Bio Green Med Solution, Inc 10-Q for FY2021 Q3
Bio Green Med Solution, Inc. (BGMS)
About this 10-Q
Bio Green Med Solution, Inc filed this 10-Q on November 12, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).
Headline figures
Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $0 a year earlier
- Net loss
- $4.99M
- compared with a net loss of $2.26M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
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| | For the transition period from __________________ to __________________ |
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Commission file number
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction | (I.R.S. Employer | |
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(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
| Accelerated filer ☐ |
Smaller reporting filer | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 10, 2021 there were
CYCLACEL PHARMACEUTICALS, INC.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | ||
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CYCLACEL PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(In $000s, except share, per share, and liquidation preference amounts)
(Unaudited)
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| December 31, | | September 30, | ||
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| 2020 |
| 2021 | ||
ASSETS | | | | | | |
Current assets: |
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Cash and cash equivalents | | $ | | | $ | |
Prepaid expenses and other current assets | |
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Total current assets | |
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Property and equipment, net | |
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Right-of-use lease asset | | | | | | |
Non-current deposits | | | | | | |
Total assets | | $ | | | $ | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
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Current liabilities: | |
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Accounts payable | | $ | | | $ | |
Accrued and other current liabilities | |
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Total current liabilities | |
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Lease liability | | | | | | |
Total liabilities | |
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Stockholders’ equity: | |
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Preferred stock, $ | |
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Series A convertible preferred stock, $ | |
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Series B convertible preferred stock, $ | |
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Common stock, $ | |
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Additional paid-in capital | |
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Accumulated other comprehensive loss | |
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Accumulated deficit | |
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Total stockholders’ equity | |
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Total liabilities and stockholders’ equity | | $ | | | $ | |
The accompanying notes are an integral part of these consolidated financial statements.
3
CYCLACEL PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000s, except share and per share amounts)
(Unaudited)
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| Three Months Ended |
| Nine Months Ended |
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| | September 30, | | September 30, | | ||||||||
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| 2021 |
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Revenues | | $ | | | $ | | | $ | | | $ | | |
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Operating expenses: | |
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Research and development | |
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General and administrative | |
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Total operating expenses | |
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Operating loss | |
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Other income (expense): | |
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Foreign exchange gains (losses) | |
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Interest income | |
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Other income, net | |
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Total other income, net | |
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Loss before taxes | |
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Income tax benefit | |
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Net loss | |
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Dividend on convertible exchangeable preferred shares | |
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Net loss applicable to common shareholders | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Basic and diluted earnings per common share: | |
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Net loss per share – basic and diluted | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Weighted average common shares outstanding | |
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The accompanying notes are an integral part of these consolidated financial statements.
4
CYCLACEL PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In $000s)
(Unaudited)
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| Three Months Ended |
| Nine Months Ended |
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| | September 30, | | September 30, | | ||||||||
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| 2020 |
| 2021 |
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Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
Translation adjustment | |
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Unrealized foreign exchange gain (loss) on intercompany loans | |
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Comprehensive loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | |
The accompanying notes are an integral part of these consolidated financial statements.
5
CYCLACEL PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In $000s, except share amounts)
(Unaudited)
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| Accumulated | | | | | | | |
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| Additional |
| Other | | | |
| Total | |||
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| Preferred Stock |
| Common Stock |
| Paid-in |
| Comprehensive |
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| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Loss |
| Deficit |
| Equity | ||||||
Balances at December 31, 2019 | | | | $ | — |
| | | $ | | | $ | | | $ | ( | | $ | ( | | $ | |
Stock-based compensation |
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Preferred stock dividends |
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Unrealized foreign exchange on intercompany loans |
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Translation adjustment |
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Loss for the period |
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Balances at March 31, 2020 |
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Issue of common stock, pre-funded warrants and warrants on equity financing, net of expenses |
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Stock-based compensation |
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Preferred stock dividends |
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Unrealized foreign exchange on intercompany loans |
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Translation adjustment |
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Loss for the period |
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Balances at June 30, 2020 |
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Stock-based compensation |
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Preferred stock dividends |
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Unrealized foreign exchange on intercompany loans |
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Translation adjustment |
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Loss for the period |
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Balances at September 30, 2020 |
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| | | $ | | | $ | | | $ | ( | | $ | ( | | $ | |
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Balances at December 31, 2020 |
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Issuance of common stock in underwritten offering, net of issuance costs | | — | |
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Warrant Exercises | | — | |
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Stock-based compensation |
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Preferred stock dividends |
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Unrealized foreign exchange on intercompany loans |
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Translation adjustment |
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Loss for the period |
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Balances at March 31, 2021 |
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Stock-based compensation |
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Preferred stock dividends |
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Unrealized foreign exchange on intercompany loans |
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Translation adjustment |
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Loss for the period |
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Balances at June 30, 2021 |
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Issue of common stock on At Market issuance sales agreement, net of expenses | | — | |
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Stock-based compensation |
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Preferred stock dividends |
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Unrealized foreign exchange on intercompany loans |
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Translation adjustment |
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Loss for the period |
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Balances at September 30, 2021 |
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The accompanying notes are an integral part of these consolidated financial statements.
