8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 29, 2010

SUNESIS PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-51531	94-3295878
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
395 Oyster Point Boulevard, Suite 400 South San Francisco, California		94080
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (650) 266-3500

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On March 29, 2010, we entered into an agreement, or the Amendment Agreement, to amend that certain Investor Rights Agreement, dated as of April 3, 2009, or the Rights Agreement, by and among us and the accredited investors and members of management who purchased our securities in the private placement of our securities previously described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2009, or the Prior Report.

The Amendment Agreement amends the Rights Agreement to defer the Investors’ right to designate five members of the Company’s board of directors until May 1, 2010, or such later date as determined by the holders of at least a majority-in-interest of the Company’s registrable securities pursuant to the Rights Agreement.

The foregoing description of the Amendment Agreement is not complete and is qualified in its entirety by reference to the full text of the Amendment Agreement, a copy of which is filed herewith as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On March 31, 2010, we received a deficiency letter from the Listing Qualifications Department, or the Staff, of The NASDAQ Stock Market notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on The NASDAQ Capital Market pursuant to NASDAQ Listing Rule 5550(a)(2), or the Rule.

In accordance with NASDAQ Listing Rule 5810(c)(3)(A), we have been given 180 calendar days, or until September 27, 2010, to regain compliance with the Rule. If, at any time before September 27, 2010, the bid price for our common stock closes at $1.00 or more for a minimum of 10 consecutive business days as required under Listing Rule 5810(c)(3)(A), the Staff will provide written notification to us that we comply with the Rule. If we do not regain compliance with the Rule by September 27, 2010, but meet The NASDAQ Capital Market initial inclusion criteria set forth in Listing Rule 5505, except for the $1.00 per share bid price requirement, we will be granted an additional 180 calendar day compliance period.

If we do not regain compliance with the Rule by September 27, 2010 and are not eligible for an additional compliance period at that time, the Staff will provide written notification to us that our common stock may be delisted. At that time, we may appeal the Staff’s delisting determination to a NASDAQ Listing Qualifications Panel, or the Panel. We would remain listed pending the Panel’s decision. There can be no assurance that, if we do appeal the delisting determination by the Staff to the Panel, that such appeal would be successful.

A copy of the press release disclosing receipt of the NASDAQ deficiency letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 31, 2010, our board of directors approved the amendment and restatement of our 2009 Bonus Program, or the Bonus Program, which was initially adopted by our board on May 8, 2009, as previously described in our Current Report on Form 8-K filed with the SEC on May 14, 2009, or the Second Prior Report.

The Bonus Program extends the end date of the period covered by the Bonus Program from March 31, 2010 to April 30, 2010 and provides that raising net proceeds of a specified amount through a financing or corporate transaction on or before March 31, 2010 is no longer a threshold corporate objective. However, if our cash balance does not equal or exceed a specified amount on or before July 31, 2010 as a result of proceeds from one or more transactions deemed to be aligned with the value-creating objectives of the Bonus Program, or the Cash Bonus Threshold, no cash bonuses will be earned under the Bonus Program regardless of whether the corporate objectives and/or individual objectives are deemed to be achieved by the compensation committee of the board of directors. The compensation committee of the board of directors shall determine in its sole discretion whether the Cash Balance Threshold has been achieved.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
10.1	Fourth Agreement Regarding Private Placement of Securities of Sunesis Pharmaceuticals, Inc., dated as of March 29, 2010, by and among the Company and the investors identified on the signature pages thereto.
10.2	Amended and Restated Sunesis Pharmaceuticals, Inc. 2009 Bonus Program.
99.1	Press Release, dated April 1, 2010, entitled “Sunesis Pharmaceuticals Receives NASDAQ Notification.”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SUNESIS PHARMACEUTICALS, INC.
Dated: April 2, 2010	By:	/s/ Daniel N. Swisher, Jr.
		Daniel N. Swisher, Jr.
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Description
10.1	Fourth Agreement Regarding Private Placement of Securities of Sunesis Pharmaceuticals, Inc., dated as of March 29, 2010, by and among the Company and the investors identified on the signature pages thereto.
10.2	Amended and Restated Sunesis Pharmaceuticals, Inc. 2009 Bonus Program.
99.1	Press Release, dated April 1, 2010, entitled “Sunesis Pharmaceuticals Receives NASDAQ Notification.”

