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Sunesis Reports Financial Results for the Second Quarter 2009

07/29/09

SOUTH SAN FRANCISCO, Calif., July 29, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Sunesis Pharmaceuticals, Inc. (Nasdaq: SNSS) today reported financial results for the second quarter ended June 30, 2009.

Total revenue for the second quarter of 2009 was $3.5 million, with a net loss of $22.9 million, including non-cash charges of $21.0 million related to the financing completed in April. Loss from operations was $1.9 million for the second quarter and $10.2 million for the first half of 2009. As of June 30, 2009, cash, cash equivalents and marketable securities totaled $7.3 million, with no debt outstanding.

"In the second quarter, we completed the initial closing of a tranched financing of up to $43.5 million with a syndicate of experienced life science investors. We also presented positive new data on all three of our Phase 2 voreloxin studies at ASCO," said Daniel Swisher, Chief Executive Officer of Sunesis. "As we finish enrollment of both of our Phase 2 studies in AML, we are actively planning for an End-of-Phase 2 meeting later this year with the FDA to gain concurrence on our AML registration strategy."

Recent Highlights

    --  In April, Sunesis completed a $10.0 million initial closing of a
        tranched private placement of up to $43.5 million. The private placement
        contemplates the sale of up to $15.0 million of units of convertible
        preferred stock and common stock warrants and up to $28.5 million in
        common stock to accredited investors, including certain members of
        management. In the initial closing, $10.0 million of units were sold,
        resulting in net proceeds of $8.8 million. The remaining units may be
        issued by Sunesis upon the satisfaction of a clinical milestone and
        Sunesis' common stock trading above a specified floor price or upon
        approval by a majority of the investors in the private placement, among
        other conditions, and the common stock of the private placement may be
        sold upon approval by the company and a majority of the investors in the
        private placement, among other conditions.
    --  At the American Society of Clinical Oncology (ASCO) 2009 Annual Meeting
        in June, the company presented new data from three ongoing clinical
        trials demonstrating that voreloxin shows promising safety and efficacy
        in AML and in platinum-resistant ovarian cancer. These presentations can
        be found on the Sunesis website at
        http://www.sunesis.com/products-in-development/presentations.php
        --  REVEAL-1 (Response Evaluation of VorEloxin in AmL) is a Phase 2 dose
            regimen optimization study of single agent voreloxin in newly
            diagnosed elderly AML patients who are unlikely to benefit from
            standard induction chemotherapy. Interim clinical data from this
            study continue to show that voreloxin can induce durable complete
            remissions across several dosing schedules.
        --  The Phase 1b/2 trial is designed to evaluate the safety,
            pharmacokinetics and anti-leukemic activity of escalating doses of
            voreloxin when administered on days one and four with cytarabine
            given either as a continuous infusion of 400 mg/m2 daily for five
            days (CIV Schedule) or as a two hour IV bolus of 1 g/m2 daily for
            five days (Bolus Schedule). Across both the CIV and Bolus Schedules,
            a total of 14 patients with primary refractory AML were enrolled and
            treated with a voreloxin dose of 80 mg/m2 or higher. Five of 14 of
            these patients achieved a CR or CRp for an overall CR or CRp rate of
            36 percent, which compares favorably relative to expected remission
            rates in this AML population of approximately 10 to 15 percent. In
            the Bolus Schedule, both first relapse and primary refractory
            patients are currently being enrolled in Phase 2.
        --  Updated clinical data from the Phase 2 study of single agent
            voreloxin in women with platinum-resistant ovarian cancer were also
            presented at the ASCO 2009 Annual Meeting. Approximately a third of
            the study patients have also failed prior treatment with Doxil(R).
            Three dose cohorts of voreloxin have been studied, 48 mg/m2 given
            every three weeks, 60 mg/m2 given every four weeks and 75 mg/m2
            given every four weeks. Across all three dosing cohorts, 74 patients
            (52%) experienced disease control, defined as an objective response
            or stable disease for 12 weeks or more. The preliminary median
            progression free survival (PFS) for each of the three cohorts by
            increasing dose is 82 days, 84 days, and 109 days, respectively. The
            preliminary median PFS for the 44 women who were both platinum
            resistant and also had failed treatment with Doxil(R) is 90 days.
    --  In July, Sunesis received a $1.5 million milestone payment from Biogen
        Idec (Nasdaq: BIIB) for the selection of a Raf kinase inhibitor
        development candidate for the treatment of cancer. Biogen Idec is
        currently conducting IND-enabling GLP preclinical work. Sunesis retains
        an option to participate in the co-development and co-promotion of the
        Raf kinase inhibitor resulting from this collaboration.