6
CYCLACEL PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In $000s)
(Unaudited)
| | Nine Months Ended | ||||
| | September 30, | ||||
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| 2020 |
| 2021 | ||
Operating activities: | | |
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Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | | |
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Depreciation | | | | | | |
Stock-based compensation | | | | | | |
Changes in lease liability | | | ( | | | |
Changes in operating assets and liabilities: | | | | | | |
Prepaid expenses and other assets | | | ( | | | ( |
Accounts payable and other current liabilities | | | ( | | | |
Net cash used in operating activities | | | ( | | | ( |
Investing activities: | | |
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Purchase of property, plant and equipment | | | ( | | | ( |
Net cash used in investing activities | | | ( | | | ( |
Financing activities: | | |
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Proceeds from issuing common stock and warrant exercises, net of issuance costs | | | | | | |
Payment of preferred stock dividend | | | ( | | | ( |
Net cash provided by financing activities | | | | | | |
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Effect of exchange rate changes on cash and cash equivalents | | | ( | | | ( |
Net increase in cash and cash equivalents | | | | | | |
Cash and cash equivalents, beginning of period | | | | | | |
Cash and cash equivalents, end of period | | $ | | | $ | |
Supplemental cash flow information: | | |
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Cash received during the period for: | | |
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Interest | | | | | | |
Taxes | | | | | | |
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Non cash financing activities: | | |
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Accrual of preferred stock dividends | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
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CYCLACEL PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Company Overview
Nature of Operations
Cyclacel Pharmaceuticals, Inc. (“Cyclacel” or the “Company”) is a clinical-stage biopharmaceutical company developing innovative cancer medicines based on cell cycle, transcriptional regulation and mitosis biology. The Company uses insights in cancer biology to develop investigational medicines addressing the growing problem of resistance. Cancer cells learn to evade anticancer therapeutics and become resistant to available therapies. The Company aims to suppress mechanisms of resistance and reactivate the body’s own cell death mechanisms to destroy cancer cells.
Through September 30, 2021, 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.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated balance sheet as of September 30, 2021, the consolidated statements of operations, comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020, and all related disclosures contained in the accompanying notes, are unaudited. The consolidated balance sheet as of December 31, 2020 is derived from the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on March 1, 2021. 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, 2021, and the results of operations and, comprehensive loss for the three and nine months ended September 30, 2021, and cash flows for the nine months ended September 30, 2021, have been made. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other reporting period. 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, 2020 that are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021.
Reverse Stock Split
On April 14, 2020 the Company completed a -for-twenty 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 $
8
Going Concern
Management considers that there are no conditions or events, in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern for a period of at least one year from the date the financial statements are issued. The Company expects that its cash of approximately $
This evaluation is based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued, including:
| a. | The Company’s current financial condition, including its sources of liquidity; |
| b. | The Company’s conditional and unconditional obligations due or anticipated within one year; |
| c. | The funds necessary to maintain the Company’s operations considering its current financial condition, obligations, and other expected cash flows; and |
| d. | Other conditions and events, when considered in conjunction with the above, that may adversely affect the Company’s ability to meet its obligations. |
The future viability of the Company beyond the beginning of 2023 is dependent on its ability to raise additional capital to finance its operations. The Company does not currently have sufficient funds to complete development and commercialization of any of its drug candidates. Additional funding may not be available to the Company on favorable terms, or at all. If the Company is not able to secure additional funding when needed, it may have to delay, reduce the scope of or eliminate one or more of its clinical trials or research and development programs or make changes to its operating plan. In addition, it may have to partner one or more of its product candidate programs at an earlier stage of development, which would lower the economic value of those programs to the Company. The Company’s inability to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies.
In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. It has now spread globally, including the United States and United Kingdom, where the Company has its operations. The World Health Organization has declared the coronavirus outbreak a pandemic. The extent to which the coronavirus impacts the Company’s financial condition and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the ultimate duration of the pandemic, the emergence of new geographic hotspots, the emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States, the United Kingdom and other countries, and the effectiveness of actions taken globally to contain and treat the disease. Management continues to evaluate the impact of the COVID-19 pandemic on its current operations and future plans and takes appropriate measures to address any such impact, but there can be no assurance that these efforts will be successful and that the pandemic will not have negative effect on the Company’s financial position and results of operations, but it could materially affect the ability of the Company to raise future capital or to conduct clinical studies on a timely basis.
Accounting standards adopted in the period
On January 1, 2020, the Company adopted the guidance issued in ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” As permitted by the ASU, the Company will apply the new guidance on a prospective basis to any new cloud computing arrangements. ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements to be deferred over the non-cancellable term of the cloud computing arrangements plus any optional renewal periods (1) that are reasonably certain to be exercised by the customer or (2) for which exercise of the renewal option is controlled by the cloud service provider. There has been no impact of this pronouncement on the Company’s consolidated financial statements and disclosures.
9
The FASB has issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”. This standard simplifies the accounting for convertible instruments, such as convertible debt or convertible preferred stock, by eliminating two potential methods in accounting for the embedded conversion feature. The standard also removes certain conditions previously used to evaluate whether a freestanding financial instrument, or certain types of embedded features, are considered to be settled in the issuer’s own equity. Finally, ASU 2020-06 requires that an entity use the if-converted method in calculating the effects of convertible instruments on diluted earnings per share, with one limited exception. As a smaller reporting company, the amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those years. Early adoption is permitted, but no earlier than for fiscal years beginning after December 15, 2020. The Company does not currently have any contracts affected by this guidance, but has nonetheless elected to adopt ASU 2020-06 as of January 1, 2021. There was no impact of early adoption of this pronouncement on the Company’s consolidated financial statements and disclosures.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) has issued ASU 2020-04, “Reference Rate Reform (Topic 848)”. This standard provides optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform initiatives that would replace interbank offered rates, including the London Interbank Offered Rate (LIBOR). For example, modifications of lease contracts within the scope of ASC 842 solely for changes in reference rates would be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not currently have any contracts affected by this guidance.
