Cyclo Therapeutics, Inc. is a clinical-stage biotechnology company dedicated to developing innovative therapies for the treatment of rare and challenging diseases. The company's primary focus is on advancing its lead drug candidate, Trappsol® Cyclo™, for the treatment of Niemann-Pick Disease Type C1 (NPC1), a rare and fatal genetic disorder. With a robust pipeline and a strategic merger in the works, Cyclo Therapeutics is poised to make a significant impact in the rare disease landscape.
Business Overview and History
Cyclo Therapeutics was incorporated in August 1990 as Cyclodextrin Technologies Development, Inc., initially operating as a fine chemical business focused on the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries. In 2000, the company underwent a restructuring and changed its name to CTD Holdings, Inc., and in 2019, it further rebranded to Cyclo Therapeutics, Inc. to better reflect its evolving focus on developing cyclodextrin-based biopharmaceuticals.
The company's core business has transitioned from primarily reselling basic cyclodextrin products to becoming a clinical-stage biotechnology company dedicated to the development of innovative therapies for rare and challenging diseases. Cyclo Therapeutics' lead drug candidate, Trappsol® Cyclo™, is a proprietary formulation of hydroxypropyl beta cyclodextrin that the company is developing for the treatment of Niemann-Pick Disease Type C1 (NPC1), a rare and fatal genetic disorder that disrupts cholesterol metabolism and impacts the brain, lungs, liver, spleen, and other organs.
In 2014, the company filed a Type II Drug Master File with the U.S. Food and Drug Administration (FDA) for Trappsol® Cyclo™ as a treatment for NPC. This marked a significant step in the company's transition towards becoming a clinical-stage biotechnology company focused on rare diseases.
In 2015, Cyclo Therapeutics launched an International Clinical Program for Trappsol® Cyclo™ as a treatment for NPC1. The following year, in 2016, the company filed an Investigational New Drug application (IND) with the FDA, describing its Phase I clinical plans for a randomized, double-blind, parallel group study at a single clinical site in the U.S. The Phase I study was designed to evaluate the safety and pharmacokinetics of Trappsol® Cyclo™ along with markers of cholesterol metabolism and markers of NPC during a 12-week treatment period. The IND was approved by the FDA in September 2016, and in January 2017, the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC.
The company has since completed a Phase I clinical study in the U.S. and a Phase III clinical study in Europe and Israel, both of which have demonstrated the safety and tolerability of Trappsol® Cyclo™. The Phase III study also showed promising efficacy, with 100% of patients who completed the trial (9 out of 12) improving or remaining stable, and 89% meeting the outcome measure in at least two domains of the 17-domain NPC severity scale.
Encouraged by these results, Cyclo Therapeutics is currently conducting a pivotal Phase III study, known as TransportNPC™, to further evaluate the safety and efficacy of Trappsol® Cyclo™ in the treatment of NPC1. The company recently achieved a significant milestone by completing the enrollment of the last patient in the TransportNPC™ study, which is the most comprehensive ongoing controlled pivotal study regarding patient size, global footprint, duration, and clinical outcomes for the treatment of NPC1. Topline data from the 48-week interim analysis of the 104 enrolled patients in TransportNPC™ is expected in the first half of 2025.
In addition to its lead NPC1 program, Cyclo Therapeutics is also exploring the use of cyclodextrins in the treatment of Alzheimer's disease. In 2018, the company received authorization from the FDA for a single-patient Investigational New Drug (IND) expanded access program using Trappsol® Cyclo™ for the treatment of Alzheimer's disease. Based on the data collected from this patient and the company's NPC studies, Cyclo Therapeutics has prepared a synopsis for an early-stage protocol using Trappsol® Cyclo™ intravenously to treat Alzheimer's disease and submitted an IND for a Phase II study, which was cleared by the FDA in December 2021.
