Sunesis reported updated data from the dosing portion of its ongoing Phase Ib/II study of vecabrutinib for chronic lymphocytic leukemia (CLL) and other B-cell malignancies. The key data on the highest dosing cohort (300mg BID) showed stable disease (SD) in three of five patients, including one patient very close to a partial response (PR) at 40%. The company will need to escalate to higher doses (400mg is already enrolling), but we are encouraged by the activity seen here.
Written by
Sunesis Pharmaceuticals |
300mg suggests activity, but higher doses needed |
Clinical update |
Pharma & biotech |
16 December 2019 |
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Sunesis Pharmaceuticals is a research client of Edison Investment Research Limited |
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Sunesis reported updated data from the dosing portion of its ongoing Phase Ib/II study of vecabrutinib for chronic lymphocytic leukemia (CLL) and other B-cell malignancies. The key data on the highest dosing cohort (300mg BID) showed stable disease (SD) in three of five patients, including one patient very close to a partial response (PR) at 40%. The company will need to escalate to higher doses (400mg is already enrolling), but we are encouraged by the activity seen here.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.7 |
(35.5) |
(1.45) |
0.00 |
N/A |
N/A |
12/18 |
0.2 |
(26.6) |
(0.75) |
0.00 |
N/A |
N/A |
12/19e |
0.0 |
(24.0) |
(0.21) |
0.00 |
N/A |
N/A |
12/20e |
0.0 |
(26.5) |
(0.22) |
0.00 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortization of acquired intangibles, exceptional items and share-based payments.
Vecabrutinib dosing on the cusp
The company enrolled five patients into the 300mg cohort. Additionally, another patient from a previous dosing cohort who was escalated to 300mg also had an SD response. Two of these 300mg patients remain on the drug, including the 40% responder, who may further develop a PR. Although we would like to have seen a PR at this dosing level, the activity seen is suggestive of efficacy and we expect increasing activity at higher doses.
Cytokine biomarkers also suggestive of efficacy
To support the tumor response data, Sunesis also provided data on cytokine inhibition. Cytokine inhibition is an expected effect of an active BTK inhibitor, and the data provided on the 300mg cohort show definitively less production of cytokines CCL3 and CCL4 in those patients where it could be evaluated (although the company did not provide statistics). This also supports that the drug is active and potentially operating at sub-therapeutic levels.
No limits yet on further dose escalation
The safety profile of the drug remains consistent with previous reports, with the highest rates of drug-related adverse events for headache and nausea (10%). The drug did not reach a maximum tolerated dose (as we knew from the previously announced escalation to 400mg), and the pharmacokinetic data suggest that we have not reached the maximum drug exposure. We therefore see no limitation on further escalating the study until more robust responses are seen.
Valuation: Unchanged at $257m or $2.08/diluted share
Our valuation is unchanged at $257m or $2.08 per diluted share. We expect the study to arrive at a final dose most likely in the next six months, based on the current pace of enrolment and the current data. The current data do not present a significant delay in our models. We expect to update our model when more definitive data on the activity of vecabrutinib become available.
ASH update
Sunesis originally planned to release an update on its ongoing dose escalation study of vecabrutinib at the American Society of Hematology (ASH) conference on 8 December 2019. However, the poster that the company was intending to present became available online three days prior against management’s wishes, prompting the company to provide an update on these results. Vecabrutinib is a non-covalent inhibitor of Bruton’s tyrosine kinase (BTK) and is being examined in patients with CLL and other B-cell cancers that have been previously treated with another BTK inhibitor, such as Imbruvica (ibrutinib).
The data presented in the poster provide safety and efficacy data on all patients up through the 300mg BID cohort. As a reminder, Sunesis has already escalated to the 400mg cohort, but these data are not presented in the current release. The most highly anticipated data from this presentation are the efficacy assessment of patients in the 300mg cohort (Exhibit 1B). Scan data from four of the five patients (the fifth patient progressed prior to a scan) from the 300mg cohort taken at cycle 4 day 1 were presented, which showed three patients with SD. There was an additional patient (number 14) initially enrolled in the 100mg cohort, who was escalated to 200mg and then 300mg BID, who also had a SD response. The response being measured here is the percentage reduction in the sum of the product of the diameters (SPD) measure of patients’ lymph nodes, which is a proxy for their volume.
