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Edited Transcript of SNSS.OQ earnings conference call or presentation 11-Aug-20 8:30pm GMT

·13 min read

Q2 2020 Sunesis Pharmaceuticals Inc Earnings Call SOUTH SAN FRANCISCO Aug 18, 2020 (Thomson StreetEvents) -- Edited Transcript of Sunesis Pharmaceuticals Inc earnings conference call or presentation Tuesday, August 11, 2020 at 8:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Dayton Misfeldt Sunesis Pharmaceuticals, Inc. - Principal Financial Officer, Secretary, Interim CEO & Director * Judith A. Fox Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development * Parvinder S. Hyare Sunesis Pharmaceuticals, Inc. - SVP of Commercial ================================================================================ Conference Call Participants ================================================================================ * Hartaj Singh Oppenheimer & Co. Inc., Research Division - Research Analyst * James William Birchenough Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst * Marc Alan Frahm Cowen and Company, LLC, Research Division - Director ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Sunesis Pharmaceuticals Earnings Conference call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I will now hand the conference over to your speaker today, Par Hyare, Senior Vice President, Commercial. Please go ahead. -------------------------------------------------------------------------------- Parvinder S. Hyare, Sunesis Pharmaceuticals, Inc. - SVP of Commercial [2] -------------------------------------------------------------------------------- Welcome, everyone, and thank you for joining us. With me today are Dayton Misfeldt, Interim CEO; and Judy Fox, Chief Scientific Officer, EVP, Research and Development. Dayton will review recent corporate events and provide a brief financial overview of the second quarter of 2020. 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. We do not intend to update. With that, let me turn the call over to Dayton. -------------------------------------------------------------------------------- Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Principal Financial Officer, Secretary, Interim CEO & Director [3] -------------------------------------------------------------------------------- Thanks, Par. Good afternoon, and thank you for joining us. In the second quarter, we made an important decision to commit our resources towards the development of our first-in-class PDK1 inhibitor, SNS-510, as we evaluate the path forward for vecabrutinib. We remain dedicated to our mission of developing targeted inhibitors for cancer patients, and we believe there could be significant potential for our programs as important new treatment options for patients. As we focus our research and development efforts on SNS-510, we are continuing to look for opportunities to strengthen the pipeline and the organization to drive our mission. We are further characterizing SNS-510 in order to define potential clinical development paths in both solid and hematologic malignancies. Although early, preclinical studies have revealed that CDKN2A-mutated tumors are particularly sensitive to SNS-510. This is important as CDKN2A alterations are common in human cancers and may prove to be useful biomarkers for broad investigation of SNS-510 as a monotherapy and in combination with other anti-cancer agents. To that end, SNS-510 showed synergistic activity when combined with inhibitors of CDK4/6, KRAS, G12C or Bcl2 in breast cancer, KRAS mutant and lymphoma cell lines. We are currently conducting IND-enabling studies and expect to present additional preclinical findings at a scientific meeting later this year, with a target to file an IND by the first half of 2021. As a reminder, last quarter, we made the decision to focus on SNS-510 and to not advance our non-covalent BTK inhibitor, vecabrutinib, into the planned Phase II portion of the Phase Ib/II trial in adults with BTK inhibitor-resistant relapsed/refractory CLL or other B-cell malignancies. Vecabrutinib continues to exhibit an excellent safety profile and showed clinical activity, although this was insufficient to support advancing to the Phase II in BTK inhibitor-resistant disease. One CLL patient experienced a partial remission and several patients had stable disease for over 6 months. We expect to complete the wind down of this study this quarter, and we'll plan for publication of the results. While this was not the outcome we were hoping for, we would like to thank patients and clinicians for their participation and efforts. We are currently evaluating next steps and best path forward for vecabrutinib, which given the drug's excellent safety profile, could include investigation in BTK inhibitor naïve or ITK-driven indications. Since making this decision in June, we have taken several steps as an organization to ensure that we are in a strong position to develop SNS-510, while leveraging additional pipeline opportunities as they arise. In July, we reduced our workforce by approximately 30% of our headcount to rightsize the company to achieve our objectives and preserve cash resources. Once again, we would like to extend our thanks to our affected employees for their contributions to Sunesis. We also raised $12.6 million in net proceeds from an equity offering and repaid our outstanding debt. These steps provide us with sufficient capital through most of 2021. In July, we also announced plans to review strategic alternatives to maximize shareholder value that can include asset in-licensing, partnering and mergers and acquisitions. We do not plan on providing updates on these efforts, unless our Board of Directors has approved a transaction or otherwise determine that further disclosure is appropriate. I will now review financial results. We ended the second quarter with $23.2 million in cash, cash equivalents and restricted cash. In