Viracta(VIRX) - 2023 Q4 - Annual Results

Executive Summary Q4 and Full Year 2023 Highlights Viracta Therapeutics reported Q4 and full-year 2023 financial results and provided a business update, highlighting significant progress in its clinical trials for Nana-val, particularly the completion of Stage 2 enrollment in the NAVAL-1 trial for EBV+ PTCL and enrollment in the Phase 1b/2 study for advanced EBV+ solid tumors, and also strengthened its balance sheet through non-dilutive proceeds financing, extending its cash runway into mid-Q1 2025 - Completed Stage 2 enrollment in the NAVAL-1 trial of Nana-val in patients with relapsed or refractory EBV+ peripheral T-cell lymphoma (PTCL), supporting its speed-to-market strategy[1] - Completed enrollment into the first split daily dosing cohort of the Phase 1b/2 study of Nana-val in patients with advanced EBV+ solid tumors[1] - Strengthened balance sheet following receipt of non-dilutive proceeds of $5.0 million through monetization of a pre-commercialization, event-based milestone from Day One Biopharmaceuticals, Inc., extending cash runway into mid-Q1 2025[1] - Anticipate reporting topline results from Stage 1 of the NAVAL-1 study in the second quarter of 2024 and engaging with the FDA on a potential accelerated approval pathway in mid-2024 for EBV-positive PTCL[2] Business Updates Clinical Trial Updates and Anticipated Milestones Viracta provided updates on its key clinical programs, Nana-val in EBV+ lymphoma (NAVAL-1) and EBV+ solid tumors (Study 301), detailing enrollment progress, protocol amendments, and upcoming data readouts and regulatory interactions Pivotal NAVAL-1 Trial (EBV+ Lymphoma) - Completed enrollment of Stage 1 in the R/R EBV+ PTCL cohort (n=20) in Q4 2023[3] - Completed enrollment of Stage 2 in the R/R EBV+ PTCL cohort (n=21 total) in Q1 2024[3] - Amended protocol to additionally enable enrollment of second-line R/R EBV+ DLBCL patients and R/R EBV+ PTLD patients, including pediatric EBV+ PTLD patients ≥ 12 years of age[3] - Anticipated 2024 Milestones include presenting topline Stage 1 data from both arms of the R/R EBV+ PTCL cohort in Q2 2024, engaging with the FDA in mid-2024 for accelerated approval pathway alignment, presenting Stage 1 + Stage 2 data (n=21) in the R/R EBV+ PTCL cohort in Q3 2024, and reporting Stage 1 data from R/R EBV+ DLBCL and PTLD by year-end 2024[3][5] Phase 1b/2 Study (EBV+ Solid Tumors - Study 301) - The FDA granted Orphan Drug Designation (ODD) to Nana-val for the treatment of NPC in December 2023, marking its fifth FDA ODD, seventh ODD globally, and first for EBV+ solid tumors[5] - Presented data at ESMO Asia Congress 2023 confirming partial responses without dose-limiting toxicities through the initial five dose cohorts, supporting continued dose escalation[5] - Completed enrollment of the sixth dose cohort of patients with R/M EBV+ NPC, evaluating the novel split daily dosing (SDD) regimen[5] - Anticipated 2024 Milestones include determining the Recommended Phase 2 Dose (RP2D) in H2 2024 and initiating a dose-optimization cohort to confirm the RP2D as part of the study's Phase 2 expansion by year-end 2024[5] Corporate and Financial Strategy Updates Viracta executed several strategic financial transactions, including monetizing a pre-commercialization milestone, amending a royalty purchase agreement, and modifying its loan facility, which collectively strengthened its balance sheet, reduced debt, and extended its cash runway - Received $5.0 million in non-dilutive proceeds in March 2024 related to monetization of a pre-commercialization, event-based milestone from Day One Biopharmaceuticals, Inc[5] - Amended Royalty Purchase Agreement with XOMA, modifying the economic value-share to retain the right, under certain circumstances, to participate in a pre-commercialization event-based milestone up to $5.0 million[5] - Amended the SVB-Oxford Loan Facility, providing for a modification of the loan amortization period and a pro-rata reduction in the prospective debt amortization schedule, in exchange for a partial prepayment of $5.0 million. Principal amortization will be deferred between March and June 