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Edited Transcript of SNSS earnings conference call or presentation 7-Mar-19 9:30pm GMT

Q4 2018 Sunesis Pharmaceuticals Inc Earnings Call

SOUTH SAN FRANCISCO Mar 14, 2019 (Thomson StreetEvents) -- Edited Transcript of Sunesis Pharmaceuticals Inc earnings conference call or presentation Thursday, March 7, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dayton Misfeldt

Sunesis Pharmaceuticals, Inc. - Interim CEO & Director

* Deepali Suri

Sunesis Pharmaceuticals, Inc. - VP of Clinical Operations

* 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

* James William Birchenough

Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst

* Kenneth Craig Atkins

Cowen and Company, LLC, Research Division - Research Associate

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Presentation

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Operator [1]

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Welcome to Sunesis Pharmaceuticals Fourth Quarter and Year-End 2018 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded.

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

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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. 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, and I will provide a brief overview of fourth quarter and year-end 2018 financial results. We will then open the call for questions, for which Judy, Par and Deepali will also 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. We are very pleased with how 2019 has started. We are making progress in our vecabrutinib program, notably moving into the potentially active dose levels in our ongoing Phase Ib/II study. And we also completed a $20 million financing in January that takes us through some key milestones over the course of the year.

We are seeing growing evidence that noncovalent inhibition of BTK can address resistance to covalent BTK inhibitors, and vecabrutinib has a unique profile to address this population.

In the fourth quarter, we continued advancing the clinical development of our lead asset, noncovalent BTK inhibitor, vecabrutinib.

Our #1 priority remains the execution of our Phase Ib/II trial, evaluating this unique product in patients with relapsed or refractory CLL and other advanced B-cell malignancies. This study is designed to characterize safety and initial activity in patients who develop resistance to covalent BTK inhibitors as well as in patients with types of lymphomas for which BTK inhibitors are not standard of care.

The Phase Ib portion of the trial is a dose-escalation study, evaluating the safety, pharmacokinetics, pharmacodynamics and antitumor activity over a range of dose levels that determine the maximum tolerated dose and/or recommended dose. The Phase II portion of the trial will study various groups of B-cell malignancy patients, including patients with the BTK C481S mutation.

In December, we presented updated data from the 50-milligram cohort at the American Society of Hematology Annual Meeting. The data demonstrated that the pharmacokinetic profile was consistent with the results from our Phase Ia study and showed that exposure increases with dose.

We also saw evidence of pharmacodynamic activity including inhibition of BTK phosphorylation and cytokine reductions as well as some improvement in clinical symptoms.

With respect to safety, vecabrutinib appears well tolerated in the context of advanced disease.

In January, we announced advancing into the 100-milligram cohort. This is an important milestone as we continue to believe that 100 to 300 milligrams will be the potentially therapeutic dose levels.

In February, our most recent protocol amendment became effective, allowing for upfront enrollment of up to 6 evaluable patients into a cohort. By studying more patients, we can collect more data and better characterize vecabrutinib's profile at this dose level. Additional data will support a more robust selection of recommended Phase II dose. We took advantage of this opportunity to quickly allocate additional slots for the 100-milligram cohort.

We're targeting the European Hematology Association meeting in June for a clinical update, and we will provide further guidance on what data we expect at this meeting in the coming months.

Our investigators are engaged and looking forward to continued characterization of the drug as we escalate in the potentially active dose levels.

The development strategy we are pursuing for vecabrutinib is similar to the development path we have seen with next-generation TKIs; that is to evaluate our drug in populations who have developed resistance to first-generation covalent BTK inhibitors and to think about remaining unmet needs where our emerging profile could provide an advantage over covalent BTK inhibitors.

In CLL, resistance to covalent BTK inhibitors is most often associated with mutations in BTK C481.

In 2018, we continued to support studies to further characterize the mutation population. Presentations at EHA by the European Research Initiative on CLL, the ERIC group, and at ASH by the French innovation leukemia organization, the FILO group, identified BTK C481S mutation in more than half of imbruvica-relapsed patients.

In the Phase II portion of the study, we plan to investigate patients with mutated BTK C481 as well as other defined by any clinical signals from the Phase Ib and by consideration of unmet need. This will allow us to fully exploit the activity of vecabrutinib as a potent inhibitor in both wild type and mutated BTK.

Vecabrutinib also inhibits ITK, which may further bolster its anticancer activities by potentially addressing important aspects of cancer-associated immunosuppression and provides an opportunity to exploit indications where dual inhibition of BTK and ITK appear important.

We will also be at AACR in Atlanta at the end of March and early April, where our vecabrutinib preclinical poster will be presented by researchers from the laboratory of Dr. Varsha Gandhi of the MD Anderson Cancer Center. We are actively preparing for the Phase II portion of the study and expanding our reach to additional clinical sites and geographies.

We also 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/II trial for vecabrutinib.

I will now turn the call over to our CFO, Willie Quinn, to review financial results.