Fair Value of Financial Instruments
Financial instruments consist of cash equivalents, accounts payable and accrued liabilities. The carrying amounts of cash equivalents, accounts payable and accrued liabilities approximate their respective fair values due to the nature of the accounts, notably their short maturities.
Comprehensive Income (Loss)
All components of comprehensive income (loss), including net income (loss), are reported in the financial statements in the period in which they are recognized. Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments, are reported, net of any related tax effect, to arrive at comprehensive income (loss).
Revenue recognition
The Company recognizes revenue using the five step-model provided in ASC 606, Revenue from Contracts with Customers (“ASC 606”):
| (1) | identify the contract with a customer; |
| (2) | identify the performance obligations in the contract; |
| (3) | determine the transaction price; |
| (4) | allocate the transaction price to the performance obligations in the contract; and |
| (5) | recognize revenue when, or as, the Company satisfies a performance obligation. |
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The transaction price could include both fixed payments and an estimate of variable consideration, including milestone payments. The Company determines the variable consideration to be included in the transaction price by estimating the most likely amount that will be received and then applies a constraint to reduce the consideration to the amount which is probable of being received. When applying the constraint, the Company considers:
| ● | Whether achievement of a development milestone is highly susceptible to factors outside the entity’s influence, such as milestones involving the judgment or actions of third parties, including regulatory bodies; |
| ● | Whether the uncertainty about the achievement of the milestone is not expected to be resolved for a long period of time; |
| ● | Whether the Company can reasonably predict that a milestone will be achieved based on previous experience; and |
| ● | The complexity and inherent uncertainty underlying the achievement of the milestone. |
The transaction price is allocated to each performance obligation based on the relative selling price of each performance obligation. The best estimate of the selling price is determined after considering all reasonably available information, including market data and conditions, entity-specific factors such as the cost structure of the deliverable and internal profit and pricing objectives.
The revenue allocated to each performance obligation is recognized as or when the Company satisfies the performance obligation.
The Company recognizes a contract asset, when the value of satisfied (or part satisfied) performance obligations is in excess of the payment due to the Company, and deferred revenue when the amount of unconditional consideration is in excess of the value of satisfied (or part satisfied) performance obligations. Once a right to receive consideration is unconditional, that amount is presented as a receivable.
Grant revenue received from organizations that are not the Company’s customers, such as charitable foundations or government agencies, is presented as a reduction against the related research and development expenses.
Leases
The Company accounts for lease contracts in accordance with ASC 842. As of September 30, 2021, the Company’s
The Company recognizes an asset for the right to use an underlying leased asset for the lease term and records lease liabilities based on the present value of the Company’s obligation to make lease payments under the lease. As the Company’s leases do not indicate an implicit rate, the Company uses a best estimate of its incremental borrowing rate to discount the future lease payments. The Company estimates its incremental borrowing rate based on observable information about risk-free interest rates that are the same tenure as the lease term, adjusted for various factors, including the effects of assumed collateral, the nature of how the loan is repaid (e.g., amortizing versus bullet), and the Company’s credit risk.
The Company evaluates options included in its lease agreements to extend or terminate the lease. The Company will reflect the effects of exercising those options in the lease term when it is reasonably certain that the Company will exercise that option. In assessing whether it is reasonably certain that the Company will exercise an option, the Company considers factors such as:
| ● | The lease payments due in any optional period; |
| ● | Penalties for failure to exercise (or not exercise) the option; |
| ● | Market factors, such as the availability of similar assets and current rental rates for such assets; |
| ● | The nature of the underlying leased asset and its importance to the Company’s operations; and |
| ● | The remaining useful lives of any related leasehold improvements. |
11
Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease payments, if any, are recognized in the period when the obligation to make those payments is incurred. Lease incentives received prior to lease commencement are recorded as a reduction in the right-of-use asset. Fixed lease incentives received after lease commencement reduce both the lease liability and the right-of-use asset.
The Company has elected an accounting policy to account for the lease and non-lease components as a single lease component.
3. Revenue
Revenue recognized in the three and nine months ended September 30, 2020 and 2021 was $
4. Net Loss per Common Share
The Company calculates net loss per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”). Basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three months ended September 30, 2020 and 2021, as the result would be anti-dilutive:
|
| September 30, | | September 30, |
|
| 2020 |
| 2021 |
Stock options |
| |
| |
| |
| | |
Series A preferred stock |
| |
| |
Series B preferred stock |
| |
| |
Common stock warrants |
| |
| |
Total shares excluded from calculation |
| |
| |
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in $000s):
|
| December 31, | | September 30, | ||
|
| 2020 |
| 2021 | ||
Research and development tax credit receivable | | $ | | | $ | |
Prepayments and VAT receivable | | | | |
| |
Other current assets | |
| | | | |
| | $ | | | $ | |
6. Accrued and Other Liabilities
Accrued and other current liabilities consisted of the following (in $000s):
|
| December 31, | | September 30, | ||
|
| 2020 |
| 2021 | ||
Accrued research and development | | $ | | | $ | |
Accrued legal and professional fees | |
| | |
| |
Other current liabilities | |
| | |
| |
| | $ | | | $ | |
12
Other current liabilities as at 31 December 2020 include accrued compensation and the current portion of the lease liability for the Company’s facility in Dundee, Scotland. This lease was assigned on May 4, 2021 (see note 7).
