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NATURE OF OPERATIONS AND BASIS OF PRESENTATION
9 Months Ended
Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Nature of Operations

 

Cyclacel Pharmaceuticals, Inc. (“Cyclacel” or “the Company”), a biopharmaceutical company, is a pioneer in the field of cell cycle biology with a vision to improve patient healthcare with orally available innovative medicines. Cyclacel’s goal is to develop and commercialize small molecule drugs that target the various phases of cell cycle control for the treatment of cancer and other serious diseases, particularly those of high unmet medical need.

 

Cyclacel’s clinical development priorities are focused on sapacitabine, an orally available, cell cycle modulating nucleoside analog and the cyclin dependent kinase (“CDK”) inhibitor program.

 

Sapacitabine is being evaluated in the SEAMLESS Phase 3 study, which completed enrollment in December 2014 and is being conducted under a Special Protocol Assessment (“SPA”) agreement with the US Food and Drug Administration (“FDA”) for the front-line treatment of acute myeloid leukemia (“AML”) in the elderly. In December 2014, the study’s Data Safety Monitoring Board, or DSMB, conducted a planned interim analysis for futility after 247 events, or patient deaths, and the final safety review of 470 randomized patients. The DSMB found no safety concerns. However, the planned futility boundary has been crossed and the DSMB determined that, based on available interim data, it would be unlikely for the study to reach statistically significant improvement in survival. The DSMB saw no reasons why patients should discontinue treatment on their assigned arm and recommended that recruited patients stay on treatment. In accordance with the DSMB’s recommendations, the Company continued to follow-up patients as per the study protocol. The required number of events has been reached and the Company is conducting so-called data cleaning and validation operations prior to determining that the study data base can be locked. Study data will then be transferred to the Company’s independent statistical analysis vendor. When final analysis becomes available, the Company will report outcomes for the primary and secondary endpoints and determination of submissibility of the SEAMLESS data set to regulatory authorities in Europe and the United States. The procedures to be followed prior to reporting topline data and determination of submissibility to regulatory authorities may take several months.

 

As of September 30, 2016, substantially all efforts of the Company to date have been devoted to performing research and development, conducting clinical trials, developing and acquiring intellectual property, raising capital and recruiting and training personnel.

 

Capital Resources

 

The Company has incurred recurring operating losses since inception. For the nine months ended September 30, 2016, the Company incurred a net loss applicable to common stockholders of $9.1 million and as of September 30, 2016 the Company had generated an accumulated deficit of $332.2 million. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to the clinical development of its drug candidates, its preclinical programs and its administrative organization. At September 30, 2016, the Company had cash and cash equivalents of $18.0 million. The Company will need to raise substantial additional capital to pursue a regulatory strategy for the potential approval and commercialization of sapacitabine, its product candidate for the potential treatment of AML, and to continue the development of sapacitabine in other indications and the CDK inhibitor program. The Company has funded all of its operations and capital expenditures with proceeds from the issuance of public equity securities, private placements of securities, interest on investments, government grants, research and development tax credits, product revenue and licensing revenue. Additional funding may not be available to the Company on favorable terms, or at all. If the Company is unable to obtain additional funds, it will need to reduce operating expenses, enter into a collaboration or other similar arrangement with respect to development and/or commercialization rights to sapacitabine or its CDK inhibitors, if available, or be forced to delay or reduce the scope of its sapacitabine or CDK inhibitor development programs, potentially including any potential regulatory filings related to the SEAMLESS study, and/or limit or cease its operations.

  

On June 23, 2016, the Company entered into an At Market Issuance Sales Agreement (the “FBR Sales Agreement”) with FBR Capital Markets & Co. (“FBR”) under which it may issue and sell shares of its common stock, from time to time, through FBR, acting as its sales agent, under the Company’s effective “shelf” registration statement on Form S-3, which became effective on June 8, 2016. The Company has sold 766,149 shares of common stock under the sales agreement for net proceeds of approximately $3.9 million pursuant to a prospectus supplement dated as of June 23, 2016. The Company has sold 477,876 shares of common stock under the sales agreement for net proceeds of approximately $2.8 million pursuant to a prospectus supplement dated as of August 30, 2016, and there are a further approximately $1.2 million shares that may be sold pursuant to this prospectus supplement.

 

Basis of Presentation

 

The consolidated balance sheet as of September 30, 2016, the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2015 and 2016, the consolidated statements of cash flows for the nine months ended September 30, 2016, and all related disclosures contained in the accompanying notes are unaudited. The consolidated balance sheet as of December 31, 2015 is derived from the audited consolidated financial statements included in the 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The consolidated financial statements are presented on the basis of accounting principles that are generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for a complete set of financial statements. In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the consolidated balance sheet as of September 30, 2016, and the results of operations and comprehensive loss for the three and nine months ended September 30, 2016, and the consolidated statements of cash flows for the nine months ended September 30, 2016, have been made. The interim results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or for any other year. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2015 that are included in the Company’s Annual Report on Form 10-K filed with the SEC.

 

Reverse Stock Split

 

On May 27, 2016, the Company completed a one-for-twelve reverse stock split (the “Reverse Stock Split”), which reduced the number of shares of the Company’s common stock that were issued and outstanding immediately prior to the effectiveness of the Reverse Stock Split. The number of shares of the Company’s authorized common stock was not affected by the Reverse Stock Split and the par value of Cyclacel’s common stock remained unchanged at $0.001 per share. The Reverse Stock Split reduced the number of shares of the Company’s common stock that were outstanding at May 27, 2016 from 36,075,730 to 3,006,311 after the cancellation of fractional shares. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who otherwise held fractional shares of the Company’s common stock as a result of the Reverse Stock Split received a cash payment in lieu of such fractional shares. All amounts related to number of shares and per share amounts have been retroactively restated in these consolidated financial statements.