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Sunesis Pharmaceuticals (NASDAQ:SNSS)

Q2 2014 Earnings Call

August 05, 2014 11:00 am ET

Executives

Eric H. Bjerkholt - Chief Financial Officer, Principal Accounting Officer, Executive Vice President of Corporate Development & Finance and Corporate Secretary

Daniel N. Swisher - Chief Executive Officer, President and Director

Adam R. Craig - Chief Medical Officer and Executive Vice President of Development

Joseph I. DePinto - Chief Commercial Officer and Executive Vice President

Analysts

Eric Schmidt - Cowen and Company, LLC, Research Division

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Andrew R. Peters - UBS Investment Bank, Research Division

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

Jason Kantor - Crédit Suisse AG, Research Division

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

Matthew J. Andrews - Wells Fargo Securities, LLC, Research Division

Christian Richard - Merlin Nexus

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2014 Sunesis Pharmaceuticals Inc. Earnings Conference Call. My name is Philip, and I will be your operator for today. [Operator Instructions] As a reminder that this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Eric Bjerkholt, the Executive Vice President of Corporate Development and Finance, and Chief Financial Officer. Please proceed.

Eric H. Bjerkholt

Thank you, Philip, and thank you, all, for joining us today. With me from Sunesis are: Dan Swisher, President and Chief Executive Officer; Joe DePinto, Executive Vice President and Chief Commercial officer; and Dr. Adam Craig, Executive Vice President, Development and Chief Medical Officer.

During today's call Dan will review recent corporate events, Adam will provide an overview of the ongoing vosaroxin and pipeline programs, Joe will provide an update on commercial launch planning, and I will discuss second quarter 2014 financial results. We will then open the call for questions.

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 Dan.

Daniel N. Swisher

Thanks, Eric. Good morning, and thanks all of you for joining us. As we announced in the press release this morning our pivotal Phase III VALOR trial of vosaroxin and cytarabine in first relapse of primary refractory acute myeloid leukemia has now reached the prespecified number of events, 562, for unblinding. This outcome marks a key step before final analysis and database lock, and is the culmination of over 4 years of effort methodically designing the VALOR trial, enrolling and treating patients, and monitoring data collection to ensure a high-quality readout. It also marks a very exciting time for us here at Sunesis, one, where as a company, we stand to potentially transform the treatment of the disease which has seen almost no therapeutic innovation in the last 40 years. With an enrollment of over 700 patients, VALOR is the largest company-sponsored trial ever conducted in this indication and is well powered to demonstrate a clinically meaningful improvement in overall survival. With the prespecified number of events now confirmed, we continue to expect the unblinding of VALOR in the second half of this year. As we near this pivotal event, our attention has shifted to QINPREZO's near-term regulatory and commercial activities and longer-term lifecycle strategies, which I will let Adam and Joe speak to in more detail in a moment. We believe that our regulatory strategies in both Europe and the U.S. are well defined and that the building blocks of our commercial strategy are falling into place.

As part of these efforts, we have begun putting in place the seasoned team in that the commercial and scientific affairs function. As we've announced in our last call, we have established a Metsa team, including 4 home office and field base professional, who are now among other things, working closely in the field with leading AML key opinion leaders, preparing for managed access program and supporting an ongoing publication plan. On the commercial side, we've recently added 2 new key hires in market access and analytics to help us formulate payer strategies and better understand the disease whose influence and prevalence may be understated. On the development front, we've been actively supporting leading investigators to explore vosaroxin in additional patient settings and in novel combinations. We also continue to see progress in our pipeline of earlier stage assets, which include 2 new proprietary oncology kinase inhibitor program, as well as our collaborator-funded program forming a broad pipeline of novel differentiated therapeutics behind QINPREZO.

Underpinning our development programs is the strong balance sheet, which includes $58.5 million in cash and a financing facility that may provide $95 million in additional proceeds following a positive VALOR readout. Taken together, we believe our pipeline, corporate regulatory, and commercial strategies position us well to reach our ultimate goal of becoming a leading integrated oncology company.

I will now turn the call over to Adam to discuss the vosaroxin and pipeline programs. Adam?

Adam R. Craig

Thank you, Dan, and good morning, everyone. With the VALOR data readout now in sight, QINPREZO remains among the most important and promising therapies in development of AML. A positive outcome with the VALOR trial will service as an important step in demonstrating this therapeutic candidate's potential as an oncology product. Treatment of the disease is often challenging, particularly in the relapse/refractory setting. The goal is to find an appropriate balance of response to therapy, curability of response and safety.

