Cyclo Therapeutics Reports Third Quarter 2023 Financial Results
Strong pace of enrollment continues in pivotal Phase 3 global study (TransportNPC™) evaluating Trappsol® Cyclo™ for Niemann-Pick Disease Type C1 ("NPC1")
Merger with Applied Molecular Transport, Inc. ("AMT") on track to close before year end
Company continues to bolster cash position to extend runway through clinical and regulatory milestones
Cyclo Therapeutics, Inc. (NASDAQ:CYTH) ("Cyclo Therapeutics" or the "Company"), a clinical stage biotechnology company dedicated to developing life-changing medicines through science and innovation for patients and families living with diseases, today reported its financial results for the third quarter 2023.
"Our number one priority remains to be the solid operational execution of our TransportNPC™ study. We are very pleased with our continued strong pace of enrollment and importantly the strong level of engagement with the NPC community. We remain hopeful that we will bring enrollment for this important study to a close in the coming months," commented N. Scott Fine, Chief Executive Officer of Cyclo Therapeutics. "Further, during the quarter we entered into a strategic merger agreement with Applied Molecular Transport, which we expect to close before year end. Finally, we have taken important steps over the past quarter and in the recent weeks to strengthen our balance sheet and provide the necessary cash to bring us through key milestones for the Company."
Recent Highlights
- Entered into a definitive agreement with Applied Molecular Transport Inc. (NASDAQ:AMTI), to focus on advancing Cyclo Therapeutics' pivotal Phase 3 global study. TransportNPC™, evaluating Trappsol® Cyclo™ for NPC. The transaction is currently expected to close in the fourth quarter of 2023;
- Continued NPC community engagement through attendance at INPDA Face-to-Face Meeting, Critical Path Institute Scientific Breakthrough Summit, and the SSIEM Annual Symposium 2023;
- Closed of $5.0 million Private Placement with Rafael Holdings, Inc.; and
- Further strengthened Balance Sheet with early exercise of warrants by board members, management and a significant shareholder resulting in bolstered cash proceeds of $2.4 million.
About the Proposed Transaction
As previously announced, AMT and Cyclo Therapeutics entered into a definitive agreement (the Merger Agreement) pursuant to which AMT will merge with Cyclo Therapeutics in an all-stock transaction (the "Merger"). Following the closing of the Merger, the combined company will operate under the name "Cyclo Therapeutics, Inc." and will continue trading on The Nasdaq Capital Market under the ticker symbol "CYTH". The combined company will focus on advancing Cyclo Therapeutics' pivotal Phase 3 global study (TransportNPC™) evaluating Trappsol® Cyclo™ for NPC.
Under the terms of the Merger Agreement, AMT stockholders will receive approximately 0.174 shares of Cyclo Therapeutics in exchange for each of their shares in AMT (subject to adjustment based on AMT's net cash at closing). Cyclo Therapeutics expects to issue approximately 7.624 million shares of Cyclo Therapeutics' common stock to AMT shareholders, equating to approximately 25% of the combined company on a fully diluted basis.
The combined company will be led by the existing Cyclo Therapeutics management team and will be headquartered in Gainesville, FL. Subsequent to the closing of the transaction, Shawn Cross, Chief Executive Officer and Board Chair of AMT will be appointed to the Cyclo Therapeutics Board of Directors.
The Merger has been approved by the board of directors of each company and is currently expected to close in the fourth quarter of 2023, subject to the satisfaction or waiver of customary conditions, including the requisite approval by Cyclo Therapeutics' and AMT's stockholders and the effectiveness of a registration statement on Form S-4 to register the shares of Cyclo Therapeutics common stock to be issued in connection with the transaction. As the transaction proceeds, the parties will publicly disclose required information either through press releases or filings with the Securities and Exchange Commission (the "SEC"), as appropriate.
MTS Health Partners, L.P. is acting as financial advisor to AMT in connection with the transaction. Fox Rothschild LLP is serving as legal advisor to Cyclo Therapeutics and Wilson Sonsini Goodrich & Rosati, P.C. is serving as legal advisor to AMT.
Summary of Financial Results for the Third Quarter 2023
Net loss for the quarter ended September 30, 2023 was approximately $4.7 million. Research and development expenses increased 21% to approximately $3.5 million for the three months ended September 30, 2023, from approximately $2.9 for the three months ended September 30, 2022. The increase in research and development expense resulted from the increased activity in the Company's Phase 3 study of Trappsol® Cyclo™ for the treatment of NPC in the more recent period. The Company expects research and development costs to increase in 2023 as we continue to seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC and Alzheimer's disease.
The Company ended the quarter with approximately $1.8 million of cash. Subsequent to quarter-end, the Company generated cash proceeds of $2.4 million from the early exercise of warrants from certain accredited investors.
About Cyclo Therapeutics
Cyclo Therapeutics, Inc. is a clinical-stage biotechnology company dedicated to developing life-changing medicines through science and innovation for patients and families living with disease. The Company's Trappsol® Cyclo™, an orphan drug designated product in the United States and Europe, is the subject of four formal clinical trials for Niemann-Pick Disease Type C, a rare and fatal genetic disease, (www.ClinicalTrials.gov NCT02939547, NCT02912793, NCT03893071 and NCT04860960). The Company is conducting a Phase 2b clinical trial using Trappsol® Cyclo™ intravenously in early Alzheimer's disease (NCT05607615) based on encouraging data from an Expanded Access program for Alzheimer's disease (NCT03624842). Additional indications for the active ingredient in Trappsol® Cyclo™ are in development. For additional information, visit the Company's website: www.cyclotherapeutics.com.
Safe Harbor Statement
This press release contains "forward-looking statements" about the company's current expectations about future results, performance, prospects and opportunities, including, without limitation, statements regarding the satisfaction of closing conditions relating to the offering and the anticipated use of proceeds from the offering. Statements that are not historical facts, such as "anticipates," "believes" and "expects" or similar expressions, are forward-looking statements. These statements are subject to a number of risks, uncertainties and other factors that could cause actual results in future periods to differ materially from what is expressed in, or implied by, these statements. The factors which may influence the company's future performance include the company's ability to obtain additional capital to expand operations as planned, success in achieving regulatory approval for clinical protocols, enrollment of adequate numbers of patients in clinical trials, unforeseen difficulties in showing efficacy of the company's biopharmaceutical products, success in attracting additional customers and profitable contracts, and regulatory risks associated with producing pharmaceutical grade and food products. These and other risk factors are described from time to time in the company's filings with the Securities and Exchange Commission, including, but not limited to, the company's reports on Forms 10-K and 10-Q. Unless required by law, the company assumes no obligation to update or revise any forward-looking statements as a result of new information or future events.
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