|Cyclacel Rally Heats Up On Clinical Trial Progression|
|By Brian Wilson, Lead Contributor|
|Tuesday, 16 October 2012 05:53|
Results from the phase II trial for Sapacitabine in the treatment of MDS (and ALS) were encouraging, since it demonstrated that patients that failed first line therapy (hypomethylating agents) had a good chance of benefitting from sapacitabine. Still, the FDA's determination of the drug's efficacy will be made on the primary endpoint of the trials – a statistically significant demonstration of one-year survival increases in sapacitabine arms versus others.
Cyclacel's sources put new MDS cases in the United States between 15,000-46,000/year, which surpasses most estimates of AML incidence. Since sapacitabine has so much potential in MDS, and since the phase III 'SEAMLESS' results are so far away, we can say that the market will trade very heavily on speculation over the soon-to-be finished phase II results.
CYCC had some trouble earlier in the year, and had to undergo a 1:7 reverse stock split on August 24th to avoid NASDAQ delisting. While the market usually hates stocks that undergo reverse stock splits due to likely share dilutions down the road, nobody seems to want to short the stock. The latest NASDAQ listing shows only 28,525 in short interest, which gives a ridiculously low short interest ratio of roughly .1. Long-term shareholders can't count on any upside from a short-squeeze at this point, and may have to worry about profit taking on good phase II results for sapacitabine when they do come.
Due to this, the biotech investors who want confirmation of sapacitabine's phase II endpoints before buying shares could get better prices after other shareholders take profits. Once the press release is out, some traders will probably not want to be stuck with their CYCC shares, waiting for SEAMLESS results that are two long years away. Cyclacel is still a very catalyst-driven stock, after all, which was proved by the huge trading volume on October 15. It's impossible to say how many of these new buyers are only chasing the confirmed phase II results though.