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Sunesis Pharmaceuticals Reports Financial Results for the Second Quarter 2008

08/07/08

SOUTH SAN FRANCISCO, Calif., Aug 07, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Sunesis Pharmaceuticals, Inc. (Nasdaq: SNSS), a clinical-stage biopharmaceutical company focused on the development and commercialization of novel oncology therapeutics, today reported financial results for the quarter ended June 30, 2008.

Total revenue for the second quarter of 2008 was $2.6 million, with a net loss of $13.6 million, including a $4.9 million net restructuring charge. As of June 30, 2008, cash, cash equivalents and marketable securities totaled $28.3 million, and debt totaled $1.8 million.

"We are pleased with the progress of our portfolio, including our most advanced program, voreloxin. Our trials are enrolling well, and we reported positive data from our ongoing AML and ovarian cancer trials," said Daniel Swisher, Sunesis' Chief Executive Officer. "We also strengthened the leadership of our development team with the addition of two seasoned industry professionals as we focused our resources on voreloxin. I am confident that the commitment and talent of the Sunesis team will build on the legacy of past contributions as we work to aggressively advance voreloxin into and through late-stage trials."

    Recent Highlights
    -- In May, Sunesis initiated REVEAL-1 (Response Evaluation of Voreloxin in
       Elderly AML), a Phase 2 clinical trial of voreloxin (formerly SNS-595)
       in previously untreated elderly patients with acute myeloid leukemia
       (AML) who are unlikely to benefit from standard induction therapy. The
       primary objective of the REVEAL-1 trial is to evaluate voreloxin's
       anti-leukemic activity as a single agent, measured as either complete
       remission (CR) or complete remission without full platelet recovery
       (CRp). The study will also measure the duration of these responses and
       overall survival.
    -- In June, Sunesis reported results from two clinical trials of voreloxin
       in patients with relapsed/refractory AML at the 13th Congress of the
       European Hematology Association.
       -- Sunesis presented comparative safety, pharmacokinetic and response
          data from its Phase 1 dose-escalating trial of single-agent
          voreloxin, evaluating data from older patients (age >/= 60) against
          those from younger patients (age < 60). Six patients, including four
          age 60 or older and two younger than age 60, achieved CR, CRp or CRi
          (complete remission with incomplete recovery of hematopoeitic
          elements) when voreloxin was administered at doses of 50 mg/m2 or
          greater weekly or 40 mg/m2 twice-weekly. Remissions of up to seven
          months have been observed thus far, with two patients undergoing
          re-induction with voreloxin following relapse and one patient
          undergoing a bone marrow transplant. Overall, voreloxin demonstrated
          a similar safety profile in both older and younger patients.
       -- Preliminary results were also presented from Sunesis' ongoing
          dose-escalating Phase 1b clinical trial evaluating voreloxin in
          combination with cytarabine, a current standard of care in patients
          with relapsed/refractory AML. Patients enrolled in the trial receive
          escalating doses of voreloxin administered on days one and four with
          a fixed dose of cytarabine given over five days. Of the twelve
          patients then evaluable in the first three cohorts, three patients
          had achieved CRs.
    -- At the 44th American Society of Clinical Oncology Annual Meeting in
       June, Sunesis presented an update of interim data from the company's
       ongoing Phase 2 clinical trial of voreloxin in platinum-resistant
       ovarian cancer patients.
       -- Of 62 women evaluable for best response at a dose of 48 mg/m2 every
          21 days, one patient had a CR, five patients had partial responses
          (PR) (including one unconfirmed) and 45 patients achieved stable
          disease. Forty-eight percent of the 62 evaluable patients achieved
          disease control, defined as stable disease for 90 days or more or a
          CR or PR. At 48 mg/m2, preliminary median progression free survival
          was 13 weeks as of mid-May.
       -- The company reported that out of the eight patients then evaluable
          for efficacy response at a dose of 60 mg/m2 once every 28 days, one
          patient had achieved a PR and 6 patients had stable disease as best
          response. Based on indications of clinical activity and voreloxin's
          safety profile in this patient population, Sunesis has amended the
          protocol for the ongoing Phase 2 clinical trial to increase the dose
          to 75 mg/m2 given once every 28 days. The company expects to enroll
          approximately 30 patients at this new dose level by the end of this
          year.
    -- In June, Sunesis announced a corporate realignment to concentrate
       financial and human resources on the late-stage development of
       voreloxin. In conjunction with the strategic restructuring, Sunesis
       wound down its research activities and reduced its workforce by
       approximately 60 percent.
    -- Ongoing trials of Sunesis' earlier stage candidates, SNS-032 and
       SNS-314, continue. Sunesis expects to report additional data from all
       three of its clinical programs later this year.
    -- Sunesis announced the expansion of its product development leadership
       team with the appointment of industry veterans Steven B. Ketchum,
       Ph.D., as Senior Vice President, Research and Development and Mary G.
       Bolton, M.D., Ph.D., as Vice President, Clinical Development.
    -- In June, Sunesis received a $0.5 million milestone payment from Biogen
       Idec for preclinical progress against an undisclosed target in the
       companies' multi-kinase discovery and development collaboration. In
       conjunction with the June reorganization and wind down of research
       activities, the research term of this collaboration was amended to end
       on June 30, 2008, two months early.


