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Sunesis Pharmaceuticals Reports Third Quarter 2007 Financial Results

11/01/07

SOUTH SAN FRANCISCO, Calif., Nov 01, 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 September 30, 2007. Total revenues for the third quarter were $1.8 million, with a net loss of $10.8 million, including a restructuring charge of $1.2 million. As of September 30, 2007, cash, cash equivalents and marketable securities totaled $55.0 million.

    Recent Highlights

    SNS-595
    -- In October, at the recent AACR-NCI-EORTC International Conference on
       Molecular Targets and Cancer Therapeutics, Sunesis presented
       preliminary results from the company's ongoing Phase 2 clinical trial
       of SNS-595, a replication-dependent DNA-damaging agent, in patients
       with platinum-resistant ovarian cancer.

       o Administered as a single agent, SNS-595 demonstrated anti-tumor
         activity, with 88 percent (15 of 17) of evaluable patients having
         best responses of stable disease or better, including two partial
         responses.  Based on these results, SNS-595 has achieved the
         pre-specified criterion (two or more responses) for proceeding to
         Stage 2 of this trial.

    -- Data from non-clinical studies of SNS-595 were also presented at the
       AACR-NCI-EORTC International Conference.

       o In vivo studies of SNS-595 in combinations with carboplatin,
         cisplatin, and gemcitabine in solid tumor xenografts demonstrate
         potent anti-tumor activity.  Results from these non-clinical
         studies support the evaluation of SNS-595 in combination with
         platinum compounds or anti-metabolites for the treatment of solid
         tumor malignancies.

    -- In October, Sunesis completed enrollment of approximately 70 patients
       in the company's Phase 1 clinical trial of single-agent SNS-595 in
       patients with acute myeloid leukemia (AML).  Sunesis will present data
       from this study at the upcoming American Society of Hematology (ASH)
       meeting being held December 8-11, 2007 in Atlanta, GA.  In
       collaboration with advisors, Sunesis is continuing to outline a
       development strategy for the registration of SNS-595 for the treatment
       of AML.
    -- In September, Sunesis also announced the initiation of a Phase 1b
       clinical trial of SNS-595 in combination with cytarabine in patients
       with relapsed and/or refractory acute leukemias.  The trial is designed
       to evaluate the safety, tolerability and initial indications of
       anti-cancer activity of escalating doses of SNS-595 when administered
       with a fixed dose of cytarabine.


    SNS-032
    -- Data from non-clinical studies of SNS-032 was presented at the
       AACR-NCI-EORTC International Conference.

       o SNS-032, a cyclin-dependent kinase (CDK) inhibitor demonstrated
         potent anti-tumor activity in xenograft models of acute leukemia and
         multiple myeloma after intermittent, well tolerated dosing schedules.
         This activity was consistent with modulation of CDK7 and CDK9
         inhibition and supports investigation of SNS-032 in B-cell
         malignancies such as chronic lymphocytic leukemia and multiple
         myeloma.


    SNS-314
    -- In September, Sunesis presented non-clinical combination data on
       SNS-314, an Aurora kinase inhibitor, at the 14th European Cancer
       Conference (ECCO 14).

       o The cytotoxic activity of SNS-314 was shown to be additive in vitro
         when administered in combination with gemcitabine, docetaxel and
         vincristine.

       o SNS-314 in combination with docetaxel resulted in significant
         anti-tumor activity in vivo at doses and schedules where neither
         compound showed single-agent activity.

     -- In September, Sunesis announced the commencement of patient dosing in
        a Phase 1 clinical trial of SNS-314.  The dose-escalating clinical
        trial will examine safety, tolerability and preliminary anti-tumor
        activity in patients with advanced solid malignancies.


    Other
    -- In August, Sunesis announced a reorganization, including a reduction in
       its workforce by approximately 25 percent, to focus its resources on
       generating definitive data from its lead programs, while streamlining
       operations and extending the company's financial resources beyond 2008.


