Washington, D.C. 20549
FORM 10-K
(Amendment No.1)
(Mark One)
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2023 | |
OR | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 000-50626 |
CYCLACEL PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 91-1707622 | ||||
(State or Other Jurisdiction | (I.R.S. Employer | ||||
| | ||||
200 Connell Drive | 07922 | ||||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (908) (908) 517-7330
Securities registered under Sectionpursuant to section 12(b) of the Exchange Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||
Common Stock, | CYCC | The | |||
Preferred Stock, $0.001 par value | CYCCP | The |
Securities registered pursuant to Sectionsection 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
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. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | ||
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐Yes☒No
The aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in such calculation is an affiliate), as of June 30, 20172023 (based upon the closing sale price of $3.77$8.84 of such shares on The NASDAQ Capital Market on June 30, 2017)2023), the last business day of the registrant’s most recently completed second fiscal quarter, was $12,719,813.
As of March 27, 2018,April 26, 2024, there were 11,997,4471,318,257 shares of the registrant’s common stock outstanding.
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends the following parts of the Form 10-K: Certain information required in Part III of this Annual Report on Form 10-K is incorporated from the Registrant’s Proxy Statementof Cyclacel Pharmaceuticals, Inc. for the fiscal year ended December 31, 2023, as originally filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2024 (the “Original 10-K”). The purpose of this Amendment is to include information required by Part III of the Annual MeetingReport on Form 10-K that was intentionally omitted from Part III of Stockholdersthe Original 10-K. In addition, this Amendment amends Item 15 of Part IV of the Original 10-K to update the exhibit list and to include new certifications by our principal executive officer and principal financial officer under Section 302 of the Sarbanes-Oxley Act of 2002, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Except as described above, no other changes have been made to the Original 10-K. The Original 10-K continues to speak as of the dates described in the Original 10-K, and we have not updated the disclosures contained therein to reflect any events that occurred subsequent to such dates. Accordingly, this Amendment should be held onread in conjunction with the Company’s filings made with the SEC subsequent to the filing of the Original 10-K, as information in such filings may update or about May 31, 2018.supersede certain information contained in this Amendment.
In this Amendment, unless the context specifically indicates otherwise, “the Company,” “we,” “us,” “our,” and “Cyclacel” refer to Cyclacel Pharmaceuticals, Inc. and its subsidiaries.
2
| | |||||||
| | Page | ||||||
| | |||||||
| ||||||||
| | |||||||
4 | ||||||||
10 | ||||||||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 18 | |||||||
Certain Relationships and Related Transactions, and Director Independence | 20 | |||||||
21 | ||||||||
| | | ||||||
| | |||||||
| | | ||||||
23 |
3
PART I
The following Business Section contains forward-looking statements. Board of Directors
Our actual results could differ materially from those anticipatedcharter provides that our business is to be managed by or under the direction of our Board of Directors. Our Board of Directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our Board of Directors currently consists of three classes, as set forth below. We also have two directors who are elected by holders of our 6% Convertible Exchangeable Preferred Stock (the “Preferred Stock”),
Set forth below, as of December 31, 2023, are the names of our directors, their ages, their offices in these forward-looking statementsthe Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board of Directors’ conclusion at the time of filing of this proxy statement that each person listed below should serve as a result of certain risks, uncertainties and other factors including the risk factorsdirector is set forth below:
Name | Age | Position | ||
Spiro Rombotis | | 65 | | President and Chief Executive Officer; Class 2 Director |
Paul McBarron | | 63 | | Executive Vice President — Finance, Chief Financial Officer, Chief Operating Officer and Secretary; Class 3 Director Nominee |
Dr. Christopher Henney | | 83 | | Chairman; Class 3 Director Nominee |
Dr. Robert Spiegel | | 74 | | Vice Chairman; Class 3 Director Nominee |
Dr. Samuel L. Barker | | 81 | | Class 2 Director on behalf of our holders of Preferred Stock |
Dr. Kenneth M. Ferguson | | 68 | | Class 1 Director on behalf of our holders of Preferred Stock |
Dr. Brian Schwartz | | 62 | | Class 2 Director; Interim Chief Medical Officer |
Karin L. Walker | | 60 | | Class 1 Director |
Board Diversity Matrix
(as of April 23, 2024)
This table provides information on the diversity of our current Board of Directors:
Total Number of Directors | 8 | | ||||||||||
| Male |
|
| Female | | |||||||
Directors | 7 | 1 | | |||||||||
Part I: Gender Identity | ||||||||||||
Part II: Demographic Background | ||||||||||||
White | 6 | 1 | | |||||||||
Did not Disclose Demographic Background | 1 | |
Class 1 Director (Term to Expire in Part I, Item 1A2025)
Karin L. Walker. Ms. Walker has served as a director of the Company since November 2020 and has over 30 years of extensive finance experience in biopharmaceuticals, including in public biotechnology companies and technology companies. Ms. Walker currently serves as the Chief Accounting Officer of Prothena Corporation plc, a late-stage clinical biotechnology company with expertise in protein dysregulation and a pipeline of investigational therapeutics focused on neurodegenerative and rare peripheral amyloid diseases, and has held this Annual Reportposition since 2013. Prior to joining Prothena, she was Vice President, Finance and Chief Accounting Officer of Affymax, Inc., a position she held from 2012 to 2013. From 2009 to 2012, Ms. Walker was Vice President, Finance and Corporate Controller at Amyris Inc. From 2006 to 2009, she was Vice President, Finance and Corporate Controller for CV Therapeutics, Inc. Ms. Walker also held senior financial leadership positions at Knight Ridder Digital, Accellion,
4
Niku Corporation, Financial Engines, Inc. and NeoMagic Corporation. Ms. Walker also served as a director and Audit Committee Chair for LifeSci Acquisition Corp. (a publicly-traded special purpose acquisition company) in 2020. Ms. Walker earned her B.S. in business from the California State Polytechnic University, San Luis Obispo, and is a certified public accountant (CPA). We believe that Ms. Walker’s qualifications to serve on Form 10-K.the Board of Directors include experience in the biotechnology and pharmaceutical industry and her many years’ experience in finance.
Class 2 Directors (Terms to expire in 2026)
Spiro Rombotis. Mr. Rombotis joined Cyclacel as its first CEO in 1997 and has over 38 years at three public biotechs and two pharmas. He participated in in-licensing, clinical development, regulatory approval, partnering and commercial launch of several drugs, mainly in inflammation and hematology/oncology, including Abelcet®, Evacet/Myocet®, ProHance®, Remicade® and Reopro®. Major functional roles included international operations and business development as Vice President at Liposome (subsequently acquired by Elan) and previously Vice President in the pharmaceuticals division of Bristol-Myers Squibb. He began his career in the early ’80s, after training at Novartis, as one of the first employees of Centocor (subsequently acquired by Johnson & Johnson). He holds an MBA and MPH (Hospital & Health Services Management) with honors, Kellogg School of Management, Northwestern University and a BA, Williams College (1981 James A. Garfield Scholar). He serves on the Board of Trustees of BioNJ, the NJ biotech association. We believe Mr. Rombotis’ qualifications to serve on the Board of Directors include his role as President and Chief Executive Officer of our Company, his extensive knowledge and experience in the biotechnology and life sciences industry and his leadership, strategic guidance and operational vision.
Brian Schwartz, M.D. Dr. Schwartz has served as a director of the company since December 2020 and as our interim Chief Medical Officer since January 2024. Dr. Schwartz has wide-ranging experience as a drug development expert in pharmaceutical and biotechnology industries primarily in oncology, hematology, and rare diseases. From June 2008 to 2020, he served as Senior Vice President, Head of Research & Development and Chief Medical Officer of ArQule Inc., which was acquired for $2.7 billion by Merck & Co. in 2020. Prior to ArQule, Dr. Schwartz was Chief Medical Officer at Ziopharm, having previously held several senior leadership roles at Bayer and LEO Pharma. He is a current Board Member of Enlivex Pharmaceuticals and also served as a director of LifeSci Acquisition Corp., Mereo Biopharma and Infinity. In this report, “Cyclacel,”addition, he serves as an advisor and independent consultant for numerous biotech and investment companies. He received his medical degree from the “Company,” “we,” “us,”University of Pretoria, South Africa, completed a fellowship at the University of Toronto, Canada and “our” referpracticed medicine prior to Cyclacelhis career in the biopharmaceutical industry. We believe Dr. Schwartz’s qualifications to serve on the Board of Directors include his extensive knowledge and experience in the biotechnology and life science industry.
Continuing Preferred Stock Class 1 Director (Term to Expire in 2025)
Dr. Kenneth M. Ferguson. Dr. Ferguson has worked in the biopharmaceutical industry for 30 years, and has led Research and Development operations in a number of publicly funded biotechnology companies. Dr. Ferguson is currently an operating partner at Accelerator Life Science Partners. He served at ICOS Corporation, at various times in its history, as President, Vice President of Therapeutic Development and Senior Director of Research. He was co-team leader of ICOS’ joint venture with Eli Lilly and Company that resulted in the launch of Cialis®/Adcirca® for the treatment of erectile dysfunction, benign prostatic hyperplasia and pulmonary arterial hypertension. Subsequently, Dr. Ferguson was Vice President of Development and Chief Development Officer at Omeros Corporation and was involved in the approval and the launch of its first product for use in cataract surgery. Dr. Ferguson has also served as President and CEO of privately held Imvaxyn Corporation, a company dedicated to the exploration of new vaccine technology and was Chief Scientific Officer of EMulate Therapeutics. Dr. Ferguson graduated in biological sciences from Cornell University, obtained his PhD in pharmacology from the University of Texas Health Sciences Center Dallas, and completed his postdoctoral studies at Cold Spring Harbor Laboratory in New York. We believe Dr. Ferguson’s qualifications to serve on the Board of Directors include his extensive knowledge and business experience in the biotechnology industry, including as an executive in public companies, where he developed specific expertise in research and development of pharmaceutical products.
