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Sunesis Pharmaceuticals Reports Second Quarter 2007 Financial Results

08/02/07

SOUTH SAN FRANCISCO, Calif., Aug 02, 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 ended June 30, 2007. Total revenues for the second quarter were $3.3 million, with a net loss of $9.8 million. As of June 30, 2007, cash, cash equivalents and marketable securities totaled $65.2 million.

    Second Quarter Highlights
    -- In June, Sunesis presented positive interim data from the company's
       Phase 1 clinical trial of SNS-595 in patients with relapsed and/or
       refractory acute leukemias at the European Hematology Association (EHA)
       meeting.  SNS-595 has demonstrated clinically important anti-cancer
       activity, including bone marrow blast reductions to less than five
       percent and complete remissions with and without complete platelet
       recovery among patients in both dosing schedules.
    -- In May, Sunesis achieved a $1 million milestone in its BACE
       collaboration with Merck & Co., Inc. resulting from the advancement of
       a preclinical candidate.
    -- In May, Sunesis raised net proceeds of $19.5 million through a public
       offering of 4,750,000 shares of common stock to fund clinical and
       preclinical development of the company's product candidates, to
       discover additional product candidates and for general corporate
       purposes.
    -- Sunesis received a milestone payment in the form of a $375,000
       convertible note from SARcode Corporation in June triggered by
       SARcode's selection of an LFA-1 inhibitor development candidate and the
       commencement of GLP toxicology studies.
    -- Non-clinical and clinical mechanism of action and pharmacokinetic data
       for SNS-032 were also presented at the EHA meeting demonstrating that
       SNS-032 has greater selectivity and cellular potency compared to other
       CDK-targeting agents.  In addition, peripheral blood cells obtained
       from patients treated with SNS-032 in a Phase 1 solid tumor clinical
       trial showed CDK7 and CDK9 inhibition, as well as down-modulation of
       the survival signaling protein Mcl-1.
    -- At the American Association for Cancer Research (AACR) Annual Meeting
       in April, Sunesis reported non-clinical data showing that SNS-032, a
       potent, selective inhibitor of cyclin-dependent kinases (CDKs) 2, 7 and
       9, blocks both the cell cycle and transcription to drive apoptosis in
       multiple myeloma cells.
    -- In April, Valerie L. Pierce joined the Sunesis senior management team
       as Senior Vice President, General Counsel and Corporate Secretary.


Update on Clinical Programs

In June and July, Sunesis commenced a comprehensive mid-year portfolio review of all ongoing clinical- and research-stage programs to prioritize and focus its efforts. As a step in this process, the company is providing updates today regarding its clinical development programs and the company's strategy to advance SNS-595 efficiently to late-stage clinical trials.

    SNS-595
    -- Sunesis' highest priorities in its clinical development efforts are the
       advancement of SNS-595 in acute leukemias and ovarian cancer.  This
       prioritization is based on an assessment of all of the information
       available to date on SNS-595's positive clinical profile and input from
       clinical advisors, together with consideration of the commercial and
       regulatory landscape.  With this increased focus, the company expects
       to begin enrolling patients in a registration trial in acute myeloid
       leukemia (AML) in 2008.
    -- In Sunesis' Phase 1 clinical trial of SNS-595 among patients with acute
       leukemias, a dose-limiting toxicity has been observed in the
       twice-weekly dosing schedule at 50 mg/m2 and the company is enrolling
       additional patients at the expected maximum-tolerated dose of 40 mg/m2
       twice-weekly.  In the weekly dosing schedule, a maximum-tolerated dose
       has not yet been achieved, and dose escalation continues.  Sunesis
       plans to present complete results from the Phase 1 trial at the
       American Society of Hematology (ASH) meeting in December.
    -- Sunesis expects to initiate an additional clinical study of SNS-595 in
       combination with cytarabine in acute leukemia this quarter.
    -- Sunesis continues to enroll patients in the first stage of its Phase 2
       clinical trial of SNS-595 for ovarian cancer.  Preliminary data
       indicate promising signs of anti-cancer activity, consistent with
       results observed among ovarian cancer patients in Sunesis' Phase 1
       clinical trial of SNS-595 in solid tumors.  Data from the Phase 2 trial
       are expected to be reported at the AACR-NCI-EORTC International
       Conference in October.
    -- To date, activity has been observed in the Phase 2 small cell lung
       cancer trial at the 48 mg/m2 dose, including 16 patients with stable
       disease or minor responses and two patients with confirmed objective
       tumor responses out of 21 patients evaluated to date.  In addition,
       SNS-595 has demonstrated better tolerability than expected in this
       patient population.  Data from this study will be presented at ECCO 14,
       the European Cancer Conference, in September.  Based on these findings
       and recent input received from clinical investigators and advisors, the
       company believes future evaluation of SNS-595 in small cell lung cancer
       at higher doses would be a rational next step in pursuing this
       indication.  Given the priority to advance SNS-595 rapidly in its
       development as a therapy for acute leukemias and ovarian cancer,
       Sunesis has decided to suspend enrollment of its Phase 2 clinical trial
       of SNS-595 in platinum-sensitive small cell lung cancer.  However,
       further studies in small cell lung cancer could be supported within the
       context of a future development partnership.

    SNS-032
    -- Dose escalation continues in a Phase 1 safety trial of SNS-032 in
       patients with B-cell malignancies.

