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Edited Transcript of SNSS earnings conference call or presentation 10-Mar-20 8:30pm GMT

Q4 2019 Sunesis Pharmaceuticals Inc Earnings Call

SOUTH SAN FRANCISCO Mar 28, 2020 (Thomson StreetEvents) -- Edited Transcript of Sunesis Pharmaceuticals Inc earnings conference call or presentation Tuesday, March 10, 2020 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

* James William Birchenough

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

* Marc Alan Frahm

Cowen and Company, LLC, Research Division - Director

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Presentation

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Operator [1]

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Welcome to Sunesis Pharmaceuticals Fourth Quarter and Year End 2019 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker, Mr. 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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Welcome, everyone, and 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; and Par Hyare, Senior Vice President, Commercial.

Dayton will review recent corporate events. Judy will provide more details on our pipeline, and I will provide a brief financial overview of fourth 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 have made significant progress in 2019 as we work to build value across our product portfolio. For vecabrutinib, our non-covalent BTK inhibitor, we are in the seventh cohort in the Phase Ib dose escalation portion of the trial, and we are on track to complete this portion of the trial in the second quarter.

We continue to advance SNS-510, our first-in-class PDK1 inhibitor, for the clinic with an IND filing targeted by the end of this year. And lastly, we have new partners developing TAK-580, a pan-Raf inhibitor and vosaroxin, a Topo II inhibitor for AML, for which we retain downstream economic interest.

We ended 2019 with $34.6 million in cash, sufficient to advance our portfolio through important milestones. For vecabrutinib, we continue to see a very favorable safety profile, combined with evidence of clinical activity in patients with and without BTK C481 mutations.

In the 300-milligram cohort, we saw continued improvement of tumor-burden reduction in the CLL patients still on study and now in cycle 8. We will complete first response assessments for the 400-milligram cohort this month and expect to have initial response assessments for the 500-milligram cohort in the second quarter. We are prepared to begin the Phase II trial once we have identified the recommended dose. However, we will only start the Phase II after seeing a sufficient efficacy signal. We look forward to evaluating data from cohorts 6 and 7 in the near future to determine next steps.

I will turn the call over to Judy in a bit to provide further detail on our pipeline. But before I do so, I would like to highlight the recent progress made with our proprietary PDK1 inhibitor, SNS-510. We are generating encouraging data on this program. In October, we presented preclinical data showing exciting activity in hematologic and solid tumor cancer models at the triple meeting, the AACR-NCI-EORTC conference. This month, we received encouraging results from an in vitro combination study, indicating that SNS-510 can combine synergistically with several drug classes. We are completing IND-enabling studies for SNS-510 with a target to file an IND by the end of 2020. Beyond vecabrutinib and SNS-510, we are also creating value in our product pipeline through partnerships. We are pleased that both TAK-580 and vosaroxin are now licensed to 2 companies, excited about the potential of these drugs and look forward to watching as the development progresses. The licensing agreements generated revenue for the company, adding to our cash balance, while improving our focus on our proprietary pipeline assets.

With that, I will turn the call over to Judy to go into more detail on our current clinical progress.

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

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Thanks, Dayton. We are currently in the seventh cohort of the Phase Ib trial of vecabrutinib. Currently, 8 patients are on treatment across 3 cohorts, 300, 400 and 500 milligrams. We see continued evidence of clinical benefit, and we'll have data on response assessment from the 400-milligram cohort this month and the 500-milligram cohort next quarter. In December, at ASH, we presented data showing that stable disease has been observed in 3 of 5 patients in a 300-milligram cohort.

As of today, 1 CLL patient remains on study in cycle 8 from this cohort with a 47% reduction in tumor burden at their second scan, improving from their initial 41% reduction. Their hem parameters have normalized. Another patient from the 300-milligram cohort, a heavily pretreated marginal zone lymphoma patient with 9 prior lines of therapy completed 8 cycles before coming off study due to disease progression. That completement has been very well tolerated in the higher dose levels, and we have not seen any Grade III or higher drug-related adverse events in cohorts about 50 milligrams to date. We have seen an incremental increase in exposure and decreases in cytokines remain consistent.

In cohort 6, the 400-milligram cohort, we enrolled 4 patients, 3 with CLL and 1 was DLBCL. And DLBCL was nonevaluable due to disease progression during cycle 1. The 3 CLL patients remain on treatment and results of their first response assessment will be available later this month.

In cohort 7, the 500-milligram cohort, all 6 treated patients have cleared the safety evaluation period. 2 CLL patients are off treatment with disease progression and 4 patients remain on treatment, including 2 at CLL and 2 at mantle cell lymphoma. We expect first response assessment in the second quarter for these patients and additional patients are being evaluated for the cohort.

Vecabrutinib may also have potential as we enhance our T cell engagement therapies by virtue of its dual inhibition of BTK and ITK. Nonclinical studies assessing the effect of vecabrutinib in combination with CAR-T therapy are ongoing. Ibrutinib, which also inhibits BTK and ITK has shown improved clinical outcomes for CAR-T therapy in CLL patients clinically, and the combination of ibrutinib with the bispecific T cell engager blinatumomab shows enhanced activity in nonclinical studies of CLL patient samples ex vivo.