5
Continuing Preferred Stock Class 2 Director (Term to Expire in 2026)
Samuel L. Barker. Dr. Barker has served as a director of the Company since September 2014. In 2001, Dr. Barker co-founded Clearview Projects, Inc., a provider of partnering and transaction services to biopharmaceutical companies, where he was active until September 2010, having served as its President and Chief Executive Officer from 2003 to 2004. Dr. Barker served in a series of leadership positions at Bristol-Myers Squibb Company until his retirement in 1999. His positions at Bristol-Myers Squibb included service as Executive Vice President, Worldwide Franchise Management and Strategy during 1998; President, United States Pharmaceuticals from 1992 to 1998; and President, Bristol-Myers Squibb Intercontinental Commercial Operations from 1989 to 1991. Prior to 1989, Dr. Barker held executive positions in research and development, manufacturing, business development and served as President of U.S. commercial operations at Squibb Pharmaceuticals. Dr. Barker has served as a director of Lexicon Pharmaceuticals, Inc.
Class 3 Directors (Terms to Expire in 2027; if re-elected)
Christopher S. Henney, Ph.D. D.Sc. Dr. Henney has served as a director of the Company since March 2006. Dr. Henney became Chairman of the Board of Directors of the Company in October 2020. Dr. Henney had served as a director of Xcyte Therapies Inc., acquired by the Company in 2006, since March 2005, and continued on as Vice Chairman of the Company. Previously, Dr. Henney co-founded three major publicly held U.S. biotechnology companies, Immunex, ICOS and Dendreon, and held a seat on the board of directors and executive positions at each company. From 1995 to January 2003, Dr. Henney was Chairman and Chief Executive Officer of Dendreon Corporation. During part of 2016, he was also interim President and Chief Executive Officer of Cascadian Therapeutics Inc. and a board member of Anthera Pharmaceuticals, Inc., both biotechnology companies. Dr. Henney was a director of Prothena Corporation plc from 2013 until May 2022. Dr. Henney received a Ph.D. in experimental pathology from the University of Birmingham and a D.Sc. from the same university for cancer and other proliferative diseases. Cyclacel is a pioneer company incontributions to the field of cell cycle biology with a visionimmunology. In 2012, Dr. Henney was inducted into the Biotechnology Hall of Fame. We believe Dr. Henney’s qualifications to improve patient healthcare by translating cancer biology into medicines.
Paul McBarron. Mr. McBarron has served as a director of the Company since March 2006. Mr. McBarron joined Cyclacel in January 2002 and has over 30 years of experience with pharmaceutical and biotechnology companies. He has served as a financial executive at Sterling Drug, Sanofi-Winthrop and SmithKline Beecham and, from 1996 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.
Robert J. Spiegel, M.D. Dr. Spiegel has served as a complex set of interacting proteins tightly regulates progression through the phasesdirector of the cell cycle by which a cell grows, replicates its DNACompany since September 2018. Dr. Spiegel has over 30 years of extensive R&D and divides. This process also includes mechanisms known as cell cycle checkpoints, to ensure all necessary events of each cell cycle phase are completed before beginning the next phase. If the events are not completed correctly, the cells may commit suicide by a process of programmed cell death called apoptosis. Cyclin dependent kinases, or CDKs, are key regulators among the numerous proteins involvedoperational experience in cell cycle control processes. CDKs connect with proteins called cyclins to regulate cell cycle checkpoints and control transcription, DNA repair and metastatic spread. The discovery of CDKs and cyclins and their regulation of cell cycle checkpoint control were cited in the 2001 Nobel Prize in Physiology or Medicine.
6
the first Director for Oncology Clinical Research. He subsequently held a series of senior executive positions, including Senior Vice President for Worldwide Clinical Research and Chief Medical Officer. During his time at Schering-Plough he led teams that took numerous drug candidates through clinical development and was involved with over 30 New Drug Application approvals by the U.S. FDA. For the last seven years, he has been a consultant to the biotech industry and has served on the Scientific Advisory Board and Board of Directors of multiple biotech companies. Dr. Spiegel received his B.A. from Yale University and his M.D. from the University of Pennsylvania. He completed his specialty training at the National Cancer Institute, National Institute of Health (NIH). We believe Dr. Spiegel’s qualifications to serve on the Board of Directors include his extensive knowledge and business experience in the biotechnology industry, including a diversified background as an executive in public companies and as a board member of several public companies, giving him a breadth of knowledge and valuable understanding of our business.
Director Independence
Our Board of Directors has reviewed the materiality of any relationship that each of our directors has with the Company, either directly or indirectly. Based upon this review, our Board of Directors has determined that each of the following directors is an “independent director” as such term is defined by rules of The Nasdaq Stock Market, Inc., or Nasdaq:
● | Christopher S. Henney, Ph.D., D.Sc. |
● | Robert J. Spiegel, M.D. |
● | Samuel L. Barker, Ph.D. |
● | Kenneth M. Ferguson, Ph.D. |
● | Karin L. Walker |
The Board of Directors has established three standing committees: (1) the Compensation and Organization Development Committee, (2) the Audit Committee, and (3) the Nominating and Corporate Governance Committee. The Board of Directors has also determined that each member of these committees meets the independence requirements applicable to each such committee as prescribed by Nasdaq and the SEC. Dr. Schwartz will not be considered an independent director while serving as interim Chief Medical Officer. Following his appointment on January 25, 2024, Dr Schwartz resigned from the Nominating and Corporate Governance Committee. In September 2018, the Board of Directors also reconstituted the Science and Technology Committee.
Committees of the Board of Directors and Meetings
Meeting Attendance. During fiscal 2023, there were 11 meetings of our Board of Directors, and the Compensation and Organization Development Committee, the Audit Committee, the Nominating and Corporate Governance Committee and the Science and Technology Committee met collectively a total of 15 times. No director attended fewer than 55% of the total number of meetings of the Board of Directors or of the committees of the Board of Directors on which they served during fiscal 2023. We have adopted a policy encouraging our directors to attend annual meetings of stockholders. Five of our then directors attended our annual stockholders’ meeting held on June 13, 2023. Each of the committees of the Board of Directors is described below.
Audit Committee. Our Audit Committee met six times during fiscal 2023. The Audit Committee during such period had four members: Karin L. Walker (Chair), Dr. Christopher Henney, Dr. Samuel L. Barker and Dr. Robert J. Spiegel. Karin L. Walker was appointed as Chairman of the Audit Committee on February 18, 2021. All members of the Audit Committee satisfy the current independence standards promulgated by Nasdaq and the SEC, as such standards apply specifically to members of audit committees. The Board of Directors has determined that Karin L. Walker is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of Regulation S-K.
Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include the authority to retain and terminate the services of our independent registered public accounting firm. In addition, the Audit Committee reviews annual financial statements, considers matters relating to accounting policy
7
and internal controls and reviews the scope of annual audits. For additional information, please see the report of the Audit Committee set forth elsewhere in this proxy statement. A copy of the Audit Committee’s written charter is publicly available on our website at www.cyclacel.com.
Compensation and Organization Development Committee. Our Compensation and Organization Development Committee met three times during fiscal 2023. The Compensation and Organization Development Committee is composed entirely of directors who are not our current or former employees, all of whom qualify as independent under the definition promulgated by Nasdaq and the SEC. The Compensation and Organization Development Committee currently attemptinghas three members: Dr. Samuel L. Barker (Chairman), Dr. Christopher S. Henney and Dr. Kenneth M. Ferguson. Our Compensation and Organization Development Committee’s role and responsibilities are set forth in its written charter and include reviewing, approving and making recommendations regarding our compensation policies, practices and procedures to develop nucleoside analogs, CDK inhibitorsensure that legal and PLK inhibitors,fiduciary responsibilities of the Board of Directors are carried out and that such policies, practices and procedures contribute to our success. The Compensation and Organization Development Committee also administers our 2020 Inducement Equity Incentive Plan, our 2018 Equity Incentive Plan, our 2015 Equity Incentive Plan and our Amended and Restated 2006 Equity Incentive Plan, as amended. Our Compensation and Organization Development Committee is responsible for the determination of the compensation of our chief executive officer, and shall conduct its decision making process with respect to that issue without the chief executive officer present.
A copy of the Compensation and Organization Development Committee’s written charter is publicly available on our website at www.cyclacel.com.
Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee met [once] during fiscal 2023. The Nominating and Corporate Governance Committee consists of Dr. Christopher S. Henney (Chairman), Karin L. Walker and Dr. Robert J. Spiegel, all of whom qualify as independent under the definition promulgated by Nasdaq and the SEC. Dr. Brian Schwartz resigned from the Nominating and Corporate Governance Committee when appointed interim Chief Medical Officer on January 25, 2024. The functions of the Nominating and Corporate Governance Committee are set forth in the Nominating and Corporate Governance Committee’s charter and include evaluating and making recommendations to the full Board of Directors as to the size and composition of the Board of Directors and its committees, evaluating and making recommendations as to potential candidates, and evaluating the performance of the Board of Directors. Generally, our Nominating and Corporate Governance Committee considers candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. Once identified, the Nominating and Corporate Governance Committee will evaluate a candidate’s qualifications in accordance with its guiding principles as set forth in the Nominating and Corporate Governance Committee’s written charter. Additionally, the Nominating Committee will consider issues of diversity among its members in identifying and considering nominees for director, and strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on our board of directors and its committees.
If a stockholder wishes to nominate a candidate for director who is not to be included in our proxy statement, it must follow the procedures described in our By-Laws and in “Stockholder Proposals and Nominations for Director” at the end of this proxy statement.
In addition, under our current corporate governance policies, the Nominating and Corporate Governance Committee may consider candidates recommended by stockholders as well as from other sources, such as other directors or officers, third party search firms or other appropriate sources. For all potential candidates, the Nominating and Corporate Governance Committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the industry in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board of Directors and concern for the long-term interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources.
8
A copy of the Nominating and Corporate Governance Committee’s written charter is publicly available on our website at www.cyclacel.com.
Science and Technology Committee. The Science and Technology Committee, which met 4 times during fiscal 2023, consists of Dr. Robert J. Spiegel (Chairman), Dr. Samuel L. Barker, Dr. Kenneth M. Ferguson and Dr. Brian Schwartz.
The responsibilities of the Science and Technology Committee are set forth in the Science and Technology Committee’s charter and include providing oversight on behalf of the Board of Directors of our overall strategic direction and investment in research and development (“R&D”) and technological and scientific initiatives. The Science and Technology Committee also assists the Board of Directors and our management in evaluating risks and potential commercial value of technical profiles regarding our R&D programs and technology, as they might impact our business performance, growth and competitive position.
