Seeking Alpha • Aug 07
Cyclacel: Trading At Less Than Half Its Cash Value, Near-Term Catalysts, No Obvious Bear Thesis
Cyclacel Pharmaceuticals is an oncology company with two major value drivers in Phase 1/2 trials and overdue catalysts.
It trades at an $11 million market cap, with last reported cash of $34.5 million, and mean analyst estimate shows a +1,500% rise potential.
Oral fadraciclib, an oral CDK2/9 inhibitor, has shown impressive results so far, with no toxicity which is huge.
CYC140, an oral PLK-1 inhibitor, has also shown good results and no toxicity.
The biggest short-term catalyst is already overdue. Earnings will be reported on August 10, 2022.
Thesis
Cyclacel (CYCC) is that company with a completely beaten down stock after a checkered past with its drug sapacitabine, a prodrug which failed a Phase 3 trial in 2014.
Cyclacel now has two value drivers which target proteins that allow cancer to develop and grow. From what appears so far, both could be used as monotherapy or in combination with other drugs, and so far appear to be without toxicity. Those advantages are not little in oncology. Oral fadraciclib is an oral CDK2/9 inhibitor, which enables cell-death. CYC140 is a PLK-1 inhibitor, a target of oncology drug developers for years, which I have also covered in-depth in my Cardiff coverage.
The stock has been completely beaten down over the past five years, having traded at $36 in 2018, and even higher before.
Cyclacel five year stock chart (Ycharts)
Even in 2021, it was still trading in the $5 to $10 range, with no apparent reason for the continuous sell-off, other than market sentiment and lack of news. I believe that may be about to change, as the company should have actually already reported some news at this point about its ongoing Phase 1/2 study of oral fadraciclib in solid tumors.
The stock is now trading well below cash value. With the second quarter results on the doorstep, I still assume the stock would need to go up more than 100% only to reach its current cash level. With a current share price of $1.17 and a mean analyst price target of $20, the stock has tremendous upside potential of about 1,700%. I believe the upcoming catalysts, coming from a data readout of fadraciclib in solid tumors and the initiation of the phase 2 of the Phase 1/2 trial, as well as a better macro-economic outlook than the past eleven months, may be drivers here.
Company overview
The company has two clinical stage value drivers, both to be taken orally, fadraciclib and CYC140. Fadraciclib is the company's lead asset.
Cyclacel's key value drivers (Cyclacel company presentation)
Fadraciclib
Introduction
Fadraciclib, formerly CYC065, is an MCL-1 inhibitor that works using pathways CDK9 and CDK2. It has higher potency and improved properties than the first generation CDK inhibitor seliclicib, good results so far and synergy with AbbVie's (ABBV) venetoclax. Its oral intake formulation allows frequent dosing and durable effects without any reported dose-limiting toxicity.
Mechanism of action
As mentioned, fadraciclib targets two cyclin-dependent kinases or CDK’s, namely CDK2 and CDK9.
Fadraciclib CDK inhibition summary (Cyclacel corporate presentation)
Such kinases lead to uncontrolled cell proliferation. Different CDK4/6 inhibitors already exist, such as palbociclib, riboclib and abemacilib. It is therefore useful to target inhibition of CDK’s. CDK’s have a common adverse event, which is myelosuppression. CDK9 inhibitors have so far not led to great clinical outcomes, which is supposedly due to the fact that they are quickly cleared from plasma. Targeting the CDK9 pathway leads to loss of MCL1 protein, a cell-death prohibiting protein which is strongly expressed on several tumors, and is therefore key in survival. BCL-2, another one of such survival proteins, is targeted by the existing drug venetoclax, which is the only FDA-approved drug to target apoptosis. An issue with venetoclax, however, is that it has no effect on MCL-1, and is not of great effect in the lymph nodes, where one sees high levels of proteins resisting cell death. Cyclacel has reported in April 2022 that a recent study in Nature found that fadraciclib and venetoclax created synergy in chronic lymphocytic leukemia, and did show efficacy in the lymph nodes.