    --  On July 24, 2009, Sunesis applied to transfer the listing of its common
        stock from The NASDAQ Global Market to The NASDAQ Capital Market. The
        NASDAQ Capital Market is a continuous trading market that operates in
        the same manner as The NASDAQ Global Market. All companies listed on The
        NASDAQ Capital Market must meet certain financial requirements and
        adhere to NASDAQ's corporate governance standards. Sunesis believes
        it is in compliance with the minimum stockholders' equity
        requirement and all other applicable criteria for continued listing on
        The NASDAQ Capital Market, but for the $1.00 bid price requirement,
        which has been suspended by NASDAQ through August 2, 2009. If the
        application is approved, the company will no longer be subject to
        delisting from NASDAQ as a result of the previously disclosed
        stockholders' equity deficiency as of December 31, 2008, but it
        will need to comply with The NASDAQ Capital Markets' continued
        listing requirements on an ongoing basis.

Financial Highlights

    --  Revenues for the three and six months ended June 30, 2009 were $3.5
        million and $3.7 million compared to $2.6 million and $4.9 million for
        the same periods in 2008. Sunesis recognized $2.0 million in the second
        quarter of 2009 for the sale to SARcode of its interest in the
        lymphocyte function-associated antigen-1, or LFA-1, patents and related
        know-how that had previously been the subject of a license agreement
        with them, and $1.5 million for the Biogen Idec Raf kinase inhibitor
        milestone referred to above. Revenues in the 2008 periods were primarily
        related to research funding under the Biogen Idec collaboration.
    --  Research and development expenses decreased to $3.4 million and $7.7
        million for the three and six months ended June 30, 2009 from $8.3
        million and $17.0 million for the same periods in 2008. The decreases
        were primarily due to savings from the termination of substantially all
        discovery research activities in June 2008.
    --  General and administrative expenses for the first three and six months
        of 2009 were $2.0 million and $4.3 million compared to $3.2 million and
        $6.5 million for the same periods in 2008. The decreases were primarily
        due to reduced administrative headcount and facility costs as a result
        of the company's June 2008 and March 2009 restructurings.
    --  Restructuring charges of $1.9 million were recorded in the first half of
        2009, including $1.3 million for lease termination activities and $0.6
        million for employee termination costs related to the March 2009
        restructuring. For the three and six months ended June 30, 2008,
        restructuring charges were $4.9 million and $5.2 million, relating
        primarily to the June 2008 restructuring.
    --  Other expense of $21.0 million and $21.1 million was recorded in the
        three and six months ended June 30, 2009, primarily resulting from
        non-cash charges of $21.0 million related to the accounting for the
        private placement.
    --  Sunesis reported net losses of $22.9 million and $31.2 million for the
        three and six months ended June 30, 2009, compared to reported net
        losses of $13.6 million and $23.2 million for the same periods in 2008.

    --  Cash used in operations was $5.8 million and $12.4 million for the three
        and six month periods ending June 30, 2009, compared to $8.2 million and
        $18.7 million for the same periods in 2008.

