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    Could SNSS be the next hot pharma company?

    I am not a pharma expert, but I do dabble in it.  I probably should become one.  Pharma stocks seem to dominate the boards at times.  I think the company, Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) should be on your pharma radar.  It is a penny stock now, but they have grand plans.

    Let’s talk about the bad stuff first:

    **  SNSS has received a delisting notice from Nasdaq for not maintaining the magic $1 trading level.
    ** They recently issued their latest Q and it shows that they spend money like drunken sailors.  Net loss was $4.0 million for the fourth quarter of 2009 and $40.2 million year ended December 31, 2009.   Nearly $20 million of that loss was non-cash, but SNSS still burns cash like crazy.
    ** The company needs money to survive.  With only $4 million in the bank, they need to raise capital…..which could be dilutive and devaluing.

    Now, let’s talk about the good stuff:

    ** SNSS, which focuses on treatment of solid and hematological cancers, has a very promising drug candidate in the treatment of AML, a virulent and vicious form of leukemia.  I have read where that market alone is almost a billion dollars annually.  SNSS, which would have no direct competition in that niche, is proceeding on an FDA approval.  So far, I have seen no hiccups on their march towards approval.  That drug alone could push SNSS, on a valuation basis, to over 5.  Pure hype and excitement from any news related FDA approval news could push the stock to a double or a triple in the matter of days.
    ** Clean balance sheet – Even though it is not strong, SNSS has no debt and has a “clean” BS.
    ** Volatility – This can be a good stock to trade.  It has had some high volatility historically.  With the need to keep their Nasdaq listing intact, expect them to pull “a few rabbits out of their hats” which could drive the stock up.  With some news, they could be one of the penny stock darlings on the boards again.

    I think that SNSS has some real home-run potential.  They have a few problems at present, but management seems to be able to effectively navigate the shoals in the pharma world.

    Here is their chart (with my annotations) so you can see that the chart is also favorable:

    I think that SNSS should be on your trading radar.  The progress the company has made on its blockbuster AML drug will make raising capital easy imo.  I am not on the inside and am speculating, but I think that SNSS has a bright future.  It won’t be a penny stock a year from now.

    Have a great trading day!

    Jeffrey Dean, Editor

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