanged for preferred
stock of the surviving entity having rights, preferences and limitations substantially similar, but
no less favorable, to our convertible preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, in the event a third party seeks to acquire our company or acquire control of our
company by way of a merger, but the terms of such offer do not provide for our preferred stock to
remain outstanding or be converted into or exchanged for preferred stock of the surviving entity
having rights, preferences and limitations substantially similar, but no less favorable, to our
preferred stock, the terms of the Certificate of Designation of our preferred stock provide for an
adjustment to the conversion ratio of our preferred stock such that, depending on the terms of any
such transaction, preferred stockholders may be entitled, by their terms, to receive up to $10.00
per share in common stock, causing our common stockholders not to receive as favorable a price as
the price at which such shares may be trading at the time of any such
transaction. As of March 31, 2011, there were 1,213,142 shares of our preferred stock issued and outstanding. If the
transaction were one in which proceeds were received by the Company for distribution to
stockholders, and the terms of the Certificate of Designation governing the preferred stock were
strictly complied with, approximately $13,344,563 would be paid to the preferred holders before any
distribution to the common stockholders, although the form of transaction could affect how the
holders of preferred stock are treated. In such an event, although such a transaction would be
subject to the approval of our holders of common stock, we cannot assure our common stockholders
that we will be able to negotiate terms that would provide for a price equivalent to, or more
favorable than, the price at which our shares of common stock may be trading at such time. Thus,
the terms of our preferred stock might hamper a third party&#146;s acquisition of our company.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our certificate of incorporation and bylaws and certain provisions of Delaware law may delay or
prevent a change in our management and make it more difficult for a third party to acquire us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our amended and restated certificate of incorporation and bylaws contain provisions that could
delay or prevent a change in our Board of Directors and management teams. Some of these provisions:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>authorize the issuance of preferred stock that can be created and issued by the
Board of Directors without prior stockholder approval, commonly referred to as
&#147;blank check&#148; preferred stock, with rights senior to those of our common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide for the Board of Directors to be divided into three classes; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>require that stockholder actions must be effected at a duly called stockholder
meeting and prohibit stockholder action by written consent.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, because we are incorporated in Delaware, we are governed by the provisions of
Section&nbsp;203 of the Delaware General Corporation Law, which limits the ability of large stockholders
to complete a business combination with, or acquisition of, us. These provisions may prevent a
business combination or acquisition that would be attractive to stockholders and could limit the
price that investors would be willing to pay in the future for our stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These provisions also make it more difficult for our stockholders to replace members of our
Board of Directors. Because our Board of Directors is responsible for appointing the members of our
management team, these provisions could in turn affect any attempt to replace our current
management team. Additionally, these provisions may prevent an acquisition that would be attractive
to stockholders and could limit the price that investors would be willing to pay in the future for
our common stock.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may have limited ability to pay cash dividends on our preferred stock, and there is no assurance
that future quarterly dividends will be declared.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delaware law may limit our ability to pay cash dividends on our preferred stock. Under
Delaware law, cash dividends on our preferred stock may only be paid from surplus or, if there is
no surplus, from the corporation&#146;s net profits for the current or preceding fiscal year. Delaware
law defines &#147;surplus&#148; as the amount by which the total assets of a corporation, after subtracting
its total liabilities, exceed the corporation&#146;s capital, as determined by its Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since we are not profitable, our ability to pay cash dividends will require the availability
of adequate surplus. Even if adequate surplus is available to pay cash dividends on our preferred
stock, we may not have sufficient cash to pay dividends on the convertible preferred stock or we
may choose not to declare the dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;1, 2011, we paid a quarterly cash dividend with respect to fourth quarter of
fiscal year 2010, and on April 8, 2011, we declared a dividend payable on May 2, 2011. The Board of Directors considered numerous factors in determining whether to
declare the quarterly dividend, including the requisite financial analysis and determination of a
surplus. While the Board of Directors will analyze the advisability of the declaration of dividends
in future quarters, there is no assurance that future quarterly dividends will be declared.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have not declared quarterly dividends on our 6% Preferred Stock for a total of six quarterly
dividend periods. As a result, we will have to grant additional rights to our holders of preferred
stock with respect to the management of the Company.</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although our Board of Directors declared the quarterly cash dividend with respect to the
fourth quarter of fiscal year 2010, which was paid on
February&nbsp;1, 2011,  on April 8, 2011, we declared a dividend
payable on May 2, 2011, and there are still dividends
that have accrued and are unpaid on the preferred stock for at least six quarters. As a result,
the holders of our preferred stock are now entitled to nominate and elect two directors to the
Company&#146;s board of directors. This right accrued to the Preferred Stockholders as of August&nbsp;2,
2010. We held a special meeting of the holders of our preferred stock to elect two directors to our
Board of Directors, which was adjourned because a quorum of the holders of our preferred stock was
not present in person or represented by proxy to transact business at the meeting. A quorum was not
reached at such adjourned meeting either, and the meeting was not further adjourned. The holders
of our preferred stock will have the opportunity at our 2011 annual meeting of stockholders to
elect two directors to our Board of Directors. Once elected, the directors elected by the
preferred stockholders will have the ability to participate in the management of the Company until
all such dividends have been paid in full.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our common and convertible preferred stock may experience extreme price and volume fluctuations,
which could lead to costly litigation for the Company and make an investment in the Company less
appealing.</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market price of our common and convertible preferred stock may fluctuate substantially due
to a variety of factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>additions to or departures of our key personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements of technological innovations or new products or services by us or
our competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements concerning our competitors or the biotechnology industry in
general;</TD>
</TR>

</TABLE>
</DIV>

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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>new regulatory pronouncements and changes in regulatory guidelines;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general and industry-specific economic conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in financial estimates or recommendations by securities analysts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>variations in our quarterly results;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements about our collaborators or licensors; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in accounting principles.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market prices of the securities of biotechnology companies, particularly companies like us
without product revenues and earnings, have been highly volatile and are likely to remain highly
volatile in the future. This volatility has often been unrelated to the performance of particular
companies. In the past, companies that experience volatility in the market price of their
securities have often faced securities class action litigation. Moreover, market prices for stocks
of biotechnology-related and technology companies frequently reach levels that bear no relationship
to the performance of these companies. These market prices generally are not sustainable and are
highly volatile. Whether or not meritorious, litigation brought against us could result in
substantial costs, divert our management&#146;s attention and resources and harm our financial condition
and results of operations. In addition, due to our stock price from time to time, we may not
continue to qualify for continued listing on the NASDAQ Global Market. Please see Risk Factor: <I>Our
common stock may have a volatile public trading price.</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The future sale of our common and preferred stock and future issuances of our common stock upon
conversion of our preferred stock, could negatively affect our stock price and cause dilution to
existing holders of our common stock.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our common or preferred stockholders sell substantial amounts of our stock in the public
market, or the market perceives that such sales may occur, the market price of our common and
preferred stock could fall. For example, we were approached by a preferred stockholder that elected
to convert 123,400 of its shares of preferred stock, which shares were converted into 239,396
shares of common stock in the first quarter of 2010. In addition, 710,271 shares of preferred stock
were converted to 1,416,203 shares of common stock during the second quarter of 2010. If
additional holders of preferred stock elect to convert their shares to shares of common stock at
renegotiated prices, such conversion as well as the sale of substantial amounts of our common or
preferred stock, could cause dilution to existing holders of our common stock, thereby also
negatively affecting the price of our common stock.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we exchange the convertible preferred stock for debentures, the exchange will be taxable but we
will not provide any cash to pay any tax liability that any convertible preferred stockholder may
incur.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An exchange of convertible preferred stock for debentures, as well as any dividend make-whole
or interest make-whole payments paid in our common stock, will be taxable events for United States
federal income tax purposes, which may result in tax liability for the holder of convertible
preferred stock without any corresponding receipt of cash by the holder. In addition, the
debentures may be treated as having original issue discount, a portion of which would generally be
required to be included in the holder&#146;s gross income even though the cash to which such income is
attributable would not be received until maturity or redemption of the debenture. We will not
distribute any cash to the holders of the securities to pay these potential tax liabilities.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we automatically convert the convertible preferred stock, there is a substantial risk of
fluctuation in the price of our common stock from the date we elect to automatically convert to the
conversion date.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may automatically convert the convertible preferred stock into common stock if the closing
price of our common stock has exceeded $35.30. There is a risk of fluctuation in the price of our
common stock between the time when we may first elect to automatically convert the preferred and
the automatic conversion date.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We do not intend to pay cash dividends on our common stock in the foreseeable future.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not anticipate paying cash dividends on our common stock in the foreseeable future. Any
payment of cash dividends will depend on our financial condition, results of operations, capital
requirements, the outcome of the review of our strategic alternatives and other factors and will be
at the discretion of our Board of Directors. Accordingly, investors will have to rely on capital
appreciation, if any, to earn a return on their investment in our common stock. Furthermore, we may
in the future become subject to contractual restrictions on, or prohibitions against, the payment
of dividends.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The number of shares of common stock which are registered, including the shares to be issued upon
exercise of our outstanding warrants, is significant in relation to our currently outstanding
common stock and could cause downward pressure on the market price for our common stock.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of shares of common stock registered for resale, including those shares which are
to be issued upon exercise of our outstanding warrants, is significant in relation to the number of
shares of common stock currently outstanding. If the security holder determines to sell a
substantial number of shares into the market at any given time, there may not be sufficient demand
in the market to purchase the shares without a decline in the market price for our common stock.
Moreover, continuous sales into the market of a
</DIV>

