Kura Oncology, Inc. — Fiscal 2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual report rather than a quarterly report; “2022 Q4” corresponds to the year-end reporting period. Kura is a clinical-stage biopharmaceutical company developing precision oncology therapies and has no approved products or product revenue.
Business Context and Pipeline
- Ziftomenib: Lead menin-KMT2A inhibitor in development for genetically defined acute myeloid leukemia, or AML. In the KOMET-001 Phase 1b study, the 600 mg dose produced a 30% complete remission rate in NPM1-mutant AML patients, or 6 of 20. Differentiation syndrome was the most common treatment-emergent adverse event and was more problematic in KMT2A-rearranged AML.
- Tipifarnib: Farnesyl transferase inhibitor being evaluated in combination with alpelisib in biomarker-defined head and neck cancer in the KURRENT-HN trial. Kura discontinued enrollment in the HRAS-overexpression cohort and discontinued further development of tipifarnib monotherapy in AIM-HN.
- KO-2806: Next-generation farnesyl transferase inhibitor. The FDA cleared the IND in January 2023; Kura expects to begin the FIT-001 Phase 1 study in the third quarter of 2023.
- Kura owns global commercial rights to its programs and relies on third parties for clinical research, manufacturing and companion-diagnostic development.
Financial and Liquidity Metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Product revenue | $0 | $0 | No approved products |
| Research and development expense | $92.8 million | $84.7 million | +$8.1 million |
| General and administrative expense | $47.1 million | $46.5 million | +$0.5 million |
| Total operating expenses | $139.9 million | $131.3 million | +$8.6 million |
| Other income, net | $4.0 million | $0.8 million | +$3.2 million |
| Net loss | $135.8 million | $130.5 million | +$5.4 million loss |
| Net loss per share | $2.03 | $1.97 | Higher loss per share |
| Net cash used in operating activities | $110.1 million | $104.6 million | +$5.5 million use |
Margins: Operating and net profit margins are not meaningful because the company has no product revenue and operates at a substantial loss.
- Cash, cash equivalents and short-term investments totaled $438.0 million at December 31, 2022, including $51.8 million of cash and cash equivalents and $386.2 million of short-term investments.
- Management expects existing liquidity to fund operating expenses into the fourth quarter of 2025, based on current plans.
- Accumulated deficit was $568.8 million.
- Long-term debt, net, was $9.2 million, representing $10.0 million of principal outstanding under a new term-loan facility.
- The term-loan facility provides for up to $125.0 million in total borrowings, subject to conditions. The loans mature in November 2027, bear interest at a rate that was 9.90% at year-end, and are secured by substantially all assets other than intellectual property.
- Contractual obligations included $20.2 million of operating lease, debt-principal and estimated interest payments, excluding uncertain milestone obligations. License agreements may require up to approximately $80.0 million of contingent milestone payments plus royalties if specified development, regulatory and commercial milestones are achieved.
Material Changes Versus Fiscal 2021
- Research and development spending increased 9.5% to $92.8 million, primarily due to higher ziftomenib clinical-trial costs, increased personnel costs and greater discovery-stage activity related to KO-2806.
- Tipifarnib-related research and development expense declined to $20.0 million from $30.6 million as the company closed enrollment in its registration-directed monotherapy trial.
- General and administrative expense increased modestly, primarily due to personnel costs.
- Interest and other income increased as a result of higher interest income on investments.
- Operating cash use increased to $110.1 million from $104.6 million.
- Investing activities generated $32.6 million, compared with $126.8 million of cash used in 2021, primarily because marketable securities matured in 2022.
- Financing activities generated $38.6 million, including approximately $24.7 million of net proceeds from a Bristol-Myers Squibb equity investment and $9.4 million of net proceeds from the term-loan facility.
- Kura entered into a $150.0 million at-the-market equity facility but had not sold shares under it by year-end.
- The company issued 1.37 million shares to Bristol-Myers Squibb for gross proceeds of approximately $25.0 million and issued lender warrants for up to 26,078 shares at an exercise price of $14.38 per share.
Guidance, Outlook, Risks and Unusual Items
- Kura expects continued operating losses and negative operating cash flow for the foreseeable future and expects to require substantial additional financing.
- The company expects to advance ziftomenib’s Phase 2 registration-directed study in NPM1-mutant AML and to initiate the KOMET-007 and KOMET-008 combination studies in 2023, subject to regulatory review and operational execution.
- In February 2023, after the reporting period, Kura announced dosing of the first patients in the Phase 2 portion of KOMET-001. It expects to enroll approximately 85 patients, with complete remission or complete remission with partial hematologic recovery as the primary endpoint.
- Kura expects to determine the optimal biologically active dose for the PIK3CA cohort of KURRENT-HN in mid-2023.
- The company discontinued further development of tipifarnib monotherapy in HRAS-mutant head and neck cancer and closed the KURRENT-LUNG trial despite positive preclinical data.
- KOMET-001 previously experienced an FDA partial clinical hold after a Grade 5 event potentially associated with differentiation syndrome. The hold was lifted in January 2022 following agreement on a mitigation strategy.
- Key risks include clinical-trial failure or delay, differentiation syndrome and other adverse events, failure to obtain regulatory approval, limited patient populations and companion-diagnostic requirements, reliance on third-party manufacturers and CROs, competition from other menin inhibitors, future capital needs and dilution, debt covenants and secured creditor rights, intellectual-property challenges, COVID-19 and supply-chain disruptions.
- The company reported no material legal proceedings and stated that disclosure controls and internal control over financial reporting were effective as of December 31, 2022. Ernst & Young LLP issued unqualified audit opinions.
Most Important Facts for Investors to Verify
- Whether the Phase 2 KOMET-001 study confirms the Phase 1b ziftomenib response signal in NPM1-mutant AML and adequately manages differentiation syndrome.
- Enrollment pace, endpoint performance and regulatory interaction for the ziftomenib registration-directed program.
- Whether ziftomenib combination studies begin on the stated 2023 timelines and produce incremental clinical benefit.
- Progress and durability of the tipifarnib-plus-alpelisib PIK3CA cohort in KURRENT-HN.
- Actual cash burn and whether the projected cash runway through the fourth quarter of 2025 changes as development spending increases.
- Availability and conditions for the remaining $115.0 million under the term-loan facility, including minimum-cash covenants and potential default consequences.
- Future equity issuance under the $150.0 million ATM facility, equity compensation plans, warrants and other sources of dilution.
- FDA clearance, trial initiation and early safety data for KO-2806.
- Development and regulatory progress for required companion diagnostics and the ability of third parties to maintain clinical supply.