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Exhibit 1: Vecabrutinib responses by dose |
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Source: Sunesis Pharmaceuticals. Note: A = Cohorts 1–5 (25–300mg BID), B = Cohort 5 (300mg BID). |
Although we would like to have seen a PR in this cohort, we are nevertheless encouraged by the response rate. One patient in particular (number 28) had a 40% response, which is on the cusp of a PR (the cut-off being 50%). This patient may yet develop a PR at a later assessment. Undoubtedly, a higher dose will be needed to progress to the Phase II portion of the study, but these data are highly suggestive of drug activity, and appropriate for an intermediate dosing cohort. As mentioned above, Sunesis is already enrolling the 400mg cohort and may enroll a further 500mg cohort per protocol if needed, before moving to Phase II. Drug exposure continues to increase over the dose ranges examined, and the steady-state Cmin values (a measurement of the amount of drug in the blood before redosing) are highly linear, suggesting that we are not at the upper limit of drug absorption.
To support the conclusion that the drug is active and that these responses are a drug effect, the company also presented updated cytokine data. A reduction in cytokines is an expected consequence of BTK inhibition and drug activity. Although Sunesis did not present statistics on these data, there appears to be a clear trend for the 300mg cohort, especially for CCL4, where the most data are available.
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Exhibit 2: Cytokine suppression as a function of vecabrutinib dose |
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Source: Sunesis Pharmaceuticals |
The safety data provided in the poster are roughly similar to previous reports, with the most common drug-related treatment emergent adverse events (TEAEs) being headache and nausea (10% each), and most of the severe (grade 3 or higher) TEAE were hematologic in nature, which are generally expected in this patient population, especially with sub-therapeutic treatment. As we already know (from the previously announced escalation to 400mg), at 300mg dosing, the drug did not yet reach its maximum tolerated dose.
Roughly half of the patients that have been enrolled to date (11/23) have harbored the BTK C481S resistance mutation. These patients are of particular interest because the non-covalent mechanism of vecabrutinib can potentially address this resistance mechanism (see our 24 June 2019 Update note and 22 March 2019 Outlook report). We would like to have seen more of these patients to provide a better understanding of the drug activity in this subgroup but, given the study protocol, these patients cannot be preselected. The planned Phase II portion of the study will specifically enroll these patients.
Valuation
Our valuation is unchanged at $257m or $2.08 per diluted share. We expect the vecabrutinib study to progress to Phase II in the next six months with the coming dose escalations, which does not significantly alter our timeline. We find the data from the recent release encouraging but need a more definitive readout (positive or negative) to adjust our probabilities of success.
The value of this program and other non-covalent BTK inhibitors was recently demonstrated by the $2.7bn offer to buyout ArQule from Merck. ArQule presented the final results from its Phase I dosing study of ARQ 531 at the same ASH meeting, which (consistent with previous results) showed a strong response and 8/9 patients with a C481S mutation achieved a PR. The fact that Merck made such a high value offer at such an early stage also highlights the importance of these dosing studies, because we can have reasonable confidence that these early signs of efficacy can translate to later studies on account of the mechanism already being vetted. This is also the case for Sunesis, and we expect a major value inflection if the company can similarly prove that vecabrutinib can generate meaningful clinical responses.
Exhibit 3: Valuation of Sunesis
Development program |
Clinical stage |
Expected commercialization |
Prob. of success |
Launch year |
Launch pricing ($) |
Peak sales ($m) |
Patent/exclusivity protection |
Royalty/ margin |
rNPV |
TAK-580 |
Phase I/II |
Licensed to Takeda |
10% |
2025 |
500,000 |
603 |
2032 |
15% |
$21 |
Vecabrutinib |
Phase Ib/II |
Proprietary |
20% |
2024 |
152,000 |
666 |
2034 |
55% |
$193 |
SNS-510 |
IND ready |
Proprietary |
10% |
2025 |
130,000 |
344 |
2031 |
51% |
$26 |
Unallocated costs (discovery programs, administrative costs, etc.) |
($16) |
||||||||
Total |
|
|
|
|
|
|
|
|
$224 |
Net cash and equivalents (Q319) ($m) |
$32.8 |
||||||||
Total firm value ($m) |
$256.7 |
||||||||
Total basic shares (m) |
111.3 |
||||||||
Value per basic share ($) |
$2.31 |
||||||||
Convertible Pref stock (m) |
19.7 |
||||||||
Total diluted shares (m) |
131.0 |
||||||||
Value per diluted share ($) |
$2.08 |
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Source: Sunesis reports, Edison Investment Research
Financials
Our financial forecasts remain unchanged at this time. We expect the company to require $100m in additional capital to reach profitability in 2024, which we include as illustrative debt ($20m in 2021, $40m in 2022 and $40m in 2023).