QINPREZO is a first-in-class anticancer quinolone derivative with distinct characteristics compared to anthracyclines, which are broadly used in the treatment of hematologic and solid tumors. This unique profile has led to an expanded interest in studying it, both alone and in combination in a variety of hematologic settings.

To date, we have explored this potential through investigator-sponsored trails at leading institutions, such as the MD Anderson Cancer Center, Weill Cornell, New York-Presbyterian Hospital, and Washington University.

Most recently at the ASCO Annual Meeting in June, we announced the presentation of updated results from an ongoing Phase IB/II in the Anderson-sponsored trial of vosaroxin in combination with decitabine in older patients with previously untreated AML and high-risk MDS. The combination of vosaroxin and decitabine showed robust clinical benefit and good tolerability in older patients. This data also highlighted the potential for combining agents with non-overlapping toxicity profiles and a distinct -- and distinct anti-leukemic activity. Whereas, QINPREZO is a novel first-in-class anticancer quinolone derivative, decitabine inhibits DNA methyltransferase activity, resulting in hypermethylation and cell cycle arrest. Combination with such as these in areas of significant unmet medical need represents an important possible next step in our development of QINPREZO following the unblinding of VALOR.

As we prepare for this event we continue to make significant progress with the preparation of both NDA and MAA submissions. In June, we announced that the Pediatric Committee of the European Medicines Agency issued a positive opinion of the company's Pediatric Investigation Plan or PIP for vosaroxin. A PIP is part of the EMA approval process and must be accepted prior to submission of a Marketing Authorization Application or MAA. It describes how a company intends to evaluate the use of a given drug in children. With this acceptance, our regulatory strategies in both Europe and the U.S. are now well defined.

As to our pipeline, we continue to make progress with our 2 new proprietary programs which complements our collaborated funded partnerships with Biogen Idec and Takeda. These programs, the BTK program and the PDK1 program both address compelling areas within oncology. As the year progresses, we look forward to seeing the potential of both our proprietary and collaborator-funded programs in addressing unmet medical needs in oncology and immunology.

With that, let me turn the call over to Joe.

Joseph I. DePinto

Thank you, Adam. As Dan mentioned, we are working on multiple fronts with respect to building out our commercial organization. First, we are developing a preeminent commercial oncology team. This effort is focused on recruiting top talent and leveraging an experienced internal team, supplemented by vendors and consultants with expertise in hematology. We are putting the foundation of our commercial launch in place, focusing on getting the company ready, the market prepared, and the product ready for launch.

As part of this process, I am pleased to announce the appointment of Par Hyare as our Vice President of Market Access. Par brings significant expertise in market access and sales leadership, spanning his career with AMAG, Ortho Biotech, a Johnson & Johnson Company, and Merck. His experience in leading and implementing commercial strategies involving pricing, reimbursement and access for hematology, oncology, and specialty products to hospitals, group purchasing organizations, and payers will be critical in the prelaunch phase. We have also made a key hire in business analytics who will be joining us in the coming weeks. This season biotech executive has experience in building hematology, oncology, and specialty pharma analytics teams. And we are thrilled to have him join us in the weeks ahead. Internally, we have announced the promotion of Dan Weinseimer to Executive Director of U.S. Marketing. Dan is an 8-year Sunesis veteran, who has extensive AML and product experience. We are poised post unblinding, to finalize the last few hires in our senior commercial leadership team.

Second, we are investing in brand building efforts that will be critical to positioning QINPREZO prior to and following a positive VALOR readout. These involve building a scientific platform, branding, market research, market access, and pricing strategies in the buildup to a successful QINPREZO launch.

Among these efforts is a disease area awareness campaign for AML. This campaign is set to begin in the months ahead and focus on the challenge and lack of new therapeutic options that health care practitioners have in regards to treating AML. This disease is frustrating and challenging to treat, and one, which progresses rapidly with poor 5-year survival rates. Little progress has been made in introducing new therapies to this market over the last 4 decades. Treatment success in relapse and refractory AML is a function of efficacy balanced with a manageable toxicity profile that may allow patients to transition to the next stage in therapy. Sunesis is committed to pursuing the clinical relevance in therapeutic utility of QINPREZO, a first-in-class anticancer quinolone derivative to prolong survival for patients with AML.