7. Leases
The Company currently has
As of and for the nine months ended September 30, 2021:
The Company recognized operating lease expenses of $
Remaining lease payments under the lease are (in $000’s):
2021 |
| $ | |
2022 | | | |
2023 | | | |
2024 | | | |
2025 | | | |
Thereafter | | | |
|
| $ | |
8. Stock Based Compensation
ASC 718 requires compensation expense associated with share-based awards to be recognized over the requisite service period, which for the Company is the period between the grant date and the date the award vests or becomes exercisable. Most of the awards granted by the Company (and still outstanding) vest ratably over to
Stock based compensation has been reported within expense line items on the consolidated statement of operations for the three and nine months ended September 30, 2020 and 2021 as shown in the following table (in $000s):
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| September 30, |
| September 30, |
| ||||||||
|
| 2020 |
| 2021 |
| 2020 |
| 2021 | | ||||
General and administrative | | $ | | | $ | | | $ | | | $ | | |
Research and development | | | | | $ | | | $ | | | $ | | |
Stock-based compensation costs before income taxes | | $ | | | $ | | | $ | | | $ | | |
2018 Plan
In May 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”), under which Cyclacel may make equity incentive grants to its officers, employees, directors and consultants. The 2018 Plan replaces the 2015 Equity Incentive Plan (the “2015 Plan”).
The 2018 Plan allows for various types of award grants, including stock options and restricted stock units.
13
As of September 30, 2021, the Company has reserved
2020 Inducement Equity Incentive Plan
In October 2020, the Inducement Equity Incentive Plan (the “Inducement Plan”) became effective. Under the Inducement Plan, Cyclacel may make equity incentive grants to new senior level Employees (persons to whom the Company may issue securities without stockholder approval). The Inducement Plan allows for the issuance of up to
Option Grants and Exercises
There were
| | | | |
| | Nine months ended | | Nine months ended |
|
| September 30, 2020 |
| September 30, 2021 |
Expected term (years) |
| – |
| – |
Risk free interest rate |
| | ||
Volatility |
| | ||
Expected dividend yield over expected term |
| |
There were
Outstanding Options
A summary of the share option activity and related information is as follows:
|
| |
| | |
| Weighted |
| | |
|
| |
| Weighted |
| Average |
| | | |
|
| Number of |
| Average |
| Remaining |
| Aggregate | ||
| | Options |
| Exercise |
| Contractual | | Intrinsic | ||
| | Outstanding | | Price Per Share |
| Term (Years) | | Value ($000) | ||
Options outstanding at December 31, 2020 |
| | | $ | |
| | $ | | |
Granted |
| | | $ | |
| — | |
| — |
Exercised |
| — | | | |
| — | |
| — |
Cancelled/forfeited |
| ( | | $ | |
| — | |
| — |
Options outstanding at September 30, 2021 |
| | | $ | |
| | $ | | |
| | | | | | | | | | |
Unvested at September 30, 2021 |
| | | $ | |
| | $ | | |
Vested and exercisable at September 30, 2021 |
| | | $ | |
| | $ | | |
14
The Company issued
The Company issued
|
| |
| Weighted | | Weighted | |
|
| |
| Average | | Average | |
| | Restricted |
| Grant Date | | Remaining | |
| | Stock Units | | Value Per Share | | Term | |
Restricted Stock Units outstanding at September 30, 2021 |
| | | $ | | | |
| | | | | | | |
Unvested at September 30, 2021 |
| | | $ | | | |
Vested and exercisable at September 30, 2021 |
| — | | $ | — | | |
9. Stockholders Equity
August 2021 Controlled Equity Offering Sales Agreement
On August 12, 2021, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. ("Cantor"), pursuant to which it may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $
Subject to the terms and conditions of the Sales Agreement, Cantor will use commercially reasonable efforts consistent with its normal trading and sales practices to sell shares of the Company’s common stock from time to time, based upon the Company's instructions, including any price, time or size limits specified by the Company. The Company has provided Cantor with customary indemnification rights, and Cantor will be entitled to a commission at a fixed rate equal to
During the three and nine months ended September 30, 2021, the Company sold
March 2021 Equity Financing
On March 12, 2021, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Oppenheimer & Co. Inc., as representative of the underwriters identified therein (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell
15
The closing of the offering occurred on March 16, 2021, and the net proceeds to the Company (including exercise of the over-allotment option) were approximately $
December 2020 Equity Financing
On
The combined purchase price for each Share, together with
Each share of Series B Convertible Preferred Stock will convert into
The conversion feature within the Series B Convertible Preferred Stock was determined to be beneficial as of the offering date. A beneficial conversion feature is defined as a nondetachable conversion feature that is "in-the-money" at issuance. The Company calculated the value of the beneficial conversion feature based on its intrinsic value, which is the difference between the “effective conversion price” (after allocating the proceeds of the offering between the Series B Convertible Preferred Stock, the Warrants and Common Stock issued) and the market price of the Company's common shares, multiplied by the number of shares into which the Series B Convertible Preferred Stock is convertible. The effective conversion price of $
As the series B Preferred Stock contained no stated redemption date and the conversion feature could be exercised at any time, the discount associated with the beneficial conversion feature was immediately charged against additional paid-in-capital and treated as a deemed dividend for both financial reporting and earnings per share purposes.