Turning to SNS-510, the poster we presented in October highlighted data showing that tumors with mutations or deletions and CDKN2A gene were particularly sensitive to 510. CDKN2A mutations and deletions are associated with many different cancer types. We also profiled the compound in vitro in combination with other agents in cancer cell lines and learned that SNS-510 exhibits synergistic activity when combined with inhibitors of CDK4/6, KRAS, G12C or Bcl2 in breast cancer, KRAS-mutant and lymphoma cell lines. We are progressing SNS-510 through the IND-enabling program and are in discussion with KOLs as we define our clinical plans for both solid tumor and hematologic malignancies.

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. In the fourth quarter, we delivered solid progress on vecabrutinib and SNS-510, while operating within our budget. Loss from operations for the quarter was $5.4 million and for the year, it was $23.3 million compared to $25.7 million for 2018. Total cash used in operating activities was $22.2 million for 2019 compared to $24.4 million for 2018. At the end of 2019, cash, cash equivalents and marketable securities totaled $34.6 million, including $5.5 million in restricted cash.

As Dayton mentioned, we also signed agreements with new partners to develop both TAK-580 and vosaroxin. In December, we consented the Takeda Oncology's assignment of our agreement covering the pan-Raf inhibitor TAK-580 to venture-backed start-up DOT Therapeutics-1 or DOT-1. Coincident with the transaction, Sunesis and DOT-1 entered into a new agreement covering TAK-580. Under this agreement, DOT-1 paid Sunesis an upfront fee of $2 million and agreed to pay up to $57 million in additional pre-commercial milestone payments, plus royalties on future sales of TAK-580. Also in December, we licensed vosaroxin to Denovo Biopharma, a privately held biopharma company with a biomarker approach to development. Under the terms of the agreement, we received a $0.2 million upfront payment and are eligible to receive up to $57 million in regulatory and commercial milestones, plus double-digit royalties on future sales of vosaroxin.

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 Hartaj Singh with Oppenheimer.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [2]

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Good progress. Just a couple of questions on my end. You had mentioned that there were additional patients being evaluated through the 500-milligram BID court -- cohort, but you had screen 6. So -- and I think you mentioned, there were 4 still left. Is that -- I think there's 6 slots, right, for each cohort. So are you just going to be able to add 2 more at that? Or have you amended the protocol to be able to add more patients?

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

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Thanks, Hartaj. Good question. So our investigators requested that we put additional patients on. They requested that -- they said basically that they have patients who require treatment, and we're interested in the protocol. And our safety review committee allowed us to consider these patients. And so essentially, we're over enrolling the cohort.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [4]

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Great. Thank you, Judy. Judy, also, any thoughts -- I know that you're going to -- you've said, Dayton and you mentioned that the dose escalation part of the study will be -- or should be over by the second quarter of this year. Does that include any thoughts of maybe a protocol amendment to go to higher doses? Or do you think 500-milligram BID is a fair test of the upper limit for vecabrutinib in terms of efficacy?

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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'll look at the data in its totality, and it's something that we can consider.

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Hartaj Singh, Oppenheimer & Co. Inc., Research Division - Research Analyst [6]

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Great. Okay. Also, just in terms of -- if you were to think about the next steps from the Phase Ib/II escalation into -- and you go into expansion. Just, Judy -- and not the whole dose expansion study, but let's just say going forward from the second quarter towards the end of this year. Can you just walk us through broadly what are the steps that you expect to happen, assuming you pass the dose escalation part of the study? How do you see the dose expansion sort of playing out in terms of number of sites, patients, types of patients? Just broadly, if you can kind of just expand on that for the rest of the -- for 2020.

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [7]

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Yes. So in -- at ASH in December, we presented our Phase II study design. And the total number of patients that are planned for that study is 120 patients. And there are different cohorts, looking at patients relapsing from BTK inhibitor therapies, with and without the C481 mutation. And then cohort of patients that are intolerant to prior covalent BTK inhibitor therapy.

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

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Got it. Understood, understood. And then last question for me is just on SNS-510. I know Judy, you had mentioned that you'd be looking at it, both in solid tumors and liquid tumors. Just any thoughts, so should we expect sort of combination studies right off to begin? Or would you do the classic sort of Phase I in healthy volunteers and then go into a Phase Ib/II in solid versus liquid tumors or mono versus combo, just any initial thoughts there?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [9]

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Yes. So we're in the beginning stages of flushing out our clinical development plan. And typically, you would start, not necessarily with the healthy subject study but with monotherapy that then would lead into combination therapy. So we're still, as I mentioned, developing our plans and -- but do expect to execute studies in both hematologic and solid tumor malignancies.

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

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Great. And just my last question, just on those the various mechanism action that you synergize with. Is there any one that sticks out more than others?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [11]

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No, it's early days, and I think we're quite encouraged by the data that we saw. We developed further data sets, of course, following up on the in vitro studies with in vivo studies. But we were encouraged to see basically, what you would expect on PDK mechanism with what we saw in the combination studies in vitro.