2024 (approximately $2.9 million), and prospective amortization payments in 2024 will be reduced by approximately $3.3 million[5] - Pro forma for this prepayment, the debt balance has been reduced by over 25% since year-end to $18.6 million, with anticipation of ending 2024 with less than $15 million in debt outstanding[6] - The totality of these coordinated transactions will extend the cash runway into mid-Q1 2025[6] Financial Results Fourth-Quarter and Full-Year 2023 Financial Performance Overview Viracta's financial performance for Q4 and full-year 2023 showed increased R&D expenses driven by clinical program advancement, a decrease in G&A expenses due to one-time charges in the prior year, and a higher net loss for both periods Key Financial Performance Indicators (Q4 and Full Year 2023 vs. 2022) | Metric | Q4 2023 (in millions) | Q4 2022 (in millions) | YoY Change (Q4) | FY 2023 (in millions) | FY 2022 (in millions) | YoY Change (FY) | | :-------------------------------- | :-------------------- | :-------------------- | :---------------- | :-------------------- | :-------------------- | :---------------- | | Cash, cash equivalents, and short-term investments (as of Dec 31) | $53.7 | $91.0 | -41.0% | $53.7 | $91.0 | -41.0% | | Research and development expenses | $9.4 | $6.7 | +40.3% | $33.4 | $26.3 | +27.0% | | General and administrative expenses | $4.2 | $4.9 | -14.3% | $17.3 | $24.3 | -28.8% | | Net loss | $(13.8) | $(10.3) | +34.0% | $(51.1) | $(49.2) | +3.9% | | Net loss per share (basic and diluted) | $(0.35) | $(0.27) | +29.6% | $(1.32) | $(1.30) | +1.5% | - Cash, cash equivalents, and short-term investments totaled approximately $53.7 million as of December 31, 2023. Pro forma for the aforementioned business transactions, the cash runway to fund operations is extended into mid-Q1 2025[9] - The increase in research and development expenses in 2023 was primarily driven by increases in costs incurred to support the advancement and expansion of clinical development programs, including NAVAL-1 and Study 301, as well as an increase in personnel-related costs[9] - The decrease in G&A expenses year over year was largely due to a one-time expense associated with the modification of certain equity awards totaling $5.6 million and $0.8 million in severance-related charges associated with the transition of the former Chief Executive Officer in 2022. The decrease over the comparative three-month period was primarily due to a decrease in share-based compensation expense and corporate liability insurance premiums[9] Selected Balance Sheet Highlights Viracta's balance sheet as of December 31, 2023, shows a decrease in cash and total assets compared to the prior year, while total liabilities increased and stockholders' equity decreased significantly Selected Balance Sheet Highlights (as of December 31) | (in thousands) | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | Cash, cash equivalents and short-term investments | $53,691 | $91,043 | | Total assets | $56,692 | $95,991 | | Total liabilities | $38,373 | $34,888 | | Stockholders' equity | $18,319 | $61,103 | Condensed Consolidated Statement of Operations and Comprehensive Loss The condensed consolidated statement of operations shows an increase in total operating expenses for the full year 2023, primarily driven by R&D, leading to a higher net loss compared to 2022 Condensed Consolidated Statement of Operations and Comprehensive Loss (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------- | :---------------------- | | Research and development | $9,406 | $6,703 | $33,369 | $26,262 | | General and administrative | $4,154 | $4,871 | $17,324 | $24,327 | | Total operating expenses | $13,560 | $11,574 | $50,693 | $50,589 | | Loss from operations | $(13,560) | $(11,574) | $(50,693) | $(50,589) | | Total other income (expense) | $(205) | $1,248 | $(365) | $1,392 | | Net loss | $(13,765) | $(10,326) | $(51,058) | $(49,197) | | Comprehensive loss | $(13,692) | $(10,305) | $(50,871) | $(49,375) | | Net loss per share, basic and diluted | $(0.35) | $(0.27) | $(1.32) | $(1.30) | | Weighted-average common shares outstanding, basic and diluted | 