Entry into a Material Definitive Agreement.
Merger Agreement and Transaction
November 29, 2020, Sunesis Pharmaeceuticals, Inc., a Delaware corporation, or Sunesis, entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, with Viracta Therapeutics, Inc., a Delaware corporation, or
Viracta, and Sol Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Sunesis, or Merger Sub. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, including approval of the
transaction by Sunesis stockholders and Viractas stockholders, Merger Sub will be merged with and into Viracta, with Viracta surviving the Merger as a wholly owned subsidiary of Sunesis, or the Merger. The Merger is intended to qualify
as a tax-free reorganization for U.S. federal income tax purposes.
At the effective
time of the Merger, or the Effective Time: (a) each share of Viracta capital stock outstanding immediately prior to the Effective Time, excluding any dissenting shares but including any shares of Viracta capital stock issued pursuant to the
Viracta Financing discussed below, will be automatically converted solely into the right to receive a number of shares of Sunesis common stock equal to the exchange ratio described below; and (b) each option or other right to purchase shares of
Viracta capital stock, each a Viracta Option, that is outstanding and unexercised immediately prior to the Effective Time under Viractas 2016 Equity Incentive Plan, or the Viracta Plan, whether or not vested, will be converted into and become
an option to purchase Sunesis common stock, and we will assume the Viracta Plan and each such Viracta Option in accordance with the terms of the Viracta Plan and the terms of the stock option agreement by which such Viracta Option is evidenced (but
with changes to such documents as we and Viracta mutually agree are appropriate to reflect the assumption of the Viracta Options by us). The number of shares of our common stock subject to each Viracta Option we assume will be determined by
multiplying (A) the number of shares of Viracta common stock that were subject to such Viracta Option, as in effect immediately prior to the Effective Time, by (B) the exchange ratio, and rounding the resulting number down to the nearest
whole number of shares of Sunesis common stock, and the per share exercise price for our common stock issuable upon exercise of each Viracta Option we assume will be determined by dividing (A) the per share exercise price of Viracta common
stock subject to such Viracta Option, as in effect immediately prior to the Effective Time, by (B) the exchange ratio and rounding the resulting exercise price up to the nearest whole cent. Any restriction on the exercise of any Viracta Option
we assume will continue in full force and effect and the term, exercisability, vesting schedule, accelerated vesting provisions, and any other provisions of such Viracta Option will otherwise remain unchanged. Each warrant to purchase shares of
Viracta Capital Stock that is outstanding and unexercised immediately prior to the Effective Time will be treated in accordance with its terms.
The security holders of Viracta immediately before the Merger (inclusive of investors in the Viracta Financing) are expected to own
approximately 86% of the aggregate number of outstanding shares of common stock of the combined company immediately after the consummation of the Merger, or the Closing, and the security holders of Sunesis immediately before the Merger are expected
to own approximately 14% of the aggregate number of outstanding shares of common stock of the combined company immediately after the Closing on a fully-diluted basis using the treasury stock method, subject to certain assumptions,
including: (i) that our net cash as of Closing is $14.0 million and (ii) the valuation of Viracta following the Viracta Financing.
Following the Closing, Ivor Royston, M.D. will serve as the President and Chief Executive Officer of the combined company. Additionally,
following the Closing, the board of directors of the combined company will consist of seven directors and will be comprised of six members designated by Viracta and one member designated by Sunesis.
The Merger Agreement contains customary representations, warranties and covenants made by Viracta and Sunesis, including covenants relating to
obtaining the requisite approvals of the stockholders of Viracta and Sunesis, indemnification of directors and officers, and Viractas and our conduct of our respective businesses between the date of signing the Merger Agreement and the
In connection with the Merger, we will prepare and file a registration statement on
Form S-4, or the Registration Statement, which will include a proxy statement and a prospectus, and we will seek the approval of our stockholders at a special meeting expected to be held in the first
quarter of 2021 with respect to certain actions, including:
the amendment of our certificate of incorporation to effect a reverse stock split of all outstanding shares of
our common stock at a reverse stock split ratio in a range to be mutually agreed upon by Sunesis and Viracta for the purpose of maintaining compliance with Nasdaq listing standards;