By Mary Welch

Staff Writer

Sunesis Pharmaceuticals Inc. reaped $25.2 million in a private financing, bringing the total raised by the young company to $33.8 million.

“We could have raised significantly more and we, in fact, set out to raise significantly less, about $18 million,” said Steven James, Sunesis’ senior vice president of business operations. “We have some really good people investing and there were other really good people we had to turn away.”

Leading the purchase of Series B preferred stock was E.M. Warburg, Pincus & Co. LLC, of New York. International Biomedicine Holdings, of San Francisco, and New Medical Technologies, of Basel, Switzerland, were also new investors in this round. Previous venture capital investors that also participated were Mayfield Fund, of Menlo Park, Calif.; Venrock Associates, of New York; Abingworth Management Ltd., of London; and Skyline Ventures, of Palo Alto, Calif. Hamilton Capital Ltd., of Hamilton, Bermuda, acted as adviser and placement agent for a part of the financing.

The money should last at least two years without additional cash infusions or partnerships adding to the coffers. However, Sunesis does intend to seek corporate partnerships for some of its programs.

The funds will be directed largely to medicinal chemistry of existing lead compounds and initiation of drug discovery for several additional protein-protein and enzyme targets.

“I believe we were able to raise this large amount of money at this valuation for a number of reasons,” James said. “The technology we are developing is very broad based and there is the opportunity to generate numerous products. In addition, we have directed our efforts at a set of molecular targets where no one has previously been successful – the protein-protein area. We have demonstrated a number of protein-protein targets where we have had success. It’s working. We’re less than two years old and have rapidly hit our targets in the area of small-molecule therapeutics. That means it may be administered by a pill, which is the ultimate goal for large pharmaceutical companies.”

The binding interfaces between the proteins are very large, which makes traditional approaches to drug screening and design unsuccessful, he said. Nearly all drugs that target protein-protein interactions or that mimic large protein signaling molecules are also large proteins, which are expensive to manufacture, difficult to formulate and must be given by injection. In fact, for most protein-protein interactions, only a small subset of the overall intermolecular surfaces are important in defining binding affinity. This insight, developed by Sunesis’ founder and president Jim Wells, was critical to starting the company.

Founded in June 1998, the Redwood City, Calif. company has developed systematic approaches to identifying and mimicking the key intermolecular surfaces, or “hot spots,” for specific protein targets. Sunesis said its technology greatly accelerates the pace of initial identification and subsequent optimization of small molecules that bind to protein-protein targets. In this way, Sunesis can systematically produce small molecules that are potent and specific agonists/antagonists of protein-protein interactions.

“Since most major diseases result from the inactivity or hyperactivity of large protein signaling molecules, we believe that we can identify lead molecules for numerous important pharmaceutical targets in the areas of cancer, osteoporosis, immunological, viral, metabolic and inflammatory diseases,” James said.

The company, which has 43 employees, said it has delivered high-affinity, small-molecule, non-peptidic ligands to important drug targets. These technologies have also been used to identify small-molecule leads to refractory enzyme drug targets.

“The technology is working,” James said. “And we are constantly improving and developing it. The majority of genomic targets today are protein-protein in nature so we have the potential to create a large pipeline. In addition to pursuing the list of highly validated targets that already have a large protein therapeutic or antibody market, we also have the potential to develop agonists therapies as well.”

Currently, several compounds are in the research phase, with animal studies expected to begin next year.

Sunesis was founded by Wells, former head of protein engineering at Genentech Inc., of South San Francisco, and Jonathan Ellman, a professor of chemistry at the University of California at Berkeley. Eric Gordon, a founder of Versicor Inc., of Fremont, Calif., and former vice president of chemistry at Affymax Research Institute in Palo Alto, Calif., serves as senior vice president of research. Wells is the company’s president and chief scientific officer.

In conjunction with the financing, Jonathan Leff, vice president of Warburg, Pincus, joined Sunesis’ board of directors.