Because of the lack of treatment success this disease is not well understood from a commercial perspective unlike other well-addressed hematology markets. The commercial team has leveraged U.S. medical claims data from both Medicare and commercial payers to further clarify AML incidence and prevalence based on diagnosis and treatment behavior. This preliminary analysis review of the higher incidence for AML than registry data would suggest. Recent literature published in this space has confirmed the severe underreporting of secondary AML in registry-based epidemiology estimates. Our data shows that, although more patients exists, treatment rates and relapse and refractory AML are less than in newly diagnosed patients because many patients opt not to receive further therapeutic intervention. We are currently refining our work to better understand and maximize the full potential of QINPREZO in AML.

With that, I will now turn the call over to Eric to discuss the financials.

Eric H. Bjerkholt

Thank you, Joe. I will recap financials announced this morning beginning with our cash position. We ended the quarter with $58.5 million in cash compared to $39.3 million at the end of 2013. The increase of $19.2 million was primarily due to net proceeds of $45.5 million from equity financing arrangements and the exercise of warrants, partially offset by $21.6 million of net cash used in operating activities, and $4.6 million of principal payments against notes payable. As of June 30, outstanding debt totaled $13.8 million.

For the income statement, revenue for the 3 and 6 months ended June 30, 2014, and '13 was $2 million and $4 million, respectively. Revenue in each period was due to the deferred revenue recognized under the royalty agreement with Royalty Pharma. R&D expense was $7.2 million and $14.8 million for the 3 and 6 months ended June 30, 2014, as compared to $7.7 million and $15.1 million for the same period last year, primarily relating to the QINPREZO development program in each period. Partially offset by spending on our kinase inhibitor program, the decrease between the 3 and 6 months periods were primarily due to lower clinical trial expenses.

G&A expenses for the 3 and 6 months ended June 30, this year, were $6.4 million and $9.8 million as compared to $2.9 million and $5.3 million for the same period, last year. The increases from 2013 to this year were primarily due to higher personnel and consulting costs related to commercial planning and medical affairs.

In summary, we are well capitalized and have the resources, and operating team, and momentum to execute on our corporate objective. With that, I will turn the call over to Dan.

Daniel N. Swisher

So thanks all for joining. Before we take questions, I'd like to make one last comment. The readout of VALOR is clearly the single most important upcoming event in our evolution into a leading oncology company, having now reached the prespecified number of events, a necessary prerequisite for unblinding. We look forward to moving on to finalize data collection and analysis, and consistent with our previous guidance to announcement of top line results this half. Our focus during this period is on a timely and high-quality data readout, so as you might appreciate, we do not expect to provide further guidance on the timing of an announcement beyond the second half of 2014 guidance or any update to the progress of final data collection or analysis.

With that, I would like to open the call to your questions. Philip?

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from the line of Eric Schmidt from Cowen and Company.

Eric Schmidt - Cowen and Company, LLC, Research Division

Dan, would you be able to tell us when the last event was achieved. Was that relatively recently?

Daniel N. Swisher

Yes. That's as far as we can frame that at this point in time, that it was recent.

Eric Schmidt - Cowen and Company, LLC, Research Division

Okay, and assuming you have positive readout from VALOR, how soon could you turn around a -- say an NDA or EMA filing.

Daniel N. Swisher

Well, Adam, do you want to address that? And I'll just say kind of broadly, our guidance is first half 2015 for the full NDA submission, and second half for the EMA submission of next year. But, obviously, we're going to work as hard as we can.

Adam R. Craig

Yes, Eric, it takes about 6 months to write an NDA. And -- but I would add one point about that is we would need to meet with the FDA for pre-NDA submission -- for pre-NDA meeting and determine their needs, their final needs. We've already met them once, but this will be a more formal meeting. Once we know the need then we could refine the timeline. But it normally takes about 6 months. And the -- but one opportunity we do have here is for rolling NDA. And we are already well advance in preparation for nonclinical and the chemistry sections. And we would hope after a pre-NDA meeting with the agency that we could submit those quickly and get that rolling process up and running so that the main focus of the writing will be the clinical section.

Eric Schmidt - Cowen and Company, LLC, Research Division

Okay. And, Adam, do you have a placeholder in at ASH for a possible full presentation of the data.

