Investing to Wealth

Cyclacel Pharmaceuticals Inc. (NASDAQ: CYCC)

Cyclacel Pharmaceuticals Inc. (CYCC) is a development-stage biopharmaceutical company engaged in the discovery, development and commercialization of mechanism-targeted drugs to treat human cancers and other serious disorders. The Company markets, directly in the United States, Xclair Cream for radiation dermatitis, and Numoisyn Liquid and Numoisyn Lozenges for xerostomia through its wholly owned subsidiary, ALIGN Pharmaceuticals LLC (ALIGN). CYCC focuses primarily on the development of orally available anticancer agents that target the cell cycle with the aim of slowing the progression or shrinking the size of tumors. The Company has been focusing on the cell cycle since its inception. On January 13, 2009, it announced that it began treating patients in a phase II, open label, single arm, multicenter clinical trial of sapacitabine in patients with non-small cell lung cancer (NSCLC) who have had one prior chemotherapy.

The Company was founded in 1992 and is headquartered in Berkeley Heights, New Jersey.

Source: Reuters.com, SEC Filings.

Financial Summary

Total revenues for the third quarter of 2009 were $0.2 million, representing a decrease of 14% compared to $0.3 million for the same period in 2008. These revenues were mainly attributable to sales of the Xclair® and Numoisyn® products.

Total research and development (R&D) expenses in the third quarter of 2009 were $1.4 million, a 65% decrease as compared to $4.0 million in the third quarter of 2008. $1.6 million of the overall decrease was associated with the discontinuation of the Company’s preclinical programs from the cost-containment measures implemented in September 2008 and June 2009. The Company recognized cost reductions of approximately $1.0 million in the third quarter of 2009 as compared to the same period in 2008 due to the completion of patient enrollment in the APPRAISE trial in the third quarter of 2008.

Total selling, general and administrative expenses (SG&A) for the third quarter of 2009 were $2.2 million, a 32% decrease as compared to $3.2 million in the third quarter of 2008. The reduction in operating expenses in the third quarter of 2009 compared to the same period in 2008 is primarily attributable to the cost-containment measures implemented in September 2008 and June 2009 and the concentration of the Company’s resources on the clinical development of sapacitabine.

Other operating expenses in the third quarter of 2008 also included a non-cash charge of $6.8 million for goodwill and intangibles impairment in respect of the acquisitions of Xcyte Therapies Inc. and ALIGN following CYCC’s annual test for impairment and restructuring costs.

Other income (expense) showed income of $0.2 million in the third quarter of 2009 as compared to expense of $4.1 million in the third quarter of 2008. The decrease in expense was primarily due to an unrealized foreign exchange loss of $4.8 million in the third quarter of 2008 compared to a $0.1 million foreign exchange gain in the same period in 2009 arising from intercompany loans with CYCC’s wholly owned subsidiaries due to the translation effects of the U.S. dollar against the British pound together with a change in the valuation of warrants and a reduction in interest income earned.

The net loss in the third quarter of 2009 was $3.1 million or $0.13 per share as compared to $17.6 million in the third quarter of 2008 or $0.86 per share.

CYCC also reported results of its operations for the nine months ended September 30, 2009. Total revenues for the nine months ended September 30, 2009, were $0.7 million representing an increase of 16% compared to $0.6 million for the same period in 2008. These revenues were mainly attributable to sales of the Xclair® and Numoisyn® products.

For the nine months ended September 30, 2009, R&D expenses were $7.2 million, a 54% decrease as compared to $15.7 million in the comparable period in 2008.

For the nine months ended September 30, 2009, SG&A expenses were $6.7 million, a 41% decrease as compared to $11.3 million in the comparable period in 2008.

The reduction in operating expenses in 2009 compared to 2008 is primarily attributable to the cost-containment measures implemented in September 2008 and June 2009 and the concentration of the Company’s resources on the clinical development of sapacitabine.

Other operating expenses for the nine months ended September 30, 2008, also included a non-cash charge of $6.8 million for goodwill and intangibles impairment in respect of the acquisitions of Xcyte and ALIGN and restructuring costs. For the nine months ended September 30, 2009, the Company recorded restructuring costs of $0.4 million.

Other income (expense) for the nine months ended September 30, 2009, showed an expense of $2.0 million as compared to $0.4 million for the same period in 2008. The 2009 loss included a non-operating expense of $1.7 million related to payments due under an agreement with Scottish Enterprise as a consequence of the headcount reductions implemented by the Company. During 2008, the Company recorded a charge of $3.3 million associated with the warrant derivative as compared to income of $0.2 million in 2009 as a result of the Company’s common stock price at each quarter end. The decrease in expense was primarily due to unrealized foreign exchange loss of $4.6 million in the nine months ended September 30, 2008, compared to $0.1 million foreign exchange loss in the same period in 2009 arising mostly from intercompany loans with CYCC’s wholly owned subsidiaries due to the translation effects of the U.S. dollar against the British pound.