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Operator [12]

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Our next question comes from Jim Birchenough with Wells Fargo.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [13]

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And just to follow-up on the Hartaj's questions. So I guess, first, just, Dayton, you mentioned, you'd only move forward into a Phase II if you saw an adequate efficacy signal. So could you maybe say prospectively, what are you looking for in the patients that are at the higher dose cohorts? What level of activity do you want to see? Could you maybe give us some parameters or how you're thinking about that?

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

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Thanks, Jim. Yes. So what we'd like to see is we'd like to see multiple partial responses to move forward. So more than what we've seen. But really, this is the Phase I part. The true profile will be flushed out in the Phase II.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [15]

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And then just, Judy alluded to it, so maybe a question for Judy. But as you've gone from cohort 5 into 6 and 7, you've given Cmin levels before through cohorts 1 to 5, could you give those for cohort 6 and 7? And if not, could you maybe give a sense of, if it's still going up in a linear fashion? And are you also seeing increases in CCL 3 and CCL 4 as you were seeing with the dose escalation from cohort 1 to 5?

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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. So we'll give more complete PK data when we have the response assessment data. Certainly, from the 400-milligram cohort. And then as far as the chemokines, what we're seeing is consistent with what we saw in the 300-milligram cohort.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [17]

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So consistent increase or consistent chemokine levels?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [18]

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So we saw consistent decreases in the important chemokine...

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [19]

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Sorry.

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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. Sorry -- yes, so consistent decreases.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [21]

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And then just one final one. Have you seen in cohorts 6 and 7, any evidence of lymphocytosis as an early indicator of activity?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [22]

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We haven't commented on that in the past. And so I don't think at this point in time we're prepared to comment on it. Yes, I think that's about what I can say.

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [23]

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Jim, we've really been focused on the data. I mean the data is -- it's what we've presented. And so we stopped looking at early indicators really and have just focused on the data. And we're going to have the clinical data on the 400-milligram cohort this month and then soon thereafter, the 500-milligram cohort.

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James William Birchenough, Wells Fargo Securities, LLC, Research Division - MD and Senior Biotechnology Analyst [24]

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And just on that, how would you thought -- are we going to hear about it at the time? Or are you going to reserve that data for the 400-milligram dose cohort to a medical meeting given the focus on seeing a PR, if you saw one, would we hear about it?

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

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No, we're going to definitely provide the data as we receive it. And so we do plan to share it this month, and we'll find an appropriate way to do so. Yes. And similarly, with the 500, I don't think we're going to be waiting for a medical meeting. We're going to want to get that data out to folks.

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Operator [26]

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(Operator Instructions) Our next question will come from Marc Frahm with Cowen.

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Marc Alan Frahm, Cowen and Company, LLC, Research Division - Director [27]

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Maybe just to follow up a little bit on the earlier questions. Is there any information you can provide us on kind of the baseline mutational status of some of these patients that you may have been given to you as part of the enrollment? Are they all -- are the CLL patients, C481S positive? Did they have PLC gamma mutation and things like that?

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Judith A. Fox, Sunesis Pharmaceuticals, Inc. - Chief Scientific Officer and Executive VP of Research & Development [28]

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Yes. So I can tell you that in the 400-milligram cohort of the CLL patients, 1 had C481S mutation. And in the 500-milligram cohort, we have 1 patient with key mutations in C481 and C481S and C481R mutation.

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Marc Alan Frahm, Cowen and Company, LLC, Research Division - Director [29]

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Great. And then maybe for Willie, just with cash balance kind of where the cash runway is? And what's assumed in there in terms of, I guess, potentially progressing vecabrutinib and getting 510 into the clinic?

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William P. Quinn, Sunesis Pharmaceuticals, Inc. - Senior VP of Finance & Corporate Development and CFO [30]

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Sure. So the cash balance at the end of the year, as we said, was $34.6 million. We do have a restricted cash account of $5.5 million. So the usable cash is essentially $29.1 million. And if you think about the cash used in operating activities in 2019, it was $22 million, in 2018, it was $24 million. So order of magnitude for our historical activities. You can get a sense for the cash burn. That being said, in this fourth quarter, we did benefit from the $2 million upfront payment from the TAK-580 license. Without that, taking into account operating expense for the fourth quarter was $7.4 million. So we're not giving specific guidance in terms of runway, but we do have the financing to get through this dose escalation and to move SNS-510 forward. And to some extent, our spend is a little self-regulating in that as long as we're in the dose escalation and in the IND preparatory activity phase, we're likely to have a cash burn in that 6 to 7.5 range. And it's only after we move to the Phase II that burn would expect to go up.

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Operator [31]

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I'm showing no further questions in the queue at this time. I would now like to turn the call back over to management for any further remarks.

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

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Thank you, everyone, for participating on our call today. We believe vecabrutinib has demonstrated good safety and early signs of activity in a very sick patient population. We look forward to providing details on the 400-milligram response assessments later this month and a further clinical update in the second quarter. Thank you, and good afternoon.

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Operator [33]

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