July, we bolstered our cash position by raising an additional $12.6 million in net proceeds from an underwritten public offering of shares of our common stock and repaid our outstanding debt with Silicon Valley Bank of $5.7 million. Cash used in operating activities was $11.5 million for the 6 months ended June 30, 2020, as compared to $13 million for the same period in 2019, resulting primarily from the net loss of $12.2 million and changes in operating assets and liabilities. In conclusion, we are well positioned and look forward to leveraging the strength of our organization focusing on the development of SNS-510, while looking to maximize the value of vecabrutinib. We look forward to providing updates over the coming months. Before we turn to Q&A, I'd like to take a moment to acknowledge the industry-wide impact of COVID-19. I am proud of the flexibility and commitment that our entire team has demonstrated to maintain business continuity during this unprecedented time. Above all, we hope everyone is staying safe, and we would like to extend our gratitude to everyone who's working so hard to address the COVID-19 pandemic, both on the frontlines as well as those working to develop treatments and vaccines. With that, let's open the call to your questions. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Our first question is from Hartaj Singh with Oppenheimer. -------------------------------------------------------------------------------- Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [2] -------------------------------------------------------------------------------- Great. Just got a couple of questions on SNS-510. So one is that you've published some data over the last year on the profile of the drug. And it seems to be upstream of AKT. And one of the things about AKT that Roche also -- are, too, had an AKT inhibitor, and they were bought by Merck, is that it could potentially be pan tumor, meaning an approach where it could be -- you could apply the therapy across many different tumor types. Does SNS-510, at least your initial kind of foray in this preclinical kind of data, seem to suggest that? Or do you think it will be much more sort of tumor-specific where you could see that IND happening? And I just got a quick follow-up. -------------------------------------------------------------------------------- Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Principal Financial Officer, Secretary, Interim CEO & Director [3] -------------------------------------------------------------------------------- Thanks, Hartaj. I'm going to have Judy address that. -------------------------------------------------------------------------------- Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [4] -------------------------------------------------------------------------------- Yes, thank you. You're correct, because of where PDK1 is positioned in signal transaction pathways, it does have a potential to have broad activity against a number of different cancers, both solid and hematologic. What we discovered last year or earlier this -- last year was that cell lines with CDKN2A mutations are particularly sensitive. And so this could be a biomarker for tumors most likely to respond to 510, and we want to continue to follow that lead. -------------------------------------------------------------------------------- Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [5] -------------------------------------------------------------------------------- Great. And I assume you'll just kind of update us on that as we move along toward the IND, correct? -------------------------------------------------------------------------------- Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [6] -------------------------------------------------------------------------------- Yes. We do plan to present a scientific meeting later this year. -------------------------------------------------------------------------------- Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [7] -------------------------------------------------------------------------------- Great. And then the other question is, specifically, it seems like you're seeing some activity, synergistic or on top of other molecules, other approaches. Like what's the hurdle that you're going to apply? Some of these -- the CDK4/6s have actually had very good activity in breast cancer. The data and the clinical data actually has been fairly good. How much better activity would you have to see in a preclinical models to be able to want to go into a combination setting in the clinical setting? -------------------------------------------------------------------------------- Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [8] -------------------------------------------------------------------------------- Yes. I mean -- that's a good question. I think we are doing studies to help us understand each of the possible combination partners with SNS-510. And then SNS-510 has a potential of a few roles in the breast cancer space. One possibility would be to combine with CDK4/6 inhibitors to extend the duration where a patient remains sensitive to drugs that inhibit that pathway. Another possibility is to study 510 in patients who have progressed from CDK4/6 inhibitors. And depending on -- we're going to leverage our pharmacology studies to really develop our clinical plan moving forward. -------------------------------------------------------------------------------- Operator [9] -------------------------------------------------------------------------------- Our next question is from Marc Frahm with Cowen and Company. -------------------------------------------------------------------------------- Marc Alan Frahm, Cowen and Company, LLC, Research Division - Director [10] -------------------------------------------------------------------------------- I guess just on the strategic review, is there anything kind of on the critical path for 510 that's kind of a major expense or just kind of a major commitment that you will have made going forward that you kind of need to finalize the strategic review in advance of? Or could this go on, that review extend even as long as to the IND filing? -------------------------------------------------------------------------------- Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Principal Financial Officer, Secretary, Interim CEO & Director [11] -------------------------------------------------------------------------------- Thanks, Marc. There's not any specific big kind of gating item or gating expense with 510. We're continuing to press forward through the IND-enabling studies. As it relates to the strategic review, that is an initiative that we've started and are very active in. So whether -- I don't see one impacting the other. