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Sunesis Pharmaceuticals Reports Fourth Quarter and Full-Year 2007 Financial Results

03/11/08

SOUTH SAN FRANCISCO, Calif., March 11, 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 and fiscal year ended December 31, 2007.

Total revenue for the fourth quarter of 2007 was $2.0 million, with a net loss of $8.8 million. Total revenue for the year ended December 31, 2007 was $9.7 million, with a net loss of $38.8 million. As of December 31, 2007, cash, cash equivalents and marketable securities totaled $47.7 million, and debt totaled $2.3 million. Net cash used in operating activities in 2007 was $34.5 million.

Recent Highlights

-- This week at the 39th Annual Meeting on Women's Cancer hosted by the Society for Gynecologic Oncology in Tampa, Florida, Sunesis presented positive interim results from the company's ongoing Phase 2 clinical trial of SNS-595, a novel naphthyridine analog, in advanced platinum-resistant ovarian cancer patients.

       -- Sixty-five women have been enrolled and treated with single-agent
          SNS-595 at a dose of 48 mg/m2 administered once every three weeks,
          with the majority of these women having been enrolled since October.
          Forty-five women have sufficient follow up to yield useful safety
          results and 35 are evaluable for best response using GOG-RECIST
          criteria.
       -- In this trial, SNS-595 has demonstrated disease control (defined as
          stable disease, partial response or complete response), with 31 of
          35 of evaluable patients having best responses of stable disease or
          better.  Of the 31 patients with stable disease or better, one
          patient had a complete response and four patients had partial
          responses (two unconfirmed).
       -- SNS-595 has been generally well tolerated in this trial, with a low
          rate of febrile neutropenia or other Grade 3/4 adverse events and
          manageable Grade 1/2 nausea or vomiting.  Based on the drug's
          observed safety profile and indications of clinical activity,
          Sunesis amended the protocol to explore a higher dose of SNS-595 in
          this trial.  Enrollment has begun at a dose of 60 mg/m2 over twenty-
          eight days, and Sunesis anticipates enrolling approximately 30
          patients at this dose in the third quarter of this year.
       -- Data from this trial has been accepted for presentation at the 44th
          ASCO Annual Meeting.


    -- Sunesis updated the results from the company's Phase 1 clinical trial
       of single-agent SNS-595 in patients with relapsed or refractory acute
       leukemias, which had previously been reported at the 49th Annual
       Meeting of the American Society of Hematology (ASH) in Atlanta, Georgia
       in December 2007.  Since the ASH presentation, an additional patient in
       this trial has achieved a complete remission.
       -- Twelve of 30 patients (43 percent) who received doses of SNS-595 of
          50 mg/m2 or greater on a weekly dose schedule have now achieved bone
          marrow blast reductions to less than five percent, and five of these
          12 patients achieved either complete remission, complete remission
          without platelet recovery or complete remission with incomplete
          recovery of normal hematopoietic blood elements.
       -- SNS-595 was generally well tolerated in this trial, with a
          dose-limiting toxicity of reversible Grade 3/4 oral mucositis.
       -- Based on these promising results, Sunesis continues to pursue
          development of SNS-595 in acute myeloid leukemia (AML).  A Phase 1b
          clinical trial of SNS-595 in combination with cytarabine in relapsed
          or refractory AML patients is in progress.  Sunesis plans to begin
          enrollment in a Phase 2 clinical trial of SNS-595 on a weekly dose
          schedule in previously untreated elderly AML patients in the first
          half of 2008.  Sunesis expects to report data later this year for
          both AML clinical trials.


