On November 2, 2017 Sunesis Pharmaceuticals, Inc. (Nasdaq:SNSS) reported financial results for the third quarter ended September 30, 2017 (Press release, Sunesis, NOV 2, 2017, View Source [SID1234521490]). Loss from operations for the three months ended September 30, 2017 was $9.9 million. As of September 30, 2017, cash, cash equivalents and marketable securities totaled $12.5 million. Subsequent to the end of the quarter, the company raised approximately $6 million from sales of common stock through its at the market facility in October 2017 and $20 million in gross proceeds from concurrent underwritten public offerings on October 27, 2017, which together will provide sufficient funds for the operation of the company’s business into early 2019.
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“In the third quarter, we advanced our lead program, a reversible, non-covalent BTK inhibitor, SNS-062, with the ongoing enrollment in our Phase 1b/2 study in patients with relapsed chronic lymphocytic leukemia (CLL) and other B-cell malignancies,” said Daniel Swisher, Chief Executive Officer of Sunesis. “We will provide a program update at an investor presentation and webcast during the American Society of Hematology (ASH) (Free ASH Whitepaper) Conference in Atlanta, Georgia in December 2017, and to present interim data from the study at a peer-reviewed medical conference in mid-2018. We believe SNS-062 has the potential to overcome the leading resistance pathway to ibrutinib, the predominant standard of care for the treatment of CLL. In addition, in October, we secured the financial resources from leading life science investors extending our operating runway into early 2019.
Mr. Swisher added, “Beyond SNS-062, we have made progress with our proprietary PDK-1 and Takeda-partnered pan-RAF inhibitor programs. We are pleased to announce today the nomination of our PDK1 (phosphatidyl-inositol dependent kinase1) inhibitor, SNS-510, as a Development Candidate and potentially first-to-clinic selective inhibitor in this pathway. PDK1 is a master kinase that activates other kinases important to cell growth and survival including members of the AKT, PKC, RSK and SGK families. In addition, we look forward to announcing future updates from the ongoing clinical studies of our Takeda-partnered TAK-580 program.”
Recent Highlights
Completed $20 million concurrent public offerings with leading life science investors. On October 27, 2017, Sunesis raised $20 million in gross proceeds in concurrent underwritten public offerings of common and preferred stock and warrants, with participation by new and existing investors, including Oncology Impact Fund managed by MPM Capital, BVF Partners L.P and Burrage Capital.
Continued Progress in Phase 1b/2 Study Evaluating Oral Non-Covalent BTK-inhibitor SNS-062 in Adults with Chronic Lymphocytic Leukemia (CLL) and other B-Cell Malignancies. In July 2017, Sunesis announced that the first patient was dosed at the Dana-Farber Cancer Institute in the Phase 1b/2 dose-escalation and cohort-expansion study evaluating the safety, pharmacokinetics, pharmacodynamics, and antitumor activity of its potent, reversible, non-covalent BTK-inhibitor, SNS-062, in adults with CLL, small lymphocytic leukemia, Waldenstrom’s macroglobulinemia, and mantle cell lymphoma. The Phase 1b/2 trial is an open-label, sequential-group study that is enrolling up to 124 subjects across leading sites in the United States. The Company plans to present interim data from this study in mid-2018.
Financial Highlights
Cash, cash equivalents and marketable securities totaled $12.5 million as of September 30, 2017, as compared to $42.6 million as of December 31, 2016. The decrease of $30.1 million was primarily due to $30.8 million of net cash used in operating activities and a debt restructuring payment of $7.6 million, partially offset by $8.3 million in net proceeds primarily from sales of common stock through the company’s at the market facility. An additional $24.6 million in net proceeds were raised in October, resulting in pro-forma September 30, 2017 cash, cash equivalents and marketable securities of $37.1 million. This capital is expected to fund the company into 2019.
Revenue for the three and nine months ended September 30, 2017 was nil and $0.7 million, as compared to $0.6 million and $1.9 million for the same periods in 2016. Revenue in each period was primarily due to deferred revenue recognized related to the Royalty Agreement with Royalty Pharma.
Research and development expense was $6.8 million and $17.9 million for the three and nine months ended September 30, 2017 as compared to $5.3 million and $18.1 million for the same periods in 2016, primarily relating to the SNS-062 and the vosaroxin development program in each period. The increase of $1.5 million between the comparable three month periods was primarily due to the $2.5 million milestone payment to Biogen under the license agreement, offset by decreases in professional services of $0.8 million and salary and personnel expenses of $0.2 million. The decrease in the comparable nine months periods of $0.2 million was primarily due to a decrease in professional services of $2.5 million, salary and personnel expenses of $0.2 million, and medical affairs expenses of $0.2 million, partially offset by the $2.5 million milestone payment to Biogen under the license agreement.
General and administrative expense was $3.2 million and $10.8 million for the three and nine months ended September 30, 2017, as compared to $3.9 million and $12.2 million for the same periods in 2016. The decrease of $0.7 million for the comparable three month periods was primarily due to decreases in salary and personnel expenses of $0.4 million and commercial expenses of $0.3 million, partially offset by increases of $0.1 million in professional services. The decrease in the comparable nine months periods of $1.4 million was primarily due to a decrease in salary and related expenses of $0.9 million, commercial expenses of $0.7 million, partially offset by increase of $0.4 million in professional services.
Interest expense was $0.3 million and $1.1 million for the three and nine months ended September 30, 2017, as compared to $0.5 million and $1.2 million for the same periods in 2016. The decrease in the 2017 periods was primarily due to the decrease in the outstanding notes payable.
Net other income was $0.1 million and $0.3 million for the three and nine months ended September 30, 2017, as compared to nil and $0.1 million for the same periods in 2016. The other income was primarily comprised of interest income from the short-term investments.
Cash used in operating activities was $30.8 million for the nine months ended September 30, 2017, as compared to $29.0 million for the same period in 2016. Net cash used in the 2017 period resulted primarily from the net loss of $28.8 million and changes in operating assets and liabilities of $4.6 million, offset by net adjustments for non-cash items of $2.6 million. Net cash used in the nine month period ended September 30, 2016 resulted primarily from the net loss of $29.5 million and changes in operating assets and liabilities of $3.6 million, including a final payment fee representing interest expense of $1.2 million under the Oxford Loan Agreement, partially offset by net adjustments for non-cash items of $4.1 million.
Sunesis reported loss from operations of $9.9 million and $28.0 million for the three and nine months ended September 30, 2017, as compared to $8.5 million and $28.4 million for the same periods in 2016. Net loss was $10.2 million and $28.8 million for the three and nine months ended September 30, 2017, as compared to $9.0 million and $29.5 million for the same periods in 2016.
Conference Call Information
Sunesis will host a conference today at 2:00 p.m. Eastern Time. The call can be accessed by dialing (844) 296-7720 (U.S. and Canada) or (574) 990-1148 (international) and entering passcode 1071001. To access the live audio webcast, or the subsequent archived recording, visit the “Investors and Media – Calendar of Events” section of the Sunesis website at www.sunesis.com. The webcast will be recorded and available for replay on the company’s website for two weeks.