38,790,480 | 38,315,658 | 38,624,462 | 37,790,981 | Product and Disease Information About the NAVAL-1 Trial NAVAL-1 is a global, multicenter, pivotal Phase 2 clinical trial evaluating Nana-val in patients with relapsed or refractory (R/R) Epstein-Barr virus-positive (EBV+) lymphoma, utilizing a Simon two-stage design to identify promising subtypes for potential registration - NAVAL-1 (NCT05011058) is a global, multicenter, clinical trial of Nana-val in patients with relapsed or refractory (R/R) Epstein-Barr virus-positive (EBV+) lymphoma[8] - The trial employs a Simon two-stage design where, in Stage 1, participants are enrolled into one of three indication cohorts based on EBV+ lymphoma subtype. If two objective responses are achieved within a lymphoma subtype in Stage 1 (n=10), then additional patients will be enrolled in Stage 2 for a total of 21 patients[8] - EBV+ lymphoma subtypes demonstrating promising antitumor activity in Stage 2 may be further expanded following discussion with regulators to potentially support registration[8] About the Phase 1b/2 Study of Nana-val in Advanced EBV+ Solid Tumors (Study 301) Study 301 is an open-label, multinational Phase 1b/2 trial evaluating Nana-val alone and in combination with pembrolizumab for recurrent/metastatic (R/M) EBV+ nasopharyngeal carcinoma (NPC) and other advanced EBV+ solid tumors, focusing on dose escalation, RP2D selection, and further evaluation of antitumor activity - This Phase 1b/2 trial (NCT05166577) is an open-label, multinational clinical trial evaluating Nana-val alone and in combination with pembrolizumab[10] - The Phase 1b dose escalation part is designed to evaluate safety and to select the recommended Phase 2 dose (RP2D) of Nana-val in patients with recurrent or metastatic (R/M) Epstein-Barr virus-positive (EBV+) nasopharyngeal carcinoma (NPC)[10] - At the start of Phase 2, up to 40 patients with R/M EBV+ NPC will be randomized to receive either the RP2D or a dose level below the RP2D in a dose-optimization cohort. Once the RP2D has been confirmed, up to 60 patients with R/M EBV+ NPC will be randomized to receive Nana-val at the RP2D with or without pembrolizumab to further evaluate antitumor activity, safety and tolerability, pharmacokinetics, and potential pharmacodynamic biomarkers[10] - Additionally, patients with other advanced EBV+ solid tumors will be enrolled to receive Nana-val at the RP2D in a Phase 1b dose expansion cohort[10] About Nana-val (Nanatinostat and Valganciclovir) Nana-val is an all-oral combination therapy of nanatinostat, a selective HDAC inhibitor, and valganciclovir, an antiviral agent. It is designed to induce viral genes epigenetically silenced in EBV-associated malignancies, currently being investigated in EBV+ lymphoma and solid tumors - Nanatinostat is an orally available histone deacetylase (HDAC) inhibitor selective for specific isoforms of Class I HDACs, which are key to inducing viral genes that are epigenetically silenced in Epstein-Barr virus (EBV)-associated malignancies[11] - Nana-val is nanatinostat in combination with the antiviral agent valganciclovir, an all-oral combination therapy[11] - Currently being investigated in a pivotal Phase 2 basket trial (NAVAL-1) for R/R EBV+ lymphoma and a multinational Phase 1b/2 clinical trial for R/M EBV+ NPC and other advanced EBV+ solid tumors[11] About Peripheral T-Cell Lymphoma (PTCL) PTCL is a rare, aggressive group of T-cell lymphomas with poor outcomes for relapsed/refractory patients, especially those with EBV+ disease, representing a high unmet medical need due to the lack of approved targeted treatments - T-cell lymphomas comprise a heterogeneous group of rare and aggressive malignancies, including peripheral T-cell lymphoma not otherwise specified (PTCL-NOS) and angioimmunoblastic T-cell lymphoma (AITL)[12] - Approximately 5,600 newly diagnosed T-cell lymphoma patients and approximately 2,600 newly diagnosed PTCL-NOS and AITL patients in the U.S. annually[12] - Approximately 70% of these patients are either refractory to first-line therapy or eventually experience relapse, with poor outcomes for R/R PTCL (median progression-free survival 