10-Bagger Watch: Cyclacel Meets Biotech Trophy Hunters (CYCC)
Cyclacel Pharmaceuticals, Inc. (NASDAQ: CYCC) was the latest example of trader, speculators and investors running out to pile into the next low-price small cap biotech stock in the quest for the ten-bagger to catch the next 1,000% run-up. The news was good in that this was the publication of two peer-reviewed journal articles featuring the company’s seliciclib drug candidate.
We wanted to delve into the article summaries, give a brief financial prognosis, see where the company has been in the past, see what the company said, see what else has the company has up its sleeve, and then give a quick trader-take mindset and some other recent data on this.
THE TWO ARTICLE SUMMARIES
An article published in Clinical Cancer Research reports that seliciclib was found to be effective in killing lung cancer cells, through a novel apoptotic mechanism or induction of cancer cell suicide. The article noted that nearly all lung cancer cell lines against which seliciclib was most effective had Ras-activating mutations, which make lung cancer cells highly resistant to approved drugs such as those targeting epidermal growth factor receptors.
The second article was entitled “R-roscovitine (seliciclib) affects CLL cells more strongly than combinations of fludarabine or cladribine with cyclophosphamide: Inhibition of CDK7 sensitizes leukemic cells to caspase-dependent apoptosis”. In ex vivo studies, seliciclib was compared to fludarabine and cladribine given in combination with cyclophosphamide and was the most effective at inducing programmed cell death in malignant B-CLL cells while resulting in significantly less apoptosis induction in “normal” peripheral blood mononuclear cells.
Seliciclib has been administered to approximately 420 patients in Phase 1 and Phase 2 trials and is currently being evaluated in the APPRAISE trial, which is a Phase 2b study as a possible treatment in non-small cell lung cancer patients who failed at least two prior therapies and in a randomized Phase 2 study as a single agent in patients with nasopharyngeal cancer.
A BRIEF FINANCIAL PROGNOSIS
What we want to do is to conduct a very early analysis of the market. At this point, it is impossible to know the exact size of the market because it is not known what the total aim can be. If it was automatically deemed to be a first line of treatment for lung cancer this would be instant blockbuster with well over $1 billion in annual sales. That could still be possible depending upon a myriad of scenarios. But that part is not known.
The stock rose 152% or $1.61 to $2.67 today on many multiples of its normal 1.5 million shares. The 52-week range is $0.26 to $2.74 and the market cap at today’s close is only $65.3 million. The company had over $25 million in liquidity a year ago, but as of the last quarter that was down to just over $14.4 million. About 5 years ago this stock fell from over $25.00 down to under $5.00 and it then traded between $5 and $10 per share from 2006 to 2008. Then it slid and slid some more, and today’s price of $2.74 on an intra-day high was the highest share price since May of 2008.
WHAT THE COMPANY SAYS
The company’s chief scientist noted that this shows a high correlation between Ras mutations and sensitivity to seliciclib. Of 52 cell lines of NSCLC origin tested, 2 of the lines (almost 4%) were relatively insensitive to seliciclib and 21 (about 40%) displayed modest sensitivity. The big data showed that 29 lines (about 56%) showed marked sensitivity. Of the 13 lung cancer cell lines which had the highest sensitivity to seliciclib, 12 (about 92%) had Ras-activating mutations, including K-RAS and N-RAS. However of the 15 lung cancer cell lines which were least sensitive to seliciclib, none had Ras-activating mutations. It also reported that inhibition of CDK2 by seliciclib suppressed lung cancer growth both in vitro and in vivo of lung cancer cells addicted to CDK2/cyclin E; and lung cancer cells underwent apoptosis or cell suicide by induction of a novel mechanism called anaphase catastrophe, as illustrated in the journal’s front cover. Combining seliciclib with microtubule-targeting agents, such as paclitaxel or docetaxel, was found to be an attractive clinical regimen to consider in patients with lung cancer.
WHAT ELSE THE COMPANY HAS
Cyclacel has three orally available Cyclacel drugs in clinical development:
- 1. Sapacitabine is a cell cycle modulating nucleoside analog in Phase 2 studies for the treatment of acute myeloid leukemia in the elderly, myelodysplastic syndromes and lung cancer. The Company plans to submit a Special Protocol Assessment (SPA) request for a pivotal study with sapacitabine during the first quarter of 2010.
- 2. Seliciclib (the big news winner Thursday) is a cyclin dependent kinase inhibitor in Phase 2 studies for the treatment of lung cancer and nasopharyngeal cancer and in a Phase 1 trial in combination with sapacitabine.
- 3. CYC116 is a Aurora kinase and VEGFR2 inhibitor in a Phase 1 trial in patients with solid tumors.
Cyclacel’s ALIGN Pharmaceuticals subsidiary markets Xclair Cream in the U.S. for radiation dermatitis, Numoisyn Liquid and Numoisyn Lozenges for xerostomia.
A TAKE ON THE TRADING ACTIVITY
The market is in bull market mode even if there has been a dud of a time in the large cap biotech stocks. Traders are currently chasing up low-priced small cap stocks on any news, and today’s news-reaction looks to be no different. We would note that the company already gave one peer-reviewed article for Seliciclib on December 30, and this news magically follows the notion that the company received a NASDAQ potential delisting notice for not meeting the minimum $10 million stockholders’ equity requirement. Merriman Curhan Ford initiated coverage with a “BUY” rating in late-October, but that was when the stock was under $1.00 and it appears to have a $2.00 target.
The company also released FDA meeting data in mid-December:
“held a Type A meeting with the U.S. Food and Drug Administration (FDA) to discuss a randomized Phase 3 study design for Cyclacel’s oral sapacitabine capsules in acute myeloid leukemia (AML) and separately in myelodysplastic syndromes (MDS)…. Based on the FDA’s confirmation that the proposed study design would be acceptable for a Special Protocol Assessment (SPA), Cyclacel plans to submit a SPA request during the first quarter of 2010.”
The company’s CEO is presenting at OneMedForum 2010 Finance Conference taking place in San Francisco on Wednesday, January 13, 2010 at 10:00 AM Pacific Time (1:00 PM EST).
In fact, a pop of this magnitude, even if followed by additional near-term gains, is usually followed up with a securities sale or a private placement to raise capital. That is particularly the case when a company is not meeting listing requirements.
This won’t be the last you have heard from Cyclacel, but this is also just another incident of traders chasing gains and chasing gains. Technically this has already gone up 10-times from the absolute lows.
JON C. OGG
JANUARY 8, 2010
Comments
2 Responses to “10-Bagger Watch: Cyclacel Meets Biotech Trophy Hunters (CYCC)”
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Gosh, you do a lot of writing — and well! I have just noticed your name on this article on CYCC, having recently subscribed. Will look for more w/your byline. Thank you.
Do you make trading recommendations under another banner?
You were spot on in this article. I fortunately didn’t buy at the high’s but even if I did I don’t think I would fret too much. This company looks rather promising right now and if they are able to partner, which they have publically stated they wouldn’t do until after PhII data, this stock could be a real mover.
They are entering into late stage some promising compounds and have shown to have additional “targeted therapy” opportunities in Breast Cancer and Lung Cancer (K-Ras mutations) for the future.
Thanks Jon,
Very Informative Poster.