    -- Results from a non-clinical study of SNS-032, a potent and selective
       inhibitor of cyclin-dependent kinases (CDKs) 2, 7 and 9, were presented
       at ASH.  These data demonstrated that SNS-032 induces apoptosis in
       chronic lymphocytic leukemia (CLL) cells.  Furthermore, SNS-032's in
       vitro activity compared favorably with flavopiridol in CLL cells
       obtained from patients.  SNS-032 currently is in a Phase 1 clinical
       trial of patients with relapsed or refractory CLL or multiple myeloma.
       To date, the drug has been well tolerated in this trial, and dose
       escalation in both indications is expected to be completed this year.
    -- Sunesis is continuing enrollment in its Phase 1 dose-escalating trial
       of SNS-314, a potent and selective inhibitor of Aurora kinases A, B and
       C, in advanced solid tumors.  To date, SNS-314 has been well tolerated
       and no dose-limiting toxicities have been observed.  The company
       expects to identify a maximum-tolerated dose in this Phase 1 clinical
       trial this year.
    -- In December, Sunesis and the Multiple Myeloma Research Consortium
       (MMRC) announced a collaboration to evaluate the preclinical activity
       of SNS-032 in multiple myeloma-relevant models and in primary disease
       tissue, extending non-clinical studies performed by Sunesis.
    -- In February 2008, Sunesis received a milestone payment from Johnson &
       Johnson Pharmaceutical Research and Development, LLC (J&JPRD) triggered
       by J&JPRD's selection of a compound targeting the Cathepsin S enzyme as
       a development candidate emerging from a collaboration with Sunesis.
    -- Lesley A. Stolz, Ph.D., joined Sunesis in November 2007 as Vice
       President, Corporate and Business Development.


    Financial Highlights
    -- Revenue totaled $2.0 million and $9.7 million, respectively, for the
       three months and year ended December 31, 2007, compared to $2.0 million
       and $13.7 million for the three months and year ended December 31,
       2006.  The decrease in revenue year-over-year was primarily due to
       lower milestone payments from Merck & Co., Inc. in 2007 compared to
       2006.
    -- Research and development (R&D) expense was $8.3 million for the fourth
       quarter of 2007, compared to $8.5 million for the same period in 2006.
       R&D expense for the year ended December 31, 2007 totaled $36.1 million,
       compared to $35.6 million in 2006.  The year-over-year increase in R&D
       expense was primarily due to increased clinical trial activity for SNS-
       595 and preclinical program costs, partially offset by lower headcount
       and lower R&D expense associated with SNS-032 and SNS-314 due to
       reduced research activities in these programs.
    -- General and administrative (G&A) expense for the fourth quarter of 2007
       was $2.8 million, compared to $3.4 million for the fourth quarter of
       2006.  For the year ended December 31, 2007, G&A expense was $13.6
       million, compared to $12.3 million in 2006.  The quarter-over-quarter
       decrease primarily resulted from lower professional services expense in
       2007 compared to 2006.  The year-over-year increase in G&A expense was
       primarily due to increased non-cash stock-based compensation expense,
       employee- and office-related expenses.
    -- In the fourth quarter ended December 31, 2007, Sunesis recorded a $0.3
       million additional restructuring charge as a result of the company's
       reorganization and reduction in force in the third quarter of 2007.
       For the year ended December 31, 2007, an aggregate of $1.6 million in
       restructuring charges was recorded.  Cash restructuring costs accounted
       for approximately $1.1 million of the total $1.6 million restructuring
       charge for the year.
    -- Sunesis reported a net loss of $8.8 million for the fourth quarter of
       2007 and of $38.8 million for the twelve-month period ended December
       31, 2007, compared to a reported net loss of $9.0 million and $31.2
       million, respectively, for the three-month and twelve-month periods
       ended December 31, 2006.
    -- In 2008, Sunesis expects net cash used in operating activities of
       approximately $30 million - $35 million in the absence of any new
       collaborations, compared to $34.5 million in 2007.  A decrease in net
       cash used in operating activities is anticipated primarily due to the
       reorganization effected in August of last year, partially offset by
       increased costs associated with 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 2007 fiscal year today at 10:30 a.m. EDT. Individual and institutional investors can access the call via 877-604-9668 (U.S. and Canada) or 719-325-4904 (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. A replay of the webcast will be archived on the Sunesis website for two weeks until March 25, 2008.

About Sunesis' Oncology Programs

Sunesis has built a portfolio of product candidates in oncology focused on inhibition of the cell-cycle and survival signaling. Our lead product candidate, SNS-595, is a novel naphthyridine analog, structurally related to quinolones, a class of compounds which has not been used previously for the treatment of cancer. SNS-595 is a specific DNA intercalator and topoisomerase II poison, causing replication-dependent site-selective double-strand DNA damage, irreversible G2 arrest and rapid apoptosis. A Phase 2 single agent clinical trial of SNS-595 in ovarian cancer and a Phase 1b clinical trial of SNS-595 combination with cytarabine in relapsed/refractory AML are both ongoing. SNS-032, a potent and selective inhibitor of CDKs 2, 7 and 9, is being evaluated in a Phase 1 clinical trial in patients with relapsed/refractory CLL or multiple myeloma. SNS-314, a potent and selective pan-Aurora kinase inhibitor, is being studied in a Phase 1 dose-escalating clinical trial in patients with advanced solid tumors. In addition, Sunesis is developing novel small molecule inhibitors of Raf kinase and other protein kinases in collaboration with Biogen Idec.

