Mail Stop 3-9 February 17,
2005
Daniel Swisher
Chief Executive Officer
Sunesis Pharmaceuticals, Inc.
341 Oyster Point Boulevard
South San Francisco, California 94080
Re: Sunesis Pharmaceuticals, Inc.
Registration Statement on Form S-1
Filed December 23, 2005
File Number 333-121646
Dear Mr. Swisher:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. We note that Exhibit 10.36 to your S-1/A submitted January 27,
2005, is a form of licensing agreement granting you rights to
develop, manufacture, promote, market, use, sell, offer for sale,
import and/or distribute a chemical compound, and that Schedule
6.05
(Ex. 10.36 at page 35) states that those rights cover, among other
countries, Syria, Iran, Iraq, Cuba, and North Korea.
In light of the fact that Syria, Iran, Cuba and North Korea have
been
identified by the U.S. State Department as state sponsors of
terrorism, and are subject to economic sanctions administered by
the
U.S. Treasury Department`s Office of Foreign Assets Control,
please
advise us of the extent of the Company`s current and proposed
operations in each of these countries; the materiality to the
Company
of its operations in each country; and your view as to whether
those
operations, individually or in the aggregate, constitute a
material
investment risk for your security holders. Advise us also whether
the Company engaged in any operations in Iraq during the time that
country was identified by the U.S. State Department as a state
sponsor of terrorism and/or subject to economic sanction
administered
by OFAC. If so, please advise us of the extent of the Company`s
operations in Iraq during that time period; the materiality to the
Company of its operations in Iraq; and your view as to whether
those
operations, individually or in the aggregate, constitute a
material
investment risk for your security holders.
In preparing your response, please consider that evaluations of
materiality should not be based solely on quantitative factors,
but
should include consideration of all factors that a reasonable
investor would deem important in making an investment decision.
We will need to implement additional finance and accounting
systems
...., page 16
2. We note your response to comment 25. This comment continues to
appear generic. Do you have any reason to believe you will be
unable
to complete the required assessment as to the adequacy of your
internal control reporting or that your independent registered
public
accounting firm will be unable to provide you with an unqualified
report? If you do, ten provide additional details relating to
these
beliefs. If you do not, then it appears that this risk is no
different than the potential risk facing all public companies.
Financial Operations Overview, page 29
3. We note your response to comment 29 and the revised disclosure
on
page 30. Please revise to disclose whether this expected funding
is
dependent on the successful achievement of milestones. We may
have
additional comments.
Management`s discussion and analysis of financial condition and
results of operations.
Critical Accounting Policies, Clinical Trial Accounting, page 33
4. We note that your estimates of clinical trial costs may not be
accurate if you have incomplete or inaccurate information,
resulting
in research and development expenses being recorded in future
periods. Please tell us your experience with accurately
estimating
these expenses. Disclose the amount of changes in estimates
recognized in each period or explicitly state changes in estimates
have not been material.
Stock Based Compensation, page 33
5. Provide us your valuation of any options granted in 2005 or
confirm that no options have been granted in 2005, if true. You
believe the fair value of the company`s common stock in December
2004
(the month the Form S-1 was filed) was $4.15 per share or 87% of
the
expected mid-point of the offering range of $4.80. You have
increased the fair value of your common stock on a straight-line
basis for options granted between September 2004 and March 2005
resulting in a fair value of $4.80 in March 2005. You determined
to
pursue an IPO in November 2004. You also signed a new agreement
with
Merck in November 2004. It is not clear to us why you would not
have
a valuation for your common stock in November 2004 when you
decided
to pursue an IPO. It is also not clear why you would assume a
straight-line increase in the value of your common stock from
September 2004 through March 2005 (a future date) when future
events
cannot be predicted and the only significant event noted was the
November 2004 agreement with Merck. More fully explain how you
considered the November 2004 Merck agreement in valuing your
common
stock in 2004. Was the Merck agreement the only significant event
after September 2004? Explain why the fair value of your common
stock would increase after November 2004 absent any significant
new
events.
Research and Development, page 34
6. Please disclose the costs incurred to date on each major
research
and development project.
Intellectual Property, page 55
7. We note your response to comment 40. Your revised disclosure
states that you have 57 patents, 43 relating to SNS-595 and three
relating to tethering. Please describe the subject matter of the
remaining 11 patents.
Financial Statements
Note 5, Collaborative Research Agreements page F-15 to F-18.
8. Expand the disclosure in Note 5 to indicate the amount of each
upfront and milestone fee received to date that is disclosed.
As appropriate, please amend your filing in response to
these
comments. You may wish to provide us with marked copies of the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information. Detailed cover letters
greatly facilitate our review. Please file your cover letter on
EDGAR under the form type label CORRESP. Please understand that we
may have additional comments after reviewing your amendment and
responses to our comments.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Ibolya Ignat at (202) 824-5528 or James
Atkinson, at (202) 942-2826 if you have questions regarding
comments
on the financial statements and related matters. Please contact
Zafar
Hasan at (202) 942-7381 or me at (202) 942-1840 with any other
questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: William Davisson
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, CA 94025
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