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Sunesis Pharmaceuticals Reports Fourth Quarter and Full Year 2005 Financial Results

03/24/06

SOUTH SAN FRANCISCO, Calif., March 24, 2006 /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 and fiscal year ended December 31, 2005. Total revenues for the fourth quarter were $4.5 million, with a net loss of $5.3 million. Total revenues for 2005 were $16.5 million, with a net loss of $27.5 million. As of December 31, 2005, cash, cash equivalents and marketable securities totaled $48.3 million and debt totaled $2.4 million.

Fourth Quarter Highlights

    -- At the American Association for Cancer Research-National Cancer
       Institute-European Organization for Research and Treatment of Cancer
       conference, Sunesis presented the results of its first Phase I clinical
       trial for SNS-595, a novel S-phase active cancer therapeutic that
       induces rapid apoptosis.  SNS-595 achieved a maximum tolerated dose of
       48 mg/m2 and demonstrated promising signals of clinical activity with
       13 of 41 patients experiencing sustained disease control lasting more
       than 12 weeks.
    -- In November, Sunesis commenced enrollment of a Phase I dose-escalation
       trial for SNS-595 in patients with refractory acute leukemia.  The goal
       of this clinical trial is to establish an optimal dosing regimen for
       use in Phase II/III testing in patients with relapsed or refractory
       acute myelocytic leukemia (AML).
    -- In December, Sunesis commenced enrollment of a Phase II clinical trial
       with SNS-595 for the second-line treatment of patients with non-small
       cell lung cancer.
    -- Sunesis earned a discovery milestone in December for progress made in
       its Raf kinase collaboration with Biogen Idec.

    Recent Highlights

    -- In January, Sunesis initiated a Phase I/II clinical study in patients
       with advanced solid tumor malignancies of its second cancer
       therapeutic, SNS-032, a novel inhibitor of cyclin-dependent kinases 2,
       7 and 9.
    -- In March, Sunesis initiated a Phase II clinical trial with SNS-595 for
       the second-line treatment of patients with small cell lung cancer.
    -- Earlier this month, Sunesis closed a private placement of common stock
       and warrants with net proceeds to Sunesis of approximately $43.7
       million.  With this financing, Sunesis had over $90 million in cash,
       cash equivalents and marketable securities on a pro-forma basis, as of
       December 31, 2005.
    -- Today, Sunesis announces the attainment of a $500,000 milestone payment
       from Biogen Idec for the discovery of novel inhibitors of an
       undisclosed oncology kinase target.

    Financial Highlights

    -- Revenue from research collaborations totaled $4.5 million and $16.4
       million for the three-month and twelve-month periods ended December 31,
       2005, respectively, compared to $3.8 million and $10.1 million for the
       three-month and twelve-month periods ended December 31, 2004,
       respectively.  This increase in collaboration revenue was primarily due
       to the full year of research funding from the multi-kinase
       collaboration with Biogen Idec signed in August 2004 and the deferred
       revenue that was recognized in connection with the termination of the
       research phase of the BACE collaboration with Merck & Co.
    -- Research and development (R&D) expense was $7.9 million and $36.2
       million for the three-month and twelve-month periods ended December 31,
       2005, respectively.  R&D expense for the three- and twelve-month
       periods ended December 31, 2004, was $6.1 million and $23.6 million,
       respectively.  The year-over-year increase of $12.6 million in R&D
       expenses was primarily due to:  (i) a $9.7 million expense related to
       the in-licensing of SNS-032 and related intellectual property from
       Bristol-Myers Squibb in April 2005, of which $8.0 million represents a
       non-cash licensing fee; (ii) a $3.4 million increase in expense related
       to the development of SNS-314, our Aurora kinase inhibitor; (iii) a
       $2.6 million increase in expense related to the development of SNS-595;
       and (iv) a partial off-set of $4.0 million related to a reduction in
       expense for other programs.
    -- General and administrative (G&A) expense for the fourth quarter of 2005
       was $2.2 million, compared to $1.9 million for the prior year.  For the
       twelve-month period ended December 31, 2005, G&A expense was $8.3
       million, compared to $7.4 million for the twelve-month period ended
       December 31, 2004.  The increase in G&A expense was primarily due to an
       increase in non-cash stock compensation expense and costs related to
       being a publicly traded company.
    -- Sunesis reported a net loss of $5.3 million for the fourth quarter and
       $27.5 million for the twelve-month period ended December 31, 2005,
       compared to a reported loss of $4.0 million and $20.5 million,
       respectively, for the three-month and twelve-month periods ended
       December 31, 2004.  The net loss applicable to common stockholders was
       $115.6 million for 2005, including an $88.1 million non-cash deemed
       dividend related to the conversion of preferred stock into common stock
       in conjunction with the initial public offering (IPO) in September
       2005.  This non-cash deemed dividend results from the redistribution of
       pre-IPO ownership which occurred in conjunction with the IPO.

    Other Business

Sunesis announced today that it has named Don Young, Senior Director of Biometrics.