EX-10.1

Exhibit 10.1

FOURTH AGREEMENT REGARDING PRIVATE PLACEMENT OF SECURITIES

OF

SUNESIS PHARMACEUTICALS, INC.

THIS AGREEMENT (the “Agreement”) is made and entered into as of this 29^th day of March, 2010, by and among SUNESIS PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), and the persons and entities listed on Exhibit A hereto (the “Investors”).

RECITALS

A. The Company and the Investors wish to amend that certain Investor Rights Agreement, dated April 3, 2009, as amended June 29, 2009 and October 27, 2009 (as amended, the “Rights Agreement”), by and among the Company and the Investors (as defined in the Rights Agreement);

B. Pursuant to Section 8(c) of the Rights Agreement, Section 7(b) of the Rights Agreement may be amended only by written consent of the Company, the Majority Investors (as defined in the Rights Agreement) and Alta Partners, Bay City Capital, NEA and Nextech (each as defined in the Rights Agreement); and

C. The undersigned hold or have the right to acquire at least a majority-in-interest of the total Unit Shares and constitute the Majority Investors and include Alta Partners, Bay City Capital, NEA and Nextech (collectively, the “Requisite Investors”).

AGREEMENT

NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. AMENDMENT TO RIGHTS AGREEMENT. All capitalized terms not otherwise defined in this Section 2 shall be as defined in the Rights Agreement. The Company and the undersigned hereby agree that Section 7(b)(2) of the Rights Agreement is hereby amended and restated to read as follows:

“Subject to Section 7(b)(6) below, from and after the earlier to occur of (i) the Second Unit Closing, (ii) the Common Equity Closing and (iii) the closing of an Alternative Common Stock Financing in which the Investors exercise preemptive rights pursuant to the terms of this Agreement and, as a result, beneficially own greater than a majority of the Company’s voting stock as of such closing, the Company shall take all appropriate action to promptly establish and maintain the size of the Board at nine (9) members, five (5) of which shall be Investor Designees and nominated in accordance with the provisions of this Section 7(b). Alta Partners, Bay City Capital, NEA and Nextech, together with their respective affiliates, shall each have the right to designate one (1) such Investor Designee. Notwithstanding the foregoing, the Company’s obligation to set and maintain the size of the Board at nine (9) members and the Investors’ right to designate five (5) Investor Designees pursuant to this Section 7(b)(2) shall not be effective prior to May 1, 2010 or such later date as determined by the Majority Investors. On or prior to January 20 of each year in which the Majority Investors have rights pursuant to this Section 7(b) (assuming the Company has made a request therefor at least five (5) Trading Days prior thereto), and within five (5) Trading Days of the request by the Company in connection with the preparation of a proxy statement with respect to the election of members of the Board or a vacancy created on

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the Board by the resignation, death or disability of an Investor Designee or the failure of an Investor Designee to be elected at a meeting of the Company at any time at which the Majority Investors have rights pursuant to this Section 7(b), each Investor shall notify the Company of the number of voting shares of the Company’s capital stock beneficially owned by such Investor as of a date within five (5) Trading Days of the delivery of such notice.”

2. MISCELLANEOUS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof. Other than as set forth herein, the Rights Agreement shall remain in full force and effect. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. Upon the execution of this Agreement by the Company and the Requisite Investors, all parties to the Rights Agreement shall be bound by this Agreement.

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COMPANY:		INVESTORS:
SUNESIS PHARMACEUTICALS, INC.		BAY CITY CAPITAL FUND V, L.P.
Signature:	/s/ Daniel N. Swisher, Jr.	By:	/s/ Fred Craves
Print Name:	Daniel N. Swisher, Jr.	Name	Fred Craves
Title:	President and CEO	Title:	Managing Director
Address:	395 Oyster Point Boulevard, #400
	South San Francisco, CA 94080
		BAY CITY CAPITAL FUND V CO-INVESTMENT FUND, L.P.
		By:	/s/ Fred Craves
		Name:	Fred Craves
		Title:	Managing Director

