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20 Jan SNSS Research Report

Posted at 14:26h in TPS Offer by

Dave’s Note : Sent to TPS members on 1/20/21 pre-market at $3.10. This is a private link of that behind the paywall report. 

 

SNSS 3.10

6-12 month target $8.25 plus

Viracta Website

Viracta is committed to advancing new medicines to benefit patients with viral-associated cancers and other serious diseases.

Viracta’s proprietary platform is a highly targeted combination therapy approach for virus-associated malignancies. Our initial focus is on cancers associated with the Epstein Barr Virus (EBV). We will also expand into additional applications to utilize this approach for a range of cancers and virus-associated diseases.

Trading under the symbol SNSS currently (Sunesis Pharma), Viracta will reverse merge into the SNSS shell in the 1st first quarter 2021, possibly as early as February. This is almost like SPAC deal in that its pre-funded, reverse merging, changing symbol etc.  Have to get long before everyone figures out the upside here- Dave

120m Shares outstanding estimated following the reverse merger. 

Current estimated market cap at 360 million at $3 a share

120m cash from my research post merger, or $1 per share equivalent out of a $3 share price, fully funded.

  • Concurrent with the merger, a symbol and name change, a 1 for 3 up to a 1 for 6 reverse split per management to drop the share count and raise the share price, (more attractive to institutions),  then likely coverage by a few wall street firms following the listing, and trial data readouts and more.
  • A second lead program in 2021 as well is on tap for another herpes virus indication. All of the aforementioned will start to move the shares out of this range if I’m right and towards $8 (Pre split adjusted) in 12 months or perhaps much less time. 

Once the merger is closed, Viracta Therapeutics will be a public oncology company with top tier institutional investors, an experienced and accomplished management team, a robust oncology platform targeting virus induced malignancies, and an important partnership with Nankwest (NK).

my 6-12 month target is $8.25 (Pre split and merger price based on SNSS price today) assumes a 1 Billion market cap

Dr. Royston is currently the CEO of Viracta Therapeutics, a portfolio company of Forward Ventures which he heads,  a legend in Biotech investing and exiting those companies/investments to big pharma…and key to the story.

He has left the helm of his venture fund, just to run Viracta, that is how much be believes in the science here for cancer treatment with a twist…

He sold his last Pharma on an exit from his Forward Venture fund holdings at a 7 Billion market cap.

Lets look at his track record… 

  • Dr. Royston founded Hybritech,  which was then acquired By Eli Lily.
  • Founded Idec pharma, which later merged with Biogen

He then launched Forward Ventures, which brought the following companies public and SOLD:

  • Applied Molecular Evolution (acquired by Eli Lilly)
  • Combichem (acquired by DuPont);
  • Corixa (acquired by GlaxoSmithKline);
  • Genesys Therapeutics (merged with Somatix and acquired by Cell Genesys);
  • LigoCyte (acquired by Takeda);
  • Morphotek (acquired by Eisai);
  • TargeGen (acquired by Sanofi-Aventis);
  •  Triangle Pharmaceuticals (acquired by Gilead).

Always pay attention to management and the value creators, they tend to repeat success. (Terren Peizer of BIVI comes to mind) 

Viracta Therapeutics : The story  and the Platform 

The Epstein-Barr/HPV Virus lies dormant in cells in the human body.  This can and does cause many dangerous malignant lymphomas.

Viracta’s lead compound is a unique KICK and KILL format… a multi combination drug, a 1-2 punch if you will.

The first drug or the KICK activates the herpes virus, it replicates the dormant virus and makes it active.  You do that to actually be able to identify the virus, kill it, and wipe away all the malignant cells. Imagine the upside of this action for a platform biotech! In phase 2 we saw a 40% complete response rate in patients who otherwise failed at every other therapy or drug for this condition.

This methodology can work in a bevy of herpes virus caused malignancies, in addition to other viruses that cause tumors. Therefore its a TIPPING POINT for a PLATFORM!

This first trial has shown the first proof of concept for refractory lymphoma for patients who otherwise would have died prior to this treatment. As they say, “The alternative is death”. This will pave the way for new trials and more candidates ahead, including in 2021.

