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Sunesis Pharmaceuticals Reports Third Quarter 2006 Financial Results

11/02/06

SOUTH SAN FRANCISCO, Calif., Nov 02, 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 ended September 30, 2006. Total revenues for the third quarter were $1.9 million, with a net loss of $8.7 million. As of September 30, 2006, cash, cash equivalents and marketable securities totaled $71.2 million, a reduction of $7.9 million compared to June 30, 2006.

Update on Pipeline Programs

Sunesis continues to enroll patients in two Phase 2 clinical trials of SNS-595 in non-small cell lung cancer and small cell lung cancer, a Phase 1 clinical trial of SNS-595 in acute leukemias, and a Phase 1/2 clinical trial of SNS-032 in solid tumors.

    SNS-595
    * Sunesis will be presenting preliminary results of the SNS-595 Phase 1
      leukemia trial at the American Society of Hematology meeting in Orlando,
      FL in December 2006.
    * Sunesis' goal is to complete enrollment of the first 25 patients (stage
      1) of the non-small cell lung cancer trial and the first 40 patients
      (stage 1) of the small cell lung cancer trial of SNS-595 by the end of
      2006.
    * The Company's goal is to begin enrolling a Phase 2 trial of SNS-595 for
      the treatment of ovarian cancer in patients who have relapsed following
      treatment with a platinum therapy before the end of 2006.

    SNS-032
    * Enrollment of the dose-escalation portion of the Phase 1/2 trial for
      SNS-032 in solid tumors is expected to be complete by the end of 2006.
    * The Company expects to begin enrolling a Phase 1 trial of SNS-032 in
      B-cell malignancies early in 2007.

    SNS-314
    * Sunesis expects to file an Investigational New Drug application with the
      U.S. Food and Drug Administration for SNS-314, the Company's Aurora
      kinase inhibitor, early in 2007.

    Financial Highlights
    * Revenue from research collaborations totaled $1.9 million for the
      quarter ended September 30, 2006, compared to $3.3 million for the
      quarter ended September 30, 2005.  This decrease in collaboration
      revenue was primarily due to the completion of the research phase of
      several collaborations in 2005 and early 2006.
    * Research and development (R&D) expense was $8.6 million for the third
      quarter 2006, compared to $6.9 million for the third quarter 2005.  The
      $1.7 million increase in R&D expense was primarily due to increased
      expenses related to the development of our three lead programs:
      SNS-595, SNS-032 and SNS-314.
    * General and administrative (G&A) expense for the third quarter of 2006
      was $3.0 million, compared to $2.1 million for the third quarter of
      2005.  The increase in G&A expense was primarily due to an increase in
      non-cash stock compensation expense in conjunction with the adoption of
      FAS 123R and costs related to being a publicly-traded company.
    * Sunesis reported a net loss of $8.7 million for the third quarter of
      2006, compared to a reported net loss applicable to common stockholders
      of $93.7 million for the third quarter of 2005.  The 2005 period
      included a non-cash deemed dividend of $88.1 million to the holders of
      our preferred stock recorded in conjunction with our IPO in September
      2005.  Excluding this deemed dividend, the net loss for the third
      quarter of 2005 was $5.6 million.
    * Cash used in operating activities was $19.0 million for the nine months
      ended September 30, 2006, compared to $15.5 million for the first nine
      months of 2005.
    * In the third quarter of 2006, Sunesis recorded non-cash stock
      compensation expense of $693,000.

    Other Business

Sunesis announced today that it has named Millie Gottewald, Director of Clinical Operations. The Compensation Committee of the Company's Board of Directors approved an employment commencement grant to Ms. Gottewald of a non- qualified stock option to purchase 20,000 shares of Sunesis common stock, effective October 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 1/4th of the total grant on the first anniversary of Ms. Gottewald'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 on Thursday, November 2 at 11:00 am EST/8:00 am PST. Individual and institutional investors can access the call via (800) 361-0912 (U.S. and Canada) or (913) 981-5559 (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

                              Three months ended        Nine months ended
                                 September 30,            September 30,
                               2006        2005         2006          2005
                                 (unaudited)               (unaudited)
    Revenue:
      Collaboration revenue  $237,046   $1,685,537   $6,124,418    $5,028,923
      Collaboration revenue
       from related party   1,712,045    1,637,499    5,591,890     6,880,943
      Grant and fellowship
       revenue                     --       21,942       37,901        89,347
    Total revenues          1,949,091    3,344,978   11,754,209    11,999,213

    Operating expenses:
      Research and
       development          8,583,298    6,870,942   27,146,773    28,263,850
      General and
       administrative       3,047,583    2,067,215    8,882,784     6,056,145
    Total operating
     expenses              11,630,881    8,938,157   36,029,557    34,319,995

    Loss from operations   (9,681,790)  (5,593,179) (24,275,348)  (22,320,782)

    Interest income           992,261      178,515    2,495,965       574,204
    Interest expense          (45,970)    (229,450)    (433,625)     (445,975)
    Other income, net           1,856        2,094        5,749         8,300
    Net loss               (8,733,643)  (5,642,020) (22,207,259)  (22,184,253)
    Convertible preferred
     stock deemed dividends        --  (88,092,302)          --   (88,092,302)
    Net loss applicable to
     common stockholders   (8,733,643) (93,734,322) (22,207,259) (110,276,555)

    Basic and diluted net
     loss per share
     applicable to
     common stockholders       $(0.30)     $(44.57)      $(0.82)      $(67.58)
    Shares used in computing
     basic and diluted net
     loss per share
     applicable to common
     stockholders          29,333,909    2,103,296   27,209,536     1,631,700


                        SUNESIS PHARMACEUTICALS, INC.
                           CONDENSED BALANCE SHEETS

                                              September 30,     December 31,
                                                  2006              2005
    ASSETS                                     (Unaudited)         (Note 1)

    Current assets:
       Cash and cash equivalents               $27,678,348       $17,704,465
       Marketable securities                    43,551,833        30,629,061
       Prepaids and other current assets         1,561,514         2,068,195
    Total current assets                        72,791,695        50,401,721

    Property and equipment, net                  4,790,452         4,006,527
    Deposits and other assets                      300,000           300,000
    Total assets                               $77,882,147       $54,708,248

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
       Accounts payable                         $2,201,320        $2,044,571
       Accrued compensation                      2,144,576         2,067,769
       Other accrued liabilities                 1,513,577         1,277,595
       Current portion of deferred revenue       2,489,645         3,787,453
       Current portion of equipment financing      849,309         1,067,520
    Total current liabilities                    9,198,427        10,244,908

    Non current portion of deferred revenue      1,580,658         3,319,765
    Non current portion of equipment financing     898,524         1,306,027
    Deferred rent and other non-current
     liabilities                                 1,450,991         1,371,346

    Commitments

    Stockholders' equity:
    Preferred stock, $0.0001 per value,
     5,000,000 shares authorized, no shares
     issued and outstanding at September 30,
     2006 and December 31, 2005                         --                --
    Common stock, $0.0001 par value;
     100,000,000 shares authorized,
     29,358,548 and 21,514,007 shares
     issued and 29,358,548 and 21,511,126
     shares outstanding at September 30,
     2006 and December 31, 2005                      2,936             2,151
    Additional paid-in capital                 297,190,837       249,689,714
    Deferred stock compensation                 (1,225,223)       (2,162,688)
    Accumulated other comprehensive income
     (loss)                                            158           (55,073)
    Accumulated deficit                       (231,215,161)     (209,007,902)
    Total stockholders' equity                  64,753,547        38,466,202

    Total liabilities and stockholders' equity $77,882,147       $54,708,248


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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