Kura Oncology(KURA) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Unaudited Q3 2021 financial statements reflect decreased assets and increased net loss driven by higher R&D and G&A expenses Condensed Balance Sheets Condensed Balance Sheets Data | | September 30, 2021 (Unaudited, $ in thousands) | December 31, 2020 ($ in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $39,183 | $325,493 | | Short-term investments | $504,262 | $307,827 | | Total current assets | $548,905 | $637,292 | | Total assets | $561,141 | $647,212 | | Liabilities and Stockholders' Equity | | | | Total liabilities | $27,385 | $36,307 | | Total stockholders' equity | $533,756 | $610,905 | | Total liabilities and stockholders' equity | $561,141 | $647,212 | - Total assets decreased from $647.2 million at the end of 2020 to $561.1 million as of September 30, 2021, while total liabilities also decreased from $36.3 million to $27.4 million in the same period[10] Condensed Statements of Operations and Comprehensive Loss Condensed Statements of Operations and Comprehensive Loss Data | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | (In thousands, except per share data) | 2021 ($ in thousands) | 2020 ($ in thousands) | 2021 ($ in thousands) | 2020 ($ in thousands) | | Research and development | $22,367 | $16,601 | $63,765 | $42,873 | | General and administrative | $11,310 | $7,593 | $34,455 | $22,694 | | Net Loss | $(33,366) | $(23,769) | $(97,723) | $(63,466) | | Net loss per share, basic and diluted | $(0.50) | $(0.42) | $(1.47) | $(1.24) | - Net loss for the nine months ended September 30, 2021, increased to $97.7 million from $63.5 million in the same period of 2020, primarily due to a significant rise in both Research and Development and General and Administrative expenses[13] Condensed Statements of Stockholders' Equity - Total stockholders' equity decreased from $610.9 million at December 31, 2020, to $533.8 million at September 30, 2021. The decrease was primarily driven by a net loss of $97.7 million, partially offset by $17.2 million in share-based compensation and $3.6 million from stock option exercises[16] Condensed Statements of Cash Flows Condensed Statements of Cash Flows Data | (In thousands) | Nine Months Ended Sep 30, 2021 ($ in thousands) | Nine Months Ended Sep 30, 2020 ($ in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(81,185) | $(51,522) | | Net cash used in investing activities | $(200,896) | $(39,746) | | Net cash (used in) provided by financing activities | $(4,229) | $142,298 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(286,310) | $51,030 | - Cash used in operating activities increased to $81.2 million for the first nine months of 2021, compared to $51.5 million in the prior-year period. Financing activities used $4.2 million in cash, a stark contrast to the $142.3 million provided by financing in the same period of 2020, which included proceeds from a common stock issuance[22] Notes to Unaudited Condensed Financial Statements - The company is a clinical-stage biopharmaceutical company focused on precision medicines for cancer, with a pipeline of small molecule product candidates[25] - In May 2021, the company repaid all amounts owed under its Term Loan with Silicon Valley Bank, resulting in a loss on extinguishment of debt of approximately $0.2 million[47] - Share-based compensation expense for the nine months ended September 30, 2021, was $17.2 million, a significant increase from $9.1 million in the same period of 2020[57] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased R&D and G&A expenses, strong liquidity, and future funding needs for clinical development Overview - Kura Oncology is a clinical-stage biopharmaceutical company with two primary product candidates: tipifarnib (for HNSCC and other tumors) and KO-539 (for acute leukemia)[61] - Tipifarnib received Breakthrough Therapy Designation from the FDA for treating recurrent or metastatic HRAS mutant HNSCC[66] - The company initiated a clinical collaboration with Novartis to evaluate tipifarnib in combination with alpelisib in HNSCC patients, with a Phase 1/2 trial (KURRENT) planned for Q4 2021[67] - For KO-539, the company amended the KOMET-001 trial to include Phase 1b expansion cohorts to determine the recommended Phase 2 dose (RP2D), with a determination expected by Q1 2022[74][75] Results of Operations Three Months Ended September 30, 2021 vs 2020 | (In thousands) | Three Months Ended Sep 30, 2021 ($ in thousands) | Three Months Ended Sep 30, 2020 ($ in thousands) | Change ($ in thousands) | | :--- | :--- | :--- | :--- | | Research and development | $22,367 | $16,601 | $5,766 | | General and administrative | $11,310 | $7,593 | $3,717 | Nine Months Ended September 30, 2021 vs 2020 | (In thousands) | Nine Months Ended Sep 30, 2021 ($ in thousands) | Nine Months Ended Sep 30, 2020 ($ in thousands) | Change ($ in thousands) | | :--- | :--- | :--- | :--- | | Research and development | $63,765 | $42,873 | $20,892 | | General and administrative | $34,455 | $22,694 | $11,761 | - The increase in R&D expenses for the nine months ended Sep 30, 2021 was primarily due to a $10.6 million increase in KO-539-related costs for its Phase 1/2 clinical trial and manufacturing, and a $4.8 million increase in tipifarnib-related costs[88] - The increase in G&A expenses for the nine months ended Sep 30, 2021 was primarily due to a $5.5 million increase in non-cash share-based compensation and a $4.1 million increase in personnel costs from additional headcount[89] Liquidity and Capital Resources - As of September 30, 2021, the company had $543.4 million in cash, cash equivalents, and short-term investments[94] - Management believes existing cash is sufficient to fund operating expenses and capital expenditure requirements into 2024[94] - The company has an at-the-market (ATM) facility to sell up to $75.0 million of common stock, but no shares have been sold under this facility to date[92] - The company anticipates needing substantial additional funding for its continuing operations, particularly for clinical trials, seeking marketing approval, and potential commercialization[93] Quantitative and Qualitative Disclosures about Market Risk Primary market risk is interest rate fluctuations on investments, with no material impact from a 10% change or inflation - The company's main market risk is interest rate risk on its cash and investment portfolio, which consists of money market funds, corporate debt, U.S. Treasury securities, and other high-quality instruments[106] - Management does not believe that a hypothetical 10% change in interest rates would have a significant impact on the company's financial statements[106] - Inflation is not believed to have had a material effect on the company's business, financial condition, or results of operations[107] Controls and Procedures Management concluded disclosure controls and procedures were effective with no material changes to internal controls during the quarter - The company's CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of the end of the quarter[110] - No material changes to internal control over financial reporting were identified during the most recent quarter[111] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings adversely affecting its financial position - The company is not currently a party to any material legal proceedings[114] Risk Factors This section outlines numerous risks, including clinical success dependency, COVID-19 impacts, funding needs, and third-party reliance - The company's ability to conduct clinical trials has been and could continue to be adversely impacted by the COVID-19 pandemic, potentially causing delays in site startup and patient enrollment[117] - The company is highly dependent on the success of its lead product candidates, tipifarnib and KO-539, which are still in clinical development and may never receive regulatory approval[119] - The company will need to obtain substantial additional capital to continue operations, and raising capital may cause dilution to stockholders or restrict operations[170] - The company relies on third-party contractors for manufacturing and conducting clinical trials, and any failure by these third parties to perform satisfactorily could delay or impair development efforts[173][180] Exhibits This section indexes exhibits filed with the Form 10-Q, including officer certifications and XBRL data - Lists exhibits filed with the report, including officer certifications (31.1, 31.2, 32.1) and Inline XBRL documents[315]