U.S. Markets open in 6 hrs

Sunesis jumps as cancer drug study expands

NEW YORK (AP) -- Shares of Sunesis Pharmaceuticals Inc. surged Tuesday after the company said it is expanding a study of its cancer drug vosaroxin.

THE SPARK: Sunesis said it is adding 225 more patients to a late-stage trial design to test vosaroxin as a treatment for acute myeloid leukemia. The company said the expansion was recommended by a committee of independent monitors who had reviewed early results from the trial. The study will now include a total of 675 patients who have acute myeloid leukemia that has not responded to one previous round of treatment, or has returned after one previous treatment.

Enrolling more patients will make the study longer and more expensive, but it also increases the chances it will show a statistically significant difference in survival between patients treated with vosaroxin and patients treated with standard drugs.

The monitoring committee also could have recommended that the trial be stopped early if there was clear proof that vosaroxin was working or that it was not working.

The recommendation triggers a $25 million investment in Sunesis by Royalty Pharma. Royalty Pharma will also get warrants to buy additional stock and it will receive royalty payments on sales of vosaroxin if the drug is approved.

THE BIG PICTURE: The South San Francisco, Calif., company said it now expects to finish enrolling patients in the study in 2013, and it will report results from the study in the first half of 2014. The study is designed to measure how long patients live after they are treated with either vosaroxin and the chemotherapy drug cytarabine, or cytarabine and a placebo.

Vosaroxin is Sunesis' most advanced drug candidate. The company is also studying the drug as a treatment for ovarian cancer that hasn't responded to platinum-based chemotherapy. Sunesis is also collaborating with Biogen Idec Inc. and Millennium Pharmaceuticals, a unit of Japanese drugmaker Takeda.

THE ANALYSIS: Cantor Fitzgerald analyst Mara Goldstein said sales of vosaroxin could reach $500 million a year, as it has been some time since any new drugs were approved as secondary treatments for leukemia. Goldstein kept a "Buy" rating on Sunesis shares and raised her price target to $8 per share from $6.

SHARE ACTION: Sunesis shares advanced 97 cents, or 36.7 percent, to $3.61 in afternoon trading. Earlier the stock rose to $4.02, its highest price since June 2010.