Positive Hints on Phase III Trial Causes Cyclacel To Recover Losses Quickly Print E-mail
By Brian Wilson, Lead Contributor   
Thursday, 06 December 2012 08:15
icon_newsnotesAfter seeing a temporary break of its bullish momentum in November’s trading, Cyclacel Pharmaceuticals (NASDAQ: CYCC) is heating up again as the market digests the latest results gathered from the phase III SEAMLESS trial for sapacitabine in the treatment of AML.

SEAMLESS is under a special protocol assessment agreement with the FDA that allows for a potential approval of the drug prior to the completion of the trials. This means that FDA approval could come at any moment, which is an exciting notion that has driven up speculation significantly clearly. It’s also worth noting that sapacitabine is also under development for myelodysplastic syndrome (MDS) and non-small cell lung carcinoma (NSCLC)
MDS is actually a precursor to AML in one out of every three patients. If you look back, you can see that it wasn’t the AML program that caused the last runup in CYCC but the MDS program. The last update on sapacitabine’s development for MDS was from a presentation at the Eighth Annual Hematologic Malignancies 2012 Conference, which was held between October 10-14th 2012 (see the data here).

From the press release:

"MDS patients have a poor outcome after treatment failures with front-line therapies. The updated survival data support previously reported data indicating that sapacitabine is active in this patient population," said Hagop Kantarjian, M.D., Chairman & Professor, Department of Leukemia, The University of Texas MD Anderson Cancer Center and principal investigator for the study. "Median survival for patients with intermediate-2 or high-risk MDS following treatment failures of hypomethylating agents is 4.3 to 5.6 months. We urgently need effective therapies for these patients."

Sapacitabine’s phase II data, as well as the company’s optimistic commentary on the results, caused Cyclacel to rally from roughly $5/share to $7 by the end of October. While it was clear that the investors liked what they saw of the phase II clinical trials, these sizable gains were lost in November after Cyclacel’s third quarter earnings report. It wasn’t until December that shares saw renewed interest from the market, as more clinical data became available.

The company’s most recent press release (December 4th) revealed data from SEAMLESS that will be presented at the American Society of Hematology Annual Meeting (ASH), which will be held in Atlanta on December 9, 2012. Since the actual data that will be shown in the presentation has already been made available on the ASH website (search for abstract # 2630), the market was able to move CYCC nearly 25% higher in the last few trading sessions in reaction to details on sapacitabine’s phase III program. We didn’t see any really interesting numbers, but we did get a positive conclusion statement that increases the likelihood that SEAMLESS ends up successful.

“Conclusion:  The sequential combination of decitabine and sapacitabine appears to be safe and active.  A large randomized, phase III trial is currently underway comparing this treatment regimen against single agent decitabine in the treatment of elderly AML.”

ASH 2012 Abstract #2630 Pooled Analysis of Elderly Patients with Newly Diagnosed AML Treated with Sapacitabine and Decitabine Administered in Alternating Cycles.

Although we don’t have the full results from SEAMLESS, expect this to become the main thing that Cyclacel traders watch going into 2013.  A giant spike in short interest in early November might’ve helped cause the downfall in the price of CYCC stock, although the same aggregated pool of shares short is now in dangerous territory as CYCC trades near a 52-week high of $8.18/share. There is certainly potential for a short squeeze of up to 21% of floated shares of CYCC given any enormously positive developments (like an FDA approval of sapacitabine for the treatment of AML in 2013.)

CYCC is a great opportunity for traders who enjoy momentum plays, while value investors might be more drawn to the modest $65 million market capitalization. As is the case for most biotechnology stocks, like Cyclacel, the attractiveness of the trade is also highly dependent on an investor’s timeframe. Those who will trade CYCC based on momentum in the short run should be quite nimble due to the extreme volatility of this ticker and its tendency to have overly dramatic reactions to press releases. Those who are buying Cyclacel for the value of sapacitabine should ignore the short term movements and wait for more results from the phase III SEAMLESS trial, which might result in an early FDA approval.

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