For the nine months ended September 30, 2009, the Company reported a net loss of $15.2 million or $0.71 per share, compared to a net loss for the same period in 2008 of $32.4 million or $1.59 per share.

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast amongst 3 polled investment analysts. Against the Cyclacel Pharmaceuticals Inc company.

The 2 analysts offering 12 month price targets for CYCC have a median target of 4.50, with a high estimate of 7.00 and a low estimate of 2.00. The median estimate represents a 81.45% increase from the last price of 2.48.

Source: www.ft.com

Consensus Estimates Analysis

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=CYCC.W

Investment Highlights

CYCC recently announced that a newly published study demonstrates that the Company’s seliciclib (CYC202 or R-roscovitine), an orally available inhibitor of multiple cyclin-dependent kinases (CDKs), reversed resistance to the aromatase inhibitor letrozole (Femara(R)) and killed hormone receptor positive breast cancer cells that had become insensitive to the effects of letrozole. The new study was published in the current edition of Clinical Cancer Research, a journal of the American Association for Cancer Research. Seliciclib is currently in phase 2 clinical trials for non-small cell lung cancer and nasopharyngeal cancer.

Approximately three out of four women suffering from breast cancer after menopause have cancers that express the hormonal receptors for estrogen and progesterone and are offered treatment with aromatase inhibitor drugs including letrozole. Letrozole treatment reduces the risk of early metastasis in women with estrogen receptor–positive breast cancer. Letrozole is believed to interact with a natural CDK inhibitor p27, which in turns regulates the activity of the CDK2/cyclin E complex. Over time, breast cancer cells develop resistance to letrozole and the therapy becomes ineffective.

Researchers from The University of Texas M.D. Anderson Cancer Center led by Khandan Keyomarsi, Ph.D., professor in the Department of Experimental Radiation Oncology, found that a key cause of resistance to letrozole is overexpression of the low molecular weight form of cyclin E, which also predicted for lower overall survival and higher chance of cancer recurrence after aromatase inhibitor treatment. However, after they treated letrozole-resistant breast cancer cells with seliciclib, a CDK2/cyclin E inhibitor, the resistant cancer cells were killed. The researchers concluded that their data support clinical investigation of CDK inhibitors such as seliciclib as targeted therapy in a specific patient population of postmenopausal women with hormone receptor–positive, low molecular weight cyclin E expressing breast cancer. Citation: Akli S., et. al., Clinical Cancer Research, 2010 16:4:1179–90.

Seliciclib is an orally available molecule that selectively inhibits multiple cyclin-dependent kinase or CDK targets, CDK2/E, CDK2/A, CDK7 and CDK9, that are central to the process of cell division and cell cycle control. Seliciclib has been administered to approximately 450 patients in phase 1 and phase 2 trials. It is currently being evaluated in the APPRAISE trial, a phase 2b randomized, double-blinded, placebo-controlled study, as a treatment in patients with non-small cell lung cancer (NSCLC) who failed at least two prior therapies and in a randomized phase 2 study as a single agent in patients with nasopharyngeal cancer.

The APPRAISE trial is assessing the efficacy and safety of single-agent seliciclib as a third, fourth or fifth line treatment in patients with NSCLC. The study is using a randomized discontinuation design with a primary endpoint of progression free survival.

Cyclin E, a cell cycle protein, binds to its partner enzyme CDK2, a cyclin-dependent kinase, forming a complex. The CDK2/cyclin E complex plays a key role in regulating the progression of cells through the four stages of the cell cycle and the two cell cycle arrest checkpoints where cells are checked for damage to their DNA before they divide. Unlike normal cells, cancer cells modify cyclin E to a low molecular weight form, which has been associated with genomic instability, uncontrolled proliferation and overtime the evolution of resistance to cancer treatments.

Letrozole is an aromatase inhibitor indicated for the adjuvant treatment of postmenopausal women with hormone receptor positive early breast cancer, the first-line treatment of postmenopausal women with hormone receptor positive or hormone receptor unknown locally advanced or metastatic breast cancer and the treatment of advanced breast cancer in postmenopausal women with disease progression following antiestrogen therapy.

Source: http://www.cyclacel.com/

Technical Analysis

Source: http://stockcharts.com

CYCC is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

CYCC has been relatively stable recently. This is evidenced by the width of its Bollinger Bands, which are tighter than normal. Additionally, CYCC is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

CYCC’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9day moving average or signal line. This suggests that positive momentum has begun to slow.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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