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Edited Transcript of SNSS earnings conference call or presentation 12-Nov-19 9:30pm GMT

Q3 2019 Sunesis Pharmaceuticals Inc Earnings Call

SOUTH SAN FRANCISCO Dec 3, 2019 (Thomson StreetEvents) -- Edited Transcript of Sunesis Pharmaceuticals Inc earnings conference call or presentation Tuesday, November 12, 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

* 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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* Justin Alexander Kim

Oppenheimer & Co. Inc., Research Division - Associate

* 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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Good afternoon, ladies and gentlemen, and welcome to the Q3 2019 Sunesis Pharmaceuticals, Inc. Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, 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; 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 the third quarter of 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. This is an exciting time for noncovalent BTK inhibitors, which we believe have the potential to serve as important new treatment options for patients with hematologic malignancies who have developed resistance to currently available covalent inhibitors, such as ibrutinib. Our lead asset, vecabrutinib, is a unique noncovalent BTK inhibitor among this new class of assets. We look forward to elaborating vecabrutinib's profile and how it can address the unmet needs of patients as we move closer to Phase II clinical testing.

Recently, we have made great progress in the dose escalation portion of our Phase Ib/II trial of vecabrutinib in patients with relapsed/refractory chronic lymphocytic leukemia, or CLL, and other B-cell malignancies. We have treated over 30 patients, are currently in our 6 cohort at 400 milligrams and have strong enrollment in the study. Our near-term goal is to identify the recommended Phase II dose that will allow us to begin testing vecabrutinib in defined patient populations. To prepare for this, we have laid the groundwork for the Phase II component of the study.

As announced last week, we will be providing a clinical update and giving a poster presentation detailing results from the ongoing Phase Ib portion of the trial at the American Society of Hematology Meeting in December. I will turn the call over to Judy in a bit to further discuss vecabrutinib. Keep in mind that the ASH embargo limits the information we can share at this time.

I also want to highlight the recent progress made with one of our pipeline assets, the proprietary PDK1 inhibitor, SNS-510. In October, we presented SNS-510 preclinical data, showing exciting activity in hematologic and solid tumor cancer models at the triple meeting, the AACR-NCI-EORTC Conference. We are completing additional pharmacology and manufacturing activities for SNS-510, with a target to file an IND by the end of 2020.

Supporting our development programs is a strong cash position. In July, we completed an equity financing with net proceeds of approximately $26.1 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.

We continue to attract experienced and committed people to Sunesis. We announced today the hiring of Dr. Mehdi Paborji as our new Vice President, technical operations as well as the promotion of Dr. Pietro Taverna to Vice President, Translational Medicine and Nonclinical Development. Pietro continues to be instrumental on both the vecabrutinib and PDK1 programs, and we look forward to benefiting from Mehdi's expertise as we advance our pipeline. In addition, we recently appointed Dr. Nicole Onetto to our Board of Directors. Dr. Onetto brings over 20 years of clinical development experience in oncology and hematology to Sunesis, and we look forward to benefiting from her expertise.

In summary, vecabrutinib is now rapidly progressing through dose escalation as we get closer to selecting the Phase II dose. Vecabrutinib has the potential to address the unmet needs of patients who develop resistance or intolerance to covalent BTK inhibitors. And our PDK1 inhibitor SNS-510 is a first-in-class compound that we are advancing to the clinic.

With that, I will turn the call over to Judy to go into more details on vecabrutinib.

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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. This year, we have enrolled patients across 4 different cohorts and are currently in our sixth cohort, testing 400 milligrams BID as we work towards identifying our Phase II dose. Vecabrutinib has been very well tolerated in the higher dose levels. To date, we have not seen any grade through our higher drug-related adverse events and cohorts above 50 milligrams. Pharmacokinetics continue to look promising, and we see increased exposure with higher doses. There appears to be increased pharmacodynamic activity with dose, with the relationship between dose and chemokine reduction, and we see continued evidence of clinical benefit. Given the promising profile so far, our investigators have encouraged us to evaluate higher doses, and we look forward to the outcome of the 400-milligram cohort.

In our Phase I, we are treating high-risk covalent BTK inhibitor resistant patients who are generally heavily pretreated with poor prognostic factors. In Phase II, vecabrutinib will be investigated in defined cohorts of relapsed CLL/SLL patients with and without BTK C481 mutations. We will also have our first opportunity to study vecabrutinib in patients intolerant to covalent BTK inhibitors. We are ready for a seamless transition into Phase II once the dose is identified, with planned expansion in sites in both the U.S. and Europe. Given vecabrutinib's unique profile as an inhibitor of both BTK and ITK, we will characterize the effect of vecabrutinib on patient's T cells in Phase II and in preclinical collaborations. Of note, combined BTK and ITK inhibition has approved -- improved outcomes for CAR-T therapy and CLL.

I also want to touch briefly on our PDK1 inhibitor, SNS-510. At the triple meeting, we presented data from Eurofins OncoPanel of 320 genomically profiled cancer cell lines from diverse tissue origins. We found that CDKN2A mutated tumors are particularly sensitive to SNS-510. The CDKN2A gene is commonly mutated or deleted in a number of different cancers. In addition, SNS-510 showed potent antitumor activity in AML models. We will further design potential clinical directions as we continue our IND-enabling work. We expect to file an IND for SNS-510 by the end of next year.

