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Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS)

Piper Jaffray Healthcare Conference 2013

December 3, 2013 02:00 p.m. ET

Executives

Daniel N. Swisher – CEO, President and Director

Analysts

Ted Tenthoff - Piper Jaffray

Ted Tenthoff

Excellent. So, we’re going to get started on our next presenting company Sunesis. My name is Ted Tenthoff and I’m senior Biotech Analyst here at Piper Jaffray. And before I begin I’m required to draw your attention to certain disclosures regarding the relationship between Piper Jaffray and Sunesis which are posted both at the back of the room and also at the registration desk.

So Sunesis as many of you know is a cancer drug discovery company that is conducting the Phase III pivotal, VALOR trial of vosaroxin and acute myeloid leukemia or AML as well as the phase II study in platinum-resistant ovarian cancer. Company also has discovered with Millennium Takeda and the new one with Biogen. Here to discuss the Sunesis story with me is my long time friend and fellow football -- Dan Swisher, who is the President and CEO of Sunesis. Dan thanks for being with us, it’s great to have you again at the Piper conference this year.

So last year the Data and Safety monitoring board recommended an increase in the size of the phase III VALOR trial – for VALOR trial of vosaroxin by about 225 patients. This takes us to 675 patients in total. We’ve recently completed enrolment which is FSA accomplishment, congratulations on that.

Walk us through how the one-time size adjustments increased the power of the trial and when do you think you will get data from VALOR?

Daniel N. Swisher

Great. Then thanks everybody for participating in the afternoon session, I’d just say one quick word about Safe Harbor statement that I’ll be making forward-looking statements otherwise will be quite boring and please look at the SEC filings for risk factors. I also like the idea of the VALOR trial sounds like something out of the 1970s sort – second indicator. VALOR of course, and so on, so we did announce 712 patients the up size to – and because it came a year ago at peak enrollment, complete that within a year which is great. And it’s a great testament to development team but also the enthusiasm of the investigators and so we’re on track now for Q2 readout with database stock and when we reach 562 events. And the way the trial was designed is basically the first lodge, we also factor EML study quite some time, there is no approved therapy in the setting, we’re going off a fairly large phase II dataset, that is all single on data and there is no perfect apples-to-apples comparison to know how the control on cytarabine would do, versus cytarabine plus vosaroxin.

So leukemia with the sufficient adopted trial of – at one efficacy really would be well sized within original file around 500 patients, now it is 40% better overall survival. The processes that we had is, the actual benefit is 30%, and that will be the first proven clinical survival base benefit in this patient calculation that will be very meaningful as we take that – as we see that at the interim then the sample size increase we would store VALOR back to 90%. So the simulations were based on whatever that absorb value is, and the time – which is less than 40% still clinically relevant, you re-power and its actually 85% and 95% powered study for showing the clinical result.

Ted Tenthoff

And at the time the stock responded very well because it really was the risky event and pushed out data, but when do you think you will get a final route?

Daniel N. Swisher

Yes, we gave fine guidance in our Q3 conference call where we have been saying first half of 2014 so obviously we’re finished reading, we’re watching events, we’re cleaning data and we’re confident it’s going to be intuitive next year.

Ted Tenthoff

Yes, congratulations. I’m looking forward to read that so assuming a positive readout because we’ve to be optimistic for biotechnology people. What are your filing plans and what is really that with – patient population with the size of the market?

Daniel N. Swisher

So given the more definitely the risk adjustment for us and as you mentioned, we’re showing additional shareholder scheme and at that point in time and that also give us the confidence to tell for regulatory filing so we’ve got a fast track file for the FDA so we’re already evaluating out modules for the FDA that would be outside of the clinical module and we’ve notified the FDA when we would expect the result and we will have the pre-NDA meeting and start the rowing commission with the goal of having a full NDA on file by the end of next year. And then, the European filing is due shortly thereafter in the first half of ’15.

Ted Tenthoff

Excellent. And then, the size of the patient population, both of the U.S. and Europe, your plans have been pretty – your intention is to launch yourself in the phase, what are your plans in Europe term?