3.7 months, median overall survival 6.5 months)[12] - Approximately 40% to 65% of PTCL is associated with EBV; reported outcomes for patients with EBV+ PTCL are inferior to those whose disease is EBV-negative. There is no approved targeted treatment specific for EBV+ PTCL, representing a high unmet medical need[12] About EBV-Associated Cancers Epstein-Barr virus (EBV) infects about 90% of adults globally, remaining latent and increasing susceptibility to malignant transformation. It is associated with approximately 2% of the global cancer burden, including lymphoma, nasopharyngeal carcinoma (NPC), and gastric cancer - Approximately 90% of the world's adult population is infected with EBV. Following infection, the virus remains latent in a small subset of cells for the duration of the patient's life, making cells containing latent virus increasingly susceptible to malignant transformation[13] - Patients who are immunocompromised are at an increased risk of developing EBV-positive (EBV+) lymphomas[13] - EBV is estimated to be associated with approximately 2% of the global cancer burden including lymphoma, nasopharyngeal carcinoma (NPC), and gastric cancer[13] Company Information About Viracta Therapeutics, Inc. Viracta Therapeutics is a clinical-stage precision oncology company focused on treating and preventing virus-associated cancers globally. Its lead product candidate, Nana-val, an all-oral combination therapy, is being evaluated in pivotal trials for EBV+ lymphoma and solid tumors, with plans to apply its 'Kick and Kill' approach to other virus-related cancers - Viracta is a clinical-stage precision oncology company focused on the treatment and prevention of virus-associated cancers that impact patients worldwide[14] - Viracta's lead product candidate is an all-oral combination therapy of its proprietary investigational drug, nanatinostat, and the antiviral agent valganciclovir (collectively referred to as Nana-val)[14] - Nana-val is currently being evaluated in multiple ongoing clinical trials, including a pivotal, global, multicenter, open-label Phase 2 basket trial for the treatment of multiple subtypes of relapsed or refractory (R/R) Epstein-Barr virus-positive (EBV+) lymphoma (NAVAL-1), as well as a multinational, open-label Phase 1b/2 clinical trial for the treatment of patients with recurrent or metastatic (R/M) EBV+ nasopharyngeal carcinoma (NPC) and other advanced EBV+ solid tumors[14][15] - Viracta is also pursuing the application of its 'Kick and Kill' approach in other virus-related cancers[15] Forward-Looking Statements Forward-Looking Statements Disclaimer This section contains forward-looking statements regarding Viracta's clinical trials, regulatory processes, patient populations, and cash runway, highlighting risks and uncertainties that could cause actual results to differ materially, including enrollment challenges, development plans, data timing, manufacturing capabilities, and future financing needs, and the company disclaims any obligation to update these statements except as required by law - This communication contains 'forward-looking' statements regarding details, timeline, and expected progress for Viracta's ongoing and anticipated clinical trials, FDA submission process and timelines, target patient populations, and expectations regarding cash runway[16] - Risks and uncertainties that may cause actual results to differ materially include Viracta's ability to successfully enroll patients and complete clinical trials, plans to develop and commercialize product candidates, timing of trial initiation and data availability, previous preclinical and clinical results not being predictive, timing of IND/NDA, ability to manufacture or supply drugs, and estimates regarding funding ongoing operations, future expenses, capital requirements, and need for additional financing[16] - Additional risks and uncertainties are included under the caption 'Risk Factors' in Viracta's reports and other documents filed with the SEC[17] - Viracta assumes no obligation and does not intend to update these forward-looking statements, except as required by law or applicable regulation[18]