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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">number of shares in excess of the typical trading volume for our common stock, or even the
availability of such a large number of shares, could depress the trading market for our common
stock over an extended period of time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If persons engage in short sales of our common stock, including sales of shares to be issued upon
exercise of our outstanding warrants, the price of our common stock may decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling short is a technique used by a stockholder to take advantage of an anticipated decline
in the price of a security. In addition, holders of options and warrants will sometimes sell short
knowing they can, in effect, cover through the exercise of an option or warrant, thus locking in a
profit. A significant number of short sales or a large volume of other sales within a relatively
short period of time can create downward pressure on the market price of a security. Further sales
of common stock issued upon exercise of our outstanding warrants could cause even greater declines
in the price of our common stock due to the number of additional shares available in the market
upon such exercise, which could encourage short sales that could further undermine the value of our
common stock. You could, therefore, experience a decline in the value of your investment as a
result of short sales of our common stock.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We
are exposed to risk related to the marketable
securities we may purchase.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may invest cash not required to meet short term obligations in short term marketable
securities. We may purchase securities in United States government, government-sponsored agencies
and highly rated corporate and asset-backed securities subject to an approved investment policy.
Historically, investment in these securities has been highly liquid and has experienced only very
limited defaults. However, recent volatility in the financial markets has created additional
uncertainty regarding the liquidity and safety of these investments. Although we believe our
marketable securities investments are safe and highly liquid, we cannot guarantee that our
investment portfolio will not be negatively impacted by recent or future market volatility or
credit restrictions.
</DIV>

<DIV align="left">
<A name="C19543104"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEC encourages companies to disclose forward-looking information so that investors can
better understand a company&#146;s future prospects and make informed investment decisions. This
prospectus contains such &#147;forward-looking statements&#148; within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements may be made directly in this prospectus, and they
may also be made a part of this prospectus by reference to other documents filed with the SEC which
is known as &#147;incorporation by reference.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Words such as &#147;may,&#148; &#147;anticipate,&#148; &#147;estimate,&#148; &#147;expects,&#148; &#147;projects,&#148; &#147;intends,&#148; &#147;plans,&#148;
&#147;believes&#148; and words and terms of similar substance used in connection with any discussion of
future operating or financial performance identify forward-looking statements. All forward-looking
statements are management&#146;s present expectations of future events and are subject to a number of
risks and uncertainties that could cause actual results to differ materially from those described
in the forward-looking statements. Forward-looking statements might include one or more of the
following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>anticipated results of financing activities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>anticipated agreements with marketing partners;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>anticipated clinical trial timelines or results;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>anticipated research and product development results;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>projected regulatory timelines;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>descriptions of plans or objectives of management for future operations, products or services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>forecasts of future economic performance; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>descriptions or assumptions underlying or relating to any of the above items.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please also see the discussion of risks and uncertainties under the heading &#147;Risk Factors&#148;
beginning on page 9.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In light of these assumptions, risks and uncertainties, the results and events discussed in
the forward-looking statements contained in this prospectus or in any document incorporated by
reference might not occur. Investors are cautioned not to place undue
</DIV>

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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reliance on the forward-looking statements, which speak only as of the date of this prospectus
or the date of the document incorporated by reference in this prospectus. We are not under any
obligation, and we expressly disclaim any obligation, to update or alter any forward-looking
statements, whether as a result of new information, future events or otherwise. All subsequent
forward-looking statements attributable to Cyclacel or to any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements contained or referred to in this
section.
</DIV>

<DIV align="left">
<A name="C19543105"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that we will receive any proceeds in connection with securities offered
pursuant to this prospectus. Unless we indicate otherwise in the applicable prospectus supplement,
we currently intend to use the net proceeds from this offering for general corporate purposes,
including general working capital.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not determined the amounts we plan to spend on any of the areas listed above or the
timing of these expenditures. As a result, our management will have broad discretion to allocate
the net proceeds from this offering. Pending application of the net proceeds as described above, we
intend to invest the net proceeds of the offering in short-term, investment-grade, interest-bearing
securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may set forth additional information on the use of net proceeds from the sale of securities
we offer under this prospectus in a prospectus supplement relating to the specific offering.
</DIV>

<DIV align="left">
<A name="C19543106"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PLAN OF DISTRIBUTION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may sell the securities being offered hereby in one or more of the following ways from time
to time:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>through dealers or agents to the public or to investors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to underwriters for resale to the public or to investors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>directly to investors; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>through a combination of such methods.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will set forth in a prospectus supplement the terms of the offering of securities,
including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the name or names of any agents, dealers or underwriters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the purchase price of the securities being offered and the proceeds we will receive from the sale;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any over-allotment options under which underwriters may purchase additional securities from us;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any agency fees or underwriting discounts and other items constituting agents&#146; or underwriters&#146;
compensation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any initial public offering price;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any discounts or concessions allowed or reallowed or paid to dealers; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any securities exchanges on which the securities may be listed.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Underwriters, dealers and agents that participate in the distribution of the securities may be
deemed to be underwriters as defined in the Securities Act of 1933, as amended, or the Securities
Act, and any discounts or commissions they receive from us and any profit on their resale of the
securities may be treated as underwriting discounts and commissions under the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will identify in the applicable prospectus supplement any underwriters, dealers or agents
and will describe their compensation. We may have agreements with the underwriters, dealers and
agents to indemnify them against specified civil liabilities, including liabilities under the
Securities Act. Underwriters, dealers and agents may engage in transactions with or perform
services for us or our subsidiaries in the ordinary course of their businesses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain persons that participate in the distribution of the securities may engage in
transactions that stabilize, maintain or otherwise affect the price of the securities, including
over-allotment, stabilizing and short-covering transactions in such securities, and the imposition
of penalty bids, in connection with an offering. Certain persons may also engage in passive market
making transactions
</DIV>




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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">as permitted by Rule&nbsp;103 of Regulation&nbsp;M. Passive market makers must comply with applicable volume
and price limitations and must be identified as passive market makers. In general, a passive market
maker must display its bid at a price not in excess of the highest independent bid for such
security; if all independent bids are lowered below the passive market maker&#146;s bid, however, the
passive market maker&#146;s bid must then be lowered when certain purchase limits are exceeded.
</DIV>






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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left">
<A name="C19543107"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SECURITIES WE MAY OFFER</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The descriptions of the securities contained in this prospectus, together with the applicable
prospectus supplements, summarize all the material terms and provisions of the various types of
securities that we may offer. We will describe in the applicable prospectus supplement relating to
any securities the particular terms of the securities offered by that prospectus supplement. If we
indicate in the applicable prospectus supplement, the terms of the securities may differ from the
terms we have summarized below. We will also include information in the prospectus supplement,
where applicable, about material United States federal income tax considerations relating to the
securities, and the securities exchange, if any, on which the securities will be listed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may sell from time to time, in one or more offerings:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>preferred stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>warrants to purchase common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>debt securities; and/or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>units.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus may not be used to consummate a sale of securities unless it is accompanied by
a prospectus supplement.
</DIV>
<DIV align="left">
<A name="C19543108"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DESCRIPTION OF COMMON STOCK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are authorized to issue 100,000,000 shares of common stock, $0.001 par value per share. As
of April&nbsp;1, 2011, 46,598,688 shares of common stock were issued and outstanding. The following
descriptions of our common stock and provisions of our amended and restated certificate of
incorporation and amended and restated by-laws are only summaries, and we encourage you to review
complete copies of these documents, which have been filed as exhibits to our periodic reports with
the SEC.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividends, Voting Rights and Liquidation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of common stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders, and do not have cumulative voting rights. Subject to
preferences that may be applicable to any outstanding shares of preferred stock, holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared from time to time
by our board of directors out of funds legally available for dividend payments. All outstanding
shares of common stock are fully paid and non-assessable, and the shares of common stock to be
issued upon completion of this offering will be fully paid and non-assessable. The holders of
common stock have no preferences or rights of conversion, exchange, pre-emption or other
subscription rights. There are no redemption or sinking fund provisions applicable to the common
stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders of common
stock will be entitled to share ratably in our assets that are remaining after payment or provision
for payment of all of our debts and obligations and after liquidation payments to holders of
outstanding shares of preferred stock, if any.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Delaware Law and Certain Charter and By-law Provisions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provisions of (1)&nbsp;Delaware law, (2)&nbsp;our amended and restated certificate of incorporation,
and (3)&nbsp;our amended and restated bylaws discussed below could discourage or make it more difficult
to accomplish a proxy contest or other change in our management or the acquisition of control by a
holder of a substantial amount of our voting stock. It is possible that these provisions could make
it more difficult to accomplish, or could deter, transactions that stockholders may otherwise
consider to be in their best interests or in our best interests. These provisions are intended to
enhance the likelihood of continuity and stability in the composition of our board of directors and
in the policies formulated by the board of directors and to discourage certain types of
transactions that may involve an actual or threatened change of control of us. These provisions are
designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also
are intended to discourage certain tactics that may be used in proxy fights. Such provisions also
may have the effect of preventing changes in our management.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Delaware Statutory Business Combinations Provision. </I>We are subject to the anti-takeover
provisions of Section&nbsp;203 of the Delaware General Corporation Law. In general, Section&nbsp;203
prohibits a publicly-held Delaware corporation from engaging in a &#147;business combination&#148; with an
&#147;interested stockholder&#148; for a period of three years after the date of the transaction in which the
person became an interested stockholder, unless the business combination is, or the transaction in
which the person became an interested stockholder was, approved in a prescribed manner or another
prescribed exception applies. For purposes of Section&nbsp;203, a &#147;business combination&#148; is defined
broadly to include a merger, asset sale or other transaction resulting in a financial benefit to
the
</DIV>




