NEW YORK – Sunesis Pharmaceuticals and Viracta Therapeutics announced on Monday that the two drugmakers will merge in an all-stock transaction and form a precision oncology-focused company publicly listed under Viracta's name.
The combined company, which will be headquartered in Cardiff, California, will advance Viracta's precision oncology pipeline of products against virus-associated cancers, including nanatinostat for the treatment of Epstein-Barr virus (EBV)-positive relapsed and refractory lymphomas.
The most advanced program in Viracta's pipeline is a Phase II trial of nanatinostat and the antiviral valganciclovir (Genentech's Valcyte) in EBV-positive relapsed or refractory lymphomas. In a statement announcing the merger, Sunesis described the nanatinostat-valganciclovir program as a "precision oncology and biomarker-driven combination product candidate [that] targets EBV-positive cancer cells with an inducible synthetic lethality approach."
Nanatinostat is designed to induce the expression of genes that are otherwise suppressed on EBV-positive cancer cells so that valganciclovir can recognize and kill them. Viracta expects to begin a registrational trial of nanatinostat in EBV-positive lymphomas in the first half of 2021 and a Phase Ib/II trial in EBV-positive solid tumors next year.
Sunesis, meanwhile, has two products in development: vecabrutinib, a Bruton's tyrosine kinase (BTK) inhibitor currently in Phase I trials for chronic lymphocytic leukemia, small lymphocytic lymphoma, or non-Hodgkin's lymphoma, and SNS-510, a PDK1 inhibitor in preclinical development.
Under the terms of the merger agreement, stockholders of Viracta will receive shares of newly issued Sunesis common stock. Viracta stockholders will own around 86 percent of the combined firm on a fully diluted basis, and Sunesis stockholders will own around 14 percent of the company, subject to adjustment at the close of the merger based on Sunesis' net cash.
The combined company will be led by Viracta's current management team and its board of directors will comprise six members from Viracta's board and one member from Sunesis' board.
Simultaneous with the merger agreement, Viracta agreed to sell common stock in a private placement with investors, led by BVF Partners and including aMoon, Ridgeback Capital Management, Surveyor Capital, Logos Capital, Samsara Biocapital, Sectoral Asset Management, Janus Henderson Investors, LifeSci Venture Partners, and Serrado Capital. The private placement is expected to bring in gross proceeds of $65 million before the close of the merger, adding to the $40 million the company recently raised in a Series E financing round.
Once the merger and financing are completed, the combined company will have around $120 million in cash with an expected cash runway into 2024. The merger agreement has been approved by both Sunesis and Viracta's boards of directors and is slated to close in the first quarter of 2021 following stockholders' approval.