Daniel N. Swisher

Yes, so it’s good question, I think, it’s been very strategic over the last several years to hold partnership discussions at arms length and really keep our frame unencumbered to the asset – indication. We do think the market forecast close to $1 billion the market potentials and just sort of simply the way to think about that is there is 22,000 treatment eligible patients in the U.S., 10,000 relapse of factory, four/five years after launch, we have 6,000 patients being treated annually. Given recent price analysis, 82,000 is not an unreasonable range. We will do final pricing later but just say 100,000 times 6,000 that’s $600 million annually in the U.S. In Europe is more patients with slightly lower penetration right now. We get the same number of patients maybe on vosaroxin, maybe slightly lower price but $500 million opportunity -- focused market 1,500 treated in the U.S., we would -- it's very addressable for us to take ourselves and those would be the plans you will be seeing going into the data read out from chief commercial officer, and another the leadership going.

For Europe, we have to make it decision and it's really, it's a question of the full dataset what that looks like. We know U.S. is addressable, that it will take more capital and bigger team and just sort of how much bandwidth and what the alternative looks like the – that’s decision from health position strength that we will making next year.

Ted Tenthoff

So and again if anyone has any questions please don’t hesitate to raise your hand. I am going to kind of stick with the commercial size before we come back to some of the data. We have got coming up as best we can, and one of the comments I made this is the first large relapse -- we have talked about this last year but I still believe there have been a lot of things that have really gone Sunesis’s way on the competitive front in AML really over the last half decade. So walk us through kind of what the competitive landscape looks like today for AML?

Daniel N. Swisher

As far as your question, we have been getting recently because a member of IPL companies know that have early phase one two trials and then to get the questions about the competitive intensity in AML, there has always been a lot of clinical phases to that medical need and I think a good example here is that the treatment guideline set for -- preferences clinical study or cytarabine based therapy, there has been no proven survival base study, it will be that new standard of care and importantly from a competitive perspective there is no other ongoing randomized phase III trial, so we would be the new standard that other will need to compare against or combine with and I do think kind of the time and addressable, you need the right drug profile, right risk benefit, got to get patients and clinicians, well maintain low induction mortality you got to have long term durability, you have to have to transmit if that’s possible. So there is factors that you can have including these targeted therapies, there probably are some (indiscernible) background so we are eagerly looking at the data coming out of that next year medical conferences and we wish other agents well and hope that there will be multiple new treatments options for patients soon.

Ted Tenthoff

So obviously safety and tolerability is huge issue for these patients where you have a high induction mortality rate just around current therapy and even from the other agents that are being evaluated. So walk us through those rocks and safety relative safety profile if you will and how this is a really important factor for the ongoing study?

Daniel N. Swisher

Yes, you touched on a key thing. I need to in fact survival of the risk benefit where I gave you some of the class divider, not been sufficiently efficacy so if you don’t get the patient in -- they are going to die with the disease literally within week as (indiscernible) however, if you have a drug that’s too toxin or too nerotoxic for too long, patients can die of infectious complications or other and organ toxic by other agents. And so you need the drug with the right profile. What's nice about those drugs which is novel targeted type two inhibitor with a novel scaffold is it's got certain efficacy benefits of daily drug resistant referring safety advantages of no and organ irreversible proximity, the deal two and phase is in -- which is reversible and managebale within one month treatment cycle and has not contributed to higher induction mortality. What we saw on our phase II as a 3% induction mortality which we look at other large cytarabine base studies with cytarabine alone with no higher.

So the things about VALOR is we don’t know what that data is, but we have been through five data and safety reviews every six months, the last one being in June. And with very safety review, and the -- we are looking at the various data, it never asked for more analysis or change to study conduct.

Ted Tenthoff

So I am going to jump around here a little bit because one of the other studies that was being conducted at an investigator side was the frontline AML study in elderly patients. I think you called it LA1 study if I am not mistaken. There are some results recently that were little bit confusing. So walk us through what the latest is there and the studies that’s been conducted in UK?