Just to reiterate, this trial showed an astounding  40% Complete Response rate on those who have failed everything.  This is more than likely a Breakthrough Therapy Status, and orphan drug etc… which gives a 7 year exclusive to Viracta upon approval by the FDA. Also a faster approval time and more intimate meetings with the FDA towards approval. Word is the FDA is so impressed by the data, they are allowing a Pivotal Phase 2b trial with no need for a Phase 3.  This phase 2b will enroll more single arm cohorts just to verify the data in a larger group.

Without a need for Phase 3, this can fast track and set up the valuation of this platform potentially in the Billions… a TIPPING POINT for investors to buy now, before that becomes obvious.

From my conversations with those in the industry, the CEO thinks Viracta also can be a  multi billion exit in time.  The Phase 2 Data was so strong in this indication and there is massive scalability of the drug and the platform (Kick and Kill).

Catalysts:

  • A data read out in 2021, start enrollment in the 1st half of 2021 for pivotal Phase 2b, no need for a Phase 3.   Again, Viracta has met with the FDA, they would like to approve it now but have to do a single arm study, and they just have to prove this drug does the same thing in Phase 2b as in 2a, by adding more patients.
  • A 2 Billion exit would place the post merger pre split target in a few years at as high as 16.50 a share (Future dilution not counted or projected). A 3 Billion exit $24 a share, and the CEO last exit was 7 billion!
  • Leerink and Evercore are most likely going to cover Viracta following the reverse merger and with targets. Recall how B. Riley came out on BIVI on 1/15 with a $47 target 4 weeks after I came out at $12 with a $70 12 month target, good to be early
  • Both firms did the most recent crossover private round.  So hopefully we see initiations of coverage right after public and the reverse split.  Top tier institutions are in this.    Last company from this CEO sold for 7B to Gilead, has won everywhere he has been. He gave up his venture fund to be full time CEO of Viracta.

Viracta’s lead program will be enrolling a pivotal registration trial after a positive phase 2 announced in Dec of 2020. (See phase 2 data here: http://www.viracta.com/pressreleases/Dec72020.html )

Investors:

Viracta is funded by Nankwest (NK),  Forward Ventures (From the CEO) , aMoon, Taiwan Ventures, LifeSci Ventures, BVF has also taken a large position in the public SNSS shell.

Partnership w/ Nankwest (NK):

In 2017, Nankwest led a series B financing for Viracta, landing their CEO Patrick Soon-Shiong on the Viracta board.. Concurrent with the financing, Viracta agreed to the terms of an exclusive license of its Phase 2 drug candidate, VRx-3996, to NantKwest for use in combination with NantKwest’s platform of natural killer (NK) cell therapies.

“Kick And Kill” Oncology Platform:

Viracta is committed to advancing new medicines to benefit patients with viral-associated cancers and other serious diseases. Viracta’s proprietary platform is a highly targeted combination therapy approach for virus-associated malignancies. Our initial focus is on cancers associated with the Epstein Barr Virus (EBV). Also will look to expand into additional applications to utilize this approach for a range of cancers and virus-associated diseases.

Viracta’s Kick & Kill Platform is designed as a targeted approach to treat a range of viral-associated cancers and other serious diseases. Nanatinostat (aka VRx-3996; formerly known as tractinostat or CHR-3996) is Viracta’s investigational drug that is a Class I histone deacetylase (HDAC) inhibitor – a class of epigenetic-modifying drug that affects coiling of DNA around histones to change epigenetically-controlled expression patterns.

In Viracta’s Kick & Kill approach, we are exploring applications of nanatinostat as the Kick to activate genes that have been epigenetically suppressed by the virus or cancer. The Kill can be provided by activating drugs to selectively and directly kill virus-harboring cells and/or activating suppressed immune response genes to enable patients’ endogenous immune system to kill diseased cells, which can be augmented by combining with a range of immunotherapy modalities.

Investing Advice:

Chart wise the SNSS stock has chewed through resistance at 2.75-3 and now looks to be breaking loose to the upside as institutional investors are accumulating in my opinion and based on my research.

Buy up to 3.50 and add on dips to 2.95 area with a 6-12 month target of $8.25