SecProbe.io

CORRESP
1
filename1.htm

  William C. Davisson III

  Direct Dial: (650) 463-2660

  william.davisson@lw.com

  135 Commonwealth Drive

  Menlo Park, California 94025

  Tel: (650) 328-4600 Fax: (650) 463-2600

  www.lw.com

  FIRM / AFFILIATE OFFICES

  Boston

  New York

  Brussels

  Northern Virginia

  Chicago

  Orange County

  Frankfurt

  Paris

  Hamburg

  San Diego

  Hong Kong

  San Francisco

  London

  Shanghai

  Los Angeles

  Silicon Valley

  Milan

  Singapore

  Moscow

  Tokyo

  New Jersey

  Washington, D.C.

September 22, 2005

VIA
FACSIMILE

Securities and Exchange
Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C.  20549

Attention:                                     Suzanne
Hayes, Attorney-Advisor

Re:                               Sunesis
Pharmaceuticals, Inc.

Registration
Statement on Form S-1

File No. 333-121646 (the “Registration Statement”)

Ladies and Gentlemen:

In connection with the proposed initial public offering (the
“Offering”) of Sunesis Pharmaceuticals, Inc. (the “Company”) pursuant to the
Registration Statement, we are counsel to the Company.  The managing underwriters of the Offering
have informed the Company that, due to present market conditions, it would be
advisable to reduce the proposed initial public offering price of the Offering
from $9.00 to $11.00 per share, as stated in the preliminary prospectus
previously distributed to potential investors (the “Preliminary Prospectus”),
to $7.00.  We are furnishing this letter
to the Commission to address whether a preliminary prospectus for the Offering
should be recirculated in view of such decrease.

We have advised the Company of the Commission’s position, set forth in
Rules 460 and 461 and Release No. 33-4968 under the Securities Act of 1933,
that the Commission “[h]aving due regard to the adequacy of information
respecting the registrant theretofore available to the public...and to the
public interest and the protection of investors,” will not grant acceleration
of a registration statement “[w]here the form of preliminary prospectus, which
has been distributed by the issuer or underwriter, is found to be inaccurate or
inadequate in any material respect.”  For
the reasons set forth below, the Company and the managing underwriters, after
reviewing the changes to the preliminary prospectus in their totality and after
discussing the matter with us and counsel to the underwriters, do not believe
that the Preliminary Prospectus was rendered inaccurate or inadequate in any
material respect by the changes made and, therefore, do not believe that
recirculation of a preliminary prospectus is required.

Revised Terms

The Preliminary Prospectus reflected an offering of 6,000,000 shares of
common stock at a price ranging from $9.00 to $11.00 per share.  Assuming the mid-point of the range, the
Preliminary Prospectus reflected estimated net proceeds to the Company of
approximately $54.1 million or, in the event that the underwriters’
over-allotment option was exercised in full, approximately $62.4 million.  As set forth in the Preliminary Prospectus,
the net proceeds were expected to be used as follows:  approximately $10.0 million to fund clinical
and preclinical development of SNS-595; approximately $5.0 million to fund
clinical and preclinical development of SNS-032; approximately $3.0 million to
fund clinical and preclinical development of SNS-314; approximately $5.0
million for other programs and to discover additional product candidates; and
approximately $2.3 million to repay outstanding indebtedness owed to General
Electric Capital.  In addition, the
Preliminary Prospectus reflected that the Company may use approximately $4.0
million of the net proceeds from the Offering to repay outstanding indebtedness
owed to Biogen Idec.  Accordingly, the
aggregate amount of proceeds allocated to specific uses was $29.3 million.  The Preliminary Prospectus reflected that the
remainder of the net proceeds from the Offering would be used for general
corporate purposes.  In response to a
verbal comment from the Staff, the Company increased certain amounts allocated
to certain of the specific uses of proceeds listed above, which increased
numbers were incorporated in Amendment No. 5 to the Registration Statement
filed with the Commission on September 16, 2005 but were not distributed to
potential investors in the form of a preliminary prospectus supplement.

Assuming an initial public offering price of $7.00 per share, the
Company would expect to receive net proceeds of approximately $37.3 million or,
in the event that the underwriters’ over-allotment option was exercised in
full, approximately $43.2 million.  The
Company intends to use the net proceeds from the Offering in the same manner as
reflected in the Preliminary Prospectus.
Specifically, the Company intends to use $29.3 million of such net
proceeds for the specific uses set forth in the Preliminary Prospectus (and as
described in the preceding paragraph) and to use the remainder of such net
proceeds for general corporate purposes.