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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">interested stockholder, and, subject to certain exceptions, an &#147;interested stockholder&#148; is a person
who, together with his or her affiliates and associates, owns (or within three years prior, did
own) 15% or more of the corporation&#146;s voting stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Classified Board of Directors; Removal of Directors for Cause. </I>Our amended and restated
certificate of incorporation and amended and restated bylaws provide that our board of directors is
divided into three classes, each serving staggered three-year terms ending at the annual meeting of
our stockholders. All directors elected to our classified board of directors will serve until the
election and qualification of their respective successors or their earlier resignation or removal.
The board of directors is authorized to create new directorships and to fill such positions so
created and is permitted to specify the class to which any such new position is assigned. The
person filling such position would serve for the term applicable to that class. The board of
directors (or its remaining members, even if less than a quorum) is also empowered to fill
vacancies on the board of directors occurring for any reason for the remainder of the term of the
class of directors in which the vacancy occurred. Members of the board of directors may only be
removed for cause and only by the affirmative vote of 80% of our outstanding voting stock. These
provisions are likely to increase the time required for stockholders to change the composition of
the board of directors. For example, in general, at least two annual meetings will be necessary for
stockholders to effect a change in a majority of the members of the board of directors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Advance Notice Provisions for Stockholder Proposals and Stockholder Nominations of Directors.</I>
Our amended and restated bylaws provide that, for nominations to the board of directors or for
other business to be properly brought by a stockholder before a meeting of stockholders, the
stockholder must first have given timely notice of the proposal in writing to our Secretary. For an
annual meeting, a stockholder&#146;s notice generally must be delivered not less than 45&nbsp;days nor more
than 75&nbsp;days prior to the anniversary of the mailing date of the proxy statement for the previous
year&#146;s annual meeting. For a special meeting, the notice must generally be delivered by the later
of 90&nbsp;days prior to the special meeting or ten days following the day on which public announcement
of the meeting is first made. Detailed requirements as to the form of the notice and information
required in the notice are specified in the amended and restated bylaws. If it is determined that
business was not properly brought before a meeting in accordance with our bylaw provisions, such
business will not be conducted at the meeting.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Special Meetings of Stockholders. </I>Special meetings of the stockholders may be called only by
our board of directors pursuant to a resolution adopted by a majority of the total number of
directors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No Stockholder Action by Written Consent. </I>Our amended and restated certificate of
incorporation and amended and restated bylaws do not permit our stockholders to act by written
consent. As a result, any action to be effected by our stockholders must be effected at a duly
called annual or special meeting of the stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Super-Majority Stockholder Vote Required for Certain Actions. </I>The Delaware General Corporation
Law provides generally that the affirmative vote of a majority of the shares entitled to vote on
any matter is required to amend a corporation&#146;s certificate of incorporation or bylaws, unless the
corporation&#146;s certificate of incorporation or bylaws, as the case may be, requires a greater
percentage. Our amended and restated certificate of incorporation requires the affirmative vote of
the holders of at least 80% of our outstanding voting stock to amend or repeal any of the
provisions discussed in this section of this prospectus entitled &#147;Anti-Takeover Provisions&#148; or to
reduce the number of authorized shares of common stock or preferred stock. This 80% stockholder
vote would be in addition to any separate class vote that might in the future be required pursuant
to the terms of any preferred stock that might then be outstanding. In addition, an 80% vote is
also required for any amendment to, or repeal of, our amended and restated bylaws by the
stockholders. Our amended and restated bylaws may be amended or repealed by a simple majority vote
of the board of directors.
</DIV>

<DIV align="left">
<A name="C19543109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DESCRIPTION OF PREFERRED STOCK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have the authority to issue up to 5,000,000 shares of preferred stock. As of April&nbsp;1, 2011,
1,213,142 shares of our preferred stock were outstanding (see &#147;6% Convertible Exchangeable
Preferred Stock&#148; below). The description of preferred stock provisions set forth below is not
complete and is subject to and qualified in its entirety by reference to our certificate of
incorporation and the certificate of designations relating to each series of preferred stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors has the right, without the consent of holders of common stock, to
designate and issue one or more series of preferred stock, which may be convertible into common
stock at a ratio determined by the board of directors. A series of preferred stock may bear rights
superior to common stock as to voting, dividends, redemption, distributions in liquidation,
dissolution, or winding up, and other relative rights and preferences. The board may set the
following terms of any series preferred stock, and a prospectus supplement will specify these terms
for each series offered:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of shares constituting the series and the distinctive designation of the series;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>dividend rates, whether dividends are cumulative, and, if so, from what date; and the relative rights of priority of
payment of dividends;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>voting rights and the terms of the voting rights;</TD>
</TR>

</TABLE>
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conversion privileges and the terms and conditions of conversion, including provision for adjustment of the conversion rate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>redemption rights and the terms and conditions of redemption, including the date or dates upon or after which shares may be
redeemable, and the amount per share payable in case of redemption, which may vary under different conditions and at
different redemption dates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sinking fund provisions for the redemption or purchase of shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>rights in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative
rights of priority of payment; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any other relative powers, preferences, rights, privileges, qualifications, limitations and restrictions of the series.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends on outstanding shares of preferred stock will be paid or declared and set apart for
payment before any dividends may be paid or declared and set apart for payment on the common stock
with respect to the same dividend period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If, upon any voluntary or involuntary liquidation, dissolution or winding up of the Company,
the assets available for distribution to holders of preferred stock are insufficient to pay the
full preferential amount to which the holders are entitled, then the available assets will be
distributed ratably among the shares of all series of preferred stock in accordance with the
respective preferential amounts (including unpaid cumulative dividends, if any) payable with
respect to each series.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of preferred stock will not be entitled to preemptive rights to purchase or subscribe
for any shares of any class of capital stock of the corporation. The preferred stock will, when
issued, be fully paid and non-assessable. The rights of the holders of preferred stock will be
subordinate to those of our general creditors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have previously issued 2,990,000 shares of preferred stock in one series, designated as 6%
Convertible Exchangeable Preferred Stock, of which 1,213,142 are currently outstanding and are
quoted on the NASDAQ Global Market under the symbol &#147;CYCCP.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6% Convertible Exchangeable Preferred Stock</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>General</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has designated 2,990,000 shares of the preferred stock that were issued
as convertible preferred stock on November&nbsp;3, 2004. The shares of convertible preferred stock are
duly and validly issued, fully paid and non-assessable. These shares will not have any preemptive
rights if we issue other series of preferred stock. The convertible preferred stock is not subject
to any sinking fund. We have no obligation to retire the convertible preferred stock. The
convertible preferred stock has a perpetual maturity and may remain outstanding indefinitely,
subject to the holder&#146;s right to convert the convertible preferred stock and our right to cause the
conversion of the convertible preferred stock and exchange or redeem the convertible preferred
stock at our option. Any convertible preferred stock converted, exchanged or redeemed or acquired
by us will, upon cancellation, have the status of authorized but unissued shares of convertible
preferred stock. We will be able to reissue these cancelled shares of convertible preferred stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When and if declared by our board of directors out of the legally available funds, holders of
the convertible preferred stock are entitled to receive cash dividends at an annual rate of 6% of
the liquidation preference of the convertible preferred stock. Dividends are payable quarterly on the first day of February, May, August and November. If
any dividends are not declared, they will accrue and be paid at such later date, if any, as
determined by our board of directors. Dividends on the convertible preferred stock will be
cumulative from the issue date. Dividends will be payable to holders of record as they appear on
our stock books not more than 60&nbsp;days nor less than 10&nbsp;days preceding the payment dates, as fixed
by our board of directors. If the convertible preferred stock is called for redemption on a
redemption date between the dividend record date and the dividend payment date and the holder does
not convert the convertible preferred stock (as described below), the holder shall receive the
dividend payment together with all other accrued and unpaid dividends on the redemption date
instead of receiving the dividend on the dividend date. Dividends payable on the convertible
preferred stock for any period greater or less than a full dividend period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Accrued but unpaid dividends will not
bear interest.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we do not pay or set aside cumulative dividends in full on the convertible preferred stock
and any other preferred stock ranking on the same basis as to dividends, all dividends declared
upon shares of the convertible preferred stock and any other preferred stock ranking on the same
basis as to dividends will be declared on a pro rata basis until all accrued dividends are paid in
</DIV>