GROWTH EQUITY OPPORTUNITIES FUND, LLC
By:	/s/ Charles W. Newton, III
Name:	Charles W. Newton, III
Title:	Manager of NEA 12 GP, LLC, which is the general partner of NEA Partners 12, Limited Partnership, the general partner of New Enterprise Associates 12, Limited Partnership, the sole shareholder of Growth Equity Opportunities Fund, LLC

ALTA BIOPHARMA PARTNERS III, L.P.
By: Alta BioPharma Management III LLC
By:	/s/ Edward Hurwitz
Name:	Edward Hurwitz
Title:	Director
ALTA BIOPHARMA PARTNERS III GMBH & CO. BETEILIGUNGS KG
By: Alta BioPharma Management III LLC
By:	/s/ Edward Hurwitz
Name:	Edward Hurwitz
Title:	Director
ALTA EMBARCADERO BIOPHARMA PARTNERS III, LLC
By:	/s/ Edward Hurwitz
Name:	Edward Hurwitz
Title:	Manager

ONC GENERAL PARTNER LIMITED AS GENERAL PARTNER OF ONC PARTNERS, L.P.
By:	/s/ Michael Robinson
Name:	Michael Robinson
Title:	Director

EXHIBIT A

LIST OF INVESTORS

Bay City Capital Fund V, L.P.

Bay City Capital Fund V Co-Investment Fund, L.P.

Growth Equity Opportunities Fund, LLC

Alta BioPharma Partners III, L.P.

Alta BioPharma Partners III GmbH & Co. Beteiligungs KG

Alta Embarcadero BioPharma Partners III, LLC

ONC General Partner Limited as General Partner of ONC Partners, L.P.

EX-10.2

Exhibit 10.2

SUNESIS PHARMACEUTICALS, INC.

AMENDED AND RESTATED 2009 BONUS PROGRAM

Overview

The 2009 Bonus Program (the “Program”) of Sunesis Pharmaceuticals, Inc. (the “Company”) was adopted effective May 8, 2009 (the “Effective Date”) and was amended and restated on March 31, 2010. The Program is designed to motivate, retain and reward Company employees through a combination of corporate and individual performance-based incentive compensation components during the period commencing on the Effective Date and through April 30, 2010 (the “Performance Period”), subject to the Cash Balance Threshold (as defined below). Individuals employed by the Company during the Performance Period who are designated for participation by the Compensation Committee of the Company’s Board of Directors (the “Committee”) and who remain employed by the Company through the Payment Date (as defined below) (each a “Participant”) shall be eligible to earn a bonus under the Program. The Program is administered by the Committee, and any decisions made in good faith by the Committee shall be final and binding on all Participants and interested parties.

The Program is designed to award a cash bonus payment (each a “Cash Bonus”) for performance during the Performance Period to Participants based in part on the level of achievement (1) by the Company of certain Company-wide objectives (the “Corporate Objectives”) and (2) by the Participant of certain individual performance objectives, which may include certain department, group and/or team objectives applicable to such Participant (the “Individual Objectives”), subject to the Cash Balance Threshold.

Program Objectives

The Program is intended to encourage and reward the following:

• the achievement of Corporate Objectives,

• the achievement of Individual Objectives,

as well as to recognize individual contributions and effort.

Determination of Program Objectives

The Corporate Objectives shall be approved by the Board of Directors, with input from the Committee, management, and generally relate to the achievement of certain research, clinical development, business development, financial, business and similar milestones. Each Corporate Objective is assigned a relative weighting from the Board of Directors, reflecting its importance to the achievement of the Company’s key results during the Performance Period; provided, however, the Board of Directors or the Committee may adjust the weighting of the Corporate Objectives in its sole discretion at any time.

The Individual Objectives shall be set as follows:

• For the Chief Executive Officer, the Individual Objectives shall be set by the Committee;

• For Participants who are executive officers (as that term is defined under Section 16 of the Securities Exchange Act of 1934, as amended, and Rule 16a-1 thereunder), other than the Chief Executive Officer (collectively, the “Executive Participants”), the Individual Objectives shall be set by the Committee based upon recommendations made by the Chief Executive Officer; and

• For non-Executive Participants (collectively, the “Non-Executive Participants”), the Individual Objectives shall be set by each Participant’s immediate supervisor, with input from team leaders, group and department heads and others, as appropriate.

