On Thursday, Jefferies maintained a Buy rating on Kura Oncology (NASDAQ:KURA) but reduced the stock's price target from $32.00 to $28.00. The adjustment follows Kura Oncology's recent partnership with Kyowa Kirin to further the development and commercialization of ziftomenib, a menin inhibitor, for the treatment of acute myeloid leukemia (AML).
The deal between Kura Oncology and Kyowa Kirin includes a $330 million upfront payment and up to approximately $1.2 billion in total potential milestone payments, which encompasses about $420 million in near-term milestones. Additionally, the agreement outlines a 50:50 profit-sharing arrangement in the United States and royalties on sales outside of the US.
According to the analyst, this partnership is set to fund and accelerate the development of ziftomenib in AML, with the goal of establishing it as a leader in menin inhibition. The collaboration is expected to cover various aspects of AML treatment, including frontline therapy, combinations with standard of care, and post-transplant maintenance settings.
The update to Kura Oncology's business model, reflecting the new partnership terms and the revised development trajectory for ziftomenib, led to the change in the price target. The firm's analysis suggests that the partnership has the potential to significantly support Kura's efforts in AML treatment advancements.
In other recent news, Kura Oncology reported significant advancements in its menin inhibitor program, specifically ziptamenib's treatment for acute myeloid leukemia (AML), during its Q3 2024 earnings call. Despite a net loss of $54.4 million for the quarter, the company's financial stability is maintained with over $455 million in assets, ensuring operations can continue into 2027.
Ziptamenib has shown promising results in clinical trials, and Kura Oncology is preparing for potential pivotal studies while also exploring other indications for the drug's use.
The company plans to report further trial results in early 2025 and potentially submit a New Drug Application (NDA) for AML monotherapy. In addition, Kura Oncology is preparing for pivotal studies in AML, targeting treatment combinations, and exploring ziptamenib's potential in other indications such as GIST and solid tumors. A new candidate for diabetes treatment is expected in the first half of 2025.
The company's increased net loss and higher Research and Development expenses reflect its significant investment in clinical programs. However, Kura Oncology has sufficient cash reserves to fund operations into 2027, and ziptamenib has shown robust safety and efficacy profiles in clinical trials. These developments are part of the company's commitment to advancing cancer treatment through its menin inhibitor program.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Kura Oncology's financial position and market performance. Despite the reduced price target from Jefferies, the company's stock has shown a remarkable 70.34% price total return over the past year, indicating strong investor confidence. This aligns with the positive outlook on the ziftomenib partnership and its potential impact on Kura's future in AML treatment.
However, it's important to note that Kura Oncology currently operates at a loss, with an adjusted operating income of -$217.5 million over the last twelve months. This underscores the significance of the recent partnership, which could provide crucial funding for the company's research and development efforts.
InvestingPro Tips highlight that Kura holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations. These factors could provide the company with financial flexibility as it pursues the development of ziftomenib and other oncology treatments.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Kura Oncology, providing a deeper understanding of the company's financial health and market position.
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