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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">full. For these purposes, &#147;pro rata&#148; means that the amount of dividends declared per share on the
convertible preferred stock and any other preferred stock ranking on the same basis as to dividends
bear to each other will be the same ratio that accrued and unpaid dividends per share on the shares
of the convertible preferred stock and such other preferred stock bear to each other. We will not
be able to redeem, purchase or otherwise acquire any of our stock ranking on the same basis as the
convertible preferred stock as to dividends or liquidation preferences unless we have paid or set
aside full cumulative dividends, if any, accrued on all outstanding shares of convertible preferred
stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless we have paid or set aside cumulative dividends in full on the convertible preferred
stock and any other of the convertible preferred stock ranking on the same basis as to dividends:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we may not declare or pay or set aside dividends on common
stock or any other stock ranking junior to the convertible
preferred stock as to dividends or liquidation preferences,
excluding dividends or distributions of shares, options,
warrants or rights to purchase common stock or other stock
ranking junior to the convertible preferred stock as to
dividends; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we will not be able to redeem, purchase or otherwise
acquire any of our other stock ranking junior to the
convertible preferred stock as to dividends or liquidation
preferences, except in very limited circumstances.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under Delaware law, we may only make dividends or distributions to our stockholders from:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our surplus; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the net profits for the current fiscal year or the fiscal
year before which the dividend or distribution is declared
under certain circumstances.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that any dividends payable on the preferred stock are not paid, such unpaid
dividends are accrued. We have not declared dividends with respect to at least six quarters and,
under the terms of the Certificate of Designations, the holders of the preferred stock, voting
separately as a class, become entitled to vote to fill the two vacancies created thereby until all
accrued but unpaid dividends have been paid in full, at which time such right is terminated. As a
result, the holders of our preferred stock are now entitled to vote to fill two new board
positions. We held a special meeting of the holders of our preferred stock to elect two directors
to our Board of Directors, which meeting was adjourned because a quorum of the holders of our
preferred stock was not present in person or represented by proxy to transact business at the
meeting. A quorum was not reached at such adjourned meeting either, and the meeting was not further
adjourned. The holders of our preferred stock will have the opportunity at our 2011 annual meeting
of stockholders to elect two directors to our Board of Directors. Once elected, the directors
elected by the preferred stockholders will have the ability to participate in the management of the
Company until all such dividends have been paid in full.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors declared the quarterly cash dividend with respect to the fourth quarter
of fiscal year 2010 and the first quarter of fiscal year of 2011, which was paid on February&nbsp;1, 2011 and is payable on May 2, 2011. Although our board of directors declared the quarterly cash
dividends with respect to the fourth quarter of fiscal year 2010 and the first quarter of fiscal year of 2011, which was paid on February 1, 2011 and is payable on May 2, 2011, respectively, there are still
dividends that have accrued and are unpaid on our preferred stock for at least six quarters.  As a result, the holders of our preferred stock are now entitled to nominate and elect two directors to the
Company&#146;s board of directors.
This right accrued to the preferred stockholders as of August 2, 2010. We held a special meeting of the holders of our
preferred stock to elect two directors to our board of directors, which was adjourned because a quorum of the holders
of our preferred stock was not present in person or represented by proxy to transact business at the meeting. A quorum
was not reached at such adjourned meeting either, and the meeting was not further adjourned.  The holders of our preferred
stock will have the opportunity at our 2011 annual meeting of stockholders to elect two directors to our board of directors.
 Once elected, the directors elected by the preferred stockholders will have the ability to participate in the management of
the Company until all such dividends have been paid in full.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Conversion</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Conversion Rights</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our convertible preferred stock may convert the convertible preferred stock at any
time into a number of shares of common stock determined by dividing the $10 liquidation preference
by the conversion price of $23.50, being the original conversion price of $2.35 as adjusted
following a reverse stock split, subject to adjustment as described below. This conversion price is
equivalent to a conversion rate of approximately 0.42553 shares of common stock for each share of
convertible preferred stock. We will not make any adjustment to the conversion price for accrued or
unpaid dividends upon conversion. We will not issue fractional shares of common stock upon
conversion. However, we will instead pay cash for each fractional share based upon the market price
of the common stock on the last business day prior to the conversion date. If we call the
convertible preferred stock for redemption, the holder&#146;s right to convert the convertible preferred
stock will expire at the close of business on the business day immediately preceding the date fixed
for redemption, unless we fail to pay the redemption price.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Automatic Conversion</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless we redeem or exchange the convertible preferred stock, we may elect to convert some or
all of the convertible preferred stock into shares of our common stock if the closing price of our
common stock has exceeded 150% of the conversion price for at least 20 out of 30 consecutive
trading days ending within five trading days prior to the notice of automatic conversion. If we
elect to convert less than all of the shares of convertible preferred stock, we shall select the
shares to be converted by lot or pro rata or in some other equitable manner in our discretion. On
or after November&nbsp;3, 2007, we may not elect to automatically convert the
</DIV>




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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">convertible preferred stock if full cumulative dividends on the convertible preferred stock for all
past dividend periods have not been paid or set aside for payment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Conversion Price Adjustment &#151; General</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The conversion price of $23.50 will be adjusted if:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we dividend or distribute common stock on shares of our common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we subdivide or combine our common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we issue to all holders of common stock certain rights or warrants to purchase our common stock at less than the current
market price;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we dividend or distribute to all holders of our common stock shares of our capital stock or evidences of indebtedness or
assets, excluding:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>those rights, warrants, dividends or distributions referred to in (1)&nbsp;or (3), or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>dividends and distributions paid in cash;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we made a dividend or distribution consisting of cash to all holders of common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we purchase common stock pursuant to a tender offer made by us or any of our subsidiaries; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person other than us or any of our subsidiaries makes any payment on a tender offer or
exchange offer and, as of the closing of the offer, the board of directors is not
recommending rejection of the offer. We will only make this adjustment if the tender or
exchange offer increases a person&#146;s ownership to more than 25% of our outstanding common
stock, and only if the payment per share of common stock exceeds the current market price of
our common stock. We will not make this adjustment if the offering documents disclose our
plan to engage in any consolidation, merger, or transfer of all or substantially all of our
properties and if specified conditions are met.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we implement a stockholder rights plan, this new rights plan must provide that, upon
conversion of the existing convertible preferred stock the holders will receive, in addition to the
common stock issuable upon such conversion, the rights under such rights plan regardless of whether
the rights have separated from the common stock before the time of conversion. The distribution of
rights or warrants pursuant to a stockholder rights plan will not result in an adjustment to the
conversion price of the convertible preferred stock until a specified triggering event occurs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The occurrence and magnitude of certain of the adjustments described above is dependent upon
the current market price of our common stock. For these purposes, &#147;current market price&#148; generally
means the lesser of:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the closing sale price on certain specified dates, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average of the closing prices of the common stock for
the ten trading day period immediately prior to certain
specified dates.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may make a temporary reduction in the conversion price of the convertible preferred stock
if our board of directors determines that this decrease would be in our best interest. We may, at
our option, reduce the conversion price if our board of directors deems it advisable to avoid or
diminish any income tax to holders of common stock resulting from any dividend or distribution of
stock or rights to acquire stock or from any event treated as such for income tax purposes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Conversion Price Adjustment &#151; Merger, Consolidation or Sale of Assets</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are involved in a transaction in which shares of our common stock are converted into the
right to receive other securities, cash or other property, or a sale or transfer of all or
substantially all of our assets under which the holders of our common stock shall be entitled to
receive other securities, cash or other property, then appropriate provision shall be made so that
the shares of convertible preferred stock will convert into:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if the transaction is a common stock fundamental change, as
defined below, common stock of the kind received by holders
of common stock as a result of common stock fundamental
change in accordance with paragraph (1)&nbsp;below under the
subsection entitled &#147;&#151; Fundamental Change Conversion Price
Adjustments,&#148; and</TD>
</TR>

</TABLE>
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if the transaction is not a common stock fundamental
change, and subject to funds being legally available at
conversion, the kind and amount of the securities, cash or
other property that would have been receivable upon the
recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number
of shares of common stock issuable upon conversion of the
convertible preferred stock immediately prior to the
recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange, after giving effect to
any adjustment in the conversion price in accordance with
paragraph (2)&nbsp;below under the subsection entitled &#147;&#151;
Fundamental Change Conversion Price Adjustments.&#148;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The company formed by the consolidation, merger, asset acquisition or share acquisition shall
provide for this right in its organizational document. This organizational document shall also
provide for adjustments so that the organizational document shall be as nearly practicably
equivalent to adjustments in this section for events occurring after the effective date of the
organizational document.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following types of transactions, among others, would be covered by this adjustment:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we recapitalize or reclassify our common stock, except for:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a change in par value,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a change from par value to no par value,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a change from no par value to par value, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a subdivision or combination of our common stock.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we consolidate or merge into any other person, or any merger of another
person into us, except for a merger that does not result in a
reclassification, conversion, exchange or cancellation of common stock,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we sell, transfer or lease all or substantially all of our assets and
holders of our common stock become entitled to receive other securities,
cash or other property, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we undertake any compulsory share exchange.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Fundamental Change Conversion Price Adjustments</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a fundamental change occurs, the conversion price will be adjusted as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the case of a common stock fundamental change, the conversion price shall be the conversion price after giving effect to any other prior adjustments effected pursuant
to the preceding paragraphs, multiplied by a fraction, the numerator of which is the purchaser stock price, as defined below, and the denominator of which is the
applicable price, as defined below. However, in the event of a common stock fundamental change in which:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>100% of the value of the consideration received by a holder of our common stock is common stock of the successor,
acquirer or other third party, and cash, if any, paid with respect to any fractional interests in such common stock
resulting from such common stock fundamental change, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All of our common stock shall have been exchanged for, converted into or acquired for, common stock of the successor,
acquirer or other third party, and any cash with respect to fractional interests,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the conversion price shall be the conversion price in effect immediately prior to such common stock fundamental change
multiplied by a fraction, the numerator of which is one (1)&nbsp;and the denominator of which is the number of shares of
common stock of the successor, acquirer or other third party received by a holder of one share of our common stock as a
result of the common stock fundamental change; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the case of a non-stock fundamental change, the conversion price shall be the lower of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the conversion price after giving effect to any other prior adjustments effected pursuant to the preceding paragraph and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the product of</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. the applicable price, and
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->35<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. a fraction, the numerator of which is $10 and the denominator of which is (x)
the amount of the redemption price for one share of convertible preferred stock if the redemption
date were the date of the non-stock fundamental change (or if the date of such non-stock
fundamental change falls within the period beginning on the first issue date of the convertible
preferred stock through October&nbsp;31, 2005, the twelve-month period commencing November&nbsp;1, 2005 and
the twelve-month period commencing November&nbsp;1, 2006, the product of 106.0%, 105.4% or 104.8%,
respectively, and $10) plus (y)&nbsp;any then-accrued and unpaid distributions on one share of
convertible preferred stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of convertible preferred stock may receive significantly different consideration upon
conversion depending upon whether a fundamental change is a non-stock fundamental change or a
common stock fundamental change. In the event of a non-stock fundamental change, the shares of
convertible preferred stock will convert into stock and other securities or property or assets,
including cash, determined by the number of shares of common stock receivable upon conversion at
the conversion price as adjusted in accordance with (2)&nbsp;above. In the event of a common stock
fundamental change, under certain circumstances, the holder of convertible preferred stock will
receive different consideration depending on whether the holder converts his or her shares of
convertible preferred stock on or after the common stock fundamental change.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Definitions for the Fundamental Change Adjustment Provision</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>applicable price</B>&#148; means:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in a non-stock fundamental change in which the holders of
common stock receive only cash, the amount of cash received
by a holder of one share of common stock, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the event of any other fundamental change, the average
of the daily closing price for one share of common stock
during the 10 trading days immediately prior to the record
date for the determination of the holders of common stock
entitled to receive cash, securities, property or other
assets in connection with the fundamental change or, if
there is no such record date, prior to the date upon which
the holders of common stock shall have the right to receive
such cash, securities, property or other assets.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>common stock fundamental change</B>&#148; means any fundamental change in which more than 50% of the
value, as determined in good faith by our board of directors, of the consideration received by
holders of our common stock consists of common stock that, for the 10 trading days immediately
prior to such fundamental change, has been admitted for listing or admitted for listing subject to
notice of issuance on a national securities exchange or quoted on The NASDAQ National Market,
except that a fundamental change shall not be a common stock fundamental change unless either:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we continue to exist after the occurrence of the
fundamental change and the outstanding convertible
preferred stock continues to exist as outstanding
convertible preferred stock, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>not later than the occurrence of the fundamental change,
the outstanding convertible preferred stock is converted
into or exchanged for shares of preferred stock, which
preferred stock has rights, preferences and limitations
substantially similar, but no less favorable, to those of
the convertible preferred stock.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<B>fundamental change</B>&#148; means the occurrence of any transaction or event or series of
transactions or events pursuant to which all or substantially all of our common stock shall be
exchanged for, converted into, acquired for or shall constitute solely the right to receive cash,
securities, property or other assets, whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification, recapitalization or otherwise.
However, for purposes of adjustment of the conversion price, in the case of any series of
transactions or events, the fundamental change shall be deemed to have occurred when substantially
all of the common stock shall have been exchanged for, converted into or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or other assets, but the
adjustment shall be based upon the consideration that the holders of our common stock received in
the transaction or event as a result of which more than 50% of our common stock shall have been
exchanged for, converted into or acquired for, or shall constitute solely the right to receive,
such cash, securities, property or other assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>non-stock fundamental change</B>&#148; means any fundamental change other than a common stock
fundamental change.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>purchaser stock price</B>&#148; means the average of the daily closing price for one share of the
common stock received by holders of the common stock in the common stock fundamental change during
the 10 trading days immediately prior to the date fixed for the determination of the holders of the
common stock entitled to receive such common stock or, if there is no such date, prior to the date
upon which the holders of the common stock shall have the right to receive such common stock.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->36<!-- /Folio -->
</DIV>