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 a reminder, at the beginning of the third quarter in July, we successfully completed a public offering of shares of our common and preferred stock with gross proceeds of $28 million. This offering attracted existing and new top-tier biopharma investors and will allow us to advance vecabrutinib through important clinical milestones, including the ongoing dose escalation.

Turning to the quarterly results. Loss for operations for the quarter was $6.0 million and total cash used in operating activities was $18.4 million for the 9 months ended September 30, 2019, as compared to $17.9 million for the 9 months ended September 30, 2018. We ended the quarter with $38.3 million in cash, including our cash equivalents, restricted cash and marketable securities as compared to $13.7 million as of December 31, 2018. The increase of $24.6 million was primarily due to $45.1 million in net proceeds from issuing common and preferred stock and $5.5 million in proceeds from our Silicon Valley Bank loan agreement, partially offset by $18.4 million net cash used in operating activities and a $7.5 million principal prepayment on our prior loan with Bridge Bank and Solar Capital. This capital is expected to fund the company through the initiation of the Phase II portion of the ongoing vecabrutinib Phase Ib/II 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 Justin Kim from Oppenheimer.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [2]

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From me and Hartaj. And congrats on the escalation to the 400-milligram dose. Maybe just to start, I know the presentation at ASH will carry the bulk of the clinical update. But can you speak at a high level on the relationship between dose and drug plasma concentration level? Maybe said another way, does the relationship maintain its linear relationship as we approach this higher end of the dosing range?

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

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Great. Now thank you for the question. I'll have Judy address that.

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

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We'll go into more detail at ASH. And what I can say is that we're very encouraged by the increase in exposure that we do see with dose.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [5]

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Okay. Great. It's great. And ASH really does seem like a great opportunity for the company. Can you remind us of what the scheduling for first scan will be? And which dose cohorts would be eligible for a scan by the time sort of a data cutoff?

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Dayton Misfeldt, Sunesis Pharmaceuticals, Inc. - Interim CEO & Director [6]

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Yes. So we're going to -- at ASH, we'll have data through the 300-milligram cohort that would include safety, PK/PD and inactivity data, and I'll let Judy address the scan information.

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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 the first scan is on -- at the completion of 3 cycles of treatment.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [8]

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Okay. Great. And maybe just on patient enrollment. Has the company observed that the enrolled patients are getting somewhat of a less heavily pretreated status coming into the study at these higher doses? Or is that maybe not fair to say?

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

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We continue to see a mix of patients. We have seen some patients who are on the less heavily pretreated side.

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Justin Alexander Kim, Oppenheimer & Co. Inc., Research Division - Associate [10]

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Okay. Great. And maybe just a last question on the -- on 510. Can you just talk a little bit about the types of pharmacology and manufacturing activities before the IND filing?

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

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Okay. So on a pharmacology side, as you might have seen at the triple meeting, you did see or -- present that intriguing observation of enhanced sensitivity to 510 with mutations or deletions in CDKN2A. And so we're conducting additional in vivo and mouse model studies to see how best to exploit that sensitivity, potentially in combination with CDK4/6 inhibitors. And then on the manufacturing side, we're just moving towards GMP manufacture. So traditional activities that you would do for an IND.

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Operator [12]

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Your next question comes from the line of Kenneth Atkins from Cowen.

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Kenneth Craig Atkins, Cowen and Company, LLC, Research Division - Research Associate [13]

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Could you remind us of what kind of exposures you think you need to achieve in order to see efficacy? The ASH had a sort of indicate sort of 300 mg dose, you're getting steady state semen exceeding 1,000 milligrams per ml. Do you think that's sufficient to get enough BTK inhibition to begin seeing responses?

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

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So we're continuing to understand the relationship between dose exposure and outcome as we move through our dose escalation. And as a reminder, the initial threshold was determined based on a study on healthy subjects. And as we test the drug in patients with disease, we are beginning to understand the relationship in more detail.

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Kenneth Craig Atkins, Cowen and Company, LLC, Research Division - Research Associate [15]

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Got it. Okay. And then if you begin to see efficacy at a given dose cohort, would you continue to dose escalate? Or would you go ahead and open up an expansion cohort of that dose where you're seeing efficacy? Can you just walk us through that decision process?

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

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So the decision on recommended dose will be a number of different factors. And just as a reminder, the decision to escalate or expand comes when we've completed safety for a given cohort and prior to complete activity information, meaning scans. And so it really will depend on what the composite data look at the time when dose escalation decision could be made.

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Operator [17]

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(Operator Instructions) I'm showing no further questions at this time. I would now like to turn the conference back to you, Mr. Dayton Misfeldt.

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

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Thank you. So to summarize, vecabrutinib has demonstrated good safety and early signs of activity in a very sick patient population. We've started dosing patients in the sixth cohort and are excited to evaluate this 400-milligram dose level.

Thank you all for participating on our call today and for your ongoing support and interest. And we look forward to seeing many of you at ASH in Orlando next month. Good afternoon.

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Operator [19]

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