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William P. Quinn, Sunesis Pharmaceuticals, Inc. - Senior VP of Finance & Corporate Development and CFO [4]

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Thank you, Dayton. In the fourth quarter, we delivered solid progress on vecabrutinib, while operating within our budget. Loss from operations for the quarter was $5.8 million, and for the year it was 27 -- $25.7 million compared to $34.4 million for 2017.

Total cash used in operating activities was $24.4 million for 2018 compared to $36.1 million for 2017. We ended the year with $13.7 million in cash and cash equivalents. Subsequently, in January, we raised $20 million in gross proceeds from a confidentially marketed public offering, strengthening 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.

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) And our first question comes from the line of Jim Birchenough of Wells Fargo Securities.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [2]

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Congrats on all the progress with vecabrutinib. Just on the 100-milligram dose cohort, can you give us a sense of how many patients have been identified for dosing in that cohort and when you expect to dose the first patient? And then I have a follow-up.

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

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Yes. No, thanks, Jim. Yes, we fully allocated slots to have up to 6 evaluable patients, and patients are already being dosed in that cohort.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [4]

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And then just -- we had data from ArQule their 531 and saw a pretty robust response in a C481S patient at 65 milligrams daily. So just wondering how to benchmark, if you can, the level of BTK inhibition you'd expect with that compound at that dose versus where you're at, at 100 milligrams. Do you think you're at a dose that could compete with the 65-milligram dose or do you think you'll have to escalate further? And I guess more broadly, just your thoughts on implications of that data for vecabrutinib.

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

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Yes. I'll take the last part first. Yes, we think that the growing body of evidence supporting noncovalent inhibitor thesis continues to get stronger. Data by others as well as ourselves continue to give us confidence in this thesis. As it relates to trying to benchmark the 100-milligram doses versus their molecule, it's -- can't really comment. We will say that we do believe the 100-milligram to 300-milligram range for us gets us into that potentially active dose level. And I'll ask Judy to comment any further on where we -- the dose that we're in means.

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

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Yes. So it is challenging to compare across molecules and across different assay systems. But what we know from our Phase Ia is that we expect to achieve concentrations of vecabrutinib in the 100 mg and above cohorts that should result in consistent BTK inhibition across the dosing interval. And so the thesis is that should translate into clinical benefit. So we believe that with this cohort and above, we're in the ballpark.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [7]

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And then maybe just 1 final question. Of the patients allocated or the slots allocated, can you say how many have the C481S mutation?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [8]

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Yes. I would say we're mostly seeing CLL patients. And as you know, a majority of CLL patients do have that mutation. So I'll leave it at that rather than to get into specific numbers, but we are seeing mostly CLL patients.

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Operator [9]

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

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [10]

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Just I had a couple of follow-up to Jim's question. One is you're at the 100 milligram. The protocol amendment for the 6 slots at the 100 milligram, I assume then at 200 and 300, Dayton and Judy, would you -- are you allocating any lymphoma patients or MCL patients or Waldenstrom's? What -- I assume that the slots you're going to use at 100 milligram and then further doses, you're going to slot some patients in that are also going to give you insight as to the expansion, the dose expansion cohorts, when you get there, and I'm knocking on wood as I say that, that you will be able to get some insights as to which of these subgroups you can see data from? Any thoughts there? And then I have a quick follow-up.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [11]

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Yes. Sure. I'll ask Judy to detail on our current study protocol and that will help patient populations.

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

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Yes. Thanks, Dayton. Thanks, Hartaj. So the protocol allows investigators to enroll or suggest patients for this study who meet the inclusion/exclusion criteria, so we don't control how different indications come into the study. And as Dayton mentioned, we are seeing a majority of CLL patients. And we believe what we see in one indication should translate across the indications and will help inform our decisions through Phase II.

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

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Got it, Judy. And then I know that the previous -- prior to the protocol amendment, the previous strategy sort of 3 plus 3, where sort of dosing patients and waiting about approximately a month, does that still hold with the additional slots? I mean does that change with the portable amendment? Or just any thoughts around that would help.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [14]

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Yes. I'll let Judy talk about the rationale around the protocol amendment.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [15]

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Yes. So I think you're asking how it operates. And so basically, all patients enrolled to a cohort are followed for safety. And so the cohort is completed with each and every patient evaluated during the safety period.

