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Sunesis Pharmaceuticals Reports First Quarter 2008 Financial Results

05/08/08

SOUTH SAN FRANCISCO, Calif., May 8, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Sunesis Pharmaceuticals, Inc. (Nasdaq: SNSS), a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel small-molecule therapeutics, today reported financial results for the quarter ended March 31, 2008.

Total revenue for the first quarter of 2008 was $2.3 million, with a net loss of $9.6 million. As of March 31, 2008, cash, cash equivalents and marketable securities totaled $36.8 million, and debt totaled $2.1 million.

    Recent Highlights
    -- In March, Sunesis presented positive interim results from the company's
       ongoing Phase 2 clinical trial of SNS-595 in platinum-resistant ovarian
       cancer patients.  As of March 10, 2008, these data show that 31 out of
       35 women treated with SNS-595, and evaluable for best response using
       GOG-RECIST criteria, achieved disease control, including five
       investigator-reported objective responses (one of which is
       unconfirmed).  SNS-595 was generally well tolerated.  These data were
       presented at the 39th Annual Meeting on Women's Cancer hosted by the
       Society of Gynecologic Oncologists.
    -- Earlier in the year, based on the safety profile and indications of
       activity observed at a dose of 48mg/m2 in Sunesis' Phase 2 clinical
       trial of SNS-595 in platinum-resistant ovarian cancer patients, as well
       as advice received from clinical investigators, Sunesis amended the
       protocol to increase the dose to 60mg/m2 given every 28 days.  At the
       60mg/m2 dose the company has enrolled more than 30 patients to date.
       Reports thus far indicate that SNS-595 is generally well tolerated at
       the higher dose with a low incidence of febrile neutropenia.
       Therefore, later this month Sunesis plans to submit an amendment to the
       protocol to increase the dose intensity by 25 percent to 75mg/m2 given
       every 28 days.  Sunesis expects to enroll approximately 30 patients at
       this new dose level by the end of this year.
    -- In April, Sunesis presented data on all three of its clinical-stage
       product candidates, SNS-595, SNS-032 and SNS-314, at the American
       Association for Cancer Research (AACR) Annual Meeting in San Diego,
       California.
       - Results from multiple nonclinical, translational research studies of
         SNS-595 presented by Sunesis researchers provide further insights
         into the compound's mechanism of action and activity in certain types
         of cancers.  SNS-595 acts by site-selective DNA intercalation and
         topoisomerase II poisoning resulting in apoptosis, or cell death.
         SNS-595's targeted DNA-topoisomerase II interactions and selectivity
         for proliferating cells may contribute to the broad therapeutic
         window observed to date in patients treated with SNS-595.  SNS-595 is
         not a P-glycoprotein substrate and its activity is independent of the
         p53 family, suggesting that SNS-595 may be able to overcome these
         common drug resistance mechanisms.  A Phase 2 single agent clinical
         trial of SNS-595 in ovarian cancer and a Phase 1b clinical trial of
         SNS-595 in combination with cytarabine in relapsed/refractory AML are
         ongoing.
       - SNS-032, a potent and selective inhibitor of cyclin-dependent kinases
         2, 7 and 9, is being evaluated in a Phase 1 clinical trial in
         patients with relapsed/refractory chronic lymphocytic leukemia or
         multiple myeloma. An oral presentation by Suzanne Trudel, MSc, M.D.,
         Assistant Professor, Princess Margaret Hospital, University Health
         Network in Toronto, Canada, focused on the results from studies of
         SNS-032 demonstrating broad, mechanism-based activity in human
         myeloma cell lines and primary multiple myeloma cell cultures both as
         a single agent and in combination with either bortezomib (Velcade(R))
         or lenalidomide (Revlimid(R)).  A poster presentation by William
         Plunkett, Ph.D., Professor and Chief, Section of Molecular and
         Cellular Oncology at The University of Texas MD Anderson Cancer
         Center showed that SNS-032 blocks the transcription of key
         oncoproteins associated with mantle cell lymphoma.
       - SNS-314 is a potent and selective pan-Aurora kinase inhibitor being
         studied in a Phase 1 dose-escalating clinical trial in patients with
         advanced solid tumors.  Nonclinical research presented at the AACR
         Annual Meeting demonstrate that SNS-314 inhibits tumor growth in
         human xenograft models of colorectal, prostate, non-small cell lung
         and AML.  Biomarker analyses of these nonclinical studies confirm
         SNS-314's targeted, sustained activity and favorable
         pharmacokinetics.
    -- In March and April, Sunesis filed three patent applications related to
       its next generation fragment-based drug discovery.  This technology
       combines the advantages of fragment assembly with high-throughput
       screening to generate diverse, novel starting points for medicinal
       chemistry.  This proprietary technology platform can be applied to
       large proteins or protein complexes, significantly expanding the types
       of targets that the company can address, while reducing the time and
       manpower required for lead identification.  To date, this approach has
       been applied successfully to several new drug targets, including
       anaplastic lymphoma kinase (ALK).  Pilot screens against
       other targets, including protein:protein systems, are underway.
    -- Sunesis received a preclinical milestone payment in February from
       Johnson & Johnson Pharmaceutical Research & Development, L.L.C.
       (J&JPRD) under the companies' drug discovery collaboration.  The
       milestone payment was triggered by J&JPRD's selection of a compound
       targeting the Cathepsin S enzyme as a development candidate emerging
       from the research collaboration.


