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Edited Transcript of SNSS earnings conference call or presentation 8-May-19 8:30pm GMT

Q1 2019 Sunesis Pharmaceuticals Inc Earnings Call

SOUTH SAN FRANCISCO May 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Sunesis Pharmaceuticals Inc earnings conference call or presentation Wednesday, May 8, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dayton Misfeldt

Sunesis Pharmaceuticals, Inc. - Interim CEO & Director

* Judith A. Fox

Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer

* William P. Quinn

Sunesis Pharmaceuticals, Inc. - Senior VP of Finance & Corporate Development and CFO

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Conference Call Participants

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* Hartaj Singh

Oppenheimer & Co. Inc., Research Division - Research Analyst

* Marc Alan Frahm

Cowen and Company, LLC, Research Division - VP

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the Q1 2019 Sunesis Pharmaceuticals, Inc. Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Willie Quinn, Chief Financial Officer and Senior Vice President, Corporate Development.

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William P. Quinn, Sunesis Pharmaceuticals, Inc. - Senior VP of Finance & Corporate Development and CFO [2]

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Thank you all for joining us. With me today are Dayton Misfeldt, Interim Chief Executive Officer; Judy Fox, Chief Scientific Officer; Par Hyare, Vice President, Global Oncology Operations; and Deepali Suri, Vice President, Clinical Operations.

Dayton will review recent corporate events, Judy will provide more details on the vecabrutinib program and I will provide a brief financial overview of the first quarter 2019. We will then open the call for questions, for which we will all be available.

Before we begin, let me remind you that during today's conference call, we will be making forward looking statements that represent the company's intentions, expectations or beliefs concerning future events. These forward-looking statements are qualified by important factors set forth in today's press release and the company's filings with the SEC, which could cause actual results to differ materially from those in such forward-looking statements. Information discussed on today's call is accurate as of today, and we do not intend to update.

With that, let me turn the call over to Dayton.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [3]

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Thanks, Willie. Good afternoon, and thank you for joining us. 2019 is an exciting year for the company as we look to complete the Phase Ib dose escalation and initiate the Phase II component of our vecabrutinib study.

Since the beginning of the year, we have made significant progress in our vecabrutinib program. In January, we announced that the 100-milligram cohort was open and we have now advanced into the 200-milligram cohort.

Last week, we announced the closing of a $5.5 million loan with Silicon Valley Bank. This debt refinancing together with the $20 million equity raise we completed in January strengthens our financial position to take us through some key milestones over the remainder of the year.

Our #1 priority as a company is to continue advancing the clinical development of our lead asset, the selective noncovalent BTK inhibitor, vecabrutinib and executing on the Phase Ib/II trial in patients with relapsed or refractory CLL and other advanced B-cell malignancies.

The Phase Ib dose escalation will determine the maximum tolerated dose and/or recommended dose for the Phase II cohort expansion.

In the Phase II, the safety and activity of vecabrutinib will be investigated in predefined cohorts, including in patients with the BTK C481 mutation.

We have already made significant progress this year in the Phase Ib, completing the 100-milligram cohort last month and escalating to the 200-milligram cohort.

We continue to build on the data presented last year at ASH, showing a good pharmacokinetic profile and evidence of pharmacodynamic activity as well as some clinical benefit.

To date, we are pleased with the safety profile of vecabrutinib. We will be giving a clinical update in mid-June at EHA, and Judy will provide some more details on what to expect in that update.

Before I hand it over to Judy, I'd like to remind people that we remain excited about our proprietary PDK1 inhibitor, SNS-510. While we are completing preclinical pharmacology studies, manufacturing and formulation activities for SNS-510, our primary focus remains advancing the Phase Ib trial for vecabrutinib.

Judy?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [4]

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Thanks, Dayton. We are very pleased with the progress made on the trial this year and believe with the support and leadership of our investigators and internal team, we are well positioned to execute on our clinical program. We now have 9 trial sites actively participating in the study, having recently opened U.S. Oncology (inaudible) Center.

We are well prepared for the Phase II that we intend to begin this year in the U.S. and in Europe.

In the 100-milligram cohort, 5 patients completed the safety evaluation period. There were no DLTs and no drug-related serious adverse events in this group. And the overall safety profile supported escalation to 200 milligrams.

A CLL patient who has BTK C481S mutation remains on treatment at 100 milligrams and is in cycle 5. Pharmacodynamic markers remained consistent and preliminary PK data showed trough concentrations increasing with dose. We look forward to characterizing the 200 mg dose level and plan to continue to dose escalate as warranted.

The vecabrutinib poster presentation at EHA will include data on safety, activity, PK and pharmacodynamics of vecabrutinib through the 100-milligram dose level. We also expect to present some preliminary data on the 200-milligram cohort. However, more mature data on this cohort will be available later this summer.

I will now turn the call back over to Willie to review financial results.

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William P. Quinn, Sunesis Pharmaceuticals, Inc. - Senior VP of Finance & Corporate Development and CFO [5]

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Thank you, Judy. In the first quarter, we strengthened our financial position with $20 million in gross proceeds from a confidentially marketed public offering, adding to our balance sheet and extending our runway through important clinical milestones for vecabrutinib. We are excited about the high quality life science investors, who chose to invest in this offering.