    SNS-314
    -- Patient dosing is expected to begin this month in the company's Phase 1
       clinical trial of SNS-314, a targeted small molecule that potently
       inhibits Aurora kinase.  The open-label, multi-center trial is designed
       to examine the safety and preliminary anti-tumor activity of SNS-314
       and will enroll patients with advanced solid tumor cancers.


    Financial Highlights
    -- Revenue from research collaborations totaled $3.3 million for the
       quarter ended June 30, 2007, compared to $6.7 million for the quarter
       ended June 30, 2006.  This decrease in collaboration revenue was
       primarily due to the $4.25 million preclinical milestone earned in the
       BACE collaboration with Merck & Co., Inc. in June 2006.
    -- Research and development (R&D) expense was $9.7 million for the second
       quarter of 2007, compared to $8.8 million for the second quarter of
       2006.  This increase is due to expenses related to the development of
       our three lead drug candidates:  SNS-595, SNS-032 and SNS-314.
    -- General and administrative (G&A) expense for the second quarter of 2007
       was $4.0 million, compared to $3.2 million for the second quarter of
       2006.  The increase in G&A expense was due primarily to personnel
       expenses, non-cash stock-based compensation expense, an increase in
       office and facilities costs and certain costs related to being a
       publicly traded company.
    -- Sunesis reported a net loss of $9.8 million for the second quarter of
       2007, compared to a reported loss of $4.5 million for the second
       quarter of 2006.
    -- Cash used in operating activities was $17.1 million for the six months
       ended June 30, 2007, compared to $11.5 million for the same six-month
       period in 2006.
    -- In the second quarter of 2007, Sunesis recorded non-cash stock
       compensation expense of $0.9 million.


Conference Call Information

Sunesis' management will host a conference call to review the results of the quarter and to provide an update on the company's business on Thursday, August 2 at 10:30 am EDT. Individual and institutional investors can access the call via (800) 479-9001 (U.S. and Canada) or (719) 457-2618 (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.

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 including without limitation statements related to the safety and potential efficacy of SNS-595, SNS-032 and SNS-314, planned additional clinical testing and development efforts and the anticipated timing of the commencement and completion of clinical trials and the announcement of clinical results. Words such as "anticipates," "plans," "will," "optimistic," "is expected" 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 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.
               Condensed Consolidated Statements of Operations

                             Three months ended         Six months ended
                                    June 30,                 June 30,
                               2007         2006        2007         2006
                                  (unaudited)              (unaudited)
    Revenue:
      Collaboration revenue  $1,229,167  $4,516,667    $1,458,334  $5,887,372
      Collaboration revenue
       from related party     2,041,098   2,190,986     4,078,197   3,879,845
      License revenue                --          --       250,000          --
      Grant and fellowship
       revenue                       --          --            --      37,901
    Total revenues            3,270,265   6,707,653     5,786,531   9,805,118

    Operating expenses:
      Research and
       development            9,697,462   8,847,380    19,004,940  18,563,475
       General and
        administrative        4,044,194   3,153,630     7,340,341   5,835,201
    Total operating
     expenses                13,741,656  12,001,010    26,345,281  24,398,676


    Loss from operations    (10,471,391) (5,293,357)  (20,558,750)(14,593,558)

    Interest income             743,928     957,551     1,513,554   1,503,704
    Interest expense            (44,308)   (162,103)      (96,351)   (387,655)
    Other income (expense),
     net                            188       2,003          927        3,893
    Net loss                $(9,771,583)$(4,495,906)$(19,140,620)$(13,473,616)

    Basic and diluted net
     loss per share             $ (0.31)     $(0.15)      $(0.63)      $(0.52)

    Shares used in computing
     basic and diluted net
     loss per share          31,175,933  29,256,267   30,321,338   26,129,745



                        Sunesis Pharmaceuticals, Inc.
                    Condensed Consolidated Balance Sheets

                                                     June 30,     December 31,
                                                       2007           2006
    ASSETS                                         (Unaudited)      (Note 1)

    Current assets:
      Cash and cash equivalents                    $11,702,958     $6,075,449
      Marketable securities                         53,498,997     57,029,199
      Prepaids and other current assets              1,439,214      1,082,817
    Total current assets                            66,641,169     64,187,465

    Property and equipment, net                      5,008,444      4,728,929
    Deposits and other assets                          359,974        359,974
    Total assets                                   $72,009,587    $69,276,368

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                              $1,372,457     $2,477,656
      Accrued compensation                           2,229,293      2,323,742
      Other accrued liabilities                     3,209,400         961,766
      Current portion of deferred revenue           1,802,144       2,260,478
      Current portion of equipment financing          937,739         885,273
    Total current liabilities                       9,551,033       8,908,915

    Non current portion of deferred revenue           268,161       1,143,159
    Non current portion of equipment financing      1,305,124         955,695
    Deferred rent and other non-current liabilities 1,585,719       1,464,902

    Commitments

    Stockholders' equity:
    Common stock                                        3,431           2,944
    Additional paid-in capital                    319,300,467     298,073,896
    Deferred stock compensation                      (616,900)     (1,006,604)
    Accumulated other comprehensive loss               (1,665)        (21,376)
    Accumulated deficit                          (259,385,783)   (240,245,163)
    Total stockholders' equity                     59,299,550      56,803,697

    Total liabilities and stockholders' equity    $72,009,587     $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.

SOURCE Sunesis Pharmaceuticals, Inc.

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

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