Cash Balance Threshold

Notwithstanding the foregoing, in the event the Company’s cash balance does not equal or exceed at least $25 million on or before July 31, 2010 (such funds to be derived solely from the proceeds of one or more transactions that, in the Committee’s sole discretion, are deemed to be aligned with the value-creating objectives of the Program), no Cash Bonuses will be earned under the Program irrespective of whether or not the Corporate Objectives and/or Individual Objectives are otherwise deemed achieved by the Participants (the “Cash Balance Threshold”).

Program Bonus Targets

Under the Program, each Participant is eligible to earn a cash bonus in an amount up to a specified percentage of his or her annual base salary that is earned in 2009, with such percentage based in part upon the position such Participant holds with the Company (the “Bonus Target”). Under the Program, the Bonus Targets range from 25% to 40% of a Participant’s 2009 base salary for Vice President level employees and above and from 6% to 20% of a Participant’s 2009 base salary for other Participants.

Determination of Cash Bonus Payments

The Company will determine the achievement of Corporate Objectives and Individual Objectives shortly after the end of the Performance Period, as follows:

Determination of Level of Achievement of Corporate Objectives

The Committee shall determine, after receiving and considering analysis and recommendations from management, the degree to which the Corporate Objectives have been met, expressed as a percentage of Corporate Objectives achieved, taking into consideration the weighting assigned to each Corporate Objective. Based on the percentage of Corporate Objectives achieved, the Committee will then determine the final aggregate bonus pool under the Program for all Participants (the “Bonus Pool”).

Adjustment of Bonus Targets based on Level of Achievement of Corporate Objectives

Bonus Target levels for Participants will be adjusted based on level of achievement of Corporate Objectives as determined by the Committee. For example, if the Committee determines that only 80% of the Program’s Corporate Objectives are achieved, each Participant’s Bonus Target will be decreased by 20% (in other words, a Participant with a 10% Bonus Target will have that Bonus Target reduced to 8%, or 80% of 10%.) Such adjusted Bonus Targets are referred to as the “Adjusted Bonus Targets.”

Determination of Bonus Payments for Individual Participants

Subject to the Company’s cash balance exceeding the Cash Balance Threshold, the actual Cash Bonus earned by a Participant is based on the Participant’s (i) level of contribution to the achievement of the Corporate Objectives; (ii) level of achievement by the Participant against his or her Individual Objectives and (iii) Adjusted Bonus Target (or, if the Bonus Target was not adjusted, the original Bonus Target). There is no set formula for determining the amount of Cash Bonus earned based on the achievement of Individual Objectives or Corporate Objectives. Rather, the Committee shall exercise its discretion in

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determining the amount of Cash Bonus actually earned, which determination will be final and binding. In making its determination, the Committee shall consider the following:

• For the Chief Executive Officer, the Committee’s own evaluation of his achievements;

• For Executive Participants, the recommendations made by the Chief Executive Officer; and

• For Non-Executive Participants, the recommendations made by members of the Executive Committee with input from team leaders, group and department heads and supervisors, as appropriate.

In determining the actual Cash Bonus earned, the Committee may also take into account the achievement of publicly announced targets, clinical milestones, strategic goals, cross-functional teamwork and collaboration, and unforeseen changes in the economy and/or geopolitical climate.

Timing of Cash Payments Under the Program

Payment of Cash Bonuses under the Program is expected to occur upon the later of (a) the first quarter following the conclusion of the Performance Period or (b) within fifteen (15) business after the Company’s cash balance exceeds the Cash Balance Threshold, on such date as determined by the Committee in its sole discretion (the “Payment Date”). A Participant must remain employed by the Company through the Payment Date in order to earn any Cash Bonus. In no event will the Payment Date occur after March 15, 2011, as the Program is intended to comply with Treasury Regulation Section 1.409A-1(b)(4) and will be interpreted and administered in compliance therewith to the greatest extent possible.