Daniel N. Swisher

Sure. Yes. So to comparison, I am going to redirect with a sort of broader answer but our clinical right now is the company sponsor the VALOR that would lead to market approval that’s where – recently we’ve been giving right to investigate the vosaroxin trials including LI-1 so we have three ongoing phase LI-1 which frontline elderly, a U.K. based study, we have in the understand which is a frontline AML and the VS trial and combination vosaroxin which we recently went from one data phase still and then MDS second line single agent sort of -- study which just started at (indiscernible) and there will be another study announced shortly in combination. The other way we look at these IST not all of them are going to work but it provides relatively cost effectively data that can guide further development publication etcetera and that one is what happens with LI-1 this is a cooperative group in U.K. primarily smaller community based hospitals that in a design, single to care frontline elderly as elderly is no doubt and we are looking for external agents that are better than low dose, based on our Phase II data we thought that was a pretty much of the same rank we had a 35% remission rate versus 15% to 20% for low deck and a very good safety profile, however what occur in the study is that the first experimental and which is vosaroxin compared to low deck the results were not replicated from our review I and it’s primarily because of lack of seniority with this drug profile which is faster acting low desk which is spread out for 10 days but the second bigger factor that’s smaller community hospitals are left with without the same support of care, so there is higher induction mortality than we would have anticipated or we’ve seen in another study and that this was benefits balancing the AML, the rates try to get patients in remission but the right care to get patients through the narrow to success.

Ted Tenthoff

Absolutely, by the way Chris.

Question-and-Answer Session

Unidentified Participant

And speaking is important -- kind of offset that you saw that is actually we saw in one of --?

Ted Tenthoff

So just repeat the question as would be the DSM be looks on VALOR how big that the induction mortality signal that you saw with LI-1?

Daniel N. Swisher

Yes. The answer is yes.

Ted Tenthoff

Chris any other question? Anyone else have any question for the – so you started to discuss these interesting new MDF trails, I think it makes a lot of sense as MDF is really what progresses into AML, so tell us about these two studies in a little bit more detail the MDF 1 and the (indiscernible) study. How are they different and what is the goal of -- little bit earlier here?

Daniel N. Swisher

So I think in the U.S. it's safe to say that the front line in all patients that are not standard induction chemotherapy candidate which is probably about a quarter of the annual invitations and these are patients in the mid 70s or 80s and other co-mobility they typically get -- and at the (indiscernible) there is strong -- more efficacy agent so they have ten years or so treatment history in these patients, frontline patients, and obviously they have treated 100 patients vosaroxin been in largest -- and very involved in phase II very comfortable with the safety profile. So trail design was let’s put a way for that vosaroxin which is actually a bigger dose you are giving to patients in RA1, combining with equal doses of -- and we will go through one phase evaluate six patients if there is a DL2, then we will escalate the dose. But what occur actually the six patients were very good supportive care probably among the best in the world plus also familiar to give the drug as we had no DL2, no early desk and importantly six out of six responses.

So we were very encouraged by the risk benefits profile miscalculation and they announced that they moved to the phase two portion where they will 60 patients and obviously that’s early data but very promising. It's a priority study and it's one of the reasons we have -- to talk a little bit about not only valid but future direction. And so there is publications which are important that can drive you, if you are already on a market, but then there is registration studies, we can imagine plus or minus those (indiscernible) concept. This is looking at second line patients -- there is no proven therapy there are those experimental therapies exploring that if we saw a robust activity there that’s -- could be task force accelerated specially supplemental approval.

Ted Tenthoff

Thank you that’s really helpful. So picking up on that what should we be expecting from hematology that you are done in the New Orleans?

Daniel N. Swisher

A good cocktail party.

Ted Tenthoff

That’s a great -- this Saturday night –?

Daniel N. Swisher

Probably that’s when championship will be occurring to so go card. Well I mean honestly it's a little frustrating because we are –– it's a blinded study. We can't break the -- as much I like to --next year but so but we do want to make sure people are paying attention to program where the milestone and this year we have got our investigators who have the most familiarity with the drug though, and then we both -- who is involved in our phase two and now involved in the MDF, so yes, so hopefully who can make it. Let them know, and so put you on the list and then Sunday night we are meeting with the several hundred investigators to just maintain those relationships as we are anticipating data.

Ted Tenthoff

Great. Okay. Is there any few other questions?