Board Leadership Structure
Dr. Christopher Henney serves as the Chairman of our Board of Directors and Mr. Rombotis serves as our President and Chief Executive Officer. Dr. Christopher Henney is an independent director under the definition promulgated by Nasdaq and the SEC, and we believe that it is preferable for one of our drug candidates are differentiated in that they are orally-available and demonstrate unique target profiles and mechanisms.
We recognize that different board leadership structures may be appropriate for companies in different situations. We will continue to re-examine our corporate governance policies and licensing agreements, we do not control the timing or
Role in patients with incurable advanced solid tumors unresponsive to conventional treatment orRisk Oversight
Management is responsible for which no effective therapy exists. In Part 1managing the risks that we face. The Board of the study 38 patients were treated with sapacitabine administered twice dailyDirectors is responsible for 7 days sequentially followed by seliciclib twice daily for 3 days over a 21 day cycle, and in Part 2, 29 patients were dosed with sapacitabine each morning followed by seliciclib each evening, each once daily for 5 days per week for 2 weeks of a 28 day cycle. The primary objective of the trial is to determine the maximum tolerated dose with a secondary objective of antitumor activity of the combination. Sixty-seven patients have been treated in Parts 1 and 2 of the study, of which 44 were found to carry germline BRCA mutations and one a sporadic BRCA mutation.
| | | PART 1 | | | PART 2 | | ||||||||||||||||||
| | | BRCA carriers (n=16) | | | Others (n=22) | | | BRCA carriers (n=28) | | | Others (n=1) | | ||||||||||||
CR | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | |
PR | | | | | 3 | | | | | | — | | | | | | 2 | | | | | | — | | |
SD | | | | | 2 | | | | | | 6 | | | | | | 7 | | | | | | 1* | | |
ORR (CR/PR) | | | | | 25% | | | | | | 0% | | | | | | 7% | | | | | | 0% | | |
Disease Control (CR/PR/SD) | | | | | 6 (37.5)% | | | | | | 6 (27.3)% | | | | | | 9 (32.1)% | | | | | | 1 (100.0)% | | |
|
While the agreed-upon protocol, data supporting the request are found to be false or incomplete, or the FDA determines that a substantial scientific issue essential to determining the safety or effectivenessBoard of Directors has ultimate oversight responsibility for overseeing management’s risk management process, various committees of the drug was identified afterBoard of Directors assist it in fulfilling that responsibility. Notably, the testing began. Even if an SPA is agreed to, approvalAudit Committee assists the Board of the NDA is not guaranteed because a final determination that an agreed-upon protocol satisfies a specific objective, such as the demonstrationDirectors in its oversight of efficacy, or supports an approval decision, will be based on a complete review of all the data in the NDA.
9
Policy Prohibiting Hedging
Our Insider Trading Policy provides that no employee, officer or director may acquire, sell or trade in acquiring technologies and technology licenses.
Stockholder Communications to the SEC. WeBoard of Directors
Generally, stockholders who have not incorporated by reference in this Annual Report on Form 10-Kquestions or concerns should contact our Investor Relations department at (908) 517-7330 or e-mail at ir@cyclacel.com. However, stockholders wishing to submit written communications directly to the information on, or accessible through,Board of Directors should send their communications to our website. Copies are also available, without charge, fromSecretary, Paul McBarron, Cyclacel Pharmaceuticals, Inc., 200 Connell Drive, Suite 1500, Berkeley Heights, NJNew Jersey 07922.
● | junk mail and mass mailings; |
● | resumes and other forms of job inquiries; |
● | surveys; and |
● | solicitations or advertisements. |
In addition, our directorsany material that is unduly hostile, threatening, or illegal in nature may only be removed for causeexcluded, provided that any communication that is filtered out will be made available to any independent director upon request.
Item 11. Executive Compensation
Summary Compensation Table
The following table shows the compensation paid or accrued during the last two fiscal years ended December 31, 2022 and amended and restated bylaws limit the ability our stockholders2023 to call special meetings of stockholders.
Name and Principal Position |
| Year |
|
| Salary |
|
| Bonus |
|
| Option |
|
| All Other |
|
| Total |
| ||||||
Spiro Rombotis |
|
| 2023 |
|
|
| 560,131 |
|
|
| 0 |
|
|
| 48,581 |
|
|
| 52,337 |
|
|
| 661,049 |
|
President and Chief Executive Officer |
|
| 2022 |
|
|
| 546,470 |
|
|
| 169,406 |
|
|
| - |
|
|
| 47,675 |
|
|
| 763,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Paul McBarron(3) |
|
| 2023 |
|
|
| 304,214 |
|
|
| 0 |
|
|
| 31,003 |
|
|
| 17,398 |
|
|
| 352,615 |
|
Executive Vice President, Finance, Chief Financial Officer, Chief Operating Officer, Secretary |
|
| 2022 |
|
|
| 279,568 |
|
|
| 93,655 |
|
|
| - |
|
|
| 21,452 |
|
|
| 394,675 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Mark Kirschbaum, MD |
|
| 2023 |
|
|
| 396,760 |
|
|
| 0 |
|
|
| 31,003 |
|
|
| 52,855 |
|
|
| 480,618 |
|
Former Senior Vice President and Chief Medical Officer (4) |
|
| 2022 |
|
|
| 381,500 |
|
|
| 97,644 |
|
|
| - |
|
|
| 44,699 |
|
|
| 523,843 |
|
(1) | These amounts represent the aggregate grant date fair value for option awards computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value may be found in our Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. No Options were granted during the year ended December 31, 2022 to Spiro Rombotis, Paul McBarron, or Mark Kirschbaum. Options were granted during the year ended December 31, 2023 to Spiro Rombotis, Paul McBarron, and Mark Kirschbaum in the amounts of 7,333 shares, 4,680 shares, and 4,680 shares, respectively. |
10
(2) | Consists of the following for all executive officers: Payments for private medical and health insurance, life insurance and permanent health insurance; and matching contributions made under the Company’s U.S. 401(k) Plan and U.K. Group Personal Pension Plan. |
(3) | Mr. McBarron’s compensation was translated from British pound sterling to the U.S. dollar using the exchange rates of 1.35104 as of December 31, 2022 and 1.24361 as of December 31, 2023. |
(4) | Dr. Kirschbaum was terminated as Chief Medical Officer on January 25, 2024. |
Narrative Disclosure to Summary Compensation Table
The Compensation and Organization Development Committee of control” (as each such term is defined in each agreement). The financial obligations triggered by these provisions may prevent a business combination or acquisition that would be attractive to stockholders and could limit the price that investors would be willing to pay in the future for our stock.
The evaluation is available to pay cash dividends on our preferred stock, we may not have sufficient cash to pay dividendsbased on the preferred stock or we may choose not to declareChief Executive Officer’s success in achieving his performance goals, which include financial, strategic and leadership objectives. The Chief Executive Officer also provides the dividends.
● | the executive’s scope of responsibilities; |
● | an informed market assessment of competitive practices for similar roles within peer group companies; |
● | evaluations of performance for the year, as assessed by the Chief Executive Officer, supported by the Company’s performance review process and the executive’s self-assessment; and |
● | recommendations by our Chief Executive Officer for each named executive officer with respect to base salary, cash bonus, and stock-based compensation. |
The Compensation and Organization Development Committee is authorized to purchase one share of common stock,engage and (ii) 8,872 Class B Units, each consisting of one share the Company’s Series A Convertible Preferred Stock, par value $0.001 per share, convertible into 500 shares of common stock at the initial conversion price and a warrant to purchase a number of shares of common stock equal to $1,000.00 divided by the conversion price. The net proceeds to the Company from the offering were approximately $13,700,000 after deducting underwriting discounts and commissionsretain independent consultants and other estimated Offering expenses.experts to assist in fulfilling its responsibilities, and the Committee engages periodically an external consultant to provide independent verification of market position and ensure the appropriateness of executive compensation. During the year ended December 31, 2017, 8,608 shares2023, our Compensation and Organization Development Committee retained Radford, part of the Series A Preferred Stock were converted into 4,304,000 shares of common stock. As of December 31, 2017, 264 shares of the Series A Preferred Stock remain issuedAon Rewards Solutions practice, or Radford, an independent, executive compensation consulting firm, to review and outstanding. The 264 shares of Series A Preferred Stock issuedprovide recommendations concerning our non-employee director and outstanding at December 31, 2017, are convertible into 132,000 shares of common stock. Our management team has discretion to direct the net proceeds from this offering. We intend to use all of the net proceeds, together with cash on hand, for general corporate purposes. General corporate purposes may include working capital, capital expenditures, development costs, strategic investments or possible acquisitions. Our management’s judgments may not result in positive returns on your investment and you will not have an opportunity to evaluate the economic, financial or other information upon which our management bases its decisions.
During the extent that the court in which the action or suit was brought shall determine that the defendant is fairly and reasonably entitled to indemnity for such expenses despite such adjudication of liability.
| | | High | | | Low | | ||||||
2017 | | | | | | | | | | | | | |
Quarter ended March 31, 2017 | | | | $ | 6.14 | | | | | $ | 3.13 | | |
Quarter ended June 30, 2017 | | | | $ | 10.90 | | | | | $ | 3.77 | | |
Quarter ended September 30, 2017 | | | | $ | 3.87 | | | | | $ | 1.56 | | |
Quarter ended December 31, 2017 | | | | $ | 2.25 | | | | | $ | 1.50 | | |
2016 | | | | | | | | | | | | | |
Quarter ended March 31, 2016 | | | | $ | 6.45 | | | | | $ | 3.60 | | |
Quarter ended June 30, 2016 | | | | $ | 8.27 | | | | | $ | 3.84 | | |
Quarter ended September 30, 2016 | | | | $ | 9.72 | | | | | $ | 4.21 | | |
Quarter ended December 31, 2016 | | | | $ | 6.18 | | | | | $ | 3.05 | | |
11
We granted 3,840, 2,080, and other factors they believe2,080 restricted stock units to be appropriate. Certain factors that could cause results to differ materially from those projected or implied in the forward looking statements are set forth in this Annual Report on Form 10-K forSpiro Rombotis, Paul McBarron and Mark Kirschbaum, respectively, during the year ended December 31, 2017 under2023.
Spiro Rombotis, President and Chief Executive Officer. On April 28, 2023, we entered into a two-year employment agreement with Mr. Spiro Rombotis, effective January 1, 2023.
Mr. Rombotis’ current annual base salary is $560,131, which may be increased in the caption “Item 1A — Risk factors”.