About Voreloxin

Voreloxin is a first-in-class anticancer quinolone derivative, or AQD, a class of compounds that has not been used previously for the treatment of cancer. Voreloxin both intercalates DNA and inhibits topoisomerase II, resulting in replication-dependent, site-selective DNA damage, G2 arrest and apoptosis. Voreloxin is currently being evaluated in a Phase 2 clinical trial (known as the REVEAL-1 trial) in previously untreated elderly AML patients and in a Phase 1b/2 clinical trial combining voreloxin with cytarabine for the treatment of patients with relapsed/refractory AML, as well as in an ongoing Phase 2 single-agent trial in platinum-resistant ovarian cancer.

About Acute Myeloid Leukemia

AML is a rapidly progressing cancer of the blood characterized by the uncontrolled proliferation of immature blast cells in the bone marrow. The Leukemia and Lymphoma Society estimates that over 13,000 new cases of AML were diagnosed and approximately 9,000 deaths from AML occurred in the U.S. during 2007. AML is generally a disease of older adults, and the median age of a patient diagnosed with AML is about 67 years. A majority of elderly patients are not considered candidates for standard induction therapy or decline therapy, resulting in an acute need for new treatment options.

About Ovarian Cancer

In the United States, ovarian cancer remains the leading cause of death from gynecologic malignancies and is the fifth leading cause of cancer death overall in women behind lung, breast, colorectal and pancreatic cancers. According to the American Cancer Society, in 2008 there were an estimated 21,650 new cases and more than 15,000 deaths from ovarian cancer in the U.S. alone. Following frontline treatment, recurrence rates among ovarian cancer patients are high. Treatment options remain limited following relapse, and overall long-term survival has not changed significantly over the past 40 years, with five-year survival rates at less than 30 percent.

About Sunesis Pharmaceuticals

Sunesis is a biopharmaceutical company focused on the development and commercialization of new oncology therapeutics for the treatment of solid and hematologic cancers. Sunesis has built a highly experienced cancer drug development organization committed to advancing its lead product candidate, voreloxin, in multiple indications to improve the lives of people with cancer. For additional information on Sunesis Pharmaceuticals, please visit http://www.sunesis.com.

SUNESIS and the logo are trademarks of Sunesis Pharmaceuticals, Inc. All other trademarks appearing in this release are the property of their respective owners.

This press release contains forward-looking statements, including without limitation statements related to the potential safety and efficacy and commercial potential of voreloxin, the completion of the tranched financing, the activity of voreloxin in nonclinical studies, planned additional enrollment, clinical testing and development efforts, the timing of the End-of-Phase 2 meeting with FDA and the company's ability to transfer to The NASDAQ Capital Market. Words such as "demonstrating," "planning," "promising," "shows" 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, risks related to Sunesis' need for additional funding, the risk that Sunesis' drug development activities could be halted significantly or delayed for various reasons, the risk that Sunesis' clinical trials for voreloxin 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' nonclinical 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, including the pace of enrollment, risks related to the manufacturing of voreloxin, the risk that Sunesis' proprietary rights may not adequately protect voreloxin and the risk that NASDAQ does not permit Sunesis to transfer to The NASDAQ Capital Market and that Sunesis may be subject to delisting proceedings. These and other risk factors are discussed under "Risk Factors" and elsewhere in Sunesis' Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 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.

    Investor Contact:                   Media Contact:
    Sunesis Pharmaceuticals, Inc.       Sunesis Pharmaceuticals, Inc.
    Eric Bjerkholt                      Dan Weinseimer
    650-266-3717                        650-266-3739