    Financial Highlights
    -- Collaboration revenue for the three months ended June 30, 2008
       decreased to $2.6 million compared to $3.3 million in 2007. The
       decrease was primarily due to the fact that in 2007 Sunesis received
       from Merck a $1.0 million payment upon the achievement of a preclinical
       milestone, as well as research revenue, in the companies' BACE
       collaboration, which were partially offset in 2008 by the $0.5 million
       milestone from Biogen Idec and the acceleration of research revenue
       from Biogen Idec which would have been recognized in the third quarter
       except for the termination of the research term of Sunesis'
       collaboration with Biogen Idec in June 2008. In addition, research
       revenue from Biogen Idec was lower in 2008 compared to 2007 due to a
       lower number of Sunesis researchers working on the collaboration.
    -- Research and development expense decreased by $1.4 million, or 15
       percent, to $8.3 million for the three months ended June 30, 2008 from
       $9.7 million for the same period in 2007. This decrease is primarily
       due to (i) a $0.5 million decrease in clinical trial activity related
       to SNS-314 and (ii) a $2.1 million decrease in expenses under the
       company's other kinase inhibitors program, partially offset by (iii) a
       $1.1 million increase in voreloxin expenses and (iv) a $0.1 million
       increase in SNS-032 expenses, in both cases due to increased clinical
       trial activities.
    -- General and administrative expense for the second quarter of 2008 was
       $3.2 million compared to $4.0 million for the second quarter 2007. This
       decrease resulted primarily from reduced headcount compared to the
       2007 quarter and a decrease in personnel- and office-related expenses.
    -- In the second quarter of 2008, Sunesis recorded a net restructuring
       charge of $4.9 million, comprised of $5.6 million related to the June
       restructuring, partially offset by the reversal of a $0.7 million
       charge for the August 2007 restructuring. Approximately $3.2 million of
       this charge represented cash expenses and the majority of these
       expenses will be paid in the third quarter of 2008. An additional
       restructuring charge, currently estimated at approximately
       $7.0 million, is expected to be incurred in the third quarter of 2008
       after Sunesis' former research and development facility has been
       completely vacated.
    -- Sunesis reported a net loss of $13.6 million for the quarter ended June
       30, 2008 compared to a reported net loss of $9.8 million for the
       three-month period ended June 30, 2007.
    -- Cash used in operating activities was $18.7 million for the six months
       ended June 30, 2008, compared to $17.1 million for the same six-month
       period in 2007.


Conference Call Information

Sunesis' management will host a conference call to review the results of the second quarter and to provide an update on its business today at 11:00 a.m. ET/8:00 a.m. PT. Individual and institutional investors can access the call via (877) 340-7912 (U.S. and Canada) or (719) 325-4871 (international). 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 http://www.sunesis.com. Please log on to Sunesis' website several minutes prior to the start of the presentation to ensure adequate time for any software download that may be necessary. The webcast will be recorded and available for replay on the company's website until August 21, 2008.

About Sunesis Pharmaceuticals

Sunesis is a clinical-stage biopharmaceutical company focused on the development and commercialization of new oncology therapeutics for the treatment of solid and hematologic cancers. Sunesis has built a highly experienced cancer drug development organization committed to advancing its lead product candidate, voreloxin, in multiple indications to improve the lives of people with cancer. For additional information on Sunesis Pharmaceuticals, please visit http://www.sunesis.com.

SUNESIS and the logo are trademarks of Sunesis Pharmaceuticals, Inc.

