Viracta Therapeutics, Inc. (NASDAQ:VIRX) is a clinical-stage precision oncology company dedicated to the development and commercialization of novel therapies for the treatment of virus-associated cancers. The company's lead product candidate, Nana-val, is an all-oral combination therapy consisting of nanatinostat, Viracta's proprietary investigational drug, and the antiviral agent valganciclovir. Nana-val is currently being evaluated in multiple ongoing clinical trials for the treatment of Epstein-Barr virus-positive (EBV+) lymphomas and solid tumors.

Financial Overview

For the fiscal year ended December 31, 2023, Viracta reported an annual net loss of $51,058,000 and no revenue. The company's annual operating cash flow was -$39,892,000, and its annual free cash flow was -$40,030,000.

In the first quarter of 2024, Viracta reported a net loss of $9,141,000 and no revenue. The company's operating cash flow for the quarter was -$7,849,000, and its free cash flow was also -$7,849,000.

Business Overview

Viracta is focused on the development of therapies for virus-associated cancers, with a particular emphasis on EBV+ malignancies. The company's lead product candidate, Nana-val, is being investigated in multiple ongoing clinical trials, including the pivotal NAVAL-1 trial for the treatment of relapsed/refractory (R/R) EBV+ lymphomas and a Phase 1b/2 trial for the treatment of EBV+ recurrent or metastatic nasopharyngeal carcinoma (R/M NPC) and other EBV+ solid tumors.

NAVAL-1 Trial in EBV+ Lymphomas

In June 2021, Viracta announced the initiation of the NAVAL-1 trial, a pivotal, global, multicenter, open-label Phase 2 basket trial evaluating Nana-val for the treatment of patients with R/R EBV+ lymphoma. The primary endpoint of this trial is objective response rate, with key secondary endpoints including duration of response, survival outcomes, and the safety profile of the combined treatment.

In June 2023, Viracta announced that the efficacy threshold was reached in the first five patients with R/R EBV+ peripheral T-cell lymphoma (PTCL) enrolled and treated with Nana-val. In August 2023, the company announced the strategic prioritization of three lymphoma subtypes in the NAVAL-1 trial: EBV+ PTCL, EBV+ diffuse large B-cell lymphoma (DLBCL), and EBV+ post-transplant lymphoproliferative disorders (PTLD).

In December 2023, Viracta completed enrollment of Stage 1 in the R/R EBV+ PTCL cohort of patients, and reported positive efficacy and safety data from this cohort at the April 2024 Joint Annual Congress of Taiwan Society of Blood and Marrow Transplantation and The Hematology Society of Taiwan. Nana-val demonstrated substantially greater efficacy than nanatinostat monotherapy, with an overall response rate of 50% and a complete response rate of 20% in the intent-to-treat population (71% and 29% in the efficacy-evaluable population) and a generally manageable safety profile.

In March 2024, Viracta also completed enrollment of Stage 2 in the R/R EBV+ PTCL cohort and anticipates beginning to enroll additional patients with R/R EBV+ PTCL into the post-Phase 2 expansion cohort in the second quarter of 2024. The company plans to meet with the U.S. Food and Drug Administration (FDA) mid-year 2024 to discuss preliminary results and additional requirements for accelerated approval.

Phase 1b/2 Trial in EBV+ Solid Tumors

In January 2022, Viracta announced the first patient dosed in its multinational, open-label, Phase 1b/2 trial evaluating Nana-val alone and in combination with a PD-1 checkpoint inhibitor in patients with R/M EBV+ NPC and other EBV+ solid tumors. In August 2023, the company announced the completion of enrollment through the fifth dose cohort in the dose escalation portion of the study. In October 2023, Viracta reported patient responses that included two confirmed partial responses at the higher dose levels and five stable diseases in 17 patients enrolled without any dose-limiting toxicities observed.

In May 2024, Viracta announced the completion of enrollment through the sixth dose in the Phase 1b dose escalation portion and the start of enrolling patients into the seventh dose cohort. The company anticipates determining the recommended Phase 2 dose in the second half of 2024.

Collaborations and Licensing Agreements

In May 2017, Viracta entered into a license agreement with ImmunityBio, Inc. for the development and commercialization of nanatinostat for use in combination with natural killer cell immunotherapies. Under the agreement, Viracta is eligible to receive up to $100 million in regulatory and commercial milestone payments, as well as tiered royalties on net sales of licensed products.

In December 2019, Viracta entered into license agreements with Day One Biopharmaceuticals, Inc. and Denovo Biopharma LLC to grant them exclusive worldwide licenses for the development and commercialization of the company's product candidates DAY101 and vosaroxin, respectively. In March 2021, Viracta entered into a royalty purchase agreement with XOMA (US) LLC, under which XOMA purchased the potential future milestones and royalties associated with these license agreements.

Liquidity

As of March 31, 2024, Viracta had $39.6 million in cash, cash equivalents, and short-term investments, and a working capital of $10.7 million. The company has stated that its existing cash, cash equivalents, and short-term investments may not be sufficient to fund its planned operations for at least twelve months from the issuance date of the condensed consolidated financial statements, and that it will need to raise additional capital through the issuance of its common stock, through other equity or debt financings, or through collaborations or partnerships with other companies.

In May 2021, Viracta entered into an Open Market Sale Agreement with Jefferies LLC, under which the company may offer and sell up to $50 million of shares of its common stock. As of March 31, 2024, the company had approximately $47.2 million available under this agreement.

Additionally, in November 2021, Viracta entered into a loan and security agreement with Silicon Valley Bank and Oxford Finance LLC for up to $50 million, of which $25 million has been drawn down. In March 2024, the company entered into a Second Amendment to this agreement, providing for a modification of the loan amortization period and a pro rata reduction in the prospective debt amortization schedule, in exchange for a partial prepayment of $5 million toward the outstanding principal.

Risks and Challenges

Viracta faces several risks and challenges in the development and commercialization of its product candidates, including:

1. Successful and timely completion of ongoing and planned clinical trials for Nana-val in EBV+ lymphomas and solid tumors. 2. Obtaining regulatory approvals from the FDA, EMA, and other comparable regulatory authorities for Nana-val and any future product candidates. 3. Establishing and maintaining relationships with contract research organizations and clinical sites for the clinical development of Nana-val and other product candidates. 4. Developing an efficient and scalable manufacturing process for Nana-val and ensuring a reliable supply of the necessary drug components. 5. Successful commercialization of Nana-val and any future product candidates, including building sales and marketing capabilities or entering into collaborations. 6. Protecting the company's intellectual property rights and defending against potential infringement claims. 7. Attracting and retaining key personnel to support the company's research, development, and commercialization efforts. 8. Obtaining sufficient funding to support the company's ongoing and future operations, as its existing cash resources may not be adequate to fund its planned activities for the next twelve months.

Conclusion

Viracta Therapeutics is a promising clinical-stage precision oncology company focused on the development of novel therapies for the treatment of virus-associated cancers. The company's lead product candidate, Nana-val, has demonstrated encouraging results in ongoing clinical trials for EBV+ lymphomas and solid tumors, and Viracta is well-positioned to potentially bring this innovative therapy to market. However, the company faces several risks and challenges, including the need to successfully complete its clinical trials, obtain regulatory approvals, and secure additional funding to support its operations. Investors should closely monitor Viracta's progress as the company continues to advance its pipeline and navigate the complex landscape of oncology drug development.