In addition, Mr. Rombotis also agreed to certain confidentiality and assignment of inventions obligations and will be subject to certain non-competition obligations for a period of one year following termination of his employment.
For further information on the forward-looking statements contained in this report. These statements, like all statements in this report, speak only asterms regarding termination and change-in-control of the dateCompany, see “Potential Payments upon Termination or Change-in-Control” below.
Paul McBarron, Executive Vice President — Finance, Chief Financial Officer, Chief Operating Officer and Secretary. On April 28, 2023, we entered into a two-year employment agreement with Mr. Paul McBarron, effective January 1, 2023. Mr. McBarron’s current annual base salary is £244,622, or $304,214, which may be increased in the future in accordance with the terms of this report (unlesshis employment agreement.
Mr. McBarron was paid an earlier dateannual base salary of £244,622, or $304,214 for the year ending December 31, 2023 and £226,133, or $279,568, for the year ending December 31, 2022, respectively. Mr. McBarron is indicated)also eligible for a yearly incentive cash bonus based on a percentage of his then current base salary, if he meets certain corporate and we undertake no obligation to update or reviseindividual performance criteria set by the statements except as required by law. Such forward-looking statements are not guarantees of future performanceCompensation and actual results will likely differ, perhaps materially, from those suggested by such forward-looking statements.
In addition, Mr. McBarron also agreed to certain confidentiality and assignment of inventions obligations and will be subject to certain non-competition obligations for a period of one year following termination of his employment.
For further information on the outcome of prespecifiedterms regarding termination and exploratory subgroup analyses, we plan to discuss the data with European and US regulatory authorities.
Mark Kirschbaum, Former Senior Vice President and Chief Medical Officer. On October 17, 2020, we entered into an employment agreement with Dr. Mark Kirschbaum, effective October 23, 2020. We terminated Dr. Kirschbaum’s employment on January 25, 2024.
Prior to assess safetyhis termination, Dr. Kirschbaum’ annual base salary was $396,760. Dr. Kirschbaum was paid an annual base salary of $396,760 for the year ending December 31, 2023 and recommended dosing$381,500 for Phase 2 (RP2D) in advanced cancer patients, based on determinationthe year ending December 31, 2022.
In addition, Dr. Kirschbaum also agreed to certain confidentiality and assignment of the biologically effective dose through measurement of CYC065’s effects on the Mcl-1 biomarker. Part 1 is now completeinventions obligations and the RP2D has been selected, Part 2 of the study will focus on patients with advanced solid tumors with amplification of cyclin E, Mcl-1 and/or MYCN.
12
EQUITY COMPENSATION PLAN INFORMATION
Outstanding Equity Awards at the initial conversion price, and a warrant to purchase a number of shares of common stock equal to $1,000 divided by the conversion price. The price to the public in the offering was $2.00 per Class A Unit and $1,000 per Class B Unit. During the year ended December 31, 2017, 8,608 shares of the Series A Preferred Stock were converted into 4,304,000 shares of common stock. As of December 31, 2017, 264 shares of the Series A Preferred Stock remain issued and outstanding. The 264 shares of Series A Preferred Stock issued and outstanding at December 31, 2017, are convertible into 132,000 shares of common stock.
The following table summarizes the componentsshows grants of our revenues for the years ended December 31, 2016 and 2017 (in thousands except percentages):
| | | Year ended December 31, | | | Difference | | ||||||||||||||||||
| | | 2016 | | | 2017 | | | $ | | | % | | ||||||||||||
Grant revenue | | | | $ | 843 | | | | | | — | | | | | $ | (843) | | | | | | (100) | | |
Collaboration and research and development revenue | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total Revenue | | | | $ | 843 | | | | | | — | | | | | $ | (843) | | | | | | (100) | | |
|
| | | Year ended December 31, | | | Difference | | ||||||||||||||||||
| | | 2016 | | | 2017 | | | $ | | | % | | ||||||||||||
Sapacitabine | | | | $ | 6,239 | | | | | $ | 2,661 | | | | | $ | (3,578) | | | | | | (57) | | |
Other costs related to research and development programs and management | | | | | 3,238 | | | | | | 1,576 | | | | | | (1,662) | | | | | | (51) | | |
Total research and development | | | | $ | 9,477 | | | | | $ | 4,237 | | | | | $ | (5,240) | | | | | | (55) | | |
|
| | | Year ended December 31, | | | Difference | | ||||||||||||||||||
| | | 2016 | | | 2017 | | | $ | | | % | | ||||||||||||
General and administrative | | | | $ | 5,516 | | | | | $ | 5,254 | | | | | $ | (262) | | | | | | (5) | | |
Total General and administrative | | | | $ | 5,516 | | | | | $ | 5,254 | | | | | $ | (262) | | | | | | (5) | | |
|
| | | Year ended December 31, | | | Difference | | ||||||||||||||||||
| | | 2016 | | | 2017 | | | $ | | | % | | ||||||||||||
Foreign exchange gains (losses) | | | | | 273 | | | | | | (39) | | | | | $ | (312) | | | | | | (114) | | |
Interest income | | | | | 37 | | | | | | 118 | | | | | $ | 81 | | | | | | 219 | | |
Other income, net | | | | | 66 | | | | | | 949 | | | | | $ | 883 | | | | | | 1,338 | | |
Total other income, net | | | | $ | 376 | | | | | $ | 1,028 | | | | | $ | 652 | | | | | | 173 | | |
|
| | | Year ended December 31, | | | Difference | | ||||||||||||||||||
| | | 2016 | | | 2017 | | | $ | | | % | | ||||||||||||
Income tax benefit | | | | $ | 1,983 | | | | | $ | 993 | | | | | $ | (990) | | | | | | (50) | | |
Total Income tax benefit | | | | $ | 1,983 | | | | | $ | 993 | | | | | $ | (990) | | | | | | (50) | | |
|
Name |
| Number of |
|
| Number of |
|
| Option |
|
| Option |
| ||||
Spiro Rombotis |
|
| 22 | (2) |
|
|
|
|
|
| 3,096.00 |
|
|
| 02/18/2025 |
|
|
|
| 121 | (3) |
|
|
|
|
|
| 2,120.40 |
|
|
| 12/07/2025 |
|
|
|
| 104 | (4) |
|
|
|
|
|
| 522.00 |
|
|
| 12/29/2027 |
|
|
|
| 95 | (4) |
|
|
|
|
|
| 468.00 |
|
|
| 02/22/2028 |
|
|
|
| 1,693 | (5) |
|
|
|
|
|
| 213.00 |
|
|
| 01/04/2029 |
|
|
|
| 11,666 | (6) |
|
|
|
|
|
| 64.80 |
|
|
| 12/11/2030 |
|
|
|
| 8,444 | (8) |
|
| 4,222 |
|
|
| 51.75 |
|
|
| 12/13/2031 |
|
|
|
| 0 | (9) |
|
| 7,333 |
|
|
| 8.70 |
|
|
| 06/27/2033 |
|
Paul McBarron |
|
| 14 | (2) |
|
|
|
|
|
| 3,096 |
|
|
| 02/18/2025 |
|
|
|
| 72 | (3) |
|
|
|
|
|
| 2,120.40 |
|
|
| 12/07/2025 |
|
|
|
| 86 | (4) |
|
|
|
|
|
| 522.00 |
|
|
| 12/29/2027 |
|
|
|
| 79 | (4) |
|
|
|
|
|
| 468.00 |
|
|
| 02/22/2028 |
|
|
|
| 900 | (5) |
|
|
|
|
|
| 213.00 |
|
|
| 01/04/2029 |
|
|
|
| 8,000 | (6) |
|
|
|
|
|
| 64.80 |
|
|
| 12/11/2030 |
|
|
|
| 4,444 | (8) |
|
| 2,222 |
|
|
| 51.75 |
|
|
| 12/13/2031 |
|
|
|
| 0 | (9) |
|
| 4,680 |
|
|
| 8.70 |
|
|
| 06/27/2033 |
|
Mark Kirschbaum (10) |
|
| 8,000 | (7) |
|
| 0 |
|
|
| 56.55 |
|
|
| 10/23/2030 |
|
|
|
| 4,444 | (8) |
|
| 2,222 |
|
|
| 51.75 |
|
|
| 12/13/2031 |
|
|
|
| 0 | (9) |
|
| 4,680 |
|
|
| 8.70 |
|
|
| 06/27/2033 |
|
(1) | The option exercise price is the closing price of our Common Stock on The Nasdaq Capital Market on the date the option was granted. |
(2) | These options were granted on February 18, 2015, and vest ratably on a monthly basis over 36 months. |
(3) | These options were granted on December 7, 2015, and vest ratably on a monthly basis over 36 months. |
(4) | Certain performance criteria were deemed to have been met in 2018 and 2019, and as such, performance-based options granted in 2017 and 2018 vested. |
(5) | These options were granted on January 4, 2019 and included part of the 2018 bonus award, and vest ratably on a monthly basis over 36 months. |
(6) | These options were granted on December 11, 2020, and vest ratably on a monthly basis over 36 months. |
(7) | These options were granted on October 23, 2020 and vest over 36 months as to one third (1/3) of the shares on the first anniversary of the Grant Date and as to one thirty-sixth (1/36) of the total number shares monthly thereafter. |
(8) | These options were granted on December 13, 2021, and vest ratably on a monthly basis over 36 months. |
(9) | These options were granted on June 27, 2023, and vest on achievement of certain performance criteria. |
(10) | We terminated Dr. Kirschbaum’s employment on January 25, 2024. These options have ceased vesting as of January 25, 2024, and have not been exercised as of February 6, 2024. |
13
Potential Payments Upon Termination or financial position.
| | | Year ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Cash and cash equivalents | | | | $ | 16,520 | | | | | $ | 23,910 | | |
Working capital: | | | | | | | | | | | | | |
Current assets | | | | | 19,617 | | | | | | 25,974 | | |
Current liabilities | | | | | (5,259) | | | | | | (4,113) | | |
Total working capital | | | | $ | 14,358 | | | | | $ | 21,861 | | |
|
We have incurred significant losses since our inception. As of December 31, 2017, we had an accumulated deficit of $342.5 million.