As Dayton mentioned, we also recently announced the refinancing of our debt on favorable terms through the closing of a $5.5 million loan agreement with Silicon Valley Bank, which we believe is a vote of confidence in the potential of our pipeline from a premier debt provider for life science companies.

The new agreement allows us to retire our existing loan and defer any principal repayment on the new loan for more than 18 months. The new facility includes interest-only payments through 2020 with principal repayment over 24 months beginning in 2021 as well as a much lower interest rate than the previous loan. The loan was used for the repayment of our existing indebtedness.

Turning to the quarterly results. Loss from operations for the quarter was $5.7 million and total cash used in operating activities was $6.1 million during the first quarter of 2019 as compared to $6.6 million during the first quarter of 2018.

We ended the quarter with $24.8 million in cash and cash equivalents.

In 2019, we will concentrate our spending on the clinical development of vecabrutinib and expect expenses to increase slightly as patient recruitment accelerates and we add additional clinical trial sites.

We expect our current cash to fund operations well into the fourth quarter of 2019.

With that, let's open the call to your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Marc Frahm from Cowen and Company.

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Marc Alan Frahm, Cowen and Company, LLC, Research Division - VP [2]

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Congrats on making it through to the next cohort. Maybe if you can just clarify a little bit on -- I think you're pretty clear on what's going to be in the presentation, but also how much of an update should we expect when the abstracts are released next week versus having to wait for the conference at EHA?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [3]

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Yes. As you know -- thanks, Marc, for the question. As you know, the abstracts were submitted a number of months ago, so we're going to be planning to present data that will be really up-to-date. So I would really look towards the data presentation to be more representative of the information that we'll be sharing than what we put in the abstract originally.

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Marc Alan Frahm, Cowen and Company, LLC, Research Division - VP [4]

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Okay. And then, maybe as you've now gotten into these cohorts where you think you might be in the effective dose, have you seen any kind of noticeable changes in kind of the rate of patients being referred to you for screening, being eligible for the trial, the types of patients in terms of what disease background they're coming from, anything like that, that you could provide?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [5]

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Yes. Sure. I'll let Judy provide some color there.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [6]

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Yes. We're really pleased with what we've seen. First, initially with the 100-milligram cohort this year and then now with the amendment of fully open and online sites that allows us to enroll up to 6 patients initially, we're really feeling the wind at our sails essentially and seeing all sites contribute patients for screening to the study.

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Operator [7]

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(Operator Instructions) And our next question comes from the line of Hartaj Singh from Oppenheimer.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [8]

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And I apologize for the background noise a little bit. Quick 2 questions, Dayton. One is, can you just remind us of the number of patients you've had per cohort through the 200-milligram BID? And then secondly, as you're seeing the patients on the 200-milligram BID cohort, are there sort of any new learnings that you're getting versus the previous 2 to 3 cohorts? And I just got a quick follow-up question.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [9]

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Okay. Hartaj, I'll let Judy address this.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [10]

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Yes. So as we mentioned on the call, we have 5 evaluable patients in a 100-milligram cohort. And we are screening and enrolling patients now into the 200 milligram, so not exactly sure how many patients will end up completing and rounding out that cohort. But again, with the amendment, we are seeing increased contributions from the sites.

And as far as learnings along the way, I think it's still early days and hard to conclude exactly how best to address that question. I think we are learning that these patients, as we said last year, are -- can be very sick and it is a challenging patient population that requires attention.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [11]

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Yes. No. Judy, that makes sense. Specifically, I was more interested in what's the kind of breakdown between CLL and maybe are there some FL or NHL patients. And then just some of the background therapies that you're seeing. I know we'll see that all in the abstract at EHA, but just any thoughts there as to the types of patients you'd expected to see versus the ones that maybe you didn't expect to see and you saw in these cohorts?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [12]

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Okay. So we are seeing the vast majority of our patients are in fact CLL patients. And they can be heavily pretreated with venetoclax as prior therapies, chemotherapy. We have seen a couple of patients now who haven't seen prior chemotherapy, which reflects the trend and treatment of CLL towards molecularly targeted therapies and away from chemotherapy. But generally, it is a heavily pretreated population.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [13]

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Great. Fantastic. And then just last question. Have you seen -- you said -- you mentioned you saw some patients on venetoclax. Have you seen any therapies like Bispecific CAR-T's or anything like that or it's mostly venetoclax and some of the newer agent?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [14]

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We actually presented at ASH that we have had 2 patients with prior CAR-T therapy come on study.

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Operator [15]

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(Operator Instructions) And we have no additional questions at this time. I would like to turn the call back over to Dayton for any further comments.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [16]

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Thank you all for participating on our call today and for your ongoing support and interest. We will be at EHA in June. I hope to see many of you there. We look forward to our progress over the next several months and to our future interactions and updates. Good afternoon.

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Operator [17]

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Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may now disconnect.