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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Liquidation Rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of our voluntary or involuntary dissolution, liquidation, or winding up, the
holders of the convertible preferred stock shall receive a liquidation preference of $10 per share
and all accrued and unpaid dividends through the distribution date. Holders of any class or series
of preferred stock ranking on the same basis as your convertible preferred stock as to liquidation
shall also be entitled to receive the full respective liquidation preferences and any accrued and
unpaid dividends through the distribution date. Only after the preferred stock holders have
received their liquidation preference and any accrued and unpaid dividends will we distribute
assets to common stock holders or any of our other stock ranking junior to the shares of
convertible preferred stock upon liquidation. If upon such dissolution, liquidation or winding up,
we do not have enough assets to pay in full the amounts due on the convertible preferred stock and
any other preferred stock ranking on the same basis with the convertible preferred stock as to
liquidation, the holders of the convertible preferred stock and such other preferred stock will
share ratably in any such distributions of our assets:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>first in proportion to the liquidation preferences until the preferences are paid in full, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>then in proportion to the amounts of accrued but unpaid dividends.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After we pay any liquidation preference and accrued dividends, holders of the convertible
preferred stock will not be entitled to participate any further in the distribution of our assets.
The following events will not be deemed to be a dissolution, liquidation or winding up of Cyclacel:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the sale of all or substantially all of the assets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our merger or consolidation into or with any other corporation; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our liquidation, dissolution, winding up or reorganization immediately followed by a reincorporation as another corporation.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Optional Redemption</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may redeem the convertible preferred stock, out of legally available funds, in whole or in
part, at our option, at the redemption prices listed below. The redemption price is as follows for
the 12-month period beginning November 1 of each year:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Redemption</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.18</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.12</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2013</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.06</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and $10.00 at November&nbsp;1, 2014 and thereafter. In each case we will pay accrued and unpaid
dividends to, but excluding, the redemption date. We are required to give notice of redemption not
more than 60 and not less than 20&nbsp;days before the redemption date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we redeem less than all of the shares of convertible preferred stock, we shall select the
shares to be redeemed by lot or pro rata or in some other equitable manner in our sole discretion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Exchange Provisions</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may exchange the convertible preferred stock in whole, but not in part, for debentures on
any dividend payment date on or after November&nbsp;1, 2005 at the rate of $10 principal amount of
debentures for each outstanding share of convertible preferred stock. Debentures will be issuable
in denominations of $1,000 and integral multiples of $1,000, as discussed in the section entitled
&#147;Description of Debentures&#148; below. If the exchange results in an amount of debentures that is not
an integral multiple of $1,000, we will pay in cash an amount in excess of the closest integral
multiple of $1,000. We will mail written notice of our intention to exchange the convertible
preferred stock to each record holder not less than 30 nor more than 60&nbsp;days prior to the exchange
date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We refer to the date fixed for exchange of the convertible preferred stock for debentures as
the &#147;exchange date.&#148; On the exchange date, the holder&#146;s rights as a stockholder of Cyclacel shall
cease, the shares of convertible preferred stock will no longer be outstanding, and will only
represent the right to receive the debentures and any accrued and unpaid dividends, without
interest. We may not exercise our option to exchange the convertible preferred stock for the
debentures if:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>full cumulative dividends on the convertible preferred stock to the exchange date have not been paid
or set aside for payment, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an event of default under the indenture would occur on conversion, or has occurred and is continuing.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->37<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Voting Rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our convertible preferred stock have no voting rights except as described below or
as required by law. Shares of our convertible preferred stock held by us or any entity controlled
by us will not have any voting rights.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we have not paid dividends on the convertible preferred stock or on any outstanding shares
of preferred stock ranking on the same basis as to dividends with the convertible preferred stock
in an aggregate amount equal to at least six quarterly dividends whether or not consecutive, we
will increase the size of our board of directors by two additional directors. So long as dividends
remain due and unpaid, holders of the convertible preferred stock, voting separately as a class
with holders of preferred stock ranking on the same basis as to dividends having like voting
rights, will be entitled to elect two additional directors at any meeting of stockholders at which
directors are to be elected. These directors will be appointed to classes on the board as
determined by our board of directors. These voting rights will terminate when we have declared and
either paid or set aside for payment all accrued and unpaid dividends. The terms of office of all
directors so elected will terminate immediately upon the termination of these voting rights.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not declared dividends with respect to at least six quarters and, therefore, the
holders of the preferred stock, voting separately as a class, become entitled to vote to fill the
two vacancies created thereby until all accrued but unpaid dividends have been paid in full, at
which time such right is terminated. As a result, the holders of our preferred stock are now
entitled to vote to fill two new board positions. We held a special meeting of the holders of our
preferred stock to elect two directors to our Board of Directors, which meeting was adjourned
because a quorum of the holders of our preferred stock was not present in person or represented by
proxy to transact business at the meeting. A quorum was not reached at such adjourned meeting
either, and the meeting was not further adjourned. The holders of our preferred stock will have
the opportunity at our 2011 annual meeting of stockholders to elect two directors to our Board of
Directors. Once elected, the directors elected by the preferred stockholders will have the ability
to participate in the management of the Company until all such dividends have been paid in full.
Our board of directors declared the quarterly cash dividend with respect to the fourth quarter of
fiscal year 2010, which was paid on February&nbsp;1, 2011.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without the vote or consent of the holders of at least a majority of the shares of convertible
preferred stock, we may not:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>adversely change the rights, preferences and limitations of
the convertible preferred stock by modifying our
certificate of incorporation or bylaws, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>authorize, issue, reclassify any of our authorized stock
into, increase the authorized amount of, or authorize or
issue any convertible obligation or security or right to
purchase, any class of stock that ranks senior to the
convertible preferred stock as to dividends or
distributions of assets upon liquidation, dissolution or
winding up of the stock.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No class vote on the part of convertible preferred stock shall be required (except as
otherwise required by law or resolution of our board of directors) in connection with the
authorization, issuance or increase in the authorized amount of any shares of capital stock ranking
junior to or on parity with the convertible preferred stock both as to the payment of dividends and
as to distribution of assets upon our liquidation, dissolution or winding up, whether voluntary or
involuntary, including our common stock and the convertible preferred stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, without the vote or consent of the holders of at least a majority of the shares
of convertible preferred stock we may not:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>enter into a share exchange that affects the convertible preferred stock,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>consolidate with or merge into another entity, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>permit another entity to consolidate with or merge into us,</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">unless the convertible preferred stock remains outstanding and its rights, privileges and
preferences are unaffected or it is converted into or exchanged for convertible preferred stock of
the surviving entity having rights, preferences and limitations substantially similar, but no less
favorable, to the convertible preferred stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In determining a majority under these voting provisions, holders of convertible preferred
stock will vote together with holders of any other preferred stock that rank on parity as to
dividends and that have like voting rights.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->38<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">