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Net cash used in operating activities | | | | $ | (10,079) | | | | | $ | (7,480) | | |
Net cash provided by (used in) investing activities | | | | | 9 | | | | | | (13) | | |
Net cash provided by financing activities | | | | | 6,594 | | | | | | 14,748 | | |
| | | Payments Due by Period | | |||||||||||||||||||||||||||
| | | Total | | | Less than 1 year | | | 1 – 3 years | | | 3 – 5 years | | | More than 5 years | | |||||||||||||||
Operating Lease Obligation(1) | | | | $ | 2,679 | | | | | $ | 348 | | | | | $ | 688 | | | | | $ | 687 | | | | | $ | 956 | | |
|
The following summarizes the potential payments to certain of our executive officers with whom we have entered into an employment agreement that includes a payment upon termination and/or a change-in-control, as further described below.
Spiro Rombotis, President and Chief Executive Officer. Mr. Rombotis’s employment agreement provides for certain severance arrangements. In the event that Mr. Rombotis’s employment is terminated “without cause,” other than termination in connection with a “change of control” (each as defined in the employment agreement), we will be required to pay Mr. Rombotis (i) all accrued but unpaid compensation costup to the time of such termination; (ii) for all stock-based awards at fair value on datea period of granttwelve months following such termination, severance payments in the form of his base salary as in effect immediately prior to such termination, or Severance Payments, including form of continuation coverage of his medical care and recognize compensation over the requisite service period. The fair value of restricted stock and restricted stock units is determined basedlife insurance on the numbersame terms as applicable to other executive employees, unless Mr. Rombotis obtains substitute coverage; and (iii) a period of shares grantedsix months in which to exercise all vested options held by Mr. Rombotis. In the event that Mr. Rombotis’s employment is terminated within six months following a “change-in-control” event, Mr. Rombotis will be entitled to (i) all accrued but unpaid compensation up to the time of such termination; (ii) Severance Payments for a period of 24 months; (iii) out-of-pocket expenses reasonably incurred by Mr. Rombotis in connection with his and his family’s relocation to London; and (iv) eighteen months’ accelerated vesting of any options held by him. In the quoted priceevent of termination due to his death or disability, we will pay Mr. Rombotis (or his estate, as the case may be) (i) all accrued but unpaid compensation up to the time of such termination and (ii) Severance Payments for a period of twelve months. He (or his estate, as the case may be) would also be entitled to a period of twelve months in which all of his vested options can be exercised.
Paul McBarron, Executive Vice President — Finance, Chief Financial Officer, Chief Operating Officer and Secretary. Mr. McBarron’s employment agreement provides for certain severance arrangements. In the event that Mr. McBarron’s employment is terminated “without cause,” other than termination in connection with a “change of control” (each as defined in his employment agreement), we will be required to pay Mr. McBarron (i) all accrued but unpaid compensation up to the time of such termination; (ii) Severance Payments for a period of twelve months following such termination; and (iii) a period of six months in which to exercise all vested options held by Mr. McBarron. In the event that Mr. McBarron’s employment is terminated within six months following a “change-in-control” event, Mr. McBarron will be entitled (i) all accrued but unpaid compensation up to the time of such termination; (ii) Severance Payments for a period of twelve months; and (iii) eighteen months’ accelerated vesting of any options held by him. In the event of termination due to his death or disability, we will pay Mr. McBarron (or his estate, as the case may be) all accrued but unpaid compensation up to the time of such termination and Severance Payments for a period of twelve months. He (or his estate, as the case may be) would also be entitled to a period of twelve months in which all of his vested options can be exercised.
Potential payments to each named executive officer under our common stockPlans in connection with a termination or a change-in-control of the Company
The following summarizes the potential payments to each named executive officer under the Plans in connection with a termination or a change-in-control of the Company.
Termination For Cause. If an award recipient’s service relationship with the Company terminates for “cause” (as defined in the Plans), then any unexercised award shall terminate immediately upon his or her termination of service.
14
Termination Without Cause. If an award recipient’s service relationship with the Company terminates for any reason other than for “cause” (excluding death or disability), then the recipient generally may exercise the award, to the extent vested, within 30 days (in our 2006 Plan) or three months (in our 2015 Plan, 2018 Plan, and 2020 Plan), of such termination to the extent that the award is vested on the date of grant. The determinationtermination (but in no event later than the expiration of grant-date fair value for stock option awards is estimated usingthe term of the award as set forth in the award agreement). If the recipient dies within three months following such a termination, the award generally may be exercised, to the extent vested, within 180 days’ or one year (as per the 2006 Plan, 2015 Plan, 2018 Plan, and 2020 Plan, respectively) of the recipient’s death. If an option-pricing model, which includes variables suchaward recipient’s service relationship with the Company terminates due to his or her death, the award recipient’s personal representative, estate, or the person who acquires the right to exercise the award by bequest or inheritance, as the expected volatility of our share price,case may be, generally may exercise the anticipated exercise behavior of our employees, interest rates, and dividend yields. These variables are projected based on our historical data, experience, and other factors. Changes in any of these variables could result in material adjustmentsaward, to the expense recognized for share-based payments.
| | | December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 16,520 | | | | | $ | 23,910 | | |
Prepaid expenses and other current assets | | | | | 3,097 | | | | | $ | 2,064 | | |
Total current assets | | | | | 19,617 | | | | | $ | 25,974 | | |
Property and equipment, net | | | | | 45 | | | | | $ | 29 | | |
Total assets | | | | $ | 19,662 | | | | | $ | 26,003 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 2,497 | | | | | $ | 1,558 | | |
Accrued and other current liabilities | | | | | 2,762 | | | | | $ | 2,555 | | |
Total current liabilities | | | | | 5,259 | | | | | $ | 4,113 | | |
Other liabilities | | | | | 130 | | | | | $ | 124 | | |
Total liabilities | | | | | 5,389 | | | | | $ | 4,237 | | |
Commitments and contingencies (Note 9) | | | | | | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Preferred stock, $0.001 par value; 5,000,000 shares authorized at December 31, 2016 and December 31, 2017; | | | | | | | | | | | | | |
6% Convertible Exchangeable preferred stock; 335,273 shares issued and outstanding at December 31, 2016 and December 31, 2017. Aggregate preference in liquidation of $4,006,512 at December 31, 2016 and December 31, 2017 | | | | | — | | | | | | — | | |
Series A convertible preferred stock; 0 shares and 264 shares issued and outstanding at December 31, 2016 and December 31, 2017, respectively | | | | | — | | | | | | — | | |
Common stock, $0.001 par value; 100,000,000 shares authorized at December 31, 2016 and December 31, 2017; 4,256,829 and 11,997,447 shares issued and outstanding at December 31, 2016 and December 31, 2017, respectively. | | | | | 4 | | | | | | 12 | | |
Additional paid-in capital | | | | | 350,051 | | | | | $ | 365,057 | | |
Accumulated other comprehensive loss | | | | | (743) | | | | | $ | (794) | | |
Accumulated deficit | | | | | (335,039) | | | | | $ | (342,509) | | |
Total stockholders’ equity | | | | | 14,273 | | | | | $ | 21,766 | | |
Total liabilities and stockholders’ equity | | | | $ | 19,662 | | | | | $ | 26,003 | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Revenues: | | | | | | | | | | | | | |
Grant revenue | | | | $ | 843 | | | | | $ | — | | |
Operating expenses: | | | | | | | | | | | | | |
Research and development | | | | | 9,477 | | | | | | 4,237 | | |
General and administrative | | | | | 5,516 | | | | | | 5,254 | | |
Total operating expenses | | | | | 14,993 | | | | | | 9,491 | | |
Operating loss | | | | | (14,150) | | | | | | (9,491) | | |
Other income (expense): | | | | | | | | | | | | | |
Foreign exchange gains (losses) | | | | | 273 | | | | | | (39) | | |
Interest income | | | | | 37 | | | | | | 118 | | |
Other income, net | | | | | 66 | | | | | | 949 | | |
Total other income (expense), net | | | | | 376 | | | | | | 1,028 | | |
Loss from continuing operations before taxes | | | | | (13,774) | | | | | | (8,463) | | |
Income tax benefit | | | | | 1,983 | | | | | | 993 | | |
Net loss | | | | | (11,791) | | | | | | (7,470) | | |
Dividend on convertible exchangeable preferred shares | | | | | (200) | | | | | | (201) | | |
Beneficial conversion feature of Series A convertible stock | | | | | — | | | | | | (3,638) | | |
Conversion of Series A convertible preferred stock | | | | | — | | | | | | (3,537) | | |
Net loss applicable to common shareholders | | | | $ | (11,991) | | | | | $ | (14,846) | | |
Basic and diluted earnings per common share: | | | | | | | | | | | | | |
Net loss per share – basic and diluted | | | | $ | (3.50) | | | | | $ | (1.95) | | |
Weighted average common shares outstanding | | | | | 3,424,976 | | | | | | 7,631,152 | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Net loss | | | | $ | (11,791) | | | | | $ | (7,470) | | |
Translation adjustment | | | | | 27,204 | | | | | | (14,687) | | |
Unrealized foreign exchange gain (loss) on intercompany loans | | | | | (27,351) | | | | | | 14,636 | | |
Comprehensive loss | | | | $ | (11,938) | | | | | $ | (7,521) | | |
|
| | | Preferred Stock | | | Common Stock | | | Additional Paid-in Capital | | | Accumulated Other Comprehensive Loss | | | Accumulated Deficit | | | Total Stockholders’ Equity | | ||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||
Balances at December 31, 2015 | | | | | 335,273 | | | | | $ | — | | | | | | 2,965,208 | | | | | $ | 3 | | | | | $ | 342,587 | | | | | $ | (596) | | | | | $ | (323,159) | | | | | $ | 18,835 | | |