Adam R. Craig

We're not going to comment specifically on when we intend to present the data. We've always said that we'll present the data in appropriate major hematology oncology meeting, but we're not going to be specific about when that will be.

Eric Schmidt - Cowen and Company, LLC, Research Division

Okay. A quick one for Eric. We saw a pretty substantial increase in SG&A in Q2, I assume that's related to some of the pre-commercial activities. Is that going to ramp up more substantially in Q3, or flatten out until you have the results from VALOR?

Eric H. Bjerkholt

I expect that -- well, I mean we have added some new hires of personnel costs are probably going to be little higher. The consulting costs probably be pretty similar. And then we'll ramp up after a successful unblinding.

Eric Schmidt - Cowen and Company, LLC, Research Division

So you promise us a successful unblinding?

Eric H. Bjerkholt

No.

Eric Schmidt - Cowen and Company, LLC, Research Division

One more for Joe, if I could, you kind of provided a little bit of a teaser there with the new analyses you've done in terms of the incidents of AML. Can you talk a little bit more about how many patients you think in U.S. have relapsed/refractory or front-line disease, and what the percent of treatment is on the second line setting.

Joseph I. DePinto

Thanks for the question. Yes, we started to dig in and looking at different data sets here as we prepare for our launch activity. And in looking at that, what we've taken a look at is a lot of this -- the proprietary data set that are out there around epidemiology. And what we've noticed is a high degree of underreporting of secondary AML. And then what we did is we looked at claims data both commercial, as well as government claims data in the U.S. and our goal is to triangulate the data, right, to get the best numbers that we possibly can and looking at how do we maximize the potential. At this point in time, it's really preliminary. I wanted to make sure everybody understood the kind of rigor we're putting behind this as we look to approach the launch, but we will be able to share more as we move forward. But as it looks right now, there's some significant underreporting of AML and as you look at it, some of the relapsed and refractory setting, what we're finding is some of the patients opt out of therapy for a variety of reasons as they progress in AML. We're getting a better handle on that. We want to make sure we put good rigor around it, Eric, and that we are able to have a good number for you in the future. Hope that helps.

Operator

Our next question comes from the line Adnan Butt from RBC Capital Markets.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

So, Dan, I'm not asking you to fine-tune the timing, but just in terms of procedurally, if you lock the database then how soon after database lock can top line results be announced.

Daniel N. Swisher

Yes, I wanted to have -- Adam actually walk through, it's a well-choreographed, very careful process to go from last event to data readout and maybe without giving sort of additional timing, we'll just talk about sort of the activities that are involved.

Adam R. Craig

Yes, the first thing is to do the, Dan, is to do the final cleaning of the data, and we obviously did a lot a work in this. We've done a lot of work on this over the last few months. And -- but we're doing the final cleaning now we know the timing of the last event. And there needs to be a final assessment of response and duration of response by the independent physician committee that adjudicate a response. From that, we will then move to locking the database, the data will be processed, and then there'll be a meeting of the independent DSMB who will authorize unblinding. I should say along the way, we have continued to work towards maintaining the quality data set. Everything we've done, we emphasize quality. And the objective here is to produce a quality data set in a timely manner.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Is my understanding correct that the populations were stratified? And I guess the top line data will just be top line data or would you be giving subpopulation efficacy as well in there.

Adam R. Craig

Most likely in the release is to get top line data. There is a stratification according to a geographic region. And whether patients have relapsed or refractory disease. But we don't want to ruin our chances who are representing the data on major conference. And so we believe we can give very good presentation in the conference. So we will probably restrict our data to presentation -- our release rather than the news to top line data. So we don't scrap our challenges in getting added. Well hopefully, it would be an oral presentations in a major conference.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Last question, then I will get back in queue. Just would you mind reminding us how relapsed and refractory were defined if they are the same across different AML studies and then do all the patients get 7 plus 3?

Adam R. Craig

Yes, the definition -- Eric, I'll answer the first question -- the last question first. It was a requirement in the studies that patients have had at least 1 cycle pretreatment with an anthracycline on decitabine and cytarabine. And obviously our patients met that criteria. And the definition of the refractory was patients who've either never right achieved a CR or had a CR, but it was very short duration less than 90 days. The definition of early relapse with CR greater than 90 days to 1 year, and late relapse is 1 year to 2 years. The CR duration of 1 year to 2 years. There are some differences from other protocols. Some studies have used the same. Sometimes early relapse is defined as CR lasting from 90 days to 6 months. And so there are some differences between studies. What we've chosen is fairly commonly used in Phase III AML studies.