                       SUNESIS PHARMACEUTICALS, INC.
                   CONDENSED CONSOLIDATED BALANCE SHEETS

                                               June 30,     December 31,
                                                 2009          2008
                                                 ----          ----
    ASSETS                                    (Unaudited)    (Note 1)
    Current assets:
        Cash and cash equivalents             $6,842,425    $6,296,942
        Marketable securities                    506,619     4,321,844
        Accounts receivable                    1,500,000             -
        Prepaids and other
         current assets                          404,106       934,429
                                                 -------       -------
    Total current assets                       9,253,150    11,553,215
    Property and equipment, net                  407,725       612,241
    Assets held-for-sale                          23,653       470,547
    Deposits and other assets                    101,275       147,826
                                                 -------       -------
    Total assets                              $9,785,803   $12,783,829
                                              ==========   ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
        Accounts payable and other accrued
         liabilities                          $2,049,936    $2,150,980
        Accrued clinical expense               1,321,786     1,865,773
        Accrued compensation                     415,007       537,215
        Accrued restructuring charges             59,993       191,170
        Current portion of deferred rent          23,308     1,409,513
        Current portion of
         deferred revenue                          2,083        27,083
                                                   -----        ------
    Total current liabilities                  3,872,113     6,181,734
    Non-current portion of deferred rent          87,755       110,919
    Commitments
    Stockholders' equity:
    Convertible preferred stock               56,163,436             -
    Common stock                                   3,442         3,441
    Additional paid-in capital               297,092,539   322,671,604
    Accumulated other
     comprehensive income                            127         7,841
    Accumulated deficit                     (347,433,609) (316,191,710)
                                            ------------  ------------
    Total stockholders' equity                 5,825,935     6,491,176
                                               ---------     ---------
    Total liabilities and
     stockholders' equity                     $9,785,803   $12,783,829
                                              ==========   ===========


    Note 1:  The condensed consolidated balance sheet as of December 31, 2008
    has been derived from the audited financial statements as of that date
    included in the Company's Annual Report on Form 10-K for the year ended
    December 31, 2008.

                               SUNESIS PHARMACEUTICALS, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                            Three months ended          Six months ended
                                 June 30,                   June 30,
                            ------------------         ------------------
                            2009          2008         2009          2008
                            ----          ----         ----          ----
                               (Unaudited)                 (Unaudited)
    Revenue:
      Collaboration
       revenue-related
       party             $1,500,000    $2,544,868    $1,500,000    $4,310,551
      Collaboration
       revenue-other         12,500        46,372        25,000       583,872
      License and
       other
       revenue            2,000,000             -     2,211,547             -
                          ---------     ---------     ---------     ---------
    Total revenues        3,512,500     2,591,240     3,736,547     4,894,423

    Operating
     expenses:
    Research and
     development          3,448,685     8,262,604     7,712,836    17,005,499
    General and
     administrative       1,994,903     3,235,061     4,349,916     6,501,190

    Restructuring
     charges                    532     4,876,746     1,863,393     5,197,520
                          ---------     ---------     ---------     ---------
    Total operating
     expenses             5,444,120    16,374,411    13,926,145    28,704,209
                          ---------    ----------    ----------    ----------

    Loss from
     operations          (1,931,620)  (13,783,171)  (10,189,598)  (23,809,786)

    Interest income           6,000       269,385        18,812       729,797
    Interest expense           (375)      (54,433)         (987)     (113,806)
    Other income
     (expense), net     (20,952,469)         (199)  (21,070,126)          472
                        -----------   -----------   -----------    ----------
    Net loss            (22,878,464)  (13,568,418)  (31,241,899)  (23,193,323)

    Deemed
     distribution to
     preferred
     stockholders       (26,375,000)            -   (26,375,000)            -
                        -----------   -----------   -----------   -----------
    Loss
     attributable
     to common
     stockholders      $(49,253,464) $(13,568,418) $(57,616,899) $(23,193,323)
                       ============  ============  ============  ============

    Basic and
     diluted loss
     attributable
     to common
     stockholders
     per common
     share                   $(1.43)       $(0.39)       $(1.67)       $(0.67)

    Shares used in
     computing
     basic and
     diluted loss
     attributable
     to common
     stockholders
     per common
     share               34,412,870    34,377,367    34,411,327    34,371,132

SOURCE Sunesis Pharmaceuticals, Inc.

http://www.sunesis.com

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