Cumulative effect of change in Accounting | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Principle for ASU 2016-09 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 89 | | | | | | — | | | | | | (89) | | | | | | — | | |
Issue of common stock on At Market Issuance sales agreement | | | | | — | | | | | | — | | | | | | 1,291,621 | | | | | | 1 | | | | | | 6,793 | | | | | | — | | | | | | — | | | | | | 6,794 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 782 | | | | | | — | | | | | | — | | | | | | 782 | | |
Preferred stock dividends | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (200) | | | | | | — | | | | | | — | | | | | | (200) | | |
Unrealized foreign exchange on intercompany loans | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (27,351) | | | | | | — | | | | | | (27,351) | | |
Translation adjustment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,204 | | | | | | — | | | | | | 27,204 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (11,791) | | | | | | (11,791) | | |
Balances at December 31, 2016 | | | | | 335,273 | | | | | $ | — | | | | | | 4,256,829 | | | | | $ | 4 | | | | | $ | 350,051 | | | | | $ | (743) | | | | | $ | (335,039) | | | | | $ | 14,273 | | |
Issue of common stock, preferred stock and associated warrants on underwritten offering, net of expenses | | | | | 8,872 | | | | | | — | | | | | | 3,154,000 | | | | | | 3 | | | | | | 13,681 | | | | | | — | | | | | | — | | | | | | 13,684 | | |
Series A Preferred stock conversions | | | | | (8,608) | | | | | | — | | | | | | 4,304,000 | | | | | | 4 | | | | | | (4) | | | | | | — | | | | | | — | | | | | | — | | |
Warrant exercise | | | | | — | | | | | | — | | | | | | 99,500 | | | | | | — | | | | | | 199 | | | | | | — | | | | | | — | | | | | | 199 | | |
Issue of common stock on At Market Issuance sales agreement | | | | | — | | | | | | — | | | | | | 183,118 | | | | | | 1 | | | | | | 1,065 | | | | | | — | | | | | | — | | | | | | 1,066 | | |
Stock-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 266 | | | | | | — | | | | | | — | | | | | | 266 | | |
Preferred stock dividends | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (201) | | | | | | — | | | | | | — | | | | | | (201) | | |
Unrealized foreign exchange on intercompany loans | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,636 | | | | | | — | | | | | | 14,636 | | |
Translation adjustment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (14,687) | | | | | | — | | | | | | (14,687) | | |
Loss for the period | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,470) | | | | | | (7,470) | | |
Balances at December 31, 2017 | | | | | 335,537 | | | | | $ | — | | | | | | 11,997,447 | | | | | $ | 12 | | | | | $ | 365,057 | | | | | $ | (794) | | | | | $ | (342,509) | | | | | $ | 21,766 | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss | | | | $ | (11,791) | | | | | $ | (7,470) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation expense | | | | | 133 | | | | | | 32 | | |
Gain on disposal of property and equipment | | | | | (12) | | | | | | — | | |
Stock-based compensation expense | | | | | 782 | | | | | | 266 | | |
Changes in operating assets and liabilities: | | | | | | | | | | | | | |
Prepaid expenses and other assets | | | | | 439 | | | | | | 1,232 | | |
Accounts payable and other current liabilities | | | | | 370 | | | | | | (1,540) | | |
Net cash used in operating activities | | | | | (10,079) | | | | | | (7,480) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of property and equipment | | | | | (3) | | | | | | (13) | | |
Proceeds from sale of property and equipment | | | | | 12 | | | | | | — | | |
Net cash provided by (used in) investing activities | | | | | 9 | | | | | | (13) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from issuance of equity securities, net of issuance costs | | | | | 6,794 | | | | | | 14,749 | | |
Proceeds from the exercise of stock options and warrants, net of issuance costs | | | | | — | | | | | | 200 | | |
Payment of preferred stock dividend | | | | | (200) | | | | | | (201) | | |
Net cash provided by financing activities | | | | | 6,594 | | | | | | 14,748 | | |
Effect of exchange rate changes on cash and cash equivalents | | | | | (444) | | | | | | 135 | | |
Net decrease in cash and cash equivalents | | | | | (3,920) | | | | | | 7,390 | | |
Cash and cash equivalents at beginning of period | | | | | 20,440 | | | | | | 16,520 | | |
Cash and cash equivalents at end of period | | | | $ | 16,520 | | | | | $ | 23,910 | | |
Supplemental cash flow information: | | | | | | | | | | | | | |
Cash received during the period for: | | | | | | | | | | | | | |
Interest | | | | | 38 | | | | | | 118 | | |
Taxes | | | | | 1,965 | | | | | | 1,815 | | |
Non cash financing activities: | | | | | | | | | | | | | |
Accrual of preferred stock dividends | | | | | 50 | | | | | | 50 | | |
Change-in-Control. Pursuant to the terms of December 31, 2017the Plans, in the event of a change-in-control (as defined in the Plans), all outstanding awards granted under the Plans will be sufficient to fund its operating expenses and capital expenditure requirements through toeither:
● | assumed by the successor corporation or a parent or subsidiary of the successor corporation; or |
● | substituted with an equivalent award by the successor corporation or a parent or subsidiary of the successor corporation. |
However, in the end of 2019.
● | awards consisting of options, stock appreciation rights and rights to purchase restricted stock will become fully vested and immediately exercisable, including awards that would not otherwise have become vested or exercisable; and |
● | all other awards will become fully earned and eligible to receive a payout. |
For the Company’s operations considering its current financial condition, obligations, and other expected cash flows, and
15
Under the financial statementsPlans, a change-in-control is the occurrence of Cyclacel Pharmaceuticals, Inc. and all of the Company’s wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated. Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.
● | a person, partnership, joint venture, corporation or other entity, or two or more of any of the foregoing acting as a group (or any “person” within the meaning of Sections 13(d)(3) and 14(d) of the Exchange Act), other than the Company, a Subsidiary, or an employee benefit plan (or related trust) of the Company or a Subsidiary, become(s) the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of 30% or more of the then-outstanding voting stock of the Company; |
● | during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors (together with any new director whose election by the Board of Directors or whose nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; |
● | all or substantially all of the business of the Company is disposed of pursuant to a merger, consolidation or other transaction in which the Company is not the surviving corporation or the Company combines with another Company and is the surviving corporation (unless the stockholders of the Company immediately following such merger, consolidation, combination, or other transaction beneficially own, directly or indirectly, more than 50% of the aggregate voting stock or other ownership interests of (x) the entity or entities, if any, that succeed to the business of the Company or (y) the combined company); |
● | the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which the Board of Directors in office immediately prior to such transaction or event constitutes less than a majority of the Board of Directors thereafter; or the stockholders of the Company approve a sale of all or substantially all of the assets of the Company or a liquidation or dissolution of the Company. |
Director Compensation
The following is a summary of cash and cash equivalents at December 31, 2016 and 2017 (in thousands):
| | | December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Cash | | | | $ | 5,332 | | | | | $ | 1,103 | | |
Investments with original maturity of less than three months at the time of purchase | | | | | 11,188 | | | | | | 22,807 | | |
Total cash and cash equivalents | | | | $ | 16,520 | | | | | $ | 23,910 | | |
|
| | | Fair Value Measurements as of December 31, 2016 Using: | | |||||||||||||||||||||
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents | | | | $ | 11,188 | | | | | $ | — | | | | | $ | — | | | | | $ | 11,188 | | |
Total Assets | | | | $ | 11,188 | | | | | $ | — | | | | | $ | — | | | | | $ | 11,188 | | |
|
| | | Fair Value Measurements as of December 31, 2017 Using: | | |||||||||||||||||||||
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash equivalents | | | | $ | 22,807 | | | | | $ | — | | | | | $ | — | | | | | $ | 22,807 | | |
Total Assets | | | | $ | 22,807 | | | | | $ | — | | | | | $ | — | | | | | $ | 22,807 | | |
|
| | | December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Research and development tax credit receivable | | | | $ | 1,730 | | | | | $ | 1,054 | | |
Prepayments | | | | | 867 | | | | | | 363 | | |
Delaware tax receivable | | | | | — | | | | | | 25 | | |
VAT receivable | | | | | 327 | | | | | | 409 | | |
Deposits | | | | | 132 | | | | | | 132 | | |
Other current assets | | | | | 41 | | | | | | 81 | | |
Prepaid expenses and other current assets | | | | $ | 3,097 | | | | | $ | 2,064 | | |
|
| | | Lives in years | | | December 31, | | |||||||||
| | | 2016 | | | 2017 | | |||||||||
Leasehold improvements | | | 5 to 15 | | | | $ | 792 | | | | | $ | 835 | | |
Research and laboratory equipment | | | 3 to 5 | | | | | 4,438 | | | | | | 4,854 | | |
Office equipment and furniture | | | 3 to 5 | | | | | 1,157 | | | | | | 1,236 | | |
| | | | | | | | 6,387 | | | | | | 6,925 | | |
Less: accumulated depreciation and amortization | | | | | | | | (6,342) | | | | | | (6,896) | | |
| | | | | | | $ | 45 | | | | | $ | 29 | | |
|
| | | December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Accrued research and development | | | | $ | 2,138 | | | | | $ | 1,645 | | |
Accrued legal and professional fees | | | | | 194 | | | | | | 248 | | |
Other current liabilities | | | | | 430 | | | | | | 662 | | |
| | | | $ | 2,762 | | | | | $ | 2,555 | | |
|
| | | Operating Lease Obligation | | |||
2018 | | | | $ | 348 | | |
2019 | | | | | 344 | | |
2020 | | | | | 344 | | |
2021 | | | | | 344 | | |
2022 | | | | | 343 | | |
thereafter | | | | | 956 | | |
Total future minimum lease obligations | | | | $ | 2,679 | | |
|
| | | Year Ended December 31, 2016 | | | Year Ended December 31, 2017 | | ||||||
Research and development | | | | $ | 305 | | | | | $ | 72 | | |
General and administrative | | | | | 477 | | | | | | 194 | | |