Operator

Our next question comes from the line of Andrew Peters from UBS.

Andrew R. Peters - UBS Investment Bank, Research Division

A couple of questions. I guess the first is as you build out kind of the commercial infrastructure, can you describe any early conversations you've had with payers and in terms of what sort of profiles they'd be more and less willing to kind of pay for in terms of treatment benefit or survival benefit. And then -- just as you look to the competitive landscape in AML, help us think about are there potential combinations where some of the earlier, more targeted therapies could be added on to QINPREZO backbone. And do you see the landscape eventually moving that way on a favorable study.

Daniel N. Swisher

Yes, thanks, Andrew. I'll have Joe address the first question about the payers and the work we've been doing.

Joseph I. DePinto

Andrew, we've done some preliminary work as well with the payers having par on board now really help accelerate some of that work with the payers. As we continue to look at the U.S. market and understand the commercial payers, as well as the government payers and how vosaroxin, QINPREZO will be reimbursed will be really critical. And there is been nothing in AML for so long, and it's an orphan drug that has no really significant therapeutic advancement in the last 40 years which brings promise. And payers want to make sure that they are paying for products that help their patients and quality of care. But at the same time, we need to make sure that we understand what the end or product will deliver from the target product profile. So obviously we've done some initial work, and we need to see what the final data looks like before we can put that profile in front of the payers to better understand what that will look like as we enter the market. So we have done some preliminary work. The work that we have is promising, but with par on board now, a lot of that work will start to accelerate and that it accelerates even further once we unblind the data, and we know we have from a final target product profile rather than just a different case scenario of a target product profile. So hope that helps to answer the payer question and the progress we are making. We expect to continue to make further progress as the days, months -- weeks and months move on.

Daniel N. Swisher

And I think regarding our future development strategy and lifecycle planning both within AML and beyond, Adam, maybe you can just comment on that question.

Adam R. Craig

Yes, thank you. The combination of the vosaroxin with decitabine and cytarabine is going very well. And the 2 drugs -- 2 types of drugs don't seem to have much overlapping toxicity, and I think there is great potential there. One thing I'd say generally about vosaroxin it is -- has a very predictable, very manageable side effect profile. And I'm hoping over time that we can work with the institutions to expand its use in combination with a number of other different agents. I believe it has potential in this regard because it has a very predictable side effect profile. And I am working on new opportunities now in this regard.

Operator

Your next question comes from the line of Mara Goldstein from Cantor Fitzgerald.

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

I guess my question maybe more on directed towards Joe, and that is given the age of the population in the VALOR study, it would seem to be that this will largely be very heavily skewed towards Medicare clientele. And I'm just wondering how the commercial -- how the discussions around reimbursement will differ between commercial and government payers.

Joseph I. DePinto

Yes, thanks for the question. Yes, we have looked at segmenting the market a bit and looking at the different populations. As you see, relapsed/refractory AML as we look at, we're also looking at chart audits to better understand the patient population in the U.S. and what that looks like to make sure that when we enter the market we make sure we have a clear understanding of what the market segmentations look like. So it will be typically similar to what you see in the Phase III trials and the payers that we will be working with, we're going to have prioritized from a commercial standpoint and from the government standpoint. So we will have a good understanding as we go to launch of what that looks like. So that's how we progress from a payor standpoint. Again, with now par [ph] on board we will really be able to accelerate some of that effort as him and his team start to dig into this. But the key area here, Mara, will definitely be understanding what that final profile looks like. So we can put something to the payers that they can respond to that is the reality of what we have.

Daniel N. Swisher

And I think as Joe said before and Adam as well, it's the totality of the data. So obviously primary endpoint and overall survival is important to meet from a regulatory perspective and from a customer perspective, but some of the other endpoints in terms of bridge to transplant, CR rates, the balance with toxicity those will be very important as well. And so all those need to be factored in with the final profile.

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

Okay, and do you have any information -- demographic information, I guess, that you could share with us at this point in terms of the distribution of patients in VALOR in terms of relapsed/refractory and also the subcategorizations around that.

Adam R. Craig

We haven't shared that at this point, Mara. Obviously, we do have it. We will share in due course when we present the data, but we are unable to share that today.