The Compensation Committee of the Company's Board of Directors approved an employment commencement grant of a non-qualified stock option to purchase 20,000 shares of Sunesis common stock, effective March 31, 2006. This option award was granted without shareholder approval pursuant to Nasdaq Marketplace Rule 4350 (i)(1)(A)(iv) and with the following material terms: (a) an exercise price equal to the fair market value of the Company's common stock on the grant date, (b) a term of 10 years, and (c) a vesting schedule providing that the option is exercisable as to 1/4 of the total grant on the first anniversary of Mr. Young's hire, and 1/48th of the total grant each month thereafter until each grant is fully vested.

Conference Call Information

Sunesis' management will host a conference call to review the results of the quarter and the fiscal year on Friday, March 24 at 10:30 am EST. Individual and institutional investors can access the call via 800-310-6649 (domestic) or 719-457-2693 (international). To access the live audio broadcast 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.

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 additional information on Sunesis Pharmaceuticals, please visit http://www.sunesis.com .

Safe Harbor Statement

This press release contains forward-looking statements that involve
substantial risks and uncertainties. Sunesis may not actually achieve the
plans, intentions or expectations contained in such forward-looking
statements. Actual results or events could differ materially from the plans,
intentions and expectations contained in such forward-looking statements.
Sunesis does not assume any obligation to update any such forward-looking
statements.


                          Sunesis Pharmaceuticals, Inc.
                             Statements of Operations
                (in thousands, except share and per share amounts)


                                      Three months ended        Year ended
                                         December 31,          December 31,
                                       2005       2004       2005       2004
                                         (unaudited)           (unaudited)
    Revenue:
      Collaboration revenue           $2,366     $1,635     $7,395     $5,938
      Collaboration revenue from
       related party                   2,138      2,209      9,018      4,201
      Grant and fellowship
       revenue                            19         31        109        166
    Total revenues                     4,523      3,875     16,522     10,305

    Operating expenses:
      Research and development         7,902      6,111     36,166     23,616
      General and administrative       2,227      1,875      8,283      7,352
    Total operating expenses          10,129      7,986     44,449     30,968

    Loss from operations              (5,606)    (4,111)   (27,927)   (20,663)

    Interest income                      518        202      1,092        518
    Interest expense                    (228)       (87)      (674)      (387)
    Other income (expense), net            2          1         10          2
    Net loss                          (5,314)    (3,995)   (27,499)   (20,530)
    Convertible preferred stock
     deemed dividends                     --         --    (88,092)        --
    Net loss applicable to common
     stockholders                    $(5,314)   $(3,995) $(115,591)  $(20,530)


    Basic and diluted net loss
     per share applicable to
     common stockholders              $(0.25)    $(2.94)   $(17.41)   $(15.77)
    Shares used in computing
     basic and diluted loss per
     share applicable to common
     stockholders                 21,493,392  1,358,378  6,637,935  1,302,096


                        Sunesis Pharmaceuticals, Inc.
                             Condensed Balance Sheets
                                  (in thousands)

                                                           December 31,
                                                      2005              2004
    Assets                                                 (Unaudited)

    Current assets:
       Cash and cash equivalents                    $17,704            $7,587
       Marketable securities                         30,629            29,224
       Note and interest receivable from
        officers and employees                           --               164
       Prepaids and other current assets              2,068             1,676
    Total current assets                             50,401            38,651

    Note and interest receivable from
     officers and employees                              --                85
    Property and equipment, net                       4,007             3,990
    Deposits and other assets                           300               300
    Total assets                                    $54,708           $43,026

    Liabilities and stockholders' equity
     (deficit)

    Current liabilities:
       Accounts payable                              $2,045            $1,663
       Accrued compensation                           2,068             1,599
       Other accrued liabilities                      1,278               359
       Current portion of deferred
        revenue                                       3,787             6,032
       Current portion of equipment
        financing                                     1,067             1,291
    Total current liabilities                        10,245            10,944

    Deferred revenue                                  3,320             7,678
    Borrowings under debt facility with
     related party                                       --             3,200
    Non current portion of equipment
     financing                                        1,306             1,238
    Deferred rent and other non-current
     liabilities                                      1,371             1,196

    Commitments
    Convertible preferred stock                          --           108,813

    Stockholders' equity (deficit):
       Common Stock                                       2                 1
       Additional paid-in capital                   249,690             6,494
       Notes receivable from stockholders                --              (135)
       Deferred stock compensation                   (2,163)           (2,916)
       Accumulated other comprehensive
        loss                                            (55)              (70)
       Accumulated deficit                         (209,008)          (93,417)
    Total stockholders' equity (deficit)             38,466           (90,043)

    Total liabilities, convertible
     preferred stock and stockholders'
     equity (deficit)                               $54,708           $43,026

SOURCE Sunesis Pharmaceuticals, Inc.

investors, Eric Bjerkholt, CFO of Sunesis Pharmaceuticals, Inc.; or media, Karen L.
Bergman or Michelle Corral, +1-650-575-1509, or +1-415-794-8662, both of BCC
Partners, for Sunesis
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