Fadraciclib also targets the CDK2 pathway could prevent cell proliferation in cyclin E dependent cancers.
Fadraciclb scientific rationale (Cyclacel corporate presentation)
Phase 1 trial results
Fadraciclib shown no serious toxicity or adverse events, even at higher oral dosing, which should allow for more frequent dosing and avoidance of rapid plasma clearance. This basically means the drug can be used alone, and that a combination with venetoclax will probably lead to even better outcomes.
Fadraciclib early development data (Cyclacel corporate presentation)
The Phase 1 trials in 70 patients mostly tested fadraciclib still as an IV infusion but some testing was also done orally. Trials took place either as a single agent or in combination with AbbVie’s other apoptosis-enabling drug venetoclax. Oral formulation showed equal efficacy without toxicity, which is good because CDK inhibitors are normally dosed intravenously. Intravenous dosing may be an issue because intravenous dosing does not happen so often, and may be insufficient given the rapid plasma clearance and the persistent presence of CDK proteins. The trial showed several tumor shrinkages.
Fadracliclib Phase 1 part 1 chart (Cyclacel corporate presentation)
Fadracliclib Phase 1 part 2 chart (Cyclacel corporate presentation)
The star patient of the phase 1 trial had 100% of its lesions of endometrial cancer gone after having been on the drug for two years, which would apparently also have been the first time that a CDK-inhibitor as a single agent can produce such a response. The patient remains on study, with over 2 and a half years of treatment.
Phase 1 endometrial cancer response (Cyclacel corporate presentation)
The Phase 1/2 trial in solid tumors
The Phase 1/2 trials will use fadraciclib as an oral treatment that can be taken twice daily. When one says trials in both solid tumors and liquid tumors, that means the company will evaluate in which tumors the drug can work in best. Or, as the company puts it, it has eight shots on goal in solid tumors and six in liquid tumors.
This is the design of the Phase 1/2 trial in solid tumors, in which Cyclacel reported first patient-dosing on July 13, 2021.
Fadraciclib Phase 1/2 solid tumors study design (Cyclacel corporate presentation)
Once at dose level 5, it should be decided which dosing is appropriate, at which point fadraciclib will be used either alone or in combination with other drugs, such as venetoclax, which it has already shown to have synergy with.
The proof-of-concept stage includes several cancers which fadraciclib is thought to work in. The market of solid tumors is much larger than that of hematological tumors, and successes here are much more scarce. I would therefore say the real value driver here is this trial.
Fadraciclib market potential (Cyclacel corporate presentation)
Strong characteristics and good results so far
So far, the following has been reported from this trial. Fifteen patients across all five dose levels have been treated, with no dose limiting toxicities and different responses to the treatment.
In light of the good safety profile which, I cannot reiterate this enough, is fantastic, the company has now asked the FDA whether two additional dose levels could be included.
Some responses that are reported already include anticancer activity, partial response and stable disease, with tumor shrinkage seen across different tumors such as endometrial cancer, pancreatic cancer and T-cell lymphoma. The endometrial patient had stable disease with 15% reduction of target lesions after the first oral treatment cycle. A patient with cutaneous T cell lymphoma achieved partial response (>30% of lesion reduction) in the first oral treatment cycle. A patient presenting peripheral T cell lymphoma had 38% reduction in target lesions in the same cycle. A pancreatic cancer patient achieved stable disease for five oral treatment cycles.
So, what are the value-driving factors here for me? First of all, I see no downside to this drug, and hence I believe the bear thesis is hard to be found here. The drug obviously works, and comes with no toxicity. That basically allows it to be added onto any other treatment. The lack of any toxicity profile is a rare but wonderful thing in oncology. Furthermore, persistence or durability is another issue that is frequently problematic in cancer treatment. With fadraciclib, persistence seems to be stronger over time, at least in some patients. Apart from the synergistic effect with the other apoptosis-enabling drug, venetoclax, fadraciclib can also be used as a single agent. And to further the comparison, venetoclax comes with side effects and had 2021 global net revenues of $1.8 billion. Last but not least, the drug can be taken orally, which allows for frequent dosing, more than once a day even, and this is probably why it is able to show such good durability. In short, I believe this drug candidate may be a gem which the market has not yet picked up on.