The common stock, Warrants and Series B Preferred Stock are freestanding financial instruments. The Warrants are classified within equity (as a component of additional paid-in capital) in the consolidated balance sheet and are not remeasured on a recurring basis. The Series B Preferred Stock is classified within permanent equity in the consolidated balance sheet.
The closing of the offering occurred on December 22, 2020 and the net proceeds to the Company were approximately $
As of September 30, 2021,
April 2020 Equity Financing
On April 21, 2020, the Company entered into a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co. Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC (the “Co-Placement Agents”) and a securities purchase agreement with certain purchasers for the purchase and sale of (i)
16
The pre-funded warrants and accompanying common stock warrants were sold at a combined public offering price of $
The closing of the offering occurred on April 24, 2020, and the net proceeds to the Company were approximately $
Subsequent to the closing of the offering, all of the pre-funded warrants issued in connection therewith were converted into
Warrants
December 2020 Warrants
As of September 30, 2021, warrants to purchase
There were
April 2020 Warrants
As of September 30, 2021,
The common warrants are exercisable, at the option of each holder, in whole or in part, by delivering to the Company a duly executed exercise notice accompanied by payment in full for the number of shares of the Company’s common stock purchased upon such exercise (except in the case of a cashless exercise). A holder (together with its affiliates) may not exercise any portion of the common warrant to the extent that the holder would own more than
A total of
17
July 2017 Warrants
As of September 30, 2021,
The exercise price and the number of shares issuable upon exercise of the warrants is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock. The warrant holders must pay the exercise price in cash upon exercise of the warrants, unless such warrant holders are utilizing the cashless exercise provision of the warrants. On the expiration date, unexercised warrants will automatically be exercised via the “cashless” exercise provision.
Prior to the exercise of any warrants to purchase common stock, holders of the warrants will not have any of the rights of holders of the common stock purchasable upon exercise, including the right to vote, except as set forth therein.
There were
Series A Preferred Stock
Each share of Series A Preferred Stock is convertible at any time at the option of the holder thereof, into a number of shares of common stock determined by dividing $
In the event of a liquidation, the holders of shares of the Series A Preferred Stock shall be permitted to participate on an as-converted-to-common-stock basis in any distribution of assets of the Company. The Company shall not pay any dividends on shares of common stock (other than dividends in the form of common stock) unless and until such time as dividends on each share of Series A Preferred Stock are paid on an as-converted basis. There is no restriction on the Company’s ability to repurchase shares of Series A Preferred Stock while there is any arrearage in the payment of dividends on such shares, and there are no sinking fund provisions applicable to the Series A Preferred Stock.
Subject to certain conditions, at any time following the issuance of the Series A Preferred Stock, the Company has the right to cause each holder of the Series A Preferred Stock to convert all or part of such holder’s Series A Preferred Stock in the event that (i) the volume weighted average price of our common stock for consecutive trading days (the “Measurement Period”) exceeds
18
The Series A Preferred Stock has no maturity date, will carry the same dividend rights as the common stock, and with certain exceptions, contains no voting rights. In the event of any liquidation or dissolution of the Company, the Series A Preferred Stock ranks senior to the common stock in the distribution of assets, to the extent legally available for distribution.
As of September 30, 2021, there were
10. Subsequent Events
Dividends on 6% Preferred Stock
On
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including, without limitation, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking statements” within the meaning of Section 27A of the Securities Exchange Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend that the forward-looking statements be covered by the safe harbor for forward-looking statements in the Exchange Act. The forward-looking information is based on various factors and was derived using numerous assumptions. All statements, other than statements of historical fact, that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are based upon certain assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are usually accompanied by words such as “believe,” “anticipate,” “plan,” “seek,” “expect,” “intend” and similar expressions.
Forward-looking statements necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in the forward looking statements due to a number of factors, including those set forth in Part I, Item 1A, entitled “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2020, as updated and supplemented by Part II, Item 1A, entitled “Risk Factors,” of our Quarterly Reports on Form 10-Q, and elsewhere in this report. In addition, while we expect the coronavirus pandemic to have an impact on our business operations and financial results, the extent of the impact on our clinical development and regulatory efforts, our corporate development objectives, our financial position and the value of and market for our common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, the emergence of new geographic hotspots, the re-emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States and in other countries, and the effectiveness of actions taken globally to contain and treat the disease. These factors as well as other cautionary statements made in this Quarterly Report on Form 10-Q, should be read and understood as being applicable to all related forward-looking statements wherever they appear herein. The forward-looking statements contained in this Quarterly Report on Form 10-Q represent our judgment as of the date hereof. We encourage you to read those descriptions carefully. We caution you not to place undue reliance on the forward-looking statements contained in this report. These statements, like all statements in this report, speak only as of the date of this report (unless an earlier date is indicated) and we undertake no obligation to update or revise the statements except as required by law. Such forward-looking statements are not guarantees of future performance and actual results will likely differ, perhaps materially, from those suggested by such forward-looking statements. In this report, “Cyclacel,” the “Company,” “we,” “us,” and “our” refer to Cyclacel Pharmaceuticals, Inc.