Operator

Our next question comes from the line of Jason Kantor from Credit Suisse.

Jason Kantor - Crédit Suisse AG, Research Division

Getting one step closer to the data, it's been a long time, it's very exciting. And most of my questions have been asked. But, Eric, I was just wondering could you give us sort of the exact quarter end share count and how many warrants there are outstanding. And you mentioned the possibility for some $90 million more in proceeds if the remaining warrants are exercised. Could you just give us a sense of exactly how many shares outstanding there would be post that event.

Eric H. Bjerkholt

Sure. So we have about 60.3 million shares outstanding at the moment. And what Dan was referring to is exactly, you're right, it's the 4.65 million warrants at $8.50 and that same number at $12 and if all those warrants are exercised, then that would provide about $95 million in additional equity financing. And obviously then I would...

Jason Kantor - Crédit Suisse AG, Research Division

Any other options or warrants that are outstanding now?

Eric H. Bjerkholt

Yes, so the grand total of warrants are about 19 million, but all other warrants are net exercisable, and so we don't necessarily expect that we would get proceeds from that, and also the number that would ultimately be outstanding would be a net number, and the same obviously would be true for options down the road.

Jason Kantor - Crédit Suisse AG, Research Division

And so you said 19 million, that 19 million including the 9-something from the other. That's an additional [indiscernible]

Eric H. Bjerkholt

Correct.

Jason Kantor - Crédit Suisse AG, Research Division

What's the average per stock price for the remaining net exercisable options?

Eric H. Bjerkholt

I can get back to you with a precise number, but it's roughly, I would say roughly $3.50.

Operator

Our next question comes from the line of Joe Pantginis from Roth Capital Partners.

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

Maybe a question just follow-up to tease out a little bit on some of the comments that Joe made regarding the disease awareness campaign that you're undertaking at the moment. So some questions have come out about your interactions with payers and Medicare, et cetera. How much of your time is spent in this disease awareness campaign on payers and Medicare versus docs because, I mean, I don't want to put the Rosy-colored glasses on, but figured the docs would be less of those efforts just because they're already willing and able to bring on a new therapy.

Daniel N. Swisher

Joe, thanks for the comments. We spent a good amount of time with preparing the disease area campaign. As it stated in my beginning comments in the script, one of the things we wanted to focus on is a launch approach that really focuses on getting the company ready with the hires, preparing the market, and with no new therapeutic interventions in the last 40 years, you need to do some of that and in looking at end points and looking at what makes a successful compound in relapsed/refractory, as well as looking at the uniqueness of a first in class anticancer quinolone derivative. You're going to see efforts that focus around that in the trades, in the publications, and we're going to be working with physicians, as well as healthcare practitioners, payers really making sure that we get that information out there about the AML marketplace and what end points look like that are successful end points. Dan talked a little bit about the totality of all the endpoints. All that has to be factored into the equation, Joe, and it's really important that we do that. There hasn't been a lot of that market-building work in the AML marketplace because quite frankly, there hasn't been a lot of activity here in something so close, so we're excited about it. You'll see that activity starting to hit in the not-too-distant future, but you'll see how it rolls out, and we've really put a lot of effort into it. And we're pleased with where we are with it and we're exciting to get it started.

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

Then maybe just a quick question for Adam regarding the Pediatric Plan that was put in place in Europe ahead of the potential filing, is there any feedback that you can share in your discussions before putting this plan in place with regard to the general acceptance of the plan and specifically around safety and comfort levels around safety and any other color you might be able to add.

Adam R. Craig

Yes, thank you for the question. The pediatric plan is actually very straightforward. The -- as you know, Joe, I'm a pediatric oncologists by training and the use of vosaroxin in the pediatric setting is very compelling. The drug, because it appears to be active in adults should be active in pediatrics. The plan that we put forward involves a acute leukemia Phase I trial, which will lead them to a larger Phase II trial combination study. And so it's very straightforward and it was not difficult to agree on the clinical plan with the European agencies, and we have lot of support from European and pediatric oncologists who helped us develop the plan. So really to answer your question, it's straightforward, and we look forward to doing this important work over the coming years. I think it could be very valuable to this population.

Operator

Our next question comes from the line of Matthew Andrews from Wells Fargo Securities.