In addition, the Company has increased the number of shares of common
stock authorized for issuance pursuant to its 2005 Equity Incentive Award Plan
(the “2005 Plan”) and Employee Stock Purchase Plan (the “ESPP”) by
approximately 15%.

These changes will primarily affect the disclosures in the “Summary—The
Offering,” “Use of Proceeds” and “Principal Stockholders” sections in the
Preliminary Prospectus.  Copies of those
sections reflecting an initial public offering price of $7.00 per share are
enclosed herewith.  As noted above, the
Company does not believe the resulting changes make the information in the
Preliminary Prospectus materially inaccurate or inadequate.

Effects of Reduction in Initial
Public Offering Price

As set forth below, the effect on the Company of the reduction in the
initial public offering price is minimal.

2

1.                                       Net Proceeds/Liquidity.  The
Company will receive approximately $16.8 million less in net proceeds as a
result of the reduction in the initial public offering price, enabling it to
maintain its intended use of proceeds set forth in the Preliminary Prospectus.  Although the Company will retain less cash
for general corporate purposes, the Company believes that its operations and
liquidity position after the Offering will not be materially impacted.  In addition, the Company’s ability to meet
its foreseeable capital expenditure requirements and working capital needs as
disclosed in the Preliminary Prospectus is not changed by the reduction in net
proceeds.

2.                                       Ownership by Officers, Directors
and Significant Stockholders.  The Preliminary Prospectus reflected that the
Company’s executive officers and directors and their affiliates, together with
the Company’s significant stockholders, would own approximately 58% of the
common stock upon completion of the Offering.
Such persons will continue to own, in the aggregate, approximately 58%
of the common stock upon completion of the Offering (excluding $4.0 million of
common stock that the Company expects Biogen Idec to purchase in the Offering,
as set forth in the Preliminary Prospectus).
Although the relative ownership among such persons will change as a
result of decreased in the initial public offering price and the antidilution
provisions contained in the Company’s certificate of incorporation, the Company
does not believes that such changes in relative beneficial ownership of its
existing stockholders are material to investors.

3.                                       Investors Will Be Notified.  The
Company has been informed by the managing underwriters that the normal channels
of communications between the underwriters and potential purchasers are being
and would be used to inform such potential purchasers of the change in the
offering price prior to the mailing of confirmation notices.  All underwriters in the syndicate have agreed
to notify all potential purchasers of the change in the offering price and
changes in the disclosure in the prospectus prior to confirming sales.  In addition, a copy of the final prospectus
will accompany each confirmation notice.

Effect of Increase in Shares
Available for Issuance Under Employee Plans

The effect on the Company of the 15% increase in the number of shares
of common stock authorized for issuance pursuant to the 2005 Plan and the ESPP
is minimal.  The Company intends to grant
options under the 2005 Plan in the ordinary course of business and has no
current plans to grant options covering any portion of such 15% increase.  Similarly, the increased number of shares of
common stock available for issuance pursuant to the ESPP will be available for
issuance to employees of the Company in the ordinary course of business
pursuant to the provisions of the ESPP.

As demonstrated, the Company’s financial condition, strategy, plan of
operations and goals set forth in the preliminary prospectus to be filed with
the Commission in Amendment No. 6 to the Registration Statement are the same as
those set forth in the Preliminary Prospectus, and the Company respectfully
submits that no purpose would be served by recirculating a preliminary
prospectus with substantially the same disclosures.  The Company believes that no additional or
revised information is contained in the new preliminary prospectus that would
be

3

material to an investor’s decision to purchase
shares of common stock, or that any such information causes the disclosure in
the circulated Preliminary Prospectus to be inaccurate or inadequate in any
material respect.  For these and the
other reasons discussed above, the Company believes that recirculation of a
preliminary prospectus reflecting the decrease in the initial public offering
price is not required.

If you have any question or comments concerning the foregoing, please
do not hesitate to call the undersigned at (650) 463-2660.

  Very truly
  yours,

  /s/ William
  Davisson

  William
  Davisson

  of Latham
  & Watkins LLP

cc:                                 Daryl
B. Winter, Sunesis Pharmaceuticals, Inc.

Alan Mendelson, Latham & Watkins LLP

John T. McKenna, Cooley Godward LLP

4