Stock-based compensation costs before income taxes | | | | $ | 782 | | | | | $ | 266 | | |
|
| | | Number of Options Outstanding | | | Weighted Average Exercise Price Per Share | | | Weighted Average Remaining Contractual Term (Years) | | | Aggregate Intrinsic Value ($000s) | | ||||||||||||
Options outstanding at December 31, 2015 | | | | | 206,298 | | | | | $ | 72.60 | | | | | | 8.09 | | | | | $ | — | | |
Granted | | | | | 197,841 | | | | | $ | 4.68 | | | | | | | | | | | | | | |
Exercised | | | | | — | | | | | | | | | | | | | | | | | | | | |
Cancelled/forfeited | | | | | (14,760) | | | | | $ | 396.83 | | | | | | | | | | | | | | |
Options outstanding at December 31, 2016 | | | | | 389,379 | | | | | $ | 25.80 | | | | | | 5.83 | | | | | $ | 121 | | |
Granted | | | | | 170,853 | | | | | $ | 1.93 | | | | | | | | | | | | | | |
Exercised | | | | | — | | | | | | | | | | | | | | | | | | | | |
Cancelled/forfeited | | | | | (24,615) | | | | | $ | 179.92 | | | | | | | | | | | | | | |
Options outstanding at December 31, 2017 | | | | | 535,617 | | | | | $ | 11.10 | | | | | | 8.23 | | | | | $ | — | | |
Unvested at December 31, 2017 | | | | | 386,682 | | | | | $ | 3.64 | | | | | | 8.84 | | | | | $ | — | | |
Vested and exercisable at December 31, 2017 | | | | | 148,755 | | | | | $ | 30.49 | | | | | | 6.65 | | | | | $ | — | | |
|
| | | Year ended December 31, 2016 | | | Year ended December 31, 2017 | |
Expected term (years) | | | 5 – 6 | | | 6 | |
Risk free interest rate | | | 1.370% – 1.500% | | | 1.890% – 2.265% | |
Volatility | | | 98% – 104% | | | 108% | |
Expected dividend yield over expected term | | | 0.00% | | | 0.00% | |
Resulting weighted average grant date fair value | | | $3.66 | | | $1.59 | |
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Domestic | | | | $ | (2,011) | | | | | $ | (127) | | |
Foreign | | | | | (11,763) | | | | | | (8,336) | | |
Loss from continuing operations before taxes | | | | $ | (13,774) | | | | | $ | (8,463) | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Current – domestic | | | | $ | — | | | | | $ | — | | |
Current – foreign | | | | | 1,983 | | | | | | 993 | | |
Current – total | | | | | 1,983 | | | | | | 993 | | |
Deferred – domestic | | | | | — | | | | | | — | | |
Income tax benefit | | | | $ | 1,983 | | | | | $ | 993 | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Loss from continuing operations before taxes | | | | $ | (13,774) | | | | | $ | (8,463) | | |
Income tax expense computed at statutory federal tax rate | | | | | (4,683) | | | | | | (2,877) | | |
Disallowed expenses and non-taxable income | | | | | 12 | | | | | | 3 | | |
Loss surrendered to generate R&D credit | | | | | 1,945 | | | | | | 856 | | |
Additional research and development tax relief | | | | | (2,827) | | | | | | (1,262) | | |
Change in valuation allowance | | | | | 2,029 | | | | | | (4,487) | | |
Foreign items, including change in tax rates, and other | | | | | 1,238 | | | | | | 1,901 | | |
Change in US Tax Rate | | | | | — | | | | | | 4,112 | | |
Other foreign items | | | | | 303 | | | | | | 761 | | |
| | | | $ | (1,983) | | | | | $ | (993) | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Net operating loss and tax credit carryforwards | | | | $ | 42,851 | | | | | $ | 38,948 | | |
Depreciation, amortization and impairment of property and equipment | | | | | 137 | | | | | | 111 | | |
Stock options | | | | | 2,365 | | | | | | 1,807 | | |
Research and development credits | | | | | 4,021 | | | | | | 4,021 | | |
Other | | | | | — | | | | | | — | | |
Deferred tax assets | | | | | 49,374 | | | | | | 44,887 | | |
Valuation allowance for deferred tax assets | | | | | (49,374) | | | | | | (44,887) | | |
Net deferred tax assets | | | | $ | — | | | | | $ | — | | |
|
| | | Years ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Numerator: | | | | | | | | | | | | | |
Net loss | | | | $ | (11,791) | | | | | $ | (7,470) | | |
Dividend on convertible exchangeable preferred shares | | | | $ | (200) | | | | | $ | (201) | | |
Beneficial conversion feature of Series A convertible stock | | | | $ | — | | | | | $ | (3,638) | | |
Conversion of Series A convertible preferred stock | | | | $ | — | | | | | $ | (3,537) | | |
Net loss attributable to common shareholders | | | | $ | (11,991) | | | | | $ | (14,846) | | |
Denominator: | | | | | | | | | | | | | |
Weighted-average number of common shares used in loss per share – basic and diluted | | | | | 3,424,976 | | | | | | 7,631,152 | | |
Loss per share – basic and diluted | | | | $ | (3.50) | | | | | $ | (1.95) | | |
|
| | | Year ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Stock options | | | | | 389,378 | | | | | | 535,616 | | |
Convertible preferred stock | | | | | 1,698 | | | | | | 1,698 | | |
Series A preferred stock | | | | | — | | | | | | 132,000 | | |
Common stock warrants | | | | | — | | | | | | 7,490,500 | | |
Total shares excluded from calculation | | | | | 391,076 | | | | | | 8,159,814 | | |
|
| | | Year Ended December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Revenue | | | | | | | | | | | | | |
United Kingdom | | | | $ | 843 | | | | | $ | — | | |
Total Revenue | | | | $ | 843 | | | | | $ | — | | |
Net loss | | | | | | | | | | | | | |
United States | | | | $ | (2,211) | | | | | $ | (127) | | |
United Kingdom | | | | | (9,580) | | | | | | (7,343) | | |
Total Net Loss | | | | $ | (11,791) | | | | | $ | (7,470) | | |
|
| | | December 31, | | |||||||||
| | | 2016 | | | 2017 | | ||||||
Total Assets | | | | | | | | | | | | | |
United States | | | | $ | 15,197 | | | | | $ | 23,522 | | |
United Kingdom | | | | | 4,465 | | | | | | 2,481 | | |
Total Assets | | | | $ | 19,662 | | | | | $ | 26,003 | | |
Long Lived Assets, net | | | | | | | | | | | | | |
United States | | | | $ | 2 | | | | | $ | 0 | | |
United Kingdom | | | | | 43 | | | | | | 29 | | |
Total Long Lived Assets, net | | | | $ | 45 | | | | | $ | 29 | | |
|
Name |
| Fees Earned or Paid in Cash ($) |
|
| Option |
|
| Stock |
|
| Total |
| ||||
Christopher S. Henney, Ph.D. D.Sc |
| $ | 105,500 |
|
| $ | 18,991 |
|
| $ | 12,500 |
|
| $ | 136,991 |
|
Robert J. Spiegel, M.D. |
| $ | 84,500 |
|
| $ | 18,991 |
|
| $ | 12,500 |
|
| $ | 115,991 |
|
Samuel L. Barker, Ph.D. |
| $ | 66,500 |
|
| $ | 18,991 |
|
| $ | 12,500 |
|
| $ | 97,991 |
|
Kenneth M. Ferguson, Ph.D. |
| $ | 54,000 |
|
| $ | 18,991 |
|
| $ | 12,500 |
|
| $ | 85,491 |
|
Brian Schwartz, M.D. |
| $ | 53,000 |
|
| $ | 18,991 |
|
| $ | 12,500 |
|
| $ | 84,491 |
|
Karin L. Walker |
| $ | 64,000 |
|
| $ | 18,991 |
|
| $ | 12,500 |
|
| $ | 95,491 |
|
(1) | These amounts represent the aggregate grant date fair value of options and restricted stock units granted to each director during the year ended December 31, 2023 computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in determining grant date fair value may be found in Note 11 to our financial statements included on our Form 10-K for the fiscal year ended December 31, 2023. |
(2) | The fair value of the options granted on June 30, 2023 was $6.71 per share. Each non-employee director held an aggregate of 2,829 stock options as of December 31, 2023. |
(3) | The fair value of RSUs granted on June 30, 2023 was $8.84 per share. Each non-employee director held an aggregate of 1,415 RSUs as of December 31, 2023. |
16
Director Compensation Program
Under the terms of our Director Compensation Program, the non-employee members of our Board of Directors are paid a fixed annual fee, payable on a quarterly basis, in arrears, on the first day of each quarter, as follows:
| Chairman of the Board | | | | $ | 85,000 | | |
| Vice Chairman of the Board | | | | $ | 65,000 | | |
| Other Non-Management Board Members | | | | $ | 45,000 | | |
The Chair of each of the various committees of the Board of Directors will also receive the following fixed annual fee, payable on a quarterly basis, in arrears, on the first day of each quarter, as follows:
| Audit | | | | $ | 15,000 | | |
| Compensation and Organization Development | | | | $ | 10,000 | | |
| Nominating and Corporate Governance | | | | $ | 8,000 | | |
| Science and Technology | | | | $ | 8,000 | | |
The non-Chair members of each of the various committees of the Board of Directors will also receive the following fixed annual member fee, payable on a quarterly basis, in arrears, on the first day of each quarter, as follows:
| Audit | | | | $ | 7,500 | | |
| Compensation and Organization Development | | | | $ | 5,000 | | |
| Nominating and Corporate Governance | | | | $ | 4,000 | | |
| Science and Technology | | | | $ | 4,000 | | |
In addition, the non-employee members of our Board of Directors are entitled to receive stock options and / or are reasonably likelyrestricted stock options (RSUs) on their initial appointment to materially affect, the Company’s internal control over financial reporting.
17
The following table sets forth certain information requiredwith respect to the beneficial ownership of our Common Stock and our 6% Convertible Exchangeable Preferred Stock (the “Preferred Stock”) as of April 23, 2024 for (a) each of our named executive officers, (b) each of our directors and director nominees, (c) all of our current directors and executive officers as a group, and (d) each stockholder known by item 12us to own beneficially more than 5% of our Common Stock or Preferred Stock, relying solely upon the amounts and percentages disclosed in their public filings.
Beneficial ownership is incorporated herein by reference from the Company’s Proxy Statement, which will be fileddetermined in accordance with the SEC within 120 days after the endrules of the Company’s 2017 fiscal yearSEC and includes voting or investment power with respect to the securities. We deem shares of Common Stock that may be acquired by an individual or group within 60 days of April 23, 2024 pursuant to Regulation 14Athe exercise of options or warrants to be outstanding for its 2018 Annual Meetingthe purpose of Stockholders.computing the percentage ownership of such individual or group but do not deem them to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of stock shown to be beneficially owned by them based on information provided to us by these stockholders.
Percentage of ownership of Common Stock is based on 1,318,257 shares of Common Stock outstanding as of April 23,2024. Percentage of ownership of Preferred Stock is based on 335,273 shares of Preferred Stock outstanding as of April 23,2024.
The address for each of the directors, director nominees and named executive officers is c/o Cyclacel Pharmaceuticals, Inc., 200 Connell Drive, Suite 1500, Berkeley Heights, New Jersey 07922. Addresses of other beneficial owners are noted in the table.