Product Portfolio and Financial Performance
Cyclo Therapeutics operates in one business segment, primarily focusing on the development and commercialization of innovative cyclodextrin-based products for the treatment of serious and life-threatening rare diseases and medical conditions. However, the company currently derives substantially all of its revenues from the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, mainly for use in diagnostics and specialty drugs.
The company's product portfolio consists of several key offerings:
1. Trappsol HPB: This is the company's lead drug candidate, Trappsol Cyclo (hydroxypropyl beta cyclodextrin), which is being developed as a treatment for NPC disease. Trappsol HPB sales decreased by 89% for the three-month period ended September 30, 2024, to approximately $37,000 compared to approximately $342,000 for the same period in 2023. For the nine-month period ended September 30, 2024, Trappsol HPB sales decreased by 47% to approximately $256,000 compared to approximately $485,000 for the same period in 2023. The decrease was caused by a reclassification of revenue derived from compassionate sales of Trappsol Cyclo.
2. Other Trappsol Products: The company also sells other Trappsol products, which saw a 29% increase in sales for the three-month period ended September 30, 2024, to approximately $196,000 compared to approximately $152,000 for the same period in 2023. For the nine-month period ended September 30, 2024, sales of other Trappsol products increased by 12% to approximately $300,000, compared to approximately $267,000 for the same period in 2023.
3. Aquaplex: The company's sales of Aquaplex for the three-month period ended September 30, 2024, were approximately $100, as compared to sales of Aquaplex for the three months ended September 30, 2023, of approximately $60. For the nine-month period ended September 30, 2024, Aquaplex sales were approximately $660, as compared to sales of approximately $10,000 for the nine months ended September 30, 2023.
Cyclo Therapeutics has reported consistent losses in recent years as it has focused its efforts on the development of its pipeline, particularly the Trappsol® Cyclo™ program for NPC1. For the full year 2023, the company reported a net loss of $20.06 million, with an annual revenue of $1.08 million and an operating cash flow of -$16.19 million. The company's free cash flow for the year was -$16.19 million.
For the most recent quarter (Q3 2024), the company reported revenue of $234,000, a decrease of 53% from $495,000 in Q3 2023, primarily due to the reclassification of revenue derived from compassionate sales of Trappsol Cyclo. The net loss for Q3 2024 was $8.83 million, compared to a net loss of $4.77 million in Q3 2023. The increase in net losses was primarily due to the continued investment in research and development activities for the company's Trappsol Cyclo product and other general operating expenses.
The company's total revenues for the three-month period ended September 30, 2024, decreased 53% to approximately $234,000 compared to approximately $495,000 for the same period in 2023. For the nine-month period ended September 30, 2024, total revenues decreased 27% to approximately $559,000 compared to approximately $765,000 for the same period in 2023.
Financial Ratios and Liquidity
The company's financial ratios reflect its current stage of development and the capital-intensive nature of its clinical trials. As of the end of Q3 2024, Cyclo Therapeutics had a current ratio of 0.17, a quick ratio of 0.16, and a debt-to-equity ratio of -0.002. These ratios indicate a tight liquidity position and a relatively low level of debt compared to equity.
As of the most recent reported quarter, the company had cash and cash equivalents of $928,000. The company's liquidity position will be crucial as it continues to fund its ongoing clinical trials and operational expenses.
Geographic Markets
Cyclo Therapeutics operates primarily in North America, selling cyclodextrins and related products to the pharmaceutical, nutritional, and other industries. As the company advances its clinical programs, particularly for Trappsol® Cyclo™ in NPC1, it may expand its geographic reach to other markets where there is a need for rare disease treatments.
Guidance and Outlook
Cyclo Therapeutics has not provided specific financial guidance for the upcoming fiscal year. However, the company has outlined key milestones and expected timelines for its Trappsol® Cyclo™ program:
- Topline data from the 48-week interim analysis of the 104 enrolled patients in the pivotal TransportNPC™ Phase III study is expected in the first half of 2025. - If the 48-week data demonstrate statistical significance, the company plans to submit a New Drug Application (NDA) to the FDA and a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) in the second half of 2025. - Upon NDA submission, Cyclo Therapeutics expects to qualify for a Priority Review Voucher, which could provide additional value and flexibility in advancing its programs.
