Shares of Sunesis, South San Francisco, at last check were 22% higher at $1.83.
The merged company will focus on developing Viracta’s clinical stage pipeline targeting virus-associated malignancies. This includes Viracta’s lead program, aiming to treat Epstein-Barr virus-positive relapsed/refractory lymphoma.
Both companies' boards have approved the transaction. Sunesis and Viracta, Cardiff, Calif., hope to close the deal in the first quarter, subject to a vote of holders by both companies and other conditions.
Under the terms, Viracta holders will receive new Sunesis common shares. At closing, Viracta holders are expected to own about 86% and Sunesis holders about 14% of the combined company.
The new company will do business under the Viracta name and intends to be listed on the Nasdaq under the ticker symbol VIRX.
The combined company is expected to have about a $120 million cash balance following the closing.
It will be led by Viracta’s current management team and will be headquartered in Cardiff, half an hour north of San Diego.
The seven-member board will include six directors from Viracta and one from Sunesis.
Viracta's program is currently in a Phase 2 study evaluating the combination of nanatinostat and valganciclovir. Registration trial is expected to begin in the first half.
The company also plans to initiate a Phase 1b/2 trial in EBV-positive solid tumors in 2021.
Sunesis develops targeted inhibitors to treat hematologic and solid cancers.
“This transaction will provide the resources for the combined company to leverage Viracta’s scientific platform and pipeline to treat a range of virus-associated cancers and other serious diseases," Dayton Misfeldt, Sunesis's interim chief executive, said in a statement.
Viracta recently completed a $40 million Series E preferred stock financing led by aMoon, the Ra'anana, Israel, health-tech and life-sciences venture fund. Participating were Taiwania Capital Management, Latterell Venture Partners, LifeSci Venture Partners and other current investors.
Sunesis has about 24 employees and a market capitalization of $36.2 million.