On March 10, 2020 Sunesis Pharmaceuticals, Inc. (Nasdaq: SNSS) reported financial results for the fourth quarter and year ended December 31, 2019 (Press release, Sunesis, MAR 10, 2020, View Source [SID1234555372]). Loss from operations for the three months and year ended December 31, 2019 was $5.4 million and $23.3 million. As of December 31, 2019, cash and cash equivalents, restricted cash, and marketable securities totaled $34.6 million.

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"We concluded 2019 having made solid progress across our portfolio. Vecabrutinib, our non-covalent BTK inhibitor, demonstrated a very favorable safety profile combined with evidence of clinical activity in patients with and without BTK C481-mutations. We continue to advance and characterize our proprietary PDK1 inhibitor, SNS-510, with findings supporting development in both hematologic and solid tumors. We are also building value in our product pipeline through partnerships. In December, we partnered vosaroxin with Denovo Biopharma and TAK-580 with DOT Therapeutics-1 to advance these programs to the market," said Dayton Misfeldt, Interim Chief Executive Officer of Sunesis. "Looking ahead, we remain on track to complete the Phase 1b dose escalation component of our Phase 1b/2 vecabrutinib trial in the second quarter and to advance SNS-510 to an IND by the end of year."

Vecabrutinib Phase 1b/2 Clinical Update. Since the presentation of clinical data through cohort 5 at ASH (Free ASH Whitepaper) in December 2019, Sunesis has enrolled patients in cohorts 6 and 7 of the ongoing Phase 1b/2 trial of vecabrutinib.

Cohort 5 (300mg): Sunesis announced at ASH (Free ASH Whitepaper) 2019 that stable disease was observed in three of five patients from cohort 5 (300mg BID). As of today, one chronic lymphocytic leukemia (CLL) patient remains on study in cycle 8 at 300mg BID with a 47% reduction in tumor burden at their second scan, improving from their initial 41% reduction, with normalized hematology parameters.

Cohort 6 (400mg BID): Four patients, three CLL and one diffuse large B cell lymphoma (DLBCL), were enrolled in the cohort. The DLBCL patient was nonevaluable due to disease progression during cycle one. The three CLL patients

completed the safety evaluation period, remain on treatment, and results of their first response assessments will be available later this month.

Cohort 7 (500mg BID): Six patients, four with CLL and two with mantle cell lymphoma (MCL), cleared the safety evaluation period and four of the patients remain on treatment. We expect first response assessments for these patients in the second quarter. Additional patients are being evaluated for the cohort.

Vecabrutinib has been very well tolerated, with no Grade 3 or higher drug-related adverse events reported to date across cohorts 3 – 7.

SNS-510, first-in-class PDK1 inhibitor. In October, at the 2019 AACR (Free AACR Whitepaper)-NCI-EORTC AACR-NCI-EORTC (Free AACR-NCI-EORTC Whitepaper) International Conference on Molecular Targets and Cancer Therapeutics (EORTC-NCI-AACR) (Free ASGCT Whitepaper) (Free EORTC-NCI-AACR Whitepaper), Sunesis presented data profiling the oral PDK1 inhibitor SNS-510 showing potent activity in hematologic and solid tumor cancer models. New results of in vitro combination studies indicate that SNS-510 can combine synergistically with several drugs including inhibitors of CDK4/6, KRAS G12C, and BCL2. The IND-enabling program is progressing as planned and an IND filing is targeted for the end of 2020.

Partnering TAK-580 and vosaroxin. In December, Sunesis consented to Takeda Oncology’s assignment of our agreement relating to the pan-Raf inhibitor TAK-580 to DOT Therapeutics-1, Inc. ("DOT-1"). Coincident with the transaction, Sunesis and DOT-1 entered into a new agreement covering TAK-580 and DOT-1 paid Sunesis an upfront fee of $2.0 million. Under the new TAK-580 agreement, DOT-1 agreed to pay Sunesis up to $57.0 million in pre-commercialization milestone payments, plus royalties on future sales of TAK-580. Also in December, Sunesis licensed vosaroxin to Denovo Biopharma LLC ("Denovo"). Sunesis received a $0.2 million upfront payment and is eligible to receive up to $57.0 million in regulatory and commercial milestones, plus double-digit royalties on future sales of vosaroxin.

Financial Highlights

Cash and cash equivalents, restricted cash and marketable securities totaled $34.6 million as of December 31, 2019, compared to $13.7 million as of December 31, 2018. The increase of $20.9 million was primarily due to $45.1 million of net proceeds from the issuance of common and preferred stock, and $5.5 million of proceeds from the SVB loan, partially offset by $22.2 million net cash used in operating activities and a $7.5 million principal repayment of the prior loan from Western Alliance Bank and Solar Capital Ltd.

Revenue was $2.1 million in 2019 compared to $0.2 million in 2018. Revenue in both periods was derived from license agreements. The increase of $2.0 million in 2019 was primarily due to revenue recognized from the upfront payments received under the license agreements with DOT-1 and Denovo.

Research and development expense was $15.4 million in 2019 compared to $14.6 million in 2018, primarily relating to the vecabrutinib development program. The increase of $0.8 million in 2019 was primarily due to a $1.8 million increase in professional services and clinical expenses related to the preparation for the Phase 2 portion of our ongoing clinical trial for vecabrutinib, offset by a $1.0 million decrease in salary and personnel expenses.

General and administrative expense was $9.9 million in 2019 compared to $11.3 million in 2018. The decrease of $1.4 million in 2019 was primarily due to a $1.1 million decrease in salary and personnel expenses due in large part to lower stock-based compensation and a $0.8 million decrease in professional services expenses due to lower legal and vosaroxin patent expenses. The decreases in the comparable periods were partially offset by a $0.3 million increase in insurance premiums.

Interest expense was $0.5 million in 2019 compared to $1.2 million in 2018. The decrease in 2019 was primarily due to lower interest paid under the SVB Loan Agreement compared to the prior loan.

Cash used in operating activities was $22.2 million in 2019, compared to $24.4 million in 2018. Cash used in the 2019 period resulted primarily from the net loss of $23.3 million and changes in operating assets and liabilities of $0.7 million, offset by net adjustments for non-cash items of $1.8 million.

Loss from operations was $5.4 million and $23.3 for the three months and year ended December 31, 2019, compared to $5.8 million and $25.7 million for the same periods in 2018. Net loss was $5.3 million and $23.3 million for the three months and year ended December 31, 2019, compared to $6.0 million and $26.6 million for the same periods in 2018.

Conference Call Information

Sunesis will host a conference call today at 4:30 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 2388763. 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