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Sunesis Pharmaceuticals Reports Fourth Quarter and Full Year 2006 Financial Results

03/09/07

SOUTH SAN FRANCISCO, Calif., March 9, 2007 /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, 2006. Total revenue for the fourth quarter was $2.0 million, with a net loss of $9.0 million. Total revenue for 2006 was $13.7 million, with a net loss of $31.2 million. As of December 31, 2006, cash, cash equivalents and marketable securities totaled $63.1 million, an $8.1 million reduction from September 30, 2006, and debt totaled $1.8 million.

    Fourth Quarter Highlights

    *  At the American Society of Hematology meeting in December, Sunesis
       presented preliminary results of its Phase 1 clinical trial
       demonstrating that SNS-595 is well tolerated and shows promising signs
       of clinical activity in patients with relapsed and refractory acute
       leukemia.

       Presently updated interim data show that four of six evaluable patients
       receiving SNS-595 at the 50 mg/m2 weekly dose have seen a reduction in
       bone marrow blast cells to less than five percent.  One of those
       patients has achieved complete recovery of neutrophils but incomplete
       recovery of platelets and is therefore classified as a CRp (Complete
       Remission without platelet recovery).  Dose escalation is continuing
       and the full cohort of patients at the 60 mg/m2 weekly dose has been
       enrolled.  A second, dose-escalating twice-weekly regimen is also being
       evaluated and the 30 mg/m2 dose cohort has been fully enrolled.

    *  In December, Sunesis began enrolling a Phase 2 trial of SNS-595 in
       patients with ovarian cancer.  The trial is an open-label, multi-center
       study designed to examine the safety and efficacy of SNS-595 in
       patients with platinum-resistant ovarian cancer.

    *  In December, Sunesis completed GLP toxicology studies of SNS-314.
       Discovered by Sunesis' discovery research group, SNS-314 is a potent
       and selective inhibitor of Aurora kinases.

    *  In early January, Sunesis received a licensing fee and convertible note
       from the out-license of its LFA-1 program to SARcode Corporation.

    Recent Highlights

    *  In January, Sunesis reported Stage 1 results from a Phase 2 clinical
       trial of SNS-595 in small cell lung cancer.  The company announced that
       nine of eleven patients in the relapsed, treatment-sensitive arm of the
       small cell lung cancer clinical trial had stable disease or objective
       responses, which met the criteria for advancing the study to Stage 2.
       The company expects to enroll 40 patients and have results from this
       trial by year end.

    *  In January, the company also reported results from Stage 1 of its
       Phase 2 trial of SNS-595 in non-small cell lung cancer.  SNS-595 did
       not meet the company's strict criteria for advancing the study to the
       second stage of enrollment.  However, based on the number of patients
       with stable disease and minor and mixed tumor shrinkages, Sunesis will
       consider future combination strategies in this indication.

    *  In February, Sunesis filed an Investigational New Drug (IND)
       application with the U.S. Food and Drug Administration for SNS-314, its
       Aurora kinase inhibitor.

    *  In March, the company announced enrollment of the first patient in a
       Phase 1 dose-escalation safety trial of SNS-032, the company's
       inhibitor of cyclin-dependant kinases 2, 7 and 9, in patients with
       advanced B-cell malignancies such as chronic lymphocytic leukemia,
       multiple myeloma, and mantle cell lymphoma.

    *  In March, the company identified a maximum-tolerated dose (MTD) in its
       Phase 1 trial of SNS-032 in patients with advanced solid tumors.  The
       company believes the MTD is below a dosing level likely to result in
       single-agent activity and therefore will not advance the current study
       into Phase 2.  However, the company will continue its non-clinical
       evaluations to assess the development opportunities of SNS-032 in
       combination with other cancer therapeutics for the treatment of solid
       tumors.

    Financial Highlights

    *  Revenue from research collaborations totaled $2.0 million and
       $13.7 million for the three-month and twelve-month periods ended
       December 31, 2006, respectively, compared to $4.5 million and
       $16.5 million for the three-month and twelve-month periods ended
       December 31, 2005, respectively.  This decrease in collaboration
       revenue was primarily due to the completion of the research phase
       of the collaborations with Johnson & Johnson PRD in 2005 and with
       Merck & Co. in 2006.

    *  Research and development (R&D) expense was $8.5 million and
       $35.6 million for the three-month and twelve-month periods ended
       December 31, 2006.  R&D expense for the three-month and twelve-month
       periods ended December 31, 2005, was $7.9 million and $36.2 million.
       The year-over-year decrease in R&D expenses was primarily due to:
       (i) a $4.2 million decrease in expense for our cyclin-dependant kinase
       (CDK) inhibitor program SNS-032 due to the payment of a $8 million
       non-cash in-licensing fee for SNS-032 and related intellectual property
       to Bristol-Myers Squibb in April 2005, partially off-set by increased
       clinical expense; (ii) a $1.9 million decrease in expense related to
       the development of SNS-314, our Aurora kinase inhibitor; and (iii) a
       $1.4 million decrease in expense for our BACE collaboration with
       Merck & Co. due to the completion of the research phase of that
       collaboration in February 2006.  The decrease in R&D expense was
       partially off-set by: (i) a $5.3 million increase in expense related
       to the discovery efforts directed toward several undisclosed internal
       and collaboration kinase targets; (ii) a $1.2 million increase in
       expense for the SNS-595 program and (iii) a $400,000 increase in
       expense for other programs.

