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Sunesis Pharmaceuticals, Inc. Message Board

  • josipcurkovic josipcurkovic May 4, 2010 6:23 PM Flag

    RBC capital markets company update

    Sunesis Pharmaceuticals, Inc.
    Critical path for Voreloxin likely to be defined in June.

    Sector perform
    Speculative risk

    Price: 0.93
    Shares o/s (MM): 50.8
    Priced at market close April 29,2010
    Price Target: 2.00
    Implied All-in return: 115%

    Investment opinion

    Sunesis' primary value driver is Voreloxin, A Phase III ready porduct candidate with positive Phase II data in AML. Sunesis plans to initiate a Phase III trial in H2:10. Recent meeting with FDA confirm the Phase III plan and an upcoming meeting with the EMEA should define the EU strategy. In order to conduct the Phase III trial, SNSS Sunesis will require additional capital, and its plan to access capital will likely take shape in Q2. We reiterate our sector perform rating pending clarity on its financial needs and resolution of its complex capital structure.

    More capital needed. Sunesis has three potentially dilutive options for raising capital. 1) SNSS filed a shelf registration for $60M, likely the amount it needs to conduct Phase III. 2) Sunesis entered into an "at the Market" financing facility to sell up to 20M, a potential bridge and means to access capital quickly if liquidity is available. 3) current preferred share holders have an option to purchase up to 28.5M in stock at 0.275/share by the end of June 2010. Exercise of the $28.5M option would force conversion of its preferred shares to common. We expect SNSS is likely to utulize a combination of these financing vehicles in the near term to provide resources to conduct the Phase III program. An alternative strategy would be to partner Voreloxin.

    Expect firm Phase III plans in June. Based on guidance from FDA, SNSS intends to start a Phase III trial in H2:10 in 450 patients with relapsed or refractory AML, testing standard chemotherapy +/- Voreloxin. SNSS has Plans to meet with european regulators in Q2 prior to finalizing the protocol, which it expects to initiate in H2:10

    Update at ASCO, SNSS will provide updates at ASCO (June 4-8) on its trial of single agent Voreloxinin AML, combination with cytarabine in AML, and single agent in ovarian cancer. ASCO may also serve as venue to disclose the outcome of the EMEA meeting, provided it has the feed back it requires by then.

    Valuation: Our $2 price target implies a market capitalization of roughly $480M assuming that the third tranche of its companies financing is completed, and if the associated warrents are exercised. This market capitalization sufficiently values Sunesis' Phase III ready set.

    Sunesis potential use with other cancers would greatly increase it its market capitalization the RBC analyst bases his analysis on AML Potential

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