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Edited Transcript of SNSS earnings conference call or presentation 7-Aug-19 8:30pm GMT

Q2 2019 Sunesis Pharmaceuticals Inc Earnings Call

SOUTH SAN FRANCISCO Aug 10, 2019 (Thomson StreetEvents) -- Edited Transcript of Sunesis Pharmaceuticals Inc earnings conference call or presentation Wednesday, August 7, 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 and Executive VP of Research & Development

* 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

* Yanan Zhu

Wells Fargo Securities, LLC, Research Division - Associate Analyst

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Presentation

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Operator [1]

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Good afternoon, ladies and gentlemen, and welcome to the Sunesis Pharmaceuticals Second Quarter 2019 Earnings Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mr. Willie Quinn, Chief Financial Officer and Senior Vice President, Corporate Development. The floor is yours, sir.

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

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Welcome, everyone. Thank you for joining us. With me today are Dayton Misfeldt, Interim Chief Executive Officer; Judy Fox, Chief Scientific Officer, Executive Vice President, Research and Development; Par Hyare, Senior Vice President, Commercial; 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 second 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. We've made significant progress in the first half of 2019 on the advancement of the dose escalation portion of our Phase Ib/II trial of our lead asset, vecabrutinib, in patients with relapsed/refractory chronic lymphocytic leukemia or CLL. We began the year by announcing that we had opened the 100-milligram cohort. In May, we announced that the trial had progressed to the 200-milligram cohort. And in July, we opened the 300-milligram cohort. I'm pleased to report that the 300-milligram cohort is well underway, and we are seeing continued strong enrollment to the study.

In June, we presented preliminary data at the EHA annual meeting in Amsterdam, highlighting vecabrutinib's well-tolerated safety profile and evidence of clinical activity in CLL and other advanced B-cell malignancies.

Furthermore, we reported that vecabrutinib's pharmacokinetic profile remains encouraging with medium steady-state trough concentrations continuing to increase the dose of protein levels expected to provide consistent BTK inhibition in greater clinical activity. The Phase Ib dose escalation will determine the recommended dose and/or maximum tolerated dose for the Phase II cohort expansion.

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

We remain on track to provide a clinical update at the American Society of Hematology meeting later this year, and we are actively laying the groundwork for the Phase II component of the study.

Beyond vecabrutinib, I'd like to remind people that we remained 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 the Phase Ib/II trial for vecabrutinib.

Underscoring our development programs is our recently bolstered balance sheet. In July, we completed an equity financing with net proceeds of approximately $25.9 million with support from existing and new leading institutional investors. This cash infusion will allow us to advance vecabrutinib through important clinical milestones, including the start of the Phase II portion of the trial. Behind all of the clinical developments is our dedicated team, which includes Judy Fox and Par Hyare, accomplished leaders who have made invaluable contributions to our programs and most recently with vecabrutinib. Judy was promoted to Chief Scientific Officer, Executive Vice President, Research and Development; and Par was promoted as Senior Vice President, Commercial. With the resources in hand, our experienced team and strong commitment, we are well positioned to execute on our goals for vecabrutinib and the pipeline.

With that, I'll turn the call over to Judy.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [4]

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Thank you, Dayton. We are very happy with the momentum we've seen on the trial this year and believe that with the support of our investigators and dedication of our internal team, we'll see continued execution on our clinical program. Our investigators remind us of the unmet needs of patients who develop resistance to covalent BTK inhibitors and share our belief and the comments of vecabrutinib to potentially treat these patients.

In anticipation of starting the Phase II component of this study, we continue to add sites. The most recent additions are The Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins in Baltimore, the Fred Hutchinson Cancer Research Center in Seattle, and US Oncology's Willamette Valley Cancer Institute in Eugene, Oregon. We have planned for a seamless transition into Phase II, and we'll include additional sites in the U.S. as well as expansion into Europe.

With the strong support from our investigators, enrollment for the 300-milligram cohort has progressed rapidly. We expect to have data from this cohort, including 3-month scans in time for ASH in December and look forward to presenting a full update then.

I'd like to remind everyone that we prefer to target major medical meetings for detailed clinical update.

In summary, we are pleased with the progress we've made this year in study, execution and enrollment. The favorable safety profile of vecabrutinib so far is particularly noteworthy given that this reflects results of a multicenter trial with no drug-related serious adverse events experienced to date. With the safety pharmacokinetics and evidence of clinical activity presented thus far, we are looking forward to elaborating vecabrutinib's unique clinical profile as the selected BTK inhibitor as we complete the dose escalation and move into Phase II.

I will now turn the call 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. As Dayton mentioned, in the second quarter, we successfully raised approximately $25.9 million from an equity offering with existing and new top-tier biopharma investors. This financing will be used to fund the advancement of vecabrutinib through the initiation of Phase II and for other R&D and general corporate purposes.

On the debt side, I'll remind everyone that we refinanced our previous loan with a new facility from Silicon Valley Bank in April. Our current debt is interest-only through the end of 2020.

Turning to the quarterly results. Loss from operations for the quarter was $6.2 million, and total cash used in operating activities was $13 million for the 6 months ended June 30, 2019, as compared to $12.4 million for the 6 months ended June 20, 2018 -- sorry, June 30, 2018. We ended the quarter with $17.7 million in cash and cash equivalents, restricted cash and marketable securities. With the $25.9 million in net proceeds from our recent financing, the pro forma number would be $43.6 million.

For the remainder of 2019, we will continue to concentrate our spending on the clinical development of vecabrutinib and expect expenses to increase as patient recruitment accelerates and we add additional clinical trial sites for the Phase II portion of our trial.

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) Your first question comes from the line of Mr. Marc Frahm from Cowen.