Overview
Consistent with our mission of developing medicines that expand available treatment options for patients with unmet medical needs, we have three orally-available candidates in clinical development:
| ● | Fadraciclib (formerly CYC065), a cyclin dependent kinase (CDK) inhibitor selectively targeting CDK2 and CDK9. Oral fadraciclib is currently being evaluated in mid-stage clinical trials in both patients with solid cancers and hematological malignancies. |
| ● | CYC140 is a novel, small molecule, selective and potent PLK-centric inhibitor, primarily targeting PLK1. We are currently planning a streamlined study with oral CYC140 in a broad range of solid tumors in multiple cohorts defined by cancer histology to be followed by a similar study in patients with hematological malignancies. |
| ● | Sapacitabine is a nucleoside analogue with a DNA damage response (DDR) mechanism. It is being evaluated as a combination therapy with venetoclax in patients with relapsed/refractory acute myeloid leukemia (AML). |
Cyclacel retains virtually all marketing rights worldwide to the compounds associated with the Company’s drug programs.
20
Results of Operations
Three And Nine months Ended September 30, 2020 and 2021
Results of Continuing Operations
Revenues
Revenues for each of the three and nine months ended September 30, 2020 and 2021 were $0.
The future
There are no active collaboration, licensing, or clinical supply agreements and consequently no revenues are expected in the foreseeable future.
Research and development expenses
From our inception, we have focused on drug discovery and development programs, with a particular emphasis on orally-available anticancer agents. Our research and development expenses have represented costs incurred to discover and develop novel small molecule therapeutics, including clinical trial costs for fadraciclib, CYC140, and sapacitabine. We have also incurred costs related to the advancement of product candidates through preclinical and clinical stages of development and in-house research to advance our biomarker program and technology platforms. We expense all research and development costs as they are incurred. Research and development expenses primarily include:
| ● | Clinical trial and regulatory-related costs; |
| ● | Payroll and personnel-related expenses, including consultants and contract research organizations; |
| ● | Preclinical studies and laboratory supplies and materials; |
| ● | Technology license costs; |
| ● | Stock-based compensation; and |
| ● | Rent and facility expenses for our offices and laboratories. |
The following table provides information with respect to our research and development expenditures for the three and nine months ended September 30, 2020 and 2021 (in $000s except percentages):
| | Three Months Ended | | | | | | | Nine Months Ended | | | | | | ||||||||
| | September 30, | | Difference | | September 30, | | Difference | ||||||||||||||
| | 2020 |
| 2021 |
| $ |
| % | | 2020 |
| 2021 |
| $ |
| % | ||||||
Transcriptional Regulation (fadraciclib) | | $ | 854 | | $ | 3,331 | | $ | 2,477 | | 290 | | $ | 2,592 | | $ | 7,748 | | $ | 5,156 | | 199 |
Mitosis Regulation (CYC140) | | | 127 | | | 664 | | | 537 | | 423 | | | 399 | | | 2,480 | | | 2,081 | | 522 |
DNA Damage Response (sapacitabine) | | | 54 | | | 96 | | | 42 | | 78 | | | 138 | | | 269 | | | 131 | | 95 |
Other research and development programs and expenses | | | 40 | | | 126 | | | 86 | | 215 | | | 215 | | | 387 | | | 172 | | 80 |
Total research and development expenses | | $ | 1,075 | | $ | 4,217 | | $ | 3,142 | | 292 | | $ | 3,344 | | $ | 10,884 | | $ | 7,540 | | 225 |
21
Total research and development expenses for the three and nine months ended September 30, 2021 represented 70% and 66% of our operating expenses respectively, an increase over respective comparative periods.
During both the three and nine months ended September 30, 2021, the increase in expenditure for the transcriptional regulation program relative to the respective comparative periods was due to clinical supply manufacturing and opening of clinical trial sites for the evaluation of fadraciclib in a Phase 1/2 studies. Research and development expenses relating to CYC140 increased during both the three and nine months ended September 30, 2021 as the pre-clinical evaluation and clinical trial supply manufacturing of CYC140 progressed.
The future
We anticipate that overall research and development expenses for the year ended December 31, 2021 will increase compared to the year ended December 31, 2020 as we progress both of our clinical development programs.
General and administrative expenses
General and administrative expenses include costs for administrative personnel, legal and other professional expenses and general corporate expenses. The following table summarizes the general and administrative expenses for the three and nine months ended September 30, 2020 and 2021 (in $000s except percentages):
| Three Months Ended | | | | | | | Nine Months Ended | | | | | | ||||||||
| September 30, | | Difference | | September 30, | | Difference | ||||||||||||||
| 2020 |
| 2021 |
| $ |
| % |
| 2020 |
| 2021 |
| $ |
| % | ||||||
Total general and administrative expenses | $ | 1,497 | | $ | 1,781 | | $ | 284 | | 19 | | $ | 4,124 | | $ | 5,520 | | $ | 1,396 | | 34 |
Total general and administration expenses for the three and nine months ended September 30, 2021 represented 30% and 34% of our operating expenses respectively, a decrease over respective comparative periods.
During both the three and nine months ended September 30, 2021, the increase in general and administrative expenses was primarily due to a $0.4 million reverse premium in relation to assignation of our lease facility in Dundee, Scotland and an increase in legal, professional and recruitment costs relating to expansion of the clinical team.