Unidentified Participant

[Inaudible]

Daniel N. Swisher

Yes, I want to give you simply yes. Yes honestly it's not our data and unfortunately the data wasn’t mature enough to put in a -- which was kind of the original hope. So I think some of that data is going to get shared in a midyear, maybe next year. So the data to talk more about that but the criteria for responder in this disease is some form of CR so it's not just -- it can be a CRI, CRP, they are not all CRI. I will tell you that though. All right. But yes, that’s probably much as I can say and honestly we are not anticipating 100% response rate in the full study now but 50% response rate, 40% I mean we typically expect the 25% response or so in population stuff.

Unidentified Participant

[Inaudible]

Daniel N. Swisher

Yes, so it's close first one -- so it's kind of the elderly patients that are in high risk in the first line. First line. And you know it's nice because already taken the data with -- I would go there, first line to get treated but -- but they are going to be able to down the road do cross comparison of like patients in their institution that were on alone. So we can really, I think chose out the risk benefits and that’s -- patients flow that they will get this study going forward and I anticipate by next year. So it's pretty good data set that we can then nice publication but also decide do we do further work in the study and the one -- we won’t do anything with another center until we get that data set. So we giving in them the first -- to be the champion of the --

Unidentified Participant

[Inaudible]

Daniel N. Swisher

No it's both MDF and AML. I can't tell the level but I mean it's you know, so but again you know yes but it's impressive you know patients are going to know the disease kind of basis, I mean it's very profound responses though. Encouraging but again you know it's finally after three years -- study start to lose faith and something is here you know the phase two data sets and we know the trails and -- but we are blinded. So it's kind of -- get these market feedback from open level study. And a lot of opportunity to do novel combination in other setting so we just never had the resources to pursue.

Yes, but definitely, I mean, ultimately addressable with the right drug trial design and test schedule. Yes, it's in other studies and addressable but it is risk benefit balance has been a real challenge. I think the clinical profile that really matters to these patients and whether it's a novel targeted therapy or novel cytotoxic and what the patient really cares about is hey doc, with this combination of those drugs, we’ve twice the chance going into response. The induction mortality is more than -- being alone and those response -- I mean that’s the patient wants to hear it and by the way we are going to be vulnerable by -- and we know whether or not the drug is working. Yes so it's directly measurable. So I just think if that profile get very excited about now I just need the data. But so that’s where we just try to kind of invest -- that type of study and it has been -- by nothing seems to work specially -- setting and so there is a lot of data skeptics until you get to that data and we are -- no matter how many patients you have available at the -- you just – they had no open survival separations. Yes, will work. Yes. But the profile will not work. Yes, would work in U.S. but they have more patients and they had kind of a prospective chart design which we got to value. So all right.

Ted Tenthoff

There is about a minute left. You guys attended the third quarter with 45.5 million and following the resizing of VALOR you also implemented a royalty share agreement with a royalty format, so tell us how long like cash loss and remind us what the terms of that royalty share, anyone else that get the little slice of vosaroxin?

Daniel N. Swisher

Yes, on a cash basis and pro forma we’ve raised little bit of additional money in October, we just really wanted to top up knowing whether Q2 readout that we had a good cash questions going into VALOR so we have $50 million pro forma over the last several quarters are -- approximately $10 million a quarter, $8 million operating, $2 million of a debt amortization $20 million of debt it’s getting amortized off, so you can see we’ve got approximately five quarters with one way which is well beyond the data read out, which is right beyond. We did a novel with a dollar or so we really don’t want to do any equity capital and we don’t want to give up fixed price of geographic rights to a corporate partner, we did a royalty deal with royalty partner, one of the first phase done with the Phase III company and it’s because they like to travel design with this adopted trial informing, so it’s a 6.75% royalty and we have $25 million the permanent capital and so the cost of 0.5% cost of -- 6.75% royalty to which was the original innovative back and the early 2000, so gross margin in excess of 85%.

Ted Tenthoff

Excellent, fantastic. Well, we want to thank you very much for joining us today and I look forward to seeing you down in New Orleans next week.

Daniel N. Swisher

Great, thank you Ted.

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