Biotech Stocks

Sunesis Target Price on Voreloxin Approval

Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) recently announced that it anticipates initiating multi-national, Phase 3 trial of voreloxin in the second half of 2010. What could be the target price of Sunesis Pharmaceuticals (SNSS) if Voreloxin is approved? Let’s evaluate SNSS for this purpose.

Biotech Stock Evaluation involves analyzing the different points. A fair evaluation is to be made before investing in any biotech stocks.

1. Competitor (Existing and other drugs in the Pipeline) : Voreloxin is used for treating Acute Myeloid Leukemia. CYCC is is the main competitor for SNSS. Sapacitabine (CYC682) is also in the Phase II trial stage. What will be the market share of Voreloxin? This will depend of the performance of CYC682 and Voreloxin. However if the drug is approved, we can count on at least 30% market share. (If the drug is so bad, then FDA will not approve the drug.)

2. Market for the drug. : AML is a rapidly progressing cancer of the blood characterized by the uncontrolled proliferation of immature blast cells in the bone marrow. The National Cancer Institute estimated that nearly 13,000 new cases of AML were diagnosed and approximately 9,000 deaths from AML occurred in the U.S. in 2009. Additionally, it is estimated that prevalence of AML is approximately 25,000 in the U.S. AML is generally a disease of older adults, and the median age of a patient diagnosed with AML is about 67 years. Estimated AML market is $900mm a year. 30% of 900mm = 270mm

3. No of Shares outstanding.: 110mm shares outstanding as of today. By the time the drug is approved, number of shares is most likely to go up to another 25% (to be safe). So for our calculations we will consider 110 * 1.25 = 137.5 mm

4. Gross margin: 40 % to be fair
270 * .4 = 108

5. Operating expenses: 50mm per year for new trial and research expense.

6. Profit after operating expense 108 – 50 = 58 million

7. Assume a P/E ration of 20 gives = $1.16billion

8. Price per Share will be 1160/ 137.5 = 8.43

9.Now what is the chance of approval, taking a 50% chance of FDA approval will bring the value down to $4.215.

10. Approval will be at least 2 year away. For each year discount at least 20%.
     4.215 – .843 = 3.372
     3.372 – .6744 = 2.69

So we have calculated targeted value as $8.43. However we can say that now it is $2.5 stock.

Note:  We take no responsibility for the loss or gain made by individual investor. Investors should do their own research before  investing the money in the stock.

Sunesis Poised for Phase 3 Trial of Voreloxin

Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) recently announced that it anticipates initiating multi-national, Phase 3 trial of voreloxin in the second half of 2010. Sunesis completed formal End-of-Phase 2 meetings with the U.S. Food and Drug Administration (FDA) related to its lead compound, voreloxin, in acute myeloid leukemia (AML). Sunesis has received feedback and guidance from the FDA in response to proposed plans for further development of voreloxin in the treatment of AML. Based on the development clarity achieved as a result of these meetings, Sunesis intends to proceed with its plan to conduct a randomized, double-blind, placebo-controlled, pivotal Phase 3 trial. This trial will evaluate the overall survival of voreloxin in combination with cytarabine, a widely used chemotherapy in AML, compared to cytarabine with placebo, in patients with relapsed or refractory AML.

Sunesis also reported today that, as part of its global development strategy, a pre-submission meeting has been scheduled for the current calendar quarter with the European Medicines Agency (EMA) to obtain EMA’s scientific advice on the development program for voreloxin, including the proposed Phase 3 trial.

“We are very pleased by the outcomes of these milestone meetings with the FDA and are looking forward to initiating our multi-national Phase 3 trial,” stated Daniel Swisher, Chief Executive Officer of Sunesis. “We believe that voreloxin’s novel anti-leukemic properties and encouraging Phase 2 clinical data hold significant potential in a patient population with few treatment options. As we evaluate how best to fund our voreloxin development program, including our planned Phase 3 trial, we are continuing discussions with potential pharmaceutical partners.”

Biotech Stock Tips

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