The future
We expect general and administrative expenditures for the year ended December 31, 2021 to increase by approximately 20% compared to our expenditures for the year ended December 31, 2020 due to lease assignation premium, legal, professional and recruitment costs.
Other income (expense), net
The following table summarizes other income for the three and nine months ended September 30, 2020 and 2021 (in $000 except percentages):
| Three Months Ended | | | | | | | Nine Months Ended | | | | | | ||||||||
| September 30, | | Difference | | September 30, | | Difference | ||||||||||||||
| 2020 |
| 2021 |
| $ |
| % | | 2020 |
| 2021 |
| $ |
| % | ||||||
Foreign exchange gains (losses) | $ | (25) | | $ | 9 | | $ | 34 | | (136) | | $ | 42 | | $ | 5 | | $ | (37) | | (88) |
Interest income |
| 4 | |
| 4 | |
| — | | — | |
| 36 | |
| 12 | |
| (24) | | (67) |
Other income, net |
| 56 | |
| — | |
| (56) | | (100) | |
| 891 | |
| 144 | |
| (747) | | (84) |
Total other income | $ | 35 | | $ | 13 | | $ | (22) | | (63) | | $ | 969 | | $ | 161 | | $ | (808) | | (83) |
22
The decrease in total other income for the nine months ended September 30, 2021 is related to royalties receivable under a December 2005 Asset Purchase Agreement, or APA, whereby Xcyte Therapies, Inc., or Xcyte (a business acquired by the Company in March 2006) sold certain assets and intellectual property to ThermoFisher Scientific Company, or TSC (formerly Invitrogen Corporation) through the APA and other related agreements. The assets and technology were not part of the Company’s product development plan following the transaction between Xcyte and Cyclacel in March 2006. Accordingly, the company recognized $0 and $144,000 of other income arising from sales related to this transaction during the three and nine months ended September 30, 2021, respectively. We have no knowledge of TSC’s activities and cannot predict when we may receive income under the APA, if any.
The future
Other income (expense), net for the year ended December 31, 2021, will continue to be impacted by changes in foreign exchange rates and the receipt of income under the APA. As we are not in control of sales made by TSC, we are unable to estimate the level and timing of income under the APA, if any.
Because the nature of funding advanced through intercompany loans is that of a long-term investment, unrealized foreign exchange gains and losses on such funding will be recognized in other comprehensive income until repayment of the intercompany loan becomes foreseeable.
Income tax benefit
Credit is taken for research and development tax credits, which are claimed from the United Kingdom’s revenue and customs authority, or HMRC, in respect of qualifying research and development costs incurred.
The following table summarizes total income tax benefit for the three and nine months ended September 30, 2020 and 2021 (in $000s except percentages):
| Three Months Ended | | | | | | | Nine Months Ended | | | | | | ||||||||
| September 30, | | Difference | | September 30, | | Difference | ||||||||||||||
| 2020 |
| 2021 |
| $ |
| % | | 2020 |
| 2021 |
| $ |
| % | ||||||
Total income tax benefit | $ | 281 | | $ | 998 | | $ | 717 | | 255 | | $ | 858 | | $ | 2,650 | | $ | 1,792 | | 209 |
The total income tax benefit comprises research and development tax credits recoverable. The level of tax credits recoverable is linked directly to qualifying research and development expenditure incurred in any one year and the availability of trading losses.
The future
We expect to continue to be eligible to receive United Kingdom research and development tax credits for the foreseeable future and will continue to elect to receive payment of the tax credit. The amount of tax credits we will receive is entirely dependent on the amount of eligible expenses we incur and could be restricted by any future cap or other restrictions or modifications introduced by UK taxation authorities. As we expect our eligible expenses to be higher in the fiscal year ended December 31, 2021, the level of tax credits recoverable is anticipated to be higher in 2021 compared to the fiscal year ended December 31, 2020.
23
Liquidity and Capital Resources
The following is a summary of our key liquidity measures as of September 30, 2020 and 2021 (in $000s):
| | | ||||
| | September 30, | ||||
|
| 2020 |
| 2021 | ||
Cash and cash equivalents | | $ | 23,130 | | $ | 40,219 |
Working capital: | | | | | | |
Current assets | | $ | 25,934 | | $ | 43,375 |
Current liabilities | |
| (1,712) | |
| (3,591) |
Total working capital | | $ | 24,222 | | $ | 39,784 |
Since our inception, we have relied primarily on the proceeds from sales of common and preferred equity securities to finance our operations and internal growth. Additional funding has come through research and development tax credits, government grants, the sale of product rights, interest on investments and licensing revenue. We have incurred significant losses since our inception. As of September 30, 2021, we had an accumulated deficit of $379.7 million.
Cash Flows
Cash used in operating, investing and financing activities for the nine months ended September 30, 2020 and 2021 is summarized as follows (in $000s):
| | Nine Months Ended September 30, | ||||
|
| 2020 |
| 2021 | ||
Net cash used in operating activities | | $ | (6,782) | | $ | (13,991) |
Net cash used in investing activities | |
| (54) | |
| (25) |
Net cash provided by financing activities | |
| 18,156 | |
| 20,850 |
Operating activities
Net cash used in operating activities increased by $7.2 million, from $6.8 million for the nine months ended September 30, 2020 to $14.0 million for the nine months ended September 30, 2021. The increase in cash used by operating activities was primarily the result of an increase in net loss of $7.9 million, a change in working capital of $0.1 million, offset by an increase of stock compensation expense of $0.6 million and change in lease liability of $0.2 million.
