Kura Oncology(KURA) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements (unaudited) Kura Oncology reported a net loss of $34.1 million for Q1 2023, an increase from $32.5 million in Q1 2022, primarily due to higher research and development expenses Condensed Balance Sheets Total assets decreased to $426.0 million as of March 31, 2023, from $456.3 million at year-end 2022, primarily due to reduced cash and investments Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $27,059 | $51,802 | | Short-term investments | $378,841 | $386,183 | | Total current assets | $416,450 | $446,426 | | Total assets | $425,975 | $456,306 | | Liabilities & Equity | | | | Total current liabilities | $19,233 | $24,057 | | Total liabilities | $30,792 | $36,028 | | Total stockholders' equity | $395,183 | $420,278 | | Total liabilities and stockholders' equity | $425,975 | $456,306 | Condensed Statements of Operations and Comprehensive Loss Net loss increased to $34.1 million in Q1 2023 from $32.5 million in Q1 2022, primarily driven by a rise in research and development expenses to $25.2 million Condensed Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $25,192 | $20,913 | | General and administrative | $11,374 | $11,869 | | Total operating expenses | $36,566 | $32,782 | | Total other income, net | $2,497 | $329 | | Net Loss | $(34,069) | $(32,453) | | Net loss per share, basic and diluted | $(0.50) | $(0.49) | Condensed Statements of Cash Flows Net cash used in operating activities increased to $35.9 million in Q1 2023, while investing activities provided $11.1 million, a shift from prior-year usage Condensed Statement of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(35,872) | $(32,181) | | Net cash provided by (used in) investing activities | $11,129 | $(24,962) | | Net cash provided by financing activities | $— | $303 | | Net decrease in cash, cash equivalents and restricted cash | $(24,743) | $(56,840) | Notes to Condensed Financial Statements (unaudited) Key notes include a $2.8 million employee retention credit, $378.8 million in short-term investments, and $63.9 million in unrecognized share-based compensation expense - The company recognized a $2.8 million employee retention credit related to wages paid from July 2020 through September 2021, recognized as a reduction to personnel costs within operating expenses[31] Share-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $3,073 | $2,456 | | General and administrative | $3,765 | $4,194 | | Total | $6,838 | $6,650 | - As of March 31, 2023, unrecognized estimated compensation expense was approximately $49.6 million for stock options and $14.3 million for restricted stock units, to be recognized over a weighted average period of 2.8 years[45] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses clinical development progress, financial results, and liquidity, noting increased R&D expenses and $405.9 million in cash to fund operations into Q4 2025 Overview Kura Oncology, a clinical-stage biopharmaceutical company, is advancing ziftomenib into Phase 2 trials, supported by $405.9 million in liquidity and access to additional capital - The company is advancing its three main product candidates: ziftomenib (menin-KMT2A inhibitor), tipifarnib (farnesyl transferase inhibitor), and KO-2806 (next-gen FTI)[50][51][59] - Ziftomenib has initiated its Phase 2 registration-directed trial (KOMET-001) in NPM1-mutant AML, with combination studies (KOMET-007 and KOMET-008) expected to begin in 2023[56][57][58] - As of March 31, 2023, the company's liquidity position was $405.9 million in cash, cash equivalents, and short-term investments, supported by a loan facility of up to $125.0 million and an ATM facility of up to $150.0 million[65][66] Results of Operations Research and development expenses increased by $4.3 million in Q1 2023, primarily driven by higher costs for the ziftomenib and KO-2806 programs Research and Development Expenses by Program (in thousands) | Program | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Ziftomenib-related costs | $5,833 | $4,085 | $1,748 | | Tipifarnib-related costs | $4,390 | $4,861 | $(471) | | KO-2806-related costs | $2,829 | $791 | $2,038 | | Discovery stage programs | $927 | $554 | $373 | | Personnel costs and other | $8,140 | $8,166 | $(26) | | Share-based compensation | $3,073 | $2,456 | $617 | | Total R&D Expenses | $25,192 | $20,913 | $4,279 | Liquidity and Capital Resources The company held $405.9 million in cash and investments as of March 31, 2023, expected to fund operations into Q4 2025, supplemented by access to $125.0 million in loans and a $150.0 million ATM facility - The company had cash, cash equivalents, and short-term investments of $405.9 million as of March 31, 2023[83] - Based on current plans, existing cash is expected to fund operating expenses into the fourth quarter of 2025[83] - In November 2022, the company entered into a loan agreement for up to $125.0 million in term loans, drawing an initial $10.0 million[78] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate fluctuations affecting its investment portfolio and variable-rate term loan, with inflation not deemed to have a material effect - The company's primary market risk is interest rate risk, affecting its investment portfolio and variable-rate term loan[95][96] - Inflation is not believed to have had a material effect on the company's business, financial condition, or results of operations[97] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - The company's principal executive and financial officer concluded that disclosure controls and procedures were effective as of the end of the quarter[99] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[100] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its operations or financial position - As of the filing date, the company is not involved in any material legal proceedings[102] Item 1A. Risk Factors The company faces numerous risks, including high dependence on ziftomenib's success, lengthy and expensive clinical development, reliance on third parties, the need for additional capital, and potential adverse events - The company is highly dependent on the success of its lead product candidate, ziftomenib, which is still in clinical development and has no guarantee of regulatory approval[103][105] - Clinical drug development is a lengthy, expensive process with an uncertain outcome, and results from early trials may not predict results of later trials[103][121] - The company expects to incur losses for the next several years, has no approved products or historical revenue, and will need to obtain substantial additional capital to continue operations[103][148][157] - The company relies on third-party contractors for clinical trials and manufacturing, and any failure by these third parties to perform satisfactorily could delay or impair development and commercialization[103][165][173] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents and officer certifications - Lists all exhibits filed with the report, including certifications required by the Sarbanes-Oxley Act and XBRL data files[323]