The successful completion of the TransportNPC™ study and the subsequent regulatory submissions will be critical milestones for Cyclo Therapeutics as it seeks to bring Trappsol® Cyclo™ to market as a potential treatment for the devastating NPC1 disease.
Risks and Challenges
Cyclo Therapeutics, like other clinical-stage biotechnology companies, faces several risks and challenges that investors should be aware of:
1. Clinical development risk: The company's lead program, Trappsol® Cyclo™ for NPC1, is still in the pivotal Phase III stage of development. Failure to demonstrate the desired safety and efficacy profile in this study could significantly impact the company's prospects.
2. Regulatory approval risk: Even if the TransportNPC™ study is successful, there is no guarantee that the FDA and EMA will grant regulatory approval for Trappsol® Cyclo™. The regulatory review process can be lengthy and unpredictable.
3. Commercialization risk: Even if Trappsol® Cyclo™ receives regulatory approval, the company may face challenges in successfully commercializing the product, such as securing reimbursement, establishing an effective sales and marketing strategy, and competing with other therapies.
4. Reliance on key personnel: Cyclo Therapeutics' success is heavily dependent on the continued efforts and expertise of its management team and key personnel. The loss of any of these individuals could have a significant impact on the company's operations and development programs.
5. Liquidity and funding risk: As a clinical-stage company, Cyclo Therapeutics requires significant capital to fund its ongoing operations and clinical trials. The company's ability to access additional funding, whether through equity or debt financing, will be critical to its future success.
Despite these risks, Cyclo Therapeutics' focus on rare and challenging diseases, its promising clinical data for Trappsol® Cyclo™, and its strategic merger with Rafael Holdings, Inc. provide reasons for optimism about the company's long-term potential.
Proposed Merger with Rafael Holdings
In August 2024, Cyclo Therapeutics announced that it had entered into a definitive merger agreement with Rafael Holdings, Inc. (NYSE: RFL). The strategic combination is expected to provide Cyclo Therapeutics with the resources and expertise to advance the development and potential commercialization of Trappsol® Cyclo™ for the treatment of NPC1.
Under the terms of the agreement, Rafael Holdings will issue shares of its Class B common stock to Cyclo Therapeutics' shareholders, based on an exchange ratio that values Cyclo Therapeutics' shares at $0.95 per share. The merger is subject to approval by the shareholders of both companies and is expected to close in the fourth quarter of 2024.
The proposed merger with Rafael Holdings is a significant event for Cyclo Therapeutics, as it will allow the combined entity to focus its efforts on the advancement of the Trappsol® Cyclo™ program, which is currently in a pivotal Phase III study for the treatment of NPC1. The additional resources and expertise provided by Rafael Holdings could help Cyclo Therapeutics navigate the regulatory process and potentially bring this much-needed therapy to market.
Conclusion
Cyclo Therapeutics is a clinical-stage biotechnology company that is positioned to make a significant impact in the rare disease landscape. With its lead drug candidate, Trappsol® Cyclo™, currently in a pivotal Phase III study for the treatment of Niemann-Pick Disease Type C1, and a proposed merger with Rafael Holdings that could provide the resources and expertise to advance the program, the company is poised for potential success.
While Cyclo Therapeutics faces the inherent risks associated with clinical-stage biotechnology companies, its focus on rare and challenging diseases, its promising clinical data, and its strategic partnerships make it a compelling investment opportunity for those willing to take on the associated risks. As the company continues to execute on its development plans and navigate the regulatory landscape, investors will be closely watching for the key milestones and data readouts that could unlock the full potential of Cyclo Therapeutics' innovative therapies.