Investing activities
Net cash used by investing activities decreased by $29,000 for the nine months ended September 30, 2021, predominantly due to decreased capital expenditures on IT equipment.
Financing activities
Net cash provided by financing activities was $20.9 million for the nine months ended September 30, 2021 as a direct result of receiving approximately:
| ● | $13.5 million in net proceeds from the issuance of common stock under an underwriting agreement with Oppenheimer & Co. Inc., |
| ● | $4.5 million from warrant exercises associated with a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co. Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC, and |
| ● | $3.0 million from the issuance of common stock under a controlled equity offering sales agreement with Cantor Fitzgerald & Co., |
| ● | offset by dividend payments of approximately $0.2 million to the holders of our 6% Preferred Stock. |
24
Net cash provided by financing activities was $18.2 million for the nine months ended September 30, 2020 as a direct result of receiving approximately $18.3 million in net proceeds from the issuance of common stock and accompanying common stock warrants under a co-placement agency agreement with Roth Capital Partners, LLC, Ladenburg Thalmann & Co. Inc., and Brookline Capital Markets, a division of Arcadia Securities, LLC, offset by dividend payments of approximately $0.1 million to the holders of our 6% Preferred Stock.
Operating Capital and Capital Expenditure Requirements
We expect to continue to incur substantial operating losses in the future and cannot guarantee that we will generate any significant product revenues until a product candidate has been approved by the Food and Drug Administration (“FDA”) or European Medicines Agency (“EMA”) in other countries and successfully commercialized.
We believe that existing funds together with cash generated from operations, such as recent financing activities and the R&D tax credit, are sufficient to satisfy our planned working capital, capital expenditures and other financial commitments through to early 2023. However, we do not currently have sufficient funds to complete development and commercialization of any of our drug candidates. Current business and capital market risks could have a detrimental effect on the availability of sources of funding and our ability to access them in the future, which may delay or impede our progress of advancing our drugs currently in the clinical pipeline to approval by the FDA or EMA for commercialization. Additionally, we plan to continue to evaluate in-licensing and acquisition opportunities to gain access to new drugs or drug targets that would fit with our strategy. Any such transaction would likely increase our funding needs in the future.
Our future funding requirements will depend on many factors, including but not limited to:
| ● | the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities; |
| ● | the costs associated with establishing manufacturing and commercialization capabilities; |
| ● | the extent to which the coronavirus impacts the Company’s financial condition and operations, which will depend on future developments that are highly uncertain and cannot be predicted with confidence, including the ultimate duration of the pandemic, the emergence of new geographic hotspots, the re-emergence of subsequent outbreaks, travel restrictions, quarantines, social distancing and business closure requirements in the United States and in other countries, and the effectiveness of actions taken globally to contain and treat the disease; |
| ● | the costs of acquiring or investing in businesses, product candidates and technologies; |
| ● | the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; |
| ● | the costs and timing of seeking and obtaining FDA and EMA approvals; |
| ● | the effect of competing technological and market developments; and |
| ● | the economic and other terms and timing of any collaboration, licensing or other arrangements into which we may enter. |
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Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings or strategic collaborations. Although we are not reliant on institutional credit finance and therefore not subject to debt covenant compliance requirements or potential withdrawal of credit by banks, we are reliant on the availability of funds and activity in equity markets. We do not know whether additional funding will be available on acceptable terms, or at all. If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of or eliminate one or more of our clinical trials or research and development programs or make changes to our operating plan. In addition, we may have to partner one or more of our product candidates at an earlier stage of development, which would lower the economic value of those programs to us. Management continues to evaluate the impact of the COVID-19 pandemic on its current operations and future plans and takes appropriate measures to address any such impact, but there can be no assurance that these efforts will be successful and that the pandemic will not have negative effect on the Company’s financial position and results of operations, but it could materially affect the ability of the Company to raise future capital or to conduct clinical studies on a timely basis.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide information in response to this item.
Item 4. Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness, as of September 30, 2021, of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon such evaluation, our chief executive officer and principal financial and accounting officer have concluded that, as of September 30, 2021, our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to disclose in our filings with the Securities and Exchange Commission, or SEC, under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no significant changes made in our internal controls over financial. The ‘stay at home’ orders issued by the United States, United Kingdom and overseas governments in the global fight against the coronavirus pandemic has not resulted in any significant changes in our internal controls over financial reporting.
Inherent Limitation on the Effectiveness of Internal Controls
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute, assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot ensure that such improvements will be sufficient to provide us with effective internal control over financial reporting.
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PART II. Other Information
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
There have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2020. For a further discussion of our Risk Factors, refer to Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2020.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Item 6. Exhibits
Exhibit |
| Description |
| ||
101 | | The following materials from Cyclacel Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q for the period ended September 30, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements. |
104 | | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline eXtensible Business Reporting Language (included with Exhibit 101). |
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.
|
| CYCLACEL PHARMACEUTICALS, INC. | |
| | | |
Date: November 12, 2021 | | By: | /s/ Paul McBarron |
| | | Paul McBarron |
| | | Chief Operating Officer, Chief Financial Officer and Executive Vice President, Finance |
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