On Friday, Stifel, a financial services firm, adjusted its outlook on Kura Oncology (NASDAQ:KURA), reducing the price target to $11.00 from the previous $18.00. The firm has maintained a Hold rating on the stock. The adjustment follows recent developments within the company, including a partnership agreement related to ziftomenib, also known as menin. The deal is expected to provide Kura Oncology with sufficient funds for several years of development, alleviating immediate financial concerns.
The partnership also includes a US cocommercialization agreement, which is anticipated to lessen the impact on the company's balance sheet. This is particularly relevant in light of potential outcomes from the launch of Kura's R/R NPM1m AML treatment, slated for late 2025. If the launch were to result in negative cash flow, the partnership would help mitigate the risk of significant dilution that might have arisen from financing needs over 2025-2026.
Stifel's analysis suggests that the timing of Kura's partnership could be seen as an acknowledgment that the pivotal NPM1m data, which is expected in the first quarter of 2025, may not be strong enough to compete commercially. This is especially pertinent given that a competing treatment, revumenib, developed by Syndax (NASDAQ:SNDX), is projected to enter the market earlier. This perceived admission by Kura Oncology seemingly diminishes the potential for stock value growth from this near-term catalyst.
The firm further notes that the majority of the value for Kura Oncology is likely to be driven by 1L AML readouts, which are still several years away. Additionally, the rest of Kura's development pipeline is considered to carry a high risk. Given these factors, Stifel's commentary reflects a perspective that adopting a patient approach is advisable for stakeholders in Kura Oncology at this stage.
In other recent news, Kura Oncology has made significant strides in its menin inhibitor program, notably the development of ziftomenib for acute myeloid leukemia (AML) treatment. The company's strategic alliance with Kyowa Kirin is expected to accelerate ziftomenib's development, with Kura receiving a substantial $330 million upfront payment and the potential for up to $420 million in near-term milestone payments. TD (TSX:TD) Cowen and Jefferies have maintained their Buy rating on Kura Oncology, while H.C. Wainwright has reaffirmed a Buy rating and raised the target price to $37.00.
Despite a net loss of $54.4 million for the third quarter, Kura Oncology's financial stability remains intact with over $455 million in assets. The company's partnership with Kyowa Kirin is anticipated to facilitate ziftomenib's development in frontline settings and potentially expand its use beyond current indications. Kura Oncology is preparing for potential pivotal studies while also exploring other indications for ziptamenib's use and plans to report further trial results in early 2025.
InvestingPro Insights
Recent InvestingPro data paints a challenging picture for Kura Oncology, aligning with Stifel's cautious outlook. The company's market capitalization stands at $841.4 million, with a negative P/E ratio of -4.11 over the last twelve months as of Q3 2024, indicating ongoing profitability challenges. This is further underscored by an operating income of -$217.5 million and a negative EBITDA of -$216.64 million for the same period.
InvestingPro Tips highlight that Kura is "quickly burning through cash" and "not profitable over the last twelve months," which supports Stifel's concerns about the company's financial position. The recent partnership agreement mentioned in the article appears timely, given these financial pressures.
The stock's performance has been notably weak, with InvestingPro data showing a 6-month price total return of -55.39% and a 3-month return of -49.04%. This downward trend aligns with the InvestingPro Tip that the "stock has taken a big hit over the last six months."
Despite these challenges, InvestingPro Tips also note that Kura "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations," which may provide some financial flexibility as the company navigates its development pipeline and potential market entry.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Kura Oncology, providing a deeper understanding of the company's financial health and market position.
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