Cyclacel Pharmaceuticals changes its auditor

Cyclacel Pharmaceuticals , Inc. (NASDAQ:CYCC), a biopharmaceutical company, announced a change in its certifying accountant on Monday. The company's Audit Committee decided to dismiss RSM US LLP as its independent registered public accounting firm, effective immediately, and appointed Crowe LLP in its place for the fiscal year ending December 31, 2024.

The dismissal of RSM was communicated to the firm on the same day. RSM's reports on Cyclacel's financial statements for the fiscal years ending December 31, 2023 and 2022 did not contain any adverse opinion or disclaimer of opinion.

However, they did include an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern due to funding concerns.

No disagreements were reported between Cyclacel and RSM on accounting principles or practices, financial statement disclosure, or auditing scope or procedure that would have warranted mention in RSM's reports.

However, Cyclacel disclosed a material weakness in its internal control over financial reporting concerning the accounting for contractually required deposits and complex non-routine equity transactions. Remediation efforts for these material weaknesses were ongoing as of June 30, 2024.

Cyclacel confirmed that prior to filing this report with the SEC, RSM was provided with a copy and requested to furnish a letter to the SEC regarding its agreement with the statements made. RSM's letter dated today has been filed as an exhibit with this report.

Prior to engaging Crowe LLP, Cyclacel had not consulted the firm on any accounting principles or auditing matters. This change in auditors is part of the company’s ongoing efforts to manage its financial reporting and audit processes.

In other recent news, Cyclacel Pharmaceuticals, Inc. reported advancements in its precision medicine strategy, specifically the progress of its fadraciclib (Fadra) study during its latest earnings call.

The Phase 2 proof-of-concept study for Fadra, an oral CDK29 inhibitor, is proceeding well and initial clinical activity data is anticipated to be reported by the end of the year. On the financial side, Cyclacel reported an increase in cash equivalents and a decrease in net loss compared to the previous year.

These developments come with some challenges, as the company reported a net loss of $3.3 million for the quarter. However, it's worth noting that the company's cash resources are expected to fund planned programs until the end of the year. Research and development expenses have also decreased due to lower clinical trial costs.

According to the company's outlook, interim data from the Phase 2 proof-of-concept study of Fadra is expected by the end of the year. Cyclacel continues to focus on addressing unmet medical needs through its precision medicine strategy, which will be closely watched by investors and stakeholders in the competitive field of cancer therapeutics.

InvestingPro Insights

In light of Cyclacel Pharmaceuticals' recent auditor change, a glance at the company's financial health through InvestingPro's real-time data and insights offers a broader context for investors. According to InvestingPro Data, Cyclacel has a market cap of approximately $2.33 million and is trading near its 52-week low, with a price that is only 10.58% of its 52-week high. The company's revenue has seen a significant decline, with the last twelve months as of Q2 2024 showing a decrease of 78.55%, reflecting challenges in its financial performance.

From an investment perspective, two InvestingPro Tips stand out. Firstly, Cyclacel holds more cash than debt on its balance sheet, which could provide some financial flexibility in its operations. Secondly, the stock is currently in oversold territory according to the Relative Strength Index (RSI), which may interest traders looking for potential rebound opportunities. However, it's worth noting that analysts anticipate a sales decline in the current year and do not expect the company to be profitable. For a more comprehensive analysis, there are additional tips available on InvestingPro, including insights on Cyclacel's cash burn rate and its valuation implications.

For investors considering Cyclacel Pharmaceuticals, these metrics and insights can be pivotal in assessing the company's financial trajectory following its auditor change. With a fair value estimation by InvestingPro at $1.49 USD, significantly higher than the previous close price of $1.22 USD, investors have a data point to consider when evaluating the company's stock value. For further detailed analysis and tips, interested parties can refer to InvestingPro's platform, which lists over 17 additional tips for Cyclacel.

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