Name of Beneficial Owners | | | Number of | | | Percentage of | | | Number of | | | Percentage of | | ||||||||||||
Dr. Samuel L. Barker | | | | | 4,155 | | | | | | * | | | | | | 0 | | | | | | 0 | | |
Dr. Kenneth M. Ferguson(1) | | | | | 2,636 | | | | | | * | | | | | | 0 | | | | | | 0 | | |
Dr. Christopher Henney | | | | | 4,089 | | | | | | * | | | | | | 0 | | | | | | 0 | | |
| | ||||||||||||||||||||||||
Paul McBarron(2) | | | | | 16,611 | | | | | | 1.26% | | | | | | 0 | | | | | | 0 | | |
Spiro Rombotis(3) | | | | | 30,658 | | | | | | 2.33% | | | | | | 1,600 | | | | | | * | | |
Dr. Robert Spiegel | | | | | 4,073 | | | | | | * | | | | | | 0 | | | | | | 0 | | |
Dr. Brian Schwartz(4) | | | | | 25,028 | | | | | | 1.90% | | | | | | 0 | | | | | | 0 | | |
Karin Walker(5) | | | | | 4,194 | | | | | | * | | | | | | 0 | | | | | | 0 | | |
Executive officers and directors as a group (8 persons)(6) | | | | | 91,444 | | | | | | 6.94% | | | | | | 1,600 | | | | | | * | | |
5% or more stockholders | | | | | | ||||||||||||||||||||
Entities affiliated with Lind Global Fund II LP(7) | | | | | 102,250 | | | | | | 7.76% | | | | | | 0 | | | | | | 0 | | |
Entities affiliated with Altium Growth Fund, LP(8) | | | | | 82,032 | | | | | | 6.22% | | | | | | 0 | | | | | | 0 | | |
* | Represents beneficial ownership of less than 1% of the outstanding shares of our Common Stock or of our Preferred Stock. |
(1) | Includes options to purchase 175 shares of Common Stock that are exercisable within 60 days of April 23, 2024 and 527 Restricted Stock Units that will vest within 60 days of April 23, 2024. |
18
(2) | Includes options to purchase 370 shares of Common Stock that are exercisable within 60 days of April 23, 2024 |
(3) | Includes options to purchase 704 shares of Common Stock that are exercisable within 60 days of April 23, 2024. Does not include 46 shares of Common Stock beneficially owned by Kalliopi Rombotis, Mr. Rombotis’ mother. Mr. Rombotis disclaims beneficial ownership of the foregoing shares. |
(4) | Includes options to purchase 4,167 shares of Common Stock that are exercisable within 60 days of April 23, 2024 and 4,167 Restricted Stock Units that will vest within 60 days of April 23, 2024. |
(5) | Includes options to purchase 9 shares of Common Stock that are exercisable within 60 days of April 23, 2024. |
(6) | See footnotes 1 through and including 5. |
(7) | Based solely on Schedule 13G/A filed with the SEC on January 4, 2024 by Lind Global Fund II, LP. Lind Global Partners II LLC, the general partner of Lind Global Fund II LP, may be deemed to have sole voting and dispositive power with respect to the shares held by Lind Global Fund II LP. Jeff Easton, the managing member of Lind Global Partners II LLC, may be deemed to have sole voting and dispositive power with respect to the shares held by Lind Global Fund II LP. |
(8) | Based solely on Schedule 13G/A filed with the SEC on January 10, 2024 by Altium Growth Fund, LP. Altium Capital Management, LP is the investment adviser of, and may be deemed to beneficially own securities, owned by the Altium Growth Fund, LP (the “Fund”). Altium Growth GP, LLC is the general partner of, and may be deemed to beneficially own securities, owned by the Fund. |
Equity Compensation Plan Information
The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2023. As applicable, the figures described in this section have been adjusted to give effect to the reverse stock split completed on December 15, 2023.
| | | (a) | | | (b) | | | (c) | | |||||||||
Plan Category | | | Number of | | | Weighted | | | Number of | | |||||||||
Total equity compensation plans approved by security holders(1) | | | | | 137,446 | | | | | $ | 59.11 | | | | | | 22,466 | | |
Equity compensation plans not approved by security holders(2) | | | | | 8,000 | | | | | $ | 56.55 | | | | | | 5,333 | | |
(1) | Consists of our 2018 Plan, our 2015 Plan, and our 2006 Plan. The Plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and performance units. There were no shares available for issuance, as of the date hereof, under the 2006 Plan or the 2015 Plan. |
(2) | Consists of our 2020 Plan. The 2020 Plan provides for the grant of nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and performance units. |
19
Our Audit Committee reviews and approves in advance all related-party transactions. Except as described below, there have been no transactions during our last two fiscal years with our directors and officers and beneficial owners of more than 5% of our voting securities and their affiliates.
On December 21, 2023, in an insider private placement, we entered into an Insider Securities Purchase Agreement pursuant to which we agreed to sell in a private placement (i) 6,070 shares of common stock and warrants to purchase 6,070 shares of common stock, on the same terms as the unregistered warrants issued to certain institutional investors (the “Purchasers” and such warrants, the “Private Warrants”), to Spiro Rombotis, our Chief Executive Officer, and (ii) 1,886 shares of common stock and warrants to purchase 1,886 shares of common stock on the same terms as the Private Warrants issued to the Purchasers in the Offerings to Paul McBarron, our Executive Vice President-Finance, Chief Financial Officer and Chief Operating Officer. Each such share of common stock and accompanying warrant was sold at a purchase price of $3.315, which was the same purchase price for the shares of common stock sold in a concurrent registered direct offering.
Director Independence
Our Board of Directors has reviewed the materiality of any relationship that each of our directors has with the Company, either directly or indirectly. Based upon this review, our Board of Directors has determined that each of the following directors is an “independent director” as such term is defined by rules of The information requiredNasdaq Stock Market, Inc., or Nasdaq:
● | Christopher S. Henney, Ph.D., D.Sc. |
● | Robert J. Spiegel, M.D. |
● | Samuel L. Barker, Ph.D. |
● | Kenneth M. Ferguson, Ph.D. |
● | Karin L. Walker |
The Board of Directors has established three standing committees: (1) the Compensation and Organization Development Committee, (2) the Audit Committee, and (3) the Nominating and Corporate Governance Committee. The Board of Directors has also determined that each member of these committees meets the independence requirements applicable to each such committee as prescribed by item 13 is incorporated herein by referenceNasdaq and the SEC. Dr. Schwartz will not be considered an independent director while serving as interim Chief Medical Officer. Following his appointment on January 25, 2024, Dr Schwartz resigned from the Company’s Proxy Statement, which will be filed withNominating and Corporate Governance Committee. In September 2018, the SEC within 120 days afterBoard of Directors also reconstituted the endScience and Technology Committee.
20
The information requiredAudit Committee has appointed RSM US LLP, or RSM, as our independent registered public accounting firm, to audit our consolidated financial statements for the fiscal year ended December 31, 2024. The Board of Directors proposes that our holders of Common Stock ratify this appointment.
The following table presents fees for professional audit services rendered by item 14 is incorporated hereinRSM for the audit of Cyclacel’s annual financial statements for the years ended December 31, 2022 and 2023, and fees billed for other services rendered by reference fromthem during those periods.
| | | 2022 | | | 2023 | | ||||||
Audit fees(1) | | | | $ | 331,916 | | | | | $ | 335,430 | | |
Tax fees(2) | | | | $ | 27,300 | | | | | $ | 31,164 | | |
Total | | | | $ | 359,216 | | | | | $ | 366,594 | | |
(1) | Audit fees represent fees for the audit of the Company’s annual consolidated financial statements, review of the Company’s interim financial statements included in quarterly reports on Form 10-Q, services that an independent auditor would customarily provide in connection with subsidiary audits, other regulatory filings and similar engagements for each fiscal year shown, such as attest services, comfort letters, consents and assistance with review of reports filed with the SEC. |
(2) | Tax fees represent tax compliance and return preparation and tax planning and advice. |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Auditors
Consistent with SEC policies regarding auditor independence, the Company’s Proxy Statement, which will be filed withAudit Committee has responsibility for appointing, setting compensation, and overseeing the SEC within 120 days afterwork of our independent registered public accounting firm. In recognition of this responsibility, the endAudit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to engagement of the Company’s 2017 fiscalindependent auditor for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year pursuantfor each of four categories of services to Regulation 14Athe Audit Committee for its 2018 Annual Meetingapproval.
1. | Audit services include audit work performed in the preparation of financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits and attest services and consultation regarding financial accounting and/or reporting standards. |
2. | Audit-Related services are for assurance and related services that are traditionally performed by the independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits and special procedures required to meet certain regulatory requirements. |
3. | Tax services include all services performed by the independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning and tax advice. |
4. | Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from our independent registered public accounting firm. |
Prior to engagement, the Audit Committee pre-approves these services by category of Stockholders.service. The fees are budgeted and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service.
During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the
21
Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
In the event the stockholders do not ratify the appointment of RSM as our independent registered public accounting firm, the Audit Committee will reconsider its appointment.
22
The following documents are being filed as part of this reportreport:
(1) | No financial statements are filed with this Amendment No.1 to our Annual Report Form 10-K. See Index to Consolidated Financial Statements at Item 8 of the Original 10-K. |
(2) | Financial Satement Schedules |
No financial statement schedules are as follows:
(3) | Exhibits |
The following is a list of exhibits filed as part of this Amendment No.1 to our Annual Report on Form 10-K.
23
24
(previously filed as Exhibit | ||||
32.2+ | | Certification of Paul McBarron, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) (previously filed as Exhibit 32.2 to the Registrant’s Annual Report on Form 10-K, originally filed with the SEC on March 21, 2024, and incorporated herein by reference). | ||
| ||||
101 | | The following materials from Cyclacel Pharmaceuticals, Inc.’s Annual Report on Form 10-K for the year ended December 31, | ||
104 | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
Exhibits:
† | Indicates management compensatory plan, contract or arrangement. |
# | Confidential treatment has been granted with respect to certain portions of this exhibit, which portions have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to the Securities and Exchange Act of 1934, as amended. |
* | Previously Filed. |
** | Filed herewith. |
+ | Previously Furnished |
25
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: April 29, 2024 | By: | /s/ Paul McBarron |
| | Paul McBarron | ||||||
| | Chief Operating Officer, Chief Financial Officer & Executive Vice President, Finance | ||||||
| | (Principal Financial and Accounting Officer) | ||||||
26