The Phase 1/2 trial in hematological tumors
This is the design of the Phase 1/2 trial in hematological tumors, in which Cyclacel reported first patient-dosing on November 5, 2021.
Fadraciclib Phase 1/2 study design hematological tumors (Cyclacel corporate presentation)
The trial design is similar here, with four dose levels and different hematological tumors. This trial had not progressed so far yet, and probably faces headwinds from the vast supply of clinical trials of immuno-oncology drugs in hematological tumors, plus weakened patients with blood tumors not wanting to remain in hospital at risk for COVID infections.
However, in light of the tolerability seen in the trial for solid tumors, dose levels two and three have been dropped and the trial is now already enrolling at dose level 4.
CYC140
Introduction
CYC140 is the company’s oral PLK1-inhibitor. I have already given coverage of what I believe to be the furthest-advanced and so far successful PLK1-inhibitor onvansertib. Onvansertib is being tried by Cardiff Oncology (CRDF), which I believe has different upcoming catalysts and may be a possible buyout target.
PLK inhibitors pipeline overview (Cyclacel corporate presentation)
PLK1 plays a key role in the cell cycle.
PLK1 in the cell cycle (Cyclacel corporate website)
PLK inhibition has been a major target of drug developers for numerous years at this point, as it could prevent tumor-resistance to chemotherapy treatment. Before Cardiff’s onvansertib, however, drug candidates have systematically failed in trials, with toxicity issues and lack of PLK-selectivity being the main issues. The biggest failure was borne by Boehringer Ingelheim, which tested its drug candidate volasertib a Phase 3 trial where it failed with an unfavorable safety profile, which was considered to be related to the long half-life of the drug.
Finding a selective PLK1-inhibitor with a shorter half life that does its job in reducing chemotherapy resistance without generating toxicity concerns could therefore well be worth a buck, all the more in solid tumors including those that show KRAS-mutations. If it would show efficacy as a single agent, all the better. Obviously, if Cardiff’s onvansertib is a possible buyout target with apparent interest from more companies than just Pfizer, then I suppose big pharma will have been looking at what Cyclacel is doing here too.
But for now, the jury is still out as to whether Cyclacel’s CYC140 has no side effects from also targeting PLK2 and PLK3, and whether it can validly be used a single agent.
CYC140 Preclinical efficacy
CYC140 showed the following preclinical results.
CYC140 preclinical efficacy, slide 1 (Cyclacel corporate presentation)
CYC140 preclinical efficacy, slide 2 (Cyclacel corporate presentation)
Phase 1/2 trial ongoing
This is the design of the Phase 1/2 trial for CYC-140. As one can see, this design is similar to the ones discussed above.
CYC140 Phase 1/2 study design (Cyclacel corporate presentation)
The company reported first patient-dosing for this trial on April 19, 2022. On June 30, 2022, the company reported that so far, no dose-limiting toxicities had been observed, and that an ovarian cancer patient had achieved stable disease with tumor shrinkage after the first cycle. This is of course early stage, but promising so far. A first readout from this trial can be expected by end of 2022 or the beginning of 2023.
Catalysts ahead
I see three upcoming catalysts over the next months, with the first one expected for some time now:
mid 2022 should see an interim data readout of oral fadraciclib Phase I in solid tumors;
the Phase 2 trial of the same drug should be initiated in the second half of 2022;
by end of 2022 or the beginning of 2023, we should see a readout of interim data of oral fadraciclib for hematological tumors;
equally around that time, we may see first data from the Phase 1/2 trial of CYC140.
The company also plans an R&D day in the fall of 2022.
Financials