Miscellaneous Provisions

Participation in the Program shall not alter in any way the at will nature of the Company’s employment of a Participant, and such employment may be terminated at any time for any reason, with or without cause and with or without prior notice. Nothing in this Program shall be construed to be a guarantee that any Participant will receive all or part of a Cash Bonus or to imply a contract between the Company and any Participant.

This Program supersedes and replaces all prior cash incentive and bonus plans of the Company, other than the Change of Control Payment Plan and severance plans (both Executive and Non-Executive). The Committee may amend or terminate this Program at any time, with or without notice. The Committee may likewise terminate an individual’s participation in the Program at any time, with or without notice. Further, the Board of Directors or Committee may modify the Corporate Objectives, the Individual Objectives, the Bonus Targets and/or the weighting of the Corporate Objectives at any time.

The Program shall be interpreted in accordance with California law without reference to conflicts of law principles.

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EX-99.1

Exhibit 99.1

Sunesis Pharmaceuticals Receives NASDAQ Notification

SOUTH SAN FRANCISCO, CA, Apr 01, 2010 (MARKETWIRE via COMTEX News Network) — Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS) reported today that it received a letter, dated March 31, 2010, from the Listing Qualifications Staff (the “Staff”) of The NASDAQ Stock Market notifying Sunesis that it does not comply with the minimum $1.00 per share requirement for continued listing on The NASDAQ Capital Market set forth in NASDAQ Listing Rule 5550(a)(2). The notice further provides that, pursuant to Listing Rule 5810(c)(3)(A), if, at any time before September 27, 2010, the bid price for Sunesis’ common stock closes at $1.00 or more for the minimum 10 consecutive business days required, the Staff will provide written confirmation to Sunesis that it complies with Listing Rule 5550(a)(2), unless the Staff exercises its discretion to extend this 10 day period pursuant to Listing
Rule 5810(c)(3)(F).

The NASDAQ notice does not impact Sunesis’ listing on The NASDAQ Capital Market at this time and Sunesis will continue to trade under the symbol “SNSS.”

If Sunesis does not demonstrate compliance with Listing Rule 5550(a)(2) by September 27, 2010, the Staff will determine whether Sunesis meets The NASDAQ Capital Market initial listing criteria set forth in Listing Rule 5505, except for the $1.00 per share bid price requirement. If Sunesis meets the initial listing criteria, the Staff will notify Sunesis that it has been granted an additional 180 calendar day compliance period. If Sunesis is not eligible for an additional compliance period, the Staff will notify Sunesis that its common stock is subject to delisting. At that time, Sunesis may appeal to a NASDAQ Listing Qualifications Panel (“Panel”), and Sunesis would remain listed pending the Panel’s decision following a hearing. Sunesis cannot provide any assurances that a Panel will allow Sunesis to remain listed in the event of any appeal.

About Sunesis Pharmaceuticals

Sunesis is a biopharmaceutical company focused on the development and commercialization of new oncology therapeutics for the treatment of solid and hematologic cancers. Sunesis has built a highly experienced cancer drug development organization committed to advancing its lead product candidate, voreloxin, in multiple indications to improve the lives of people with cancer. For additional information on Sunesis, please visit http://www.sunesis.com.

SUNESIS and the logo are trademarks of Sunesis Pharmaceuticals, Inc.

This press release contains forward-looking statements, including without limitation statements related to the continued listing of Sunesis’ common stock on The NASDAQ Capital Market and potential outcomes in the event of Sunesis’ continued noncompliance with the NASDAQ listing standards. Words such as “may,” “will” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon Sunesis’ current expectations. Forward-looking statements involve risks and uncertainties. Sunesis’ actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks associated with Sunesis’ failure to comply with the continued listing requirements of The NASDAQ Capital Market and the risk that Sunesis becomes subject to delisting proceedings by NASDAQ. These and other risk factors are discussed under “Risk Factors” and elsewhere in Sunesis’ Annual Report on Form 10-K for the year ended December 31, 2009 and other filings with the Securities and Exchange Commission. Sunesis expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Investor and Media Inquiries:

Andrea Rabney

Argot Partners

212-600-1902

Eric Bjerkholt

Sunesis Pharmaceuticals Inc.

650-266-3717

SOURCE: Sunesis

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