    Financial Highlights
    -- Collaboration revenue totaled $2.3 million for both the three months
       ended March 31, 2008 and the three months ended March 31, 2007.
    -- Research and development (R&D) expense was $8.7 million for the first
       quarter of 2008 compared to $9.3 million for the same period in 2007.
       The quarter-over-quarter decrease in R&D expense resulted primarily
       from a decrease in expense related to the SNS-314 and kinase inhibitor
       programs, partially offset by higher expense for the development of
       SNS-032 and SNS-595 due to increased clinical trial activities.
    -- General and administrative (G&A) expense for the first quarter of 2008
       was comparable to the same period last year.  G&A expense was $3.3
       million for both the 2008 and 2007 periods.
    -- In the first quarter ended March 31, 2008, Sunesis recorded an
       additional $0.3 million real estate-related, non-cash, restructuring
       charge in conjunction with the company's reorganization and reduction
       in force in 2007.
    -- Sunesis reported a net loss of $9.6 million for the quarter ended March
       31, 2008 compared to a reported net loss of $9.4 million for the three-
       month period ended March 31, 2007.
    -- In the first quarter of 2008, Sunesis recorded non-cash stock
       compensation expense of $0.7 million.


Conference Call Information

Sunesis' management will host a conference call to review the results of the first quarter today at 11:00 a.m. EDT. Individual and institutional investors can access the call via (877) 440-5786 (U.S. and Canada) or (719) 325-4929 (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 May 22, 2008.

About Sunesis Pharmaceuticals

Sunesis is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel small-molecule therapeutics for oncology and other serious diseases. Sunesis has built a broad product candidate portfolio through internal discovery and in-licensing of novel cancer therapeutics. Sunesis is advancing its product candidates through in-house research and development efforts and strategic collaborations with leading pharmaceutical and biopharmaceutical companies. For further information on Sunesis Pharmaceuticals, please visit http://www.sunesis.com.

SUNESIS and the logo are trademarks of Sunesis Pharmaceuticals, Inc. All other trademarks, trade names and service marks appearing in this press release are the property of their respective owners.

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 SNS-595, SNS-032 and SNS-314, planned additional clinical testing and development efforts, the timing of protocol amendments, the announcement of clinical results and the significance of new patent applications, the company's ability to obtain patents on the underlying technology and the key benefits of the underlying technology. Words such as "support," "will," "plans," "indicate," "possible," "optimistic," "may," "suggests," "expects," "designed" 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 SNS-595, 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 and manufacturing of SNS-595, SNS-032 and SNS-314, risks related to Sunesis' need for additional funding and the risk that Sunesis' proprietary rights may not adequately protect the company's technologies and 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 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
                                                            March 31,
                                                      2008           2007
                                                          (unaudited)
    Revenue:
     Collaboration revenue                          $537,500       $229,167
     Collaboration revenue from related party      1,765,683      2,037,099
     License revenue                                       -        250,000
    Total revenues                                 2,303,183      2,516,266

    Operating expenses:
    Research and development                       8,742,895      9,307,478
    General and administrative                     3,266,129      3,296,147
    Restructuring charges                            320,774              -
    Total operating expenses                      12,329,798     12,603,625

    Loss from operations                         (10,026,615)   (10,087,359)

    Interest income                                  460,412        769,626
    Interest expense                                 (59,373)       (52,043)
    Other income, net                                    671            739
    Net loss                                     $(9,624,905)   $(9,369,037)

    Basic and diluted loss per share                  $(0.28)        $(0.32)

    Shares used in computing basic and
     diluted loss per share                       34,364,896     29,457,247


                        Sunesis Pharmaceuticals, Inc.
                         Consolidated Balance Sheets

                                                   March 31      December 31
                                                     2008            2007
    ASSETS                                       (unaudited)       (Note 1)

    Current assets:
     Cash and cash equivalents                    $6,235,762    $11,726,126
     Marketable securities                        30,581,908     35,957,933
     Prepaids and other current assets             1,463,390        945,583
    Total current assets                          38,281,060     48,629,642

    Property and equipment, net                    3,971,051      4,238,498
    Deposits and other assets                        377,798        377,798
    Total assets                                 $42,629,909    $53,245,938


    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
     Accounts payable and other accrued
      liabilities                                 $4,475,117     $4,515,426
     Accrued compensation                          1,405,065      2,225,868
     Current portion of deferred revenue             752,032      1,227,031
     Current portion of equipment financing          885,286        953,940
    Total current liabilities                      7,517,500      8,922,265

    Non current portion of equipment financing     1,164,819      1,352,684
    Deferred rent liabilities                      1,472,418      1,576,734
    Total liabilities                             10,154,737     11,851,683

    Commitments

    Stockholders' equity:
    Common stock                                       3,437          3,437
    Additional paid-in capital                   321,116,162    320,579,240
    Deferred stock-based compensation               (134,619)      (251,601)
    Accumulated other comprehensive income           121,180         69,262
    Accumulated deficit                         (288,630,988)  (279,006,083)
    Total stockholders' equity                    32,475,172     41,394,255

    Total liabilities and stockholders' equity   $42,629,909    $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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