Kura Oncology(KURA) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Condensed Financial Statements (unaudited) The company reported increased net losses for Q2 and H1 2023 due to higher operating expenses, while total assets grew to $494.7 million, bolstered by a $93.6 million public offering Condensed Balance Sheet Data (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $49,124 | $51,802 | | Short-term investments | $427,855 | $386,183 | | Total Current Assets | $485,646 | $446,426 | | Total Assets | $494,737 | $456,306 | | Liabilities & Equity | | | | Total Current Liabilities | $23,899 | $24,057 | | Total Liabilities | $35,059 | $36,028 | | Total Stockholders' Equity | $459,678 | $420,278 | Condensed Statements of Operations (in thousands, except per share data) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Research and development | $28,182 | $24,258 | $53,374 | $45,171 | | General and administrative | $11,821 | $11,075 | $23,195 | $22,944 | | Total operating expenses | $40,003 | $35,333 | $76,569 | $68,115 | | Net Loss | $(37,174) | $(34,769) | $(71,243) | $(67,222) | | Net loss per share, basic and diluted | $(0.53) | $(0.52) | $(1.03) | $(1.01) | Condensed Statements of Cash Flows (in thousands) | | Six Months Ended June 30, | | :--- | :--- | | | 2023 | 2022 | | Net cash used in operating activities | $(61,489) | $(62,522) | | Net cash (used in) provided by investing activities | $(35,197) | $8,135 | | Net cash provided by financing activities | $94,008 | $2,972 | | Net decrease in cash, cash equivalents and restricted cash | $(2,678) | $(51,415) | - In June 2023, the company completed a public offering, raising net proceeds of approximately $93.6 million after expenses[50] Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights the company's clinical-stage pipeline, increased R&D expenses, and strengthened liquidity from a $93.6 million offering, projecting funding sufficiency until mid-2026 - The company's pipeline includes three clinical-stage product candidates: Ziftomenib (AML), Tipifarnib (HNSCC), and KO-2806 (advanced solid tumors)[58][59][69] Research and Development Expense Breakdown (in thousands) | Expense Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Ziftomenib-related costs | $14,794 | $11,357 | $3,437 | | Tipifarnib-related costs | $7,595 | $10,093 | $(2,498) | | KO-2806-related costs | $4,772 | $2,017 | $2,755 | | Total R&D Expenses | $53,374 | $45,171 | $8,203 | - As of June 30, 2023, the company held $477.0 million in cash, cash equivalents, and short-term investments, projected to fund operations until mid-2026[99] - Additional capital sources include a $125.0 million term loan facility (with $10.0 million drawn) and an unutilized $150.0 million at-the-market (ATM) facility[94][97] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are interest rate fluctuations affecting its investment portfolio and variable-rate debt, while inflation is not considered to have a material impact - The company faces interest rate risk from its investment portfolio and variable-rate term loans[111][112] - Management believes inflation has not materially affected the company's business or financial results[113] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were deemed effective as of the end of the reporting quarter[115] - No material changes to internal control over financial reporting were identified during the most recent quarter[116] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its financial position or operations - The company is not a party to any material legal proceedings as of the filing date[118] Risk Factors This section outlines significant risks including dependency on ziftomenib's clinical success, the high cost and uncertainty of drug development, the need for additional capital, reliance on third parties, and various operational and market challenges - Development & Regulatory Risks: The company's success heavily relies on ziftomenib, with drug development being a lengthy, expensive, and uncertain process prone to adverse events that could hinder approval[121][137][151] - Financial & Capital Risks: The company has a history of losses, requires substantial additional capital which may cause dilution, and faces financing risks from adverse economic conditions[164][173][178] - Operational & Third-Party Risks: Reliance on third-party contractors for clinical trials and manufacturing, along with collaborators for combination therapies, introduces risks of delays and quality issues[146][181][189] - Commercial & Market Risks: Approved products may not gain market acceptance, and the company faces intense competition and uncertainties regarding insurance coverage and reimbursement[273][277][281] - Intellectual Property Risks: Successful commercialization hinges on robust IP protection, with the company relying on licensors to maintain patents for key products like tipifarnib[238][248] Exhibits This section indexes all exhibits filed with the Form 10-Q, including corporate governance documents, equity plans, and Sarbanes-Oxley Act certifications - Key exhibits include the Amended and Restated Non-Employee Director Compensation Policy, 2014 Equity Incentive Plan forms, and SOX Sections 302 and 906 certifications from the Principal Executive and Financial Officer[340]