<DIV align="left">
<A name="C19543110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DESCRIPTION OF WARRANTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will describe the particular terms of any warrants that we may offer under this prospectus
in more detail in the applicable prospectus supplement and the related warrant agreements and
warrant certificates. The following is a brief summary of the terms of our outstanding warrants.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The April&nbsp;2006 Warrants </I>&#151; On April&nbsp;26, 2006, as part of a private
placement, the Company sold warrants to purchase up to 2,571,429
shares of common stock at an exercise price of $7.00 per share of
common stock, such warrants expiring at 5:00 p.m., Eastern Time, on
April&nbsp;26, 2013. As of April&nbsp;1, 2011, there were 2,571,429 shares
available for purchase under the April&nbsp;2006 Warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The February&nbsp;2007 Warrants </I>&#151; On February&nbsp;16, 2007, as part of a
&#147;registered direct&#148; offering of our units, we sold warrants to
purchase up to an aggregate of 1,062,412 shares of common stock at an
exercise price of $8.44 per share of common stock, such warrants
expiring at 5:00 p.m., Eastern Time, on February&nbsp;16, 2014. As of
April&nbsp;1, 2011, there were 1,062,412 shares available for purchase
under the February&nbsp;2007 Warrants.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The July&nbsp;2009 Warrants </I>&#151; On July&nbsp;29, 2009, as part of a &#147;registered
direct&#148; offering of our units, we sold warrants to purchase up to an
aggregate of 735,522 shares of common stock at an exercise price of
$1.00 per share of common stock, such warrants expiring at 5:00 p.m.,
Eastern Time, on July&nbsp;29, 2014. As of April&nbsp;1, 2011, warrants to
purchase up to 692,256 shares of common stock remain outstanding.
Unless otherwise specified in the applicable warrant, except upon at
least 61&nbsp;days&#146; prior notice from the holder to us, the holder will not
have the right to exercise any portion of the warrant if the holder,
together with its affiliates, would beneficially own in excess of
9.99% of the number of shares of our common stock outstanding
immediately after giving effect to the exercise, as such percentage
ownership is determined in accordance with the terms of the warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The January&nbsp;13, 2010 Warrants </I>&#151; On January&nbsp;13, 2010, as part of a
&#147;registered direct&#148; offering of our units, we sold warrants to
purchase up to an aggregate of 712,500 shares of common stock at an
exercise price of $3.26 per share of common stock, such warrants
expiring at 5:00 p.m., Eastern Time, on January&nbsp;13, 2015. Unless
otherwise specified in the applicable warrant, except upon at least 61
days&#146; prior notice from the holder to us, the holder will not have the
right to exercise any portion of the warrant if the holder, together
with its affiliates, would beneficially own in excess of 4.99% of the
number of shares of our common stock outstanding immediately after
giving effect to the exercise, as such percentage ownership is
determined in accordance with the terms of the warrants. As of April
1, 2011, there were 712,500 shares available for purchase under the
January&nbsp;13, 2010 Warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The January&nbsp;25, 2010 Warrants </I>&#151; On January&nbsp;25, 2010, as part of a
&#147;registered direct&#148; offering of our units, we sold warrants to
purchase up to an aggregate of 705,000 shares of common stock at an
exercise price of $2.85 per share of common stock, such warrants
expiring at 5:00 p.m. Eastern Time, on January&nbsp;25, 2015. Unless
otherwise specified in the applicable warrant, except upon at least 61
days&#146; prior notice from the holder to us, the holder will not have the
right to exercise any portion of the warrant if the holder, together
with its affiliates, would beneficially own in excess of 4.99% of the
number of shares of our common stock outstanding immediately after
giving effect to the exercise, as such percentage ownership is
determined in accordance with the terms of the warrants. As of April
1, 2011, there were 705,000 shares available for purchase under the
January&nbsp;25, 2010 Warrants. We refer to the February&nbsp;2007 Warrants,
July&nbsp;2009 Warrants, January&nbsp;13, 2010 and January&nbsp;25, 2010 Warrants
collectively as the Registered Direct Warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The Kingsbri</I>dge <I>Warrant </I>&#151; On November&nbsp;24, 2009, we issued to
Kingsbridge Capital Limited, or Kingsbridge, an amended and restated
warrant to purchase an aggregate of 175,000 shares of our common stock
at an exercise price of $1.40 per share, such warrant expiring on June
10, 2013. The Kingsbridge Warrant may not be exercised to the extent
that such exercise would cause the warrant holder to beneficially own
(or be deemed to beneficially own) a number of shares of our common
stock that would exceed 9.9% of our then outstanding shares of common
stock following such exercise. As of April&nbsp;1, 2011, there were 100,000
shares available for purchase under the Kingsbridge Warrant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The Warrants and the Option Warrants </I>&#151; On October&nbsp;7, 2010, as part of
a private placement, we sold the warrant to purchase up to an
aggregate of 4,161,595 shares of common stock at an exercise price of
$1.92 per share of common stock, such warrants expiring at 5:00 p.m.
Eastern Time, on October&nbsp;7, 2015. On October&nbsp;7, 2010, we also sold, as
part of the private placement, options to purchase up to 4,161,595
shares of common stock and warrants to purchase up to an aggregate of
2,080,803 shares of common stock at an exercise price of $1.92 per
share of common stock, such warrants expiring at 5:00 p.m. Eastern
Time on the date that is five years from the date of issuance of such
warrants (the &#147;Option Warrant&#148;). Unless otherwise specified in the
applicable warrant or Option Warrant, except upon at least 61&nbsp;days&#146;
prior notice from the holder to us, the holder will not have the right
to exercise any portion of such warrant if the holder, together with
its affiliates, would beneficially own in excess of 4.99%, 9.99% or
19.99% , as applicable, of the number of shares of our common stock
outstanding immediately after giving effect to the exercise, as such
percentage ownership is determined in accordance with the terms of the
warrants and the Option Warrants. As of April&nbsp;1, 2011, there were
4,161,595 shares available for purchase under the warrants, and no
Option Warrants had yet been issued.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->39<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exercisability. </I>The exercise price and number of shares of common stock issuable upon exercise
of all of the warrants may be adjusted in certain circumstances, including in the event of a stock
dividend, or our recapitalization, reorganization, merger or consolidation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exercise of Warrants. </I>All of the warrants except the warrants and Option Warrants may be
exercised upon surrender of the warrant on or prior to the expiration date at the offices of the
warrant agent, with the exercise form set forth in the warrant completed and executed as indicated,
either accompanied by full payment of the exercise price, by certified check payable to us, for the
number of warrants being exercised or, under certain circumstances, by means of a cashless
exercise, as provided for in the warrant. Notwithstanding the foregoing, the holder will not be
required to physically surrender the warrant unless and until the aggregate warrant shares
represented by the warrant are exercised. The warrants and Option Warrants may be exercised in the
same manner, except that such securities are exercisable by delivery of a written notice, with
payment made within two trading days of the delivery of the notice of exercise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cashless Exercise. </I>If, at any time during the exercisability period of any of the warrants,
the holder is not permitted to sell shares of common stock issuable upon exercise of the relevant
warrant pursuant to the registration statement or an exemption from registration is not available,
and the fair market value of our common stock exceeds the exercise price of the warrants, the
holder may elect to effect a cashless exercise of the warrants, in whole or in part, by
surrendering the warrants to us, together with delivery to us of a duly executed exercise notice,
and canceling a portion of the relevant warrant in payment of the purchase price payable in respect
of the number of shares of our common stock purchased upon such exercise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Buy-in Right. </I>If we fail to issue shares of common stock to the holder of a warrant or Option
Warrant within three business days of our receipt of a duly executed exercise notice, then the
holder or any third party on behalf of the holder may, for such holder&#146;s account, purchase in an
open market transaction or otherwise, shares of common stock to deliver in satisfaction of a sale
by the holder of shares of common stock issuable upon such exercise that the holder anticipated
receiving from us. At such holder&#146;s request and in its discretion, either (i)&nbsp;pay cash to the
holder in an amount equal to the holder&#146;s total purchase price (including brokerage commissions, if
any) for the shares of common stock so purchased (the &#147;Buy-In Price&#148;), at which point the Company&#146;s
obligation to deliver such certificate (and to issue such shares of common stock) shall terminate,
or (ii)&nbsp;promptly honor its obligation to deliver to the holder a certificate or certificates
representing such shares and pay cash to the holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A)&nbsp;such number of shares of common stock, times (B)&nbsp;the
Closing Bid Price (as defined in such warrants) on the date of exercise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Transferability. </I>Subject to applicable laws and the restriction on transfer set forth in the
relevant subscription agreement, none of the warrants may be transferred by the holder without our
consent, such consent not to be unreasonably withheld or delayed, upon surrender of the warrants to
us together with the appropriate instruments of transfer.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Exchange Listing. </I>We do not plan on making an application to list any of the warrants on The
NASDAQ Global Market, any national securities exchange or other nationally recognized trading
system. The common stock underlying the warrants is listed on the NASDAQ Global Market.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Fundamental Transactions. </I>In the event of any fundamental transaction, as described in the
warrants, and generally including any merger with or into another entity (whether or not we are the
surviving entity but excluding a migratory merger effected solely for the purpose of changing our
jurisdiction of incorporation), sale of all or substantially all of our assets, tender offer or
exchange offer, our consummation of a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) or reclassification of our common stock, then upon any subsequent exercise of a
warrant, the holder shall have the right to receive, as alternative consideration, for each share
of our common stock that would have been issuable upon such exercise immediately prior to the
occurrence of such fundamental transaction, the number of shares of common stock of the successor
or acquiring corporation or of Cyclacel, if it is the surviving corporation, and any additional
consideration receivable upon or as a result of such transaction by a holder of the number of
shares of our common stock for which the warrant is exercisable immediately prior to such event.
Notwithstanding the foregoing, the holders of the warrants and the Option Warrants, in the event of
a fundamental transaction (i)&nbsp;in which holders of common stock receive all cash or substantially
all cash or (ii)&nbsp;with a person whose common stock or equivalent equity security is not quoted or
listed on an eligible market, as defined in such warrant, and, in either case, at the request of
the holder delivered within 30&nbsp;days after consummation of the fundamental transaction, we (or our
successor entity) must purchase such warrant from the holder by paying to the holder, within seven
business days after such request (or, if later, on the effective date of the fundamental
transaction), cash in an amount equal to the Black Scholes value, as defined in such warrant, of
the remaining unexercised portion of such warrant or Option Warrant on the date of such fundamental
transaction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Waivers and Amendments. </I>The provisions of each warrant may be amended and we may not take any
action prohibited by such warrant, or omit to perform any act required to be performed pursuant to
such warrant, only with the written consent of the holder of that warrant.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->40<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rights as a Stockholder. </I>The warrant holders do not have the rights or privileges of holders
of common stock, including any voting rights, until they exercise their warrants and receive shares
of common stock. After the issuance of shares of common stock upon exercise of the warrants, each
holder will be entitled to one vote for each share held of record on all matters to be voted on by
stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No Fractional Shares. </I>No fractional shares will be issued upon exercise of any of the
warrants. With respect to all warrants, except the warrants and Option Warrants, we will pay to the
holder thereof, in lieu of the issuance of any fractional share which is otherwise issuable to the
warrant holder, an amount in cash based on the market value of the common stock on the last trading
day prior to the exercise date. With respect to the warrants and the Option Warrants, the number of
shares of common stock to be issued will be rounded up to the nearest whole number.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Option to Purchase Shares of Common Stock and Warrants</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We issued to all investors who participated in the private placement options to purchase an
aggregate of 4,161,595 shares of common stock and Option Warrants to purchase an aggregate of
2,080,803 shares of common stock. The terms of the Option Warrants are described above under
&#147;Description of our Securities &#151; Warrants.&#148; The Options are exercisable for a period of nine
months from the date of the closing of the private placement, or July&nbsp;7, 2011. The shares of common
stock that are issuable upon exercise of the Option Warrants will be registered for resale or other
disposition separately if the Option Warrants are issued.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Committed Equity Financing Facility with Kingsbridge Capital</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;10, 2007, we entered into a Committed Equity Financing Facility, or CEFF, with
Kingsbridge, as amended on November&nbsp;24, 2009, pursuant to which Kingsbridge committed to purchase,
subject to certain conditions, up to $60&nbsp;million of our common stock. As part of the CEFF, we
entered into a common stock purchase agreement, dated December&nbsp;10, 2007, as amended on November&nbsp;24,
2009, and a registration rights agreement, dated December&nbsp;10, 2007, with Kingsbridge. The CEFF
lapsed on December&nbsp;10, 2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We sold an aggregate of 4,073,949 shares of our common stock to Kingsbridge under the terms of
the CEFF in consideration of an aggregate of $5.9&nbsp;million during the term of the CEFF.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with an amendment to the CEFF dated November&nbsp;24, 2009, the Company
issued an amended and restated warrant to Kingsbridge to purchase 175,000 shares of its common
stock at an exercise price of $1.40 per share, (from an original exercise price of $7.17), which
represents 175% of the closing bid price of the Company&#146;s common stock on the date prior to the
date on which the amendment was signed. The warrant amends and restates the original warrant issued
by the Company to Kingsbridge in connection with the CEFF. No other changes were made to the
original warrant. The warrant is exercisable, subject to certain exceptions, until June&nbsp;12, 2013.
During the first quarter of 2010, Kingsbridge exercised its warrant to purchase 75,000 shares of
common stock for approximately $0.1&nbsp;million.
</DIV>

