Business Overview
Viracta Therapeutics, Inc. is a clinical-stage precision oncology company focused on the treatment and prevention of virus-associated cancers that impact patients worldwide. The company's lead product candidate, Nana-val, is an all-oral combination therapy consisting of nanatinostat, a potent and selective small molecule inhibitor of Class I histone deacetylases (HDAC), and valganciclovir, an FDA-approved anti-viral drug.
Viracta Therapeutics, Inc. was incorporated in the state of Delaware in February 1998 and is based in San Diego, California. The company was originally known as Sunesis Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company that focused on the development of new cancer therapeutics for solid tumors and hematologic malignancies. In 2019, Sunesis entered into license agreements to out-license its product candidates vosaroxin and DAY101 to other companies.
In February 2021, Sunesis Pharmaceuticals merged with privately held Viracta Therapeutics, Inc., transforming the company into a clinical-stage precision oncology company focused on the treatment and prevention of virus-associated cancers. The combined entity retained the Viracta name and continued to advance the development of Nana-val, the company's lead product candidate.
Throughout its history, Viracta has faced several challenges, including difficulties enrolling patients in its clinical trials due to the impact of the COVID-19 pandemic. The company has also had to navigate the complex regulatory landscape for developing new cancer therapies, including obtaining orphan drug designations from the FDA and European Commission for Nana-val in various EBV-associated malignancies.
Nana-val is currently being evaluated in multiple ongoing clinical trials, including the pivotal Phase 2 NAVAL-1 trial in relapsed/refractory (R/R) EBV-positive lymphomas and a Phase 1b/2 trial in EBV-positive solid tumors.
Financial Overview
As of September 30, 2024, Viracta reported $21.1 million in cash, cash equivalents, and short-term investments, compared to $53.7 million as of December 31, 2023. The company's net loss for the nine months ended September 30, 2024, was $29.5 million, compared to a net loss of $37.3 million for the same period in 2023. Viracta's operating cash flow for the nine months ended September 30, 2024, was negative $24.8 million, compared to negative $29.9 million for the same period in 2023.
For the most recent fiscal year ended December 31, 2023, Viracta reported no revenue, an annual net loss of $51.1 million, and negative operating cash flow of $39.9 million. The company's annual free cash flow for 2023 was negative $40 million.
In the most recent quarter ended September 30, 2024, Viracta reported no revenue and a net loss of $10.6 million. This represents a year-over-year decrease in net loss of $2.1 million, primarily due to decreased operating expenses. The company's total operating expenses for the nine months ended September 30, 2024, were $33.7 million, consisting of $23.7 million in research and development expenses and $10 million in general and administrative expenses.
The company's financial position has been impacted by its ongoing clinical development efforts, particularly the NAVAL-1 trial and the Phase 1b/2 trial in EBV-positive solid tumors. Viracta has sought to address its cash runway by implementing a reduction in force in July 2024 and November 2024, which impacted approximately 50% of its workforce. Additionally, the company has paused its EBV solid tumor program to focus resources on the more advanced EBV lymphoma program.
Liquidity
Viracta's liquidity position has been a significant concern for the company. The reduction in cash and cash equivalents from $53.7 million at the end of 2023 to $21.1 million as of September 30, 2024, highlights the ongoing financial challenges. The company's efforts to extend its cash runway through workforce reductions and program prioritization demonstrate the importance of managing liquidity in the face of ongoing clinical development costs.
As of September 30, 2024, Viracta reported $13.1 million in cash and cash equivalents. The company has a loan and security agreement with Silicon Valley Bank, now a division of First-Citizens Bank and Trust Company, and Oxford Finance LLC for up to $50 million, of which $25 million was drawn as of September 30, 2024. This leaves an available credit line of $25 million.
The company's debt-to-equity ratio as of September 30, 2024, was -2.56, indicating a negative equity position. The current ratio and quick ratio were both 0.76, suggesting potential short-term liquidity challenges.