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

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Just maybe can you remind us some of the earlier data in just the context around going from 200 -- or I guess, from 100 to 200 to 300 milligrams, just kind of the exposures that you would expect to -- incremental exposure you expect to get, maybe in the context of that you're targeting about 1,000 nanograms as for the target for sustained inhibition?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [3]

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Yes. So we presented this data at EHA from the first 3 cohorts. And what we're looking at presenting is seen in trough values, which provide the context for expected inhibition across the dosing interval. And we noted that in the third cohort, we saw concentrations at trough of about 873 nanograms per mil and expect to see increases in trough values as we dose escalate. So we do expect to be exceeding 1,000 nanograms per mil as we progress onward.

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

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Would that be for just the 300 milligram? Or with the 200 milligram, you expect that's also been at that 1,000 nanogram target?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [5]

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Yes, we would expect to see increases, and we'll provide full data at ASH, but we are very pleased with what we've seen and presented at EHA today.

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Marc Alan Frahm, Cowen and Company, LLC, Research Division - VP [6]

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Okay. And then maybe just a housekeeping one. Historically, there's been the relationship with Biogen around BTK inhibitors, and they have a BTK in the clinic again BIIB091. Does Sunesis have any kind of rights to that or royalty obligations from Biogen under the old partnerships?

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William P. Quinn, Sunesis Pharmaceuticals, Inc. - Senior VP of Finance & Corporate Development and CFO [7]

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Yes, Marc, this is Willie. We don't have rights to that. That's a new program that they just initiated, and it's outside the scope of our prior collaboration.

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Operator [8]

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Your next question comes from the line of Hartaj from Oppenheimer.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [9]

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Just a couple of questions, real quick. One is that I know that you had -- you're at 8 sites, I think up to sort of going to 10, Judy, last time we got an update. Can you just talk a little bit about the kind of patients you're seeing? Is it changing? Are you seeing more lymphoma patients? I know you've been seeing mostly CLL C481S mutation patients previously. Are you seeing more lymphomas, Richter's Transformation patients as you're kind of opening up to more sites? And then I just had just a quick follow-up on the PDK.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [10]

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Yes, sure. So we are -- as we've saw at EHA, consistently seeing that CLL patients are predominating in terms of enrollment to the study. And given the sites that we're at, we would expect that to continue as we move forward. Does that address your question?

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

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Yes. No, in that sense, I know you're sort of seeing all comers. But I imagine are you going to be also presenting data on like, let's say, follicular lymphoma, DLBCL patients at ASH?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [12]

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I think we'll see at the end of the day as we prepare for ASH who's enrolled in for the trial. I think you're asking about how -- what we're seeing in terms of patients in prior therapies. And I think we are seeing a trend of enrolling patients who haven't had prior chemotherapy to the study. And we're seeing that continue. And we'll, again, see how the cohorts evolve and the patients enrolled evolve as we continue onward.

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

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Great. And you are seeing -- I assume you're seeing more venetoclax patients, right? Also, I think you had seen 1 or 2 the last time we got the update.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [14]

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Yes. And as we presented in the EHA poster, we have had a number of venetoclax patients (inaudible) heavily from treating patients with the C481S mutation who had prior venetoclax but had good clinical activity with a 47% decrease in tumor burden.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [15]

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Yes. Got it. And then just on PDK, Judy, can you just remind us where exactly are you on the preclinical activities? And what sort of tumor types you think you could be targeting with that molecule?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [16]

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Yes. Thank you for that question. We are excited about PDK1, and we are completing formulation development and manufacturing work along with some pharmacology studies that we're excited about and hope to be sharing publicly later this fall. We'll provide a more complete update later on in the year. And where we expect to go? It's a drug that we believe has broad potential, and we're seeing indications that would lead us to explore both solid tumors and hemotologic malignancies.

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Operator [17]

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(Operator Instructions) Your next question comes from the line of Mr. Jim Birchenough from Wells Fargo Securities.

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Yanan Zhu, Wells Fargo Securities, LLC, Research Division - Associate Analyst [18]

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This is Yanan dialing in for Jim. Just wondering for the 200-milligram cohort, have you talked about how many patients are in that cohort? And also for the 300-milligram cohort, you talked about rapid enrollment. I just want to get a sense of what is the size of the cohort is going to be dependent on in terms of how many patients in there. And also, lastly, would you also be trying to further increase the dose beyond 300-milligram?

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William P. Quinn, Sunesis Pharmaceuticals, Inc. - Senior VP of Finance & Corporate Development and CFO [19]

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Thanks for the question. So on the 200-milligram cohort, we said that anywhere between 3 and 6 patients for that. As you might remember, with our modified design, we can enroll up to 6 patients. So that's what we can do for the 300-milligram cohort. And as Judy mentioned, we are seeing rapid enrollment to that cohort and are very pleased with what we're seeing there. I'll let Judy address moving up in dose as well.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [20]

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Yes. I think -- so we're confident that we'll have completed on the 300-milligram cohort by the time of ASH. And then as far as moving up, we do have the ability to move up. We have that opportunity written into the protocol. We'll make the decision on continued -- or further dose escalation as we examine the data from the 300-milligram cohort and the other cohorts as well. So it'll be a data-driven decision.

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Operator [21]

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(Operator Instructions) I am now showing no further questions at this time. I would now like to turn back the conference to Dayton Misfeldt. You may continue.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [22]

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Thank you all for participating on our call today and for your ongoing support and interest. We will be at a number of conferences over the next several months and at ASH at the end of the year and hope to see many of you there. We look forward to our progress and our future interactions and updates. Good afternoon.

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Operator [23]

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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.