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

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Yes. And Hartaj, we can enroll basically all at once upfront up to 6 patients. So that's the difference between the previous design with the initial 3 patients. This allows us to enroll more patients. And the reason we're excited at these dose levels that we're standing, we want to see more data at these dose levels and this allows us to capture that.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [17]

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Yes. And then I apologize, just a couple -- from the 50 milligram BID dose, as you sort of look back, are there sort of learnings, Judy and the clinical team, that you're taking forward in the 100-milligram dose and further? I mean what were the main learnings that came from that dose that you could also apply to the 100 milligram and further doses?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [18]

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Judy, would you like to answer that?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [19]

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Yes. Sure. I think what we have learned over time and in part motivated the clinical amendment is that very sick patients can enroll to this study. And so it is advantageous to have the 6 patients that can enroll initially, both to get more data and to backstop against any patients who prove to be non-evaluable. I think we also like others have come to appreciate that heavily pretreated patients are challenging in this population from the activity perspective, and so we're looking towards patients coming to this study. Obviously, we'll still take any qualifying patients, but we're also looking towards patients who are less heavily pretreated.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [20]

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Got it, Judy. No. That makes a lot of sense. And last question and I'll get off, which is that -- and this is a question I asked actually too earlier today this morning, which is that combinations seem to be becoming a little bit more popular in CLL with venetoclax and BTK inhibition or venetoclax and GAZYVA. How are you thinking, Judy, about those patients that are coming off combination therapy versus patients that are just coming off serial therapy as you think about your dose expansion cohorts?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [21]

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Judy?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [22]

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Yes. Sure. So we are taking that into consideration, and it will be part of how we evolve our Phase II thinking. That said, the fundamental hypothesis is there. So even with combinations or even with, for example, single-agent venetoclax, we expect to see resistance to BTK inhibitors that can potentially be addressed by the noncovalent class including vecabrutinib. So although it may be shaping upfront treatment and to a certain extent, follow-on treatment, we expect there to be an emerging population where resistance to the covalent inhibitors is meaningful and addressable by vecabrutinib. And that said, we are looking preclinically at combinations with vecabrutinib and intend at some point in the development to get into the combination setting.

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Operator [23]

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And our next question comes from the line of Kenneth Atkins of Cowen and Company.

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Kenneth Craig Atkins, Cowen and Company, LLC, Research Division - Research Associate [24]

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Just wondering, do you think it's possible that we'll see data from patients treated at higher dose cohort than 100 milligrams at EHA update?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [25]

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Yes. We do think there's -- we should be able to show some initial data. We'll provide more guidance as we get closer to that time in terms of what exactly we think from the higher cohorts. But we do think in addition to the 100-milligram cohort, there should be some initial data from higher cohorts.

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Kenneth Craig Atkins, Cowen and Company, LLC, Research Division - Research Associate [26]

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Got it. Okay. And then would you press release once you move in into higher dose cohorts?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [27]

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Yes. We don't have any plans to press release that. We will continue to provide updates in our regularly scheduled conference calls and obviously, clinical updates at medical meetings. But yes, we don't have any plans as of right now to announce anything.

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Operator [28]

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And our next question is a follow-up from Jim Birchenough of Wells Fargo Securities.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [29]

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Just a bit of a follow-up to Hartaj's earlier question and that is part of the difficulty at 50 milligrams at a subtherapeutic dose was in enrolling patients that were so beat up. And just wondering, for the patients that you've identified for the 100-milligram cohort, could you characterize them in terms of, the theory had been that they would be better performance status perhaps, maybe earlier but just how would you characterize the patients you've identified for 100-milligram cohort versus what you had to deal with at 50 milligrams?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [30]

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Yes. Thanks, Jim. Yes, I would say we are still seeing some sick patients similar to what we saw at the 50-milligram cohort, but we are also seeing less heavily pretreated patients as well. So we have seen some improvements in kind of the patient status in this cohort versus the other cohort.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [31]

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And then could you just maybe, as a final question, remind us how many centers are enrolling right now? And do you have any plans to expand to additional centers?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [32]

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Yes. I'll have Deepali answer that.

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Deepali Suri, Sunesis Pharmaceuticals, Inc. - VP of Clinical Operations [33]

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Sure. So we have right now 8 centers, 8 sites that are active in enrolling. We might expect an additional couple of sites prior to we open Phase II, just based on last engagement that we have from our investigators and definitely continue the momentum in Phase I. So it could be about 8 to 10 sites in Phase I. And then of course, we plan to further expand in Phase II.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [34]

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And maybe a final, final. And that is referencing back to the competing noncovalent BTK inhibitor and the data we saw earlier, they've had to expand their dose cohort because of a Grade 3 rash. And so wondering if you could comment on whether that's something that you've seen, expect to see? Is that a side effect of a kinase that you don't hit? Or any comments on that and whether you might be able to avoid that better than the 531 compound?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [35]

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Yes. I'll have Judy address the data that we've seen to date and presented at ASH in December.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer [36]

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Yes. So mechanistically, I think neither compounds hit EGFR. So I am wondering what the mechanism might be behind the Grade 3 DLT rash that ArQule observed. What we showed at ASH were AEs of all grades greater than 15%, and rash is not included among those adverse events.

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Operator [37]

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And I'm not showing any further questions at this time. I would now like to turn the call back to Dayton Misfeldt for closing remarks.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [38]

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Okay. Well, thank you all for participating on our call today and for your ongoing support and interest. We will have members of the management team at several conferences this month including Cowen, Oppenheimer and Roth. We hope to see you -- many of you at these upcoming events. We look forward to our progress in 2019 and to our future interactions and updates. Good afternoon.

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Operator [39]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a wonderful day.