Safe Harbor Statement

This press release contains forward-looking statements, including without limitation statements related to the potential safety and efficacy and commercial potential of voreloxin (formerly SNS-595), planned additional clinical testing and development efforts, the timing of clinical trial enrollment, the anticipated announcement of clinical results and the timing and amount of future restructuring charges. Words such as "will," "work to," "estimated," "expects" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon Sunesis' current expectations. Forward-looking statements involve risks and uncertainties. Sunesis' actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, the risk that Sunesis' drug discovery and development activities could be halted significantly or delayed for various reasons, the risk that Sunesis' clinical trials for voreloxin, SNS-032 and SNS-314 may not demonstrate safety or efficacy or lead to regulatory approval, the risk that preliminary data and trends may not be predictive of future data or results, the risk that Sunesis' preclinical studies and clinical trials may not satisfy the requirements of the FDA or other regulatory agencies, risks related to the conduct of Sunesis' clinical trials, including the pace of enrollment, risks related to the manufacturing of Sunesis' product candidates, risks related to Sunesis' need for additional funding and the risk that Sunesis' proprietary rights may not adequately protect the company's product candidates. These and other risk factors are discussed under "Risk Factors" and elsewhere in Sunesis' annual report on Form 10-K for the year ended December 31, 2007, its quarterly report on Form 10-Q for the quarter ended March 31, 2008 and other filings with the Securities and Exchange Commission. Sunesis expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

                          Sunesis Pharmaceuticals, Inc.
                      Consolidated Statements of Operations

                           Three months ended          Six months ended
                                 June 30,                   June 30,
                            2008         2007          2008          2007
                               (unaudited)                (unaudited)
    Revenue:
      Collaboration
       revenue            $2,591,240   $3,270,265    $4,894,423    $5,536,531
      License revenue              -            -             -       250,000
    Total revenues         2,591,240    3,270,265     4,894,423     5,786,531

    Operating expenses:
    Research and
     development           8,262,604    9,697,462    17,005,499    19,004,940
    General and
     administrative        3,235,061    4,044,194     6,501,190     7,340,341
    Restructuring
     charges               4,876,746            -     5,197,520             -
    Total operating
     expenses             16,374,411   13,741,656    28,704,209    26,345,281

    Loss from
     operations          (13,783,171) (10,471,391)  (23,809,786)  (20,558,750)

    Interest income          269,385      743,928       729,797     1,513,554
    Interest expense         (54,433)     (44,308)     (113,806)      (96,351)
    Other income
     (expense), net             (199)         188           472           927
    Net loss            $(13,568,418) $(9,771,583) $(23,193,323) $(19,140,620)

    Basic and diluted
     loss per share           $(0.39)      $(0.31)       $(0.67)       $(0.63)

    Shares used in
     computing basic
     and diluted
     loss per share       34,377,367   31,175,933    34,371,132    30,321,338



                          Sunesis Pharmaceuticals, Inc.
                           Consolidated Balance Sheets

                                              June 30         December 31
                                                2008              2007
    ASSETS                                  (unaudited)         (Note 1)

    Current assets:
      Cash and cash equivalents                 $9,480,277       $11,726,126
      Marketable securities                     18,864,275        35,957,933
      Prepaids and other current
       assets                                      845,895           945,583
    Total current assets                        29,190,447        48,629,642

    Property and equipment, net                    860,764         4,238,498
    Assets held-for-sale                         1,375,313                 -
    Deposits and other assets                      377,798           377,798
    Total assets                               $31,804,322       $53,245,938

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable and other
       accrued liabilities                      $7,072,536        $4,515,426
      Accrued compensation                       1,478,649         2,225,868
      Current portion of deferred
       revenue                                           -         1,227,031
      Current portion of equipment
       financing                                 1,410,667           953,940
    Total current liabilities                    9,961,852         8,922,265

    Non current portion of equipment
     financing                                     390,747         1,352,684
    Deferred rent liabilities                    1,564,671         1,576,734
    Total liabilities                           11,917,270        11,851,683

    Commitments

    Stockholders' equity:
    Common stock                                     3,440             3,437
    Additional paid-in capital                 322,122,902       320,579,240
    Deferred stock-based compensation              (50,906)         (251,601)
    Accumulated other comprehensive
     income                                         11,022            69,262
    Accumulated deficit                       (302,199,406)     (279,006,083)
    Total stockholders' equity                  19,887,052        41,394,255

    Total liabilities and stockholders'
     equity                                    $31,804,322       $53,245,938


    Note 1:  The consolidated balance sheet at December 31, 2007 has been
             derived from the audited financial statements at that date
             included in the Company's Form 10-K for the fiscal year ended
             December 31, 2007.

SOURCE Sunesis Pharmaceuticals, Inc.

http://www.sunesis.com

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