    *  General and administrative (G&A) expense for the fourth quarter of 2006
       was $3.4 million, compared to $2.2 million for the prior year.  For the
       twelve-month period ended December 31, 2006, G&A expense was
       $12.3 million, compared to $8.3 million for the twelve-month period
       ended December 31, 2005.  The increase in G&A expense was primarily due
       to fees associated with management of intellectual property and
       internal financial reporting systems, as well as with non-cash
       stock-based compensation expenses, employee-related expenses and
       insurance and facilities costs.

    *  Sunesis reported a net loss of $9.0 million for the fourth quarter and
       $31.2 million for the twelve-month period ended December 31, 2006,
       compared to a reported loss of $5.3 million and $27.5 million,
       respectively, for the three-month and twelve-month periods ended
       December 31, 2005.  In 2006, the company incurred a $2.9 million
       non-cash stock-based compensation expense mostly in conjunction
       with the adoption of FAS 123(R).

    *  In 2007, Sunesis expects a net cash burn rate of approximately
       $40 million in absence of any new collaborations.  The expected
       increase in cash burn from 2006 is primarily due to the expansion
       of clinical trial and other development activities for SNS-595,
       SNS-032 and SNS-314.

    Conference Call Information

Sunesis' management will host a conference call to review the results of the fourth quarter and the 2006 fiscal year on Friday, March 9 at 10:00 am EST. Individual and institutional investors can access the call via (800) 817-2743 (U.S. and Canada) or (913) 981-4915 (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 targeted 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.

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

                        Three months ended           Twelve months ended
                           December 31,                  December 31,
                         2006         2005           2006           2005
                     (unaudited)                 (unaudited)
    Revenue:
      Collaboration
       revenue         $229,167    $2,365,831     $6,353,585      $7,394,754
      Collaboration
       revenue from
       related
       party          1,725,810     2,137,499      7,317,700       9,018,442
      Grant and
       fellowship
       revenue               --        19,307         37,901         108,654
    Total revenues    1,954,977     4,522,637     13,709,186      16,521,850

    Operating expenses:
       Research and
        development   8,468,763     7,901,881     35,615,536      36,165,731
       General and
        administ-
        rative        3,372,108     2,227,046     12,254,892       8,283,191
    Total operating
     expenses        11,840,871    10,128,927     47,870,428      44,448,922

    Loss from
     operations      (9,885,894)   (5,606,290)   (34,161,242)    (27,927,072)

    Interest income     898,786       518,050      3,394,751       1,092,254
    Interest expense    (44,018)     (228,188)      (477,643)       (674,163)
    Other income,
     net                  1,124         1,724          6,873          10,024
    Net loss         (9,030,002)   (5,314,704)   (31,237,261)    (27,498,957)
    Convertible
     preferred
     stock deemed
     dividends               --            --             --     (88,092,302)
    Net loss
     applicable
     to common
     stockholders   $(9,030,002)  $(5,314,704)  $(31,237,261)  $(115,591,259)

    Basic and
     diluted net
     loss per
     share
     applicable
     to common
     stockholders        $(0.31)       $(0.25)        $(1.13)        $(17.41)

    Shares used in
     computing basic
     and diluted net
     loss per share
     applicable to
     common
     stockholders    29,386,886    21,493,392     27,758,348       6,637,935



                          SUNESIS PHARMACEUTICALS, INC.
                            Condensed Balance Sheets
                                 (in thousands)

                                               December 31,      December 31,
                                                  2006              2005
    ASSETS                                     (unaudited)        (Note 1)

    Current assets:
       Cash and cash equivalents                $6,075,449       $17,704,465
       Marketable securities                    57,029,199        30,629,061
       Prepaids and other current assets         1,082,817         2,068,195
    Total current assets                        64,187,465        50,401,721

    Property and equipment, net                  4,728,929         4,006,527
    Deposits and other assets                      359,974           300,000
    Total assets                               $69,276,368       $54,708,248

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
       Accounts payable                         $2,477,656        $2,044,571
       Accrued compensation                      2,323,742         2,067,769
       Other accrued liabilities                   961,766         1,277,595
       Current portion of deferred
        revenue                                  2,260,478         3,787,453
       Current portion of equipment
        financing                                  885,273         1,067,520
    Total current liabilities                    8,908,915        10,244,908

    Non current portion of deferred
     revenue                                     1,143,159         3,319,765
    Non current portion of equipment
     financing                                     955,695         1,306,027
    Deferred rent and other non-current
     liabilities                                 1,464,902         1,371,346

    Commitments

    Stockholders' equity:
       Common stock                                  2,944             2,151
       Additional paid-in capital              298,073,896       249,689,714
       Deferred stock compensation              (1,006,604)       (2,162,688)
       Accumulated other comprehensive
        loss                                       (21,376)          (55,073)
       Accumulated deficit                    (240,245,163)     (209,007,902)
    Total stockholders' equity                  56,803,697        38,466,202

    Total liabilities and stockholders'
     equity                                    $69,276,368       $54,708,248

    Note 1: The condensed balance sheet at December 31,2005 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, 2005.


SOURCE Sunesis Pharmaceuticals, Inc.

Investors, Eric Bjerkholt, SVP, Corporate Development & Finance of Sunesis
Pharmaceuticals, Inc., +1-650-266-3717; or Media, Karen L. Bergman or Michelle
Corral, both of BCC Partners, +1-650-575-1509 or +1-415-794-8662, for Sunesis
Pharmaceuticals, Inc.
http://www.sunesis.com

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