<DIV align="left">
<A name="C19543111"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DESCRIPTION OF DEBT SECURITIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following description, together with the additional information we include in any
applicable prospectus supplement, summarizes the material terms and provisions of the debt
securities that we may offer under this prospectus. While the terms we have summarized
below will apply generally to any future debt securities we may offer, we will describe the
particular terms of any debt securities that we may offer in more detail in the applicable
prospectus supplement. If we so indicate in a prospectus supplement, the terms of any debt
securities we offer under that prospectus supplement may differ from the terms we describe below.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will issue the senior notes under the senior indenture, which we will enter into with a
trustee to be named in the senior indenture. We will issue the subordinated notes under the
subordinated indenture, which we will enter into with a trustee to be named in the subordinated
indenture. We use the term &#147;indentures&#148; to refer to both the senior indenture and the subordinated
indenture. The indentures will be qualified under the Trust Indenture Act. We use the term
&#147;debenture trustee&#148; to refer to either the senior trustee or the subordinated trustee, as
applicable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summaries of material provisions of the senior notes, the subordinated notes and
the indentures are subject to, and qualified in their entirety by reference to, all the provisions
of the indenture applicable to a particular series of debt securities. Except as we may otherwise
indicate, the terms of the senior indenture and the subordinated indenture are identical.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>General</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will describe in each prospectus supplement the following terms relating to a series of
notes:
</DIV>



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</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the title;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any limit on the amount that may be issued;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether or not we will issue the series of notes in global form, the terms and who the depository will
be;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the maturity date;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the annual interest rate, which may be fixed or variable, or the method for determining the rate and the
date interest will begin to accrue, the dates interest will be payable and the regular record dates for
interest payment dates or the method for determining such dates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether or not the notes will be secured or unsecured, and the terms of any secured debt;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the terms of the subordination of any series of subordinated debt;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the place where payments will be made;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our right, if any, to defer payment of interest and the maximum length of any such deferral period;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the date, if any, after which, and the price at which, we may, at our option, redeem the series of notes
pursuant to any optional redemption provisions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the date, if any, on which, and the price at which we are obligated, pursuant to any mandatory sinking
fund provisions or otherwise, to redeem, or at the holder&#146;s option to purchase, the series of notes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the indenture will restrict our ability to pay dividends, or will require us to maintain any
asset ratios or reserves;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether we will be restricted from incurring any additional indebtedness;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a discussion of any material or special United States federal income tax considerations applicable to
the notes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the denominations in which we will issue the series of notes, if other than denominations of $1,000 and
any integral multiple thereof; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities.</TD>
</TR>






</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->42<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C19543tocpage">Table of Contents</A></H5><P>

<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Conversion or Exchange Rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will set forth in the prospectus supplement the terms on which a series of notes may be
convertible into or exchangeable for common stock or other securities of ours. We will include
provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our
option. We may include provisions pursuant to which the number of shares of common stock or other
securities of ours that the holders of the series of notes receive would be subject to adjustment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Consolidation, Merger or Sale</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indentures do not contain any covenant which restricts our ability to merge or
consolidate, or sell, convey, transfer or otherwise dispose of all or substantially all of our
assets. However, any successor to or acquirer of such assets must assume all of our obligations
under the indentures or the notes, as appropriate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Events of Default Under the Indenture</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following are events of default under the indentures with respect to any series of notes
that we may issue:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if we fail to pay interest when due and our failure continues for 90&nbsp;days and
the time for payment has not been extended or deferred;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if we fail to pay the principal, or premium, if any, when due and the time for
payment has not been extended or delayed;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if we fail to observe or perform any other covenant contained in the notes or
the indentures, other than a covenant specifically relating to another series
of notes, and our failure continues for 90&nbsp;days after we receive notice from
the debenture trustee or holders of at least 25% in aggregate principal amount
of the outstanding notes of the applicable series; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if specified events of bankruptcy, insolvency or reorganization occur as to us.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If an event of default with respect to notes of any series occurs and is continuing, the
debenture trustee or the holders of at least 25% in aggregate principal amount of the outstanding
notes of that series, by notice to us in writing, and to the debenture trustee if notice is given
by such holders, may declare the unpaid principal of, premium, if any, and accrued interest, if
any, due and payable immediately.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holders of a majority in principal amount of the outstanding notes of an affected series
may waive any default or event of default with respect to the series and its consequences, except
defaults or events of default regarding payment of principal, premium, if any, or interest, unless
we have cured the default or event of default in accordance with the indenture. Any such waiver
shall cure the default or event of default.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms of the indentures, if an event of default under an indenture shall occur
and be continuing, the debenture trustee will be under no obligation to exercise any of its rights
or powers under such indenture at the request or direction of any of the holders of the applicable
series of notes, unless such holders have offered the debenture trustee reasonable indemnity. The
holders of a majority in principal amount of the outstanding notes of any series will have the
right to direct the time, method and place of conducting any proceeding for any remedy available to
the debenture trustee, or exercising any trust or power conferred on the debenture trustee, with
respect to the notes of that series, provided that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the direction so given by the holder is not in conflict with any law or the applicable indenture; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>subject to its duties under the Trust Indenture Act, the debenture trustee need not take any action
that might involve it in personal liability or might be unduly prejudicial to the holders not
involved in the proceeding.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A holder of the notes of any series will only have the right to institute a proceeding under
the indentures or to appoint a receiver or trustee, or to seek other remedies if:
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->43<!-- /Folio -->
</DIV>

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<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the holder has given written notice to the debenture trustee of a
continuing event of default with respect to that series;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the holders of at least 25% in aggregate principal amount of the
outstanding notes of that series have made written request, and such
holders have offered reasonable indemnity, to the debenture trustee to
institute the proceeding as trustee; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the debenture trustee does not institute the proceeding, and does not
receive from the holders of a majority in aggregate principal amount
of the outstanding notes of that series other conflicting directions
within 60&nbsp;days after the notice, request and offer.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These limitations do not apply to a suit instituted by a holder of notes if we default in the
payment of the principal, premium, if any, or interest on, the notes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will periodically file statements with the debenture trustee regarding our compliance with
specified covenants in the indentures.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Modification of Indenture; Waiver</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and the debenture trustee may change an indenture without the consent of any holders with
respect to specific matters, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to fix any ambiguity, defect or inconsistency in the indenture; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to change anything that does not materially adversely affect the
interests of any holder of notes of any series.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, under the indentures, the rights of holders of a series of notes may be changed
by us and the debenture trustee with the written consent of the holders of at least a majority in
aggregate principal amount of the outstanding notes of each series that is affected. However, we
and the debenture trustee may only make the following changes with the consent of each holder of
any outstanding notes affected:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>extending the fixed maturity of the series of notes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reducing the principal amount, reducing the rate of or extending the time of payment of
interest, or any premium payable upon the redemption of any notes; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reducing the percentage of notes, the holders of which are required to consent to any amendment.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Discharge</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each indenture provides that we can elect to be discharged from our obligations with respect
to one or more series of debt securities, except for obligations to:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>register the transfer or exchange of debt securities of the series;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>replace stolen, lost or mutilated debt securities of the series;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>maintain paying agencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>hold monies for payment in trust;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>compensate and indemnify the trustee; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>appoint any successor trustee.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to exercise our rights to be discharged, we must deposit with the trustee money or
government obligations sufficient to pay all the principal of, any premium, if any, and interest
on, the debt securities of the series on the dates payments are due.
</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->44<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C19543tocpage">Table of Contents</A></H5><P>