    Financial Highlights
    -- Revenue from research collaborations totaled $1.8 million for the
       quarter ended September 30, 2007, compared to $1.9 million for the
       quarter ended September 30, 2006.  This slight decrease in
       collaboration revenue was primarily due to lower amortization of
       license fees in the 2007 quarter.
    -- Research and development (R&D) expense was $8.8 million for the third
       quarter of 2007, compared to $8.6 million for the third quarter of
       2006.  This change is due to increased expenses related to the
       development of SNS-595, partially offset by reduced spending on SNS-314
       and certain research programs.
    -- General and administrative (G&A) expense for the third quarter of 2007
       was $3.4 million, compared to $3.0 million for the third quarter of
       2006.  The increase in G&A expense was due primarily to higher average
       salaries, non-cash stock-based compensation expense, patent prosecution
       costs and certain costs related to being a publicly traded company.
    -- In the quarter ended September 30, 2007, Sunesis recorded a $1.2
       million restructuring charge related to the reorganization and a
       reduction in force.
    -- Sunesis reported a net loss of $10.8 million for the third quarter of
       2007, compared to a reported net loss of $8.7 million for the third
       quarter of 2006.
    -- Cash used in operating activities was $27.3 million for the nine months
       ended September 30, 2007, compared to $19.0 million for the same
       nine-month period in 2006.
    -- In the third quarter of 2007, Sunesis recorded non-cash stock
       compensation expense of $0.7 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, November 1, 2007 at 10:30 am EDT. Individual and institutional investors can access the call via (888) 297-0358 (U.S. and Canada) or (719) 325-2215 (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 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 "support," "will," "possible," "optimistic," "expects" 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, 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         Nine months ended
                                 September 30,               September 30,
                               2007         2006          2007         2006
                                  (Unaudited)                (Unaudited)
    Revenue:
      Collaboration
       revenue               $80,776     $237,046    $1,539,110    $6,124,418
      Collaboration
       revenue from
       related party       1,749,498    1,712,045     5,827,695     5,591,890
      License revenue              -            -       250,000             -
      Grant and fellowship
       revenue                     -            -             -        37,901
    Total revenues         1,830,274    1,949,091     7,616,805    11,754,209

    Operating expenses:
    Research and
     development           8,787,118    8,583,298    27,792,058    27,146,773
    General and
     administrative        3,408,693    3,047,583    10,749,034     8,882,784
    Restructuring
     charges               1,217,848            -     1,217,848             -
    Total operating
     expenses             13,413,659   11,630,881    39,758,940    36,029,557

    Loss from operations (11,583,385)  (9,681,790)  (32,142,135)  (24,275,348)

    Interest income          796,731      992,261     2,310,285     2,495,965
    Interest expense         (55,903)     (45,970)     (152,254)     (433,625)
    Other income, net            232        1,856         1,159         5,749
    Net loss            $(10,842,325) $(8,733,643) $(29,982,945) $(22,207,259)

    Basic and diluted
     loss per share           $(0.32)      $(0.30)       $(0.95)       $(0.82)

    Shares used in
     computing basic
     and diluted
     loss per share       34,315,961   29,333,909    31,667,511    27,209,536



                          SUNESIS PHARMACEUTICALS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

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

    Current assets:
      Cash and cash equivalents                  $12,411,761      $6,075,449
      Marketable securities                       42,567,612      57,029,199
      Prepaids and other current assets            1,189,608       1,082,817
    Total current assets                          56,168,981      64,187,465

    Property and equipment, net                    4,470,776       4,728,929
    Deposits and other assets                        359,974         359,974
    Total assets                                 $60,999,731     $69,276,368

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                              $556,039      $2,477,656
      Accrued compensation                         2,189,961       2,323,742
      Other accrued liabilities                    3,348,309         961,766
      Current portion of deferred revenue          1,702,031       2,260,478
      Current portion of equipment financing         939,664         885,273
    Total current liabilities                      8,736,004       8,908,915

    Non current portion of deferred revenue                -       1,143,159
    Non current portion of equipment financing     1,323,960         955,695
    Deferred rent and other non-current
     liabilities                                   1,581,226       1,464,902
    Total liabilities                             11,641,190      12,472,671

    Commitments

    Stockholders' equity:
    Common stock                                       3,432           2,944
    Additional paid-in capital                   319,938,390     298,073,896
    Deferred stock compensation                     (387,736)     (1,006,604)
    Accumulated other comprehensive
     income (loss)                                    32,563         (21,376)
    Accumulated deficit                         (270,228,108)   (240,245,163)
    Total stockholders' equity                    49,358,541      56,803,697

    Total liabilities and stockholders' equity   $60,999,731     $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-Kfor the fiscal year ended
             December 31, 2006.

SOURCE Sunesis Pharmaceuticals, Inc.

http://www.sunesis.com

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