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PropThink: Sunesis Increases Sample Size and Receives $25M in Conjunction

September 11, 2012 -

Shares of Sunesis Pharmaceuticals (NASDAQ:SNSS) are rebounding from late losses on Monday, up 50% in premarket trading after the company announced an increase in the size of its lead phase 3 clinical trial, recommended by an independent Data and Safety Monitoring Board (DSMB). More importantly, however, the sample increase triggers a $25M investment from Royalty Pharma. According to an agreement reached in March, Royalty Pharma is obligated to purchase a Revenue Participation Right (RPR) from Sunesis if the trial's DSMB moves to increase the patient sample in the VALOR Trial. The decision comes after a planned interim analysis of vosaroxin, which is in the phase 3 trial for the treatment of acute myeloid leukemia and a Phase 2 trial for ovarian cancer. The RPR gives Royalty Pharma a 6.75% royalty rate on net sales of vosaroxin until the latter of certain patent expirations, market exclusivity, or ten years on the market. The agreement also grants Royalty Pharma two five-year warrants for one million shares each. The investment is a nod of confidence to the company's only product and supports institutional belief in FDA approval of the orphan drug.
It is worth noting that today's gains are partially offset by a 21% loss before the close on Monday. Shares are up 16% on the week, from $3.40 to $3.96 just before Tuesday's opening bell. SNSS is trading at twice its normal average and is up 300% in 2012.
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