<DIV style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Form, Exchange and Transfer</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will issue the notes of each series only in fully registered form without coupons and,
unless we otherwise specify in the applicable prospectus supplement, in denominations of $1,000 and
any integral multiple thereof. The indentures provide that we may issue notes of a series in
temporary or permanent global form and as book-entry securities that will be deposited with, or on
behalf of, The Depository Trust Company or another depository named by us and identified in a
prospectus supplement with respect to that series. See &#147;Legal Ownership of Securities&#148; for a
further description of the terms relating to any book-entry securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the option of the holder, subject to the terms of the indentures and the limitations
applicable to global securities described in the applicable prospectus supplement, the holder of
the notes of any series can exchange the notes for other notes of the same series, in any
authorized denomination and of like tenor and aggregate principal amount.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms of the indentures and the limitations applicable to global securities set
forth in the applicable prospectus supplement, holders of the notes may present the notes for
exchange or for registration of transfer, duly endorsed or with the form of transfer endorsed
thereon duly executed if so required by us or the security registrar, at the office of the security
registrar or at the office of any transfer agent designated by us for this purpose. Unless
otherwise provided in the notes that the holder presents for transfer or exchange, we will make no
service charge for any registration of transfer or exchange, but we may require payment of any
taxes or other governmental charges.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will name in the applicable prospectus supplement the security registrar, and any transfer
agent in addition to the security registrar, that we initially designate for any notes. We may at
any time designate additional transfer agents or rescind the designation of any transfer agent or
approve a change in the office through which any transfer agent acts, except that we will be
required to maintain a transfer agent in each place of payment for the notes of each series.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we elect to redeem the notes of any series, we will not be required to:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>issue, register the transfer of, or exchange any notes of that series
during a period beginning at the opening of business 15&nbsp;days before
the day of mailing of a notice of redemption of any notes that may be
selected for redemption and ending at the close of business on the day
of the mailing; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>register the transfer of or exchange any notes so selected for
redemption, in whole or in part, except the unredeemed portion of any
notes we are redeeming in part.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Information Concerning the Debenture Trustee</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The debenture trustee, other than during the occurrence and continuance of an event of default
under an indenture, undertakes to perform only those duties as are specifically set forth in the
applicable indenture. Upon an event of default under an indenture, the debenture trustee must use
the same degree of care as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the debenture trustee is under no obligation to exercise any of
the powers given it by the indentures at the request of any holder of notes unless it is offered
reasonable security and indemnity against the costs, expenses and liabilities that it might incur.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Payment and Paying Agents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless we otherwise indicate in the applicable prospectus supplement, we will make payment of
the interest on any notes on any interest payment date to the person in whose name the notes, or
one or more predecessor securities, are registered at the close of business on the regular record
date for the interest.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay principal of and any premium and interest on the notes of a particular series at
the office of the paying agents designated by us, except that unless we otherwise indicate in the
applicable prospectus supplement, we will make interest payments by check which we will mail to the
holder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless we otherwise indicate in a prospectus supplement, we will designate the corporate trust
office of the debenture trustee in the City of New York as our sole paying agent for payments with
respect to notes of each series. We will name in the applicable prospectus supplement any other
paying agents that we initially designate for the notes of a particular series. We will maintain a
paying agent in each place of payment for the notes of a particular series.
</DIV>





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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All money we pay to a paying agent or the debenture trustee for the payment of the principal
of or any premium or interest on any notes which remains unclaimed at the end of two years after
such principal, premium or interest has become due and payable will be repaid to us, and the holder
of the security thereafter may look only to us for payment thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Governing Law</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indentures and the notes will be governed by and construed in accordance with the laws of
the State of New York, except to the extent that the Trust Indenture Act is applicable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Subordination of Subordinated Notes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The subordinated notes will be unsecured and will be subordinate and junior in priority of
payment to certain of our other indebtedness to the extent described in a prospectus supplement.
The subordinated indenture does not limit the amount of subordinated notes which we may issue. It
also does not limit us from issuing any other secured or unsecured debt.
</DIV>

<DIV align="left">
<A name="C19543112"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DESCRIPTION OF UNITS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may issue units consisting of common stock, preferred stock, warrants, and/or debt
securities for the purchase of common stock, preferred stock, warrants and/or debt securities in
one or more series. In this prospectus, we have summarized certain general features of the units.
We urge you, however, to read the prospectus supplements related to the series of units being
offered, as well as the unit agreements that contain the terms of the units. We will file as
exhibits to an amendment to the registration statement of which this prospectus is a part, or will
incorporate by reference from a current report on Form 8-K that we file with the SEC, as
applicable, the form of unit agreement and any supplemental agreements that describe the terms of
the series of units we are offering before the issuance of the related series of units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will evidence each series of units by unit certificates that we will issue under
a separate agreement. We will enter into the unit agreements with a unit agent. Each unit agent
will be a bank or trust company that we select. We will indicate the name and address of the unit
agent in the applicable prospectus supplement relating to a particular series of units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Listing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is listed on the NASDAQ Global Market under the symbol &#147;CYCC.&#148; Our preferred
stock is listed on the NASDAQ Global Market under the symbol &#147;CYCCP.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transfer Agent and Registrar</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;American Stock Transfer &#038; Trust Company, LLC is the transfer agent and registrar for our
common stock. Its address is 59 Maiden Lane, Plaza Level, New York, NY 10038, and their telephone
number is (800)&nbsp;937-5449.
</DIV>

<DIV align="left">
<A name="C19543113"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>LEGAL MATTERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., New York, New York, will
provide us with an opinion as to the legal matters in connection with the securities we are
offering.
</DIV>

<DIV align="left">
<A name="C19543114"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXPERTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of Cyclacel Pharmaceuticals, Inc. appearing
in Cyclacel Pharmaceuticals, Inc.&#146;s Annual Report on Form 10-K for the year ended December&nbsp;31,
2010, filed with the SEC on March&nbsp;31, 2011 have been audited by Ernst &#038; Young LLP, independent
registered public accounting firm, as set forth in its report thereon, included therein, and
incorporated herein by reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as experts in accounting
and auditing.
</DIV>

<DIV align="left">
<A name="C19543115"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>WHERE YOU CAN FIND MORE INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file annual, quarterly and current reports and other information with the SEC.
These filings contain important information that does not appear in this prospectus. For further
information about us, you may read and copy any reports, statements and other information filed by
us at the SEC&#146;s Public Reference Room at 100 F Street, N.E., Room&nbsp;1580, Washington, D.C.
20549-0102. You may obtain further information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Our SEC
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">filings are also available on the SEC Internet site at http://www.sec.gov, which contains reports,
proxy and information statements, and other information regarding issuers that file electronically
with the SEC.
</DIV>

<DIV align="left">
<A name="C19543116"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>INCORPORATION OF DOCUMENTS BY REFERENCE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEC allows us to &#147;incorporate by reference&#148; the information we file with it, which
means that we can disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this prospectus and information
we file later with the SEC will automatically update and supersede this information. The documents
we are incorporating by reference as of their respective dates of filing are:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Annual Report on Form 10-K for the year ended December&nbsp;31, 2010 filed on March&nbsp;31, 2011;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Current Reports on Form 8-K filed on January&nbsp;13, 2011, February&nbsp;1, 2011 and April&nbsp;1, 2011;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of our common stock contained in our Registration Statement on Form 8-A,
filed on March&nbsp;8, 2004 (File No.&nbsp;000-50626), which incorporates by reference the description
of the shares of our common stock contained in our Registration Statement on Form S-1 (File
No.&nbsp;333-109653) filed on December&nbsp;22, 2003 and declared effective by the SEC on March&nbsp;17,
2004, and any amendment or reports filed with the SEC for purposes of updating such
description; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of our preferred stock contained in our Registration Statement on Form 8-A,
filed on October&nbsp;27, 2004 (File No.&nbsp;000-50626), which incorporates by reference the
description of the shares of our preferred stock contained in our Registration Statement on
Form S-1 (File No.&nbsp;333-119585) filed on October&nbsp;7, 2004 and declared effective by the SEC on
November&nbsp;1, 2004, and any amendment or reports filed with the SEC for purposes of updating
such description.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may request, orally or in writing, a copy of these filings, which will be provided to you
at no cost, by writing or calling us at: 200 Connell Drive, Suite&nbsp;1500, Berkeley Heights, NJ 07922,
telephone (908)&nbsp;517-7330. Information about us is also available at our website at
<U>http://www.cyclacel.com</U>. However, the information in our website is not a part of this
prospectus and is not incorporated by reference into this prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that any statements contained in a document incorporated by reference are
modified or superseded by any statements contained in this prospectus, such statements shall not be
deemed incorporated in this prospectus except as so modified or superseded.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All documents subsequently filed by us pursuant to Sections&nbsp;13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, and prior to the termination of
this offering are incorporated by reference and become a part of this prospectus from the date such
documents are filed. Any statement contained in this prospectus or in a document incorporated by
reference is modified or superseded for purposes of this prospectus to the extent that a statement
contained in any subsequent filed document modifies or supersedes such statement.
</DIV>







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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CYCLACEL PHARMACEUTICALS, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">&nbsp;<BR><B>7,617,646 Shares of Common Stock<BR>
Warrants to Purchase 3,808,821 Shares of Common Stock</B><BR>&nbsp;
</DIV>


<DIV align="center">
<DIV style="font-size: 6pt; margin-top: 20pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PROSPECTUS SUPPLEMENT</B>
</DIV>


<DIV align="center">
<DIV style="font-size: 6pt; margin-top: 20pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">&nbsp;<BR><B>June&nbsp;30, 2011</B>
</DIV>

<DIV align="center">
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    <TD width="47%"></TD>
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    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><B>Leerink Swann</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><B>Lazard Capital Markets</B></TD>
</TR>
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</DIV>



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