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- (Operator Instructions) Our next question is from Jim Birchenough with Wells Fargo Securities. -------------------------------------------------------------------------------- James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [13] -------------------------------------------------------------------------------- Maybe the first one for me is so what is the mechanism by which 510 inhibits a CDKN2A gene products? Presumably then, these are tumor suppressor genes and so once that gene is mutated, is that as a product of that gene is what being affected here? I'm just trying to get the link between why CDKN2A mutations sensitize those tumors to PDK inhibition? -------------------------------------------------------------------------------- Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [14] -------------------------------------------------------------------------------- Yes. That's a good question. I think to clarify, it's not that 510 acts on CDKN2A gene products. It's just -- it is that in tumors that have the lesions in CDKN2A or mutations in that gene so it's no longer functional, 510 appears to have results in enhanced cytotoxicity and those tumor cell lines. I think if you think about this drug as affecting the cell cycle, and the gene products of CDKN2A being essentially tumor suppressors, that you've taken a break off when you have a mutation CDKN2A and 510 could come in and essentially by regulating the cell cycle through these other CDKs overcome that resistance or absence of tumor suppression. -------------------------------------------------------------------------------- James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [15] -------------------------------------------------------------------------------- And then I know some of the preclinical data you've shown is in models of AML where you're seeing -- whether that's activating mutations in FLT3 and you get PDK -- suppression PDK1 plus correlation. Have you been able to compare 510 with FLT3 inhibitors such as quizartinib, more modern FLT3 inhibitors? -------------------------------------------------------------------------------- Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [16] -------------------------------------------------------------------------------- Yes. We don't have in vivo activity in that regard. A number of studies are expected to be performed over the next months and that is something we could consider. -------------------------------------------------------------------------------- James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [17] -------------------------------------------------------------------------------- And presumably, potentially a combination as well? -------------------------------------------------------------------------------- Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [18] -------------------------------------------------------------------------------- Perhaps. -------------------------------------------------------------------------------- James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [19] -------------------------------------------------------------------------------- And then my last question is, there's a comment in the slide deck that some of the well-known PI3K pathway inhibitor affects are being seen in their mitigation strategies and so it -- for glucose disregulation. So what do you see in terms -- is this as potent as a direct PI3K inhibitor? And so what can you learn from -- the development of those for PI3K inhibitors? -------------------------------------------------------------------------------- Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [20] -------------------------------------------------------------------------------- Right. So I think it's a little too early for us to comment on relative induction of any type of PI3K inhibitor toxicity. But as you suggest, we are perhaps fortunate, in that there are a number of approved PI3 kinase inhibitors. And the strategies to mitigate their toxicities are pretty well-known now as well as different approaches to selecting patients for clinical trials that could help ameliorate the risk of toxicities. So that is part of our ongoing pharmacology, toxicology investigation. -------------------------------------------------------------------------------- Operator [21] -------------------------------------------------------------------------------- And I'm not showing any further questions in the queue. I will turn the call back to Dayton Misfeldt for his final remarks. -------------------------------------------------------------------------------- Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Principal Financial Officer, Secretary, Interim CEO & Director [22] -------------------------------------------------------------------------------- Well, thank you. Thanks, everyone, for participating on our call today. Stay well, and we look forward to providing future updates. Good afternoon. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.