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Sunesis Pharmaceuticals Inc. Reports Operating Results (10-Q)

August 13, 2010 | About:
10qk

10qk

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Sunesis Pharmaceuticals Inc. (SNSS) filed Quarterly Report for the period ended 2010-06-30.

Sunesis Pharmaceuticals Inc. has a market cap of $25.3 million; its shares were traded at around $0.4375 with and P/S ratio of 6.8. SNSS is in the portfolios of Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

In March 2009, we entered into agreements with accredited investors, including certain members of management, providing for the private placement of up to $15.0 million of units consisting of Series A convertible preferred stock and warrants to purchase common stock, and up to $28.5 million in common stock, in three closings, or the Private Placement. We completed the initial closing of $10.0 million in April 2009, resulting in net proceeds of $8.8 million, and the second closing of $5.0 million in October 2009, for net proceeds of $4.7 million.

Total revenues were $15,000 and $27,000 for the three and six months ended June 30, 2010 as compared to $3.5 million and $3.7 million for the same periods in 2009. Collaboration revenue in the 2009 periods was primarily comprised of a $1.5 million milestone earned from Biogen Idecs selection of a Raf kinase inhibitor development candidate for the treatment of cancer. License and other revenue in the 2009 periods was primarily comprised of $2.0 million from the sale to SARcode of our interest in all patents and related know-how that had previously been the subject of a license agreement with them. In connection with the sale, the license agreement was terminated and we will not receive any future license fees, milestones or royalties under that license. We still hold three secured convertible promissory notes issued under the original license agreement, with a total principal value of $1.0 million, which are due in 2012 and are convertible into the preferred stock of SARcode at our option. We have yet to record the amount represented by these notes as revenue, due to uncertainty of their collectibility.

Research and development expense was $3.0 million and $6.1 million for the three and six months ended June 30, 2010, as compared to $3.4 million and $7.7 million for the same periods in 2009, substantially all relating to the vosaroxin development program. The decrease of $0.4 million between the three month periods was primarily due to a decrease in clinical expenses. The decrease of $1.6 million between the six month periods was primarily due to decreases in clinical expenses of $0.9 million, outside services of $0.4 million, facility costs of $0.2 million and headcount-related expenses of $0.1 million.

General and administrative expense was $1.9 million and $3.4 million for the three and six months ended June 30, 2010, as compared to $2.0 million and $4.3 million for the same periods in 2009. The decrease of $0.1 million between the three month periods was primarily due to headcount-related expenses. The decrease of $0.9 million between the six month periods was primarily due to a restructuring plan initiated in March 2009, or the 2009 Restructuring, which resulted in a reduction of $0.7 million in headcount-related expenses. Additionally, facilities costs were reduced by $0.2 million between the six month periods. For 2010 as a whole, we expect general and administrative expense to be generally comparable to 2009.

Net other income was $34,000 and $38,000 for the three and six months ended June 30, 2010, as compared to net other expense of $20.9 million and $21.1 million for the same periods in 2009. The expense in the 2009 periods was primarily comprised of non-cash charges of $21.0 million related to the accounting for the Private Placement, comprising of $7.5 million recorded upon the initial closing in April 2009 and $13.5 million upon the revaluation in June 2009 of the options to participate in the second closing and common equity closing.

Net cash used in operating activities was $8.0 million for the six months ended June 30, 2010, as compared to $12.4 million for the same period in 2009. Net cash used in the 2010 period resulted primarily from the net loss of $9.4 million, partially offset by changes in operating assets and liabilities of $0.9 million and net adjustments for non-cash items of $0.5 million, primarily related to stock-based compensation. Net cash used in the 2009 period resulted primarily from the net loss of $31.2 million and changes in operating assets and liabilities of $1.8 million, including $1.5 million related to accounts receivable, partially offset by net adjustments for non-cash items of $20.7 million, including non-cash expense of $21.0 million related to the Private Placement, and a credit of $1.4 million for deferred rent related to the 2008 Restructuring.

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