Matthew J. Andrews - Wells Fargo Securities, LLC, Research Division

Dan, just a multipart one for you on the manufacturing. So where do you think you stand in the 2-year stability lots for QINPREZO and assuming a positive VALOR study when would you begin manufacturing commercial lots. Would this be after FDA inspects the facilities. And then finally as top-level results are announced and you are luck for which had enough time to manufacture and sufficient supply for the U.S. launch?

Daniel N. Swisher

Yes, let me address a little bit of the manufacturing and have Adam comment on the stability data. But the good news is it's a very potent compound. We've got significant manufacturing experience. We've been at commercial scale for quite some time now through the Phase III study. And so we're going to ensure that we've got sufficient stock on board to support launch, as well as our additional clinical activities, including a managed access plan that we've been putting in place to come out post unblinding. The stability and just status of the CMC section for the FDA.

Adam R. Craig

The CMC section of the FDA is very advanced and we completed very shortly. From a stability point of view, this drug is very stable. It's probably the best. It has got the best characteristics of any drug I have ever worked on the only thing we need to do is protect it from the life. If we do that, it's got great stability after 3 years.

Operator

[Operator Instructions] And our next question comes from the line of Chris Richard from Merlin Nexus.

Christian Richard - Merlin Nexus

I have a couple of follow-on questions to what Adnan asked, and just some procedural things if you could answer. So has the cleaning, Adam, being done on a rolling basis, is this kind of like a de novo effort not at the last event. And then secondarily to that it sounds like the adjudication process is going to be the bottleneck here. Is that been going also on a rolling basis, is that a fair assumption that this is really the bottleneck that will drive that readout. Can you go through a little bit if you -- 1 or 2 centers or 3 centers to adjudicate, what's the process like?

Adam R. Craig

Yes, Chris, it's not the bottleneck. I spent a lot of time with the team making sure it did not become a bottleneck. Really, what we're doing at the moment is a number of different activities in parallel. It is an important step, but it will not be the bottleneck. With regard to cleaning, the cleaning has been going on since I joined the company for the last 2 years. We've done 90%, 95% of the cleaning, if not more, now. I don't have the specific number, and we're really doing the final data cleaning now and because the last patient went on study in September of last year, and we've had plenty of time to work on the cleaning. We've had lots of site visits, and we've really focused our resources as I said previously on maintaining the quality data set, and all these activities will be in parallel and we will unblind as quickly as we can. To repeat the adjudication process is not going to be right limiting.

Christian Richard - Merlin Nexus

Okay, okay. It's going to be one site that's adjudicating or is it 3 pathologists doing it or...

Adam R. Craig

As we said previously, I'm not going to answer specifics except to say, Chris, we have an independent group that includes pathology and clinical and clinicians who make an independent assessment of our response data. And as you know, Chris, response is an important secondary endpoint for the study, and will be supportive of any survival benefit that we show.

Christian Richard - Merlin Nexus

Okay, so without pigeonholing you guys, it's not next week, but it's not Christmas either?

Daniel N. Swisher

What we're really going to say, Chris, as much as I know, there's pressure on us to do something more is to stick with the second half. Obviously we've got -- we're more than highly confident. We know the data is going to come this half.

Operator

Ladies and gentlemen, this will conclude the question-and-answer portion of today's conference. I would now like to turn over to Dan Swisher for closing remarks.

Daniel N. Swisher

Yes. Thanks to all of you for your interest in Sunesis. And obviously, very critical juncture coming forward, and we're excited by the potential. We really think about the unmet need in AML, QINPREZO can significantly advance the needs of those patients. The objective of our work at this stage is to be as forward thinking as possible, build the platform for Sunesis from which we can grow into a leading integrated oncology company. We've got -- and very deliberately have retained worldwide rights to a high-value of late-stage assets. We've got a deep R&D pipeline now both proprietary and collaborator-funded programs. So it sets us up well for the next stage. Our near-term key elements of this effort are high-quality NDA submission, which we're actively preparing for and the buildout of an experienced U.S. oncology commercial and medical affairs organizations in preparing well ahead of time, we've had the opportunity to orchestrate a truly successful product introduction the first new branded therapy in the market in several decades, so as we complete the final data collection and analysis, we look forward to completing our prelaunch activities in preparing for all of the post-data components of ultimately a well-crafted product launch. Thanks very much for joining this call. We look forward to the transformative events ahead for us. And as always, we're available to answer any follow-up questions. Thanks again for your interest in Sunesis.

Operator

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

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