Viracta's current financial position and business plan indicate that its existing cash, cash equivalents, and short-term investments may not be sufficient to fund the company's planned operations for at least the next twelve months, raising substantial doubt about its ability to continue as a going concern. The company will need to raise additional capital through equity or debt financing, or through collaborations or partnerships, to fund its continued operations and development activities.
Nana-val Development Program
Viracta's lead product candidate, Nana-val, is the focus of the company's clinical development efforts. The NAVAL-1 trial, a pivotal, global, multicenter, open-label Phase 2 basket trial, is evaluating Nana-val for the treatment of patients with R/R EBV lymphoma. In December 2023, Viracta completed enrollment of Stage 1 in the R/R EBV peripheral T-cell lymphoma (PTCL) cohort, and in March 2024, the company completed enrollment of Stage 2 in this cohort.
In April 2024, Viracta presented positive topline results from Stage 1 of the NAVAL-1 trial, which demonstrated that patients in the Nana-val treatment arm achieved clinically meaningful anti-tumor responses, 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), respectively. Importantly, Nana-val demonstrated substantially greater efficacy than nanatinostat monotherapy, further validating its "Kick and Kill" mechanism of action.
In August 2024, Viracta reported combined Stages 1 and 2 data from the R/R EBV PTCL cohort, which showed Nana-val's substantial antitumor activity and generally well-tolerated safety profile. Based on these outcomes, the company plans to focus the primary analysis on the second-line EBV PTCL subpopulation in the ongoing expansion phase of the NAVAL-1 trial and initiate a randomized controlled trial of Nana-val in the second-line treatment of EBV PTCL patients in 2025 to support potential registration.
In addition to the NAVAL-1 trial, Viracta is also evaluating Nana-val in a Phase 1b/2 trial for the treatment of patients with recurrent or metastatic (R/M) EBV-positive nasopharyngeal carcinoma (NPC) and other EBV solid tumors. In October 2023, the company announced 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 through the fifth dose cohort. Viracta has since completed enrollment through the sixth dose cohort and started enrolling patients into the seventh dose cohort.
Challenges and Risks
Viracta's development efforts have not been without challenges. The company has faced difficulties in clinical site engagement and timely site initiations for the NAVAL-1 trial, in large part due to staffing shortages and the ongoing impact of the COVID-19 pandemic. Additionally, Viracta's financial position has been strained, leading to the implementation of significant workforce reductions and the reprioritization of resources to focus on the EBV lymphoma program.
In July 2024 and November 2024, Viracta announced reductions in force that impacted approximately 23% and 42% of its workforce, respectively. These cuts were made in connection with the company's pipeline reprioritization to align resources with current priorities in the Nana-val program and reduce cash burn.
The company also faces competition from other companies developing therapies for virus-associated cancers, including HDAC inhibitors and immunotherapies. Regulatory approval for Nana-val or any of Viracta's other product candidates is not guaranteed, and the company may encounter delays or setbacks in the clinical development and commercialization process.
Outlook and Conclusion
Despite the challenges, Viracta remains focused on advancing Nana-val through its clinical development programs and exploring strategic alternatives to maximize shareholder value. The positive data from the NAVAL-1 trial and the productive feedback from the FDA have provided a clear path forward for the development of Nana-val in EBV-positive PTCL patients.
As Viracta navigates the complexities of the virus-associated cancer landscape, the company's ability to execute on its clinical strategies, secure additional funding, and potentially find strategic partnerships or acquirers will be crucial to its long-term success. The company's current financial position presents significant challenges, and management will need to address these issues to ensure the continued development and potential commercialization of its product pipeline.
Investors will closely monitor the company's progress in the coming quarters as it works to unlock the full potential of Nana-val and its broader pipeline. The outcome of ongoing clinical trials, particularly the NAVAL-1 trial, will be critical in determining Viracta's future prospects and its ability to bring innovative treatments to patients with virus-associated cancers.