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.

Safe Harbor Statement

This press release contains forward-looking statements including without limitation statements related to the potential safety and efficacy of SNS-595, SNS-032 and SNS-314, planned additional clinical testing and development efforts, the timing of enrollment in clinical trials and the announcement of clinical results. Words such as "look forward," "suggests," "may," "expects," "designed," "believe," "appears" 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, including enrollment and reporting of results, could be halted significantly or delayed for various reasons, the risk that Sunesis' clinical trials for SNS-595, SNS-032 and/or 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 and risks related to Sunesis' need for additional funding. 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, 2006 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 BALANCE SHEETS

                                               December 31,      December 31,
                                                   2007              2006
    ASSETS                                                         (Note 1)

    Current assets:
         Cash and cash equivalents             $11,726,126        $6,075,449
         Marketable securities                  35,957,933        57,029,199
         Prepaids and other current
          assets                                   945,583         1,082,817
    Total current assets                        48,629,642        64,187,465

    Property and equipment, net                  4,238,498         4,728,929
    Deposits and other assets                      377,798           359,974
    Total assets                               $53,245,938       $69,276,368

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
         Accounts payable and other
          accrued liabilities                   $4,515,426        $3,439,422
         Accrued compensation                    2,225,868         2,323,742
         Current portion of deferred
          revenue                                1,227,031         2,260,478
         Current portion of equipment
          financing                                953,940           885,273
    Total current liabilities                    8,922,265         8,908,915

    Non-current portion of deferred
     revenue                                             -         1,143,159
    Non-current portion of equipment
     financing                                   1,352,684           955,695
    Deferred rent and other non-current
     liabilities                                 1,576,734         1,464,902
    Total liabilities                           11,851,683        12,472,671

    Commitments

    Stockholders' equity:
    Common stock                                     3,437             2,944
    Additional paid-in capital                 320,579,240       298,073,896
    Deferred stock-based compensation             (251,601)       (1,006,604)
    Accumulated other comprehensive
     income (loss)                                  69,262           (21,376)
    Accumulated deficit                       (279,006,083)     (240,245,163)
    Total stockholders' equity                  41,394,255        56,803,697

    Total liabilities and stockholders'
     equity                                    $53,245,938       $69,276,368


    Note 1:  The condensed balance sheet at December 31, 2006 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, 2006.


                        SUNESIS PHARMACEUTICALS, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                             Three months ended       Twelve months ended
                                 December 31,             December 31,
                              2007         2006        2007         2006

    Revenue:
       Collaboration
        revenue              $37,500     $229,167    $1,576,610    $6,353,585
       Collaboration
        revenue from
        related party      1,759,208    1,725,810     7,586,903     7,317,700
       License revenue       250,000            -       500,000             -
       Grant and
        fellowship
        revenue                    -            -             -        37,901
    Total revenues         2,046,708    1,954,977     9,663,513    13,709,186

    Operating expenses:
       Research and
        development        8,268,413    8,468,763    36,060,470    35,615,536
       General and
        administrative     2,820,543    3,372,108    13,569,578    12,254,892
       Restructuring
        charges              345,426            -     1,563,274             -
    Total operating
     expenses             11,434,382   11,840,871    51,193,322    47,870,428

    Loss from operations  (9,387,674)  (9,885,894)  (41,529,809)  (34,161,242)

    Interest income          661,381      898,786     2,971,666     3,394,751
    Interest expense         (57,631)     (44,018)     (209,885)     (477,643)
    Other income, net          5,949        1,124         7,108         6,873
    Net loss             $(8,777,975) $(9,030,002) $(38,760,920) $(31,237,261)

    Basic and diluted
     loss per share           $(0.26)      $(0.31)       $(1.20)       $(1.13)

    Shares used in
     computing basic and
     diluted loss
     per share            34,336,645   29,386,886    32,340,203    27,758,348


SOURCE Sunesis Pharmaceuticals

http://www.sunesis.com/

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