Exhibit 4: Financial summary
$'000s |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 December |
US GAAP |
US GAAP |
US GAAP |
US GAAP |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
669 |
237 |
0 |
0 |
Cost of Sales |
0 |
0 |
0 |
0 |
||
Gross Profit |
669 |
237 |
0 |
0 |
||
Research and development |
(21,540) |
(14,615) |
(13,709) |
(15,574) |
||
Selling, general & administrative |
(13,548) |
(11,332) |
(10,199) |
(10,505) |
||
EBITDA |
|
|
(34,428) |
(25,719) |
(23,917) |
(26,088) |
Operating Profit (before GW and except.) |
(34,419) |
(25,710) |
(23,908) |
(26,079) |
||
Intangible Amortization |
0 |
0 |
0 |
0 |
||
Exceptionals/Other |
0 |
0 |
0 |
0 |
||
Operating Profit |
(34,419) |
(25,710) |
(23,908) |
(26,079) |
||
Net Interest |
(1,039) |
(905) |
(133) |
(467) |
||
Other (change in fair value of warrants) |
0 |
0 |
0 |
0 |
||
Profit Before Tax (norm) |
|
|
(35,458) |
(26,615) |
(24,041) |
(26,545) |
Profit Before Tax (IFRS) |
|
|
(35,458) |
(26,615) |
(24,041) |
(26,545) |
Tax |
0 |
0 |
0 |
0 |
||
Deferred tax |
0 |
0 |
0 |
0 |
||
Profit After Tax (norm) |
(35,458) |
(26,615) |
(24,041) |
(26,545) |
||
Profit After Tax (IFRS) |
(35,458) |
(26,615) |
(24,041) |
(26,545) |
||
Average Number of Shares Outstanding (m) |
24.5 |
35.6 |
113.5 |
118.7 |
||
EPS - normalised ($) |
|
|
(1.45) |
(0.75) |
(0.21) |
(0.22) |
EPS - IFRS ($) |
|
|
(1.45) |
(0.75) |
(0.21) |
(0.22) |
Dividend per share ($) |
0.0 |
0.0 |
0.0 |
0.0 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
1,401 |
124 |
2 |
0 |
Intangible Assets |
0 |
0 |
0 |
0 |
||
Tangible Assets |
20 |
11 |
2 |
0 |
||
Other |
1,381 |
113 |
0 |
0 |
||
Current Assets |
|
|
32,933 |
15,200 |
37,217 |
13,619 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
0 |
0 |
0 |
0 |
||
Cash |
31,750 |
13,696 |
34,981 |
11,383 |
||
Other |
1,183 |
1,504 |
2,236 |
2,236 |
||
Current Liabilities |
|
|
(8,901) |
(8,789) |
(1,221) |
(1,332) |
Creditors |
(1,697) |
(1,393) |
(1,221) |
(1,332) |
||
Short term borrowings |
(7,204) |
(7,396) |
0 |
0 |
||
Long Term Liabilities |
|
|
(112) |
(8) |
(5,474) |
(5,474) |
Long term borrowings |
0 |
0 |
(5,466) |
(5,466) |
||
Other long term liabilities |
(112) |
(8) |
(8) |
(8) |
||
Net Assets |
|
|
25,321 |
6,527 |
30,524 |
6,813 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(36,142) |
(24,404) |
(21,769) |
(23,591) |
Net Interest |
0 |
0 |
0 |
0 |
||
Tax |
0 |
0 |
0 |
0 |
||
Capex |
(26) |
0 |
0 |
(7) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
32,930 |
6,343 |
45,101 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Net Cash Flow |
(3,238) |
(18,061) |
23,332 |
(23,598) |
||
Opening net debt/(cash) |
|
|
(28,153) |
(24,546) |
(6,300) |
(29,515) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Exchange rate movements |
0 |
0 |
0 |
0 |
||
Other |
(369) |
(185) |
(117) |
0 |
||
Closing net debt/(cash) |
|
|
(24,546) |
(6,300) |
(29,515) |
(5,917) |
Source: Company accounts, Edison Investment Research
|
|
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