10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-37620

 

 

KURA ONCOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

61-1547851

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

12730 High Bluff Drive, Suite 400, San Diego, CA

 

92130

(Address of principal executive offices)

 

(Zip Code)

(858) 500-8800

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

KURA

 

The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of the close of business on July 29, 2022, the registrant had 66,893,003 shares of Common Stock, $0.0001 par value, outstanding.

 

 

 

 


KURA ONCOLOGY, INC.

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Condensed Financial Statements (unaudited)

 

 

 

 

 

Condensed Balance Sheets − As of June 30, 2022 (unaudited) and December 31, 2021

1

 

 

 

 

Condensed Statements of Operations and Comprehensive Loss – Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

2

 

 

 

 

Condensed Statements of Stockholders’ Equity – Three and Six Months Ended June 30, 2022 and 2021 (unaudited)

3

 

 

 

 

Condensed Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021 (unaudited)

5

 

 

 

 

Notes to Condensed Financial Statements (unaudited)

6

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

19

 

 

 

 

Item 4. Controls and Procedures

20

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

21

 

 

 

 

Item 1A. Risk Factors

21

 

 

 

 

Item 6. Exhibits

64

 

 

Signatures

 

 

 

 

 


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KURA ONCOLOGY, INC.

Condensed Balance Sheets

(In thousands, except par value data)

 

 

 

 

June 30,
2022

 

 

December 31,
2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

39,257

 

 

$

90,672

 

Short-term investments

 

 

411,001

 

 

 

427,288

 

Prepaid expenses and other current assets

 

 

9,528

 

 

 

4,329

 

Total current assets

 

 

459,786

 

 

 

522,289

 

Property and equipment, net

 

 

2,546

 

 

 

2,673

 

Restricted cash

 

 

210

 

 

 

210

 

Operating lease right-of-use assets

 

 

4,719

 

 

 

5,573

 

Other long-term assets

 

 

4,164

 

 

 

3,306

 

Total assets

 

$

471,425

 

 

$

534,051

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

15,583

 

 

$

20,192

 

Current operating lease liabilities

 

 

2,290

 

 

 

2,263

 

Total current liabilities

 

 

17,873

 

 

 

22,455

 

Long-term operating lease liabilities

 

 

3,602

 

 

 

4,612

 

Other long-term liabilities

 

 

459

 

 

 

375

 

Total liabilities

 

 

21,934

 

 

 

27,442

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000 shares authorized; no shares
     issued and outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000 shares authorized;
     
66,838 and 66,572 shares issued and outstanding as of
     June 30, 2022 and December 31, 2021, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

957,489

 

 

 

941,359

 

Accumulated other comprehensive loss

 

 

(7,815

)

 

 

(1,789

)

Accumulated deficit

 

 

(500,190

)

 

 

(432,968

)

Total stockholders' equity

 

 

449,491

 

 

 

506,609

 

Total liabilities and stockholders' equity

 

$

471,425

 

 

$

534,051

 

 

See accompanying notes to unaudited condensed financial statements.

1


KURA ONCOLOGY, INC.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

24,258

 

 

$

21,074

 

 

$

45,171

 

 

$

41,398

 

General and administrative

 

 

11,075

 

 

 

12,573

 

 

 

22,944

 

 

 

23,145

 

Total operating expenses

 

 

35,333

 

 

 

33,647

 

 

 

68,115

 

 

 

64,543

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

 

564

 

 

 

290

 

 

 

893

 

 

 

600

 

Interest expense

 

 

 

 

 

(306

)

 

 

 

 

 

(414

)

Total other income (expense), net

 

 

564

 

 

 

(16

)

 

 

893

 

 

 

186

 

Net Loss

 

$

(34,769

)

 

$

(33,663

)

 

$

(67,222

)

 

$

(64,357

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.52

)

 

$

(0.51

)

 

$

(1.01

)

 

$

(0.97

)

Weighted average number of shares used in computing
     net loss per share, basic and diluted

 

 

66,672

 

 

 

66,282

 

 

 

66,639

 

 

 

66,250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(34,769

)

 

$

(33,663

)

 

$

(67,222

)

 

$

(64,357

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities and
     foreign currency

 

 

(1,167

)

 

 

(311

)

 

 

(6,026

)

 

 

(439

)

Comprehensive Loss

 

$

(35,936

)

 

$

(33,974

)

 

$

(73,248

)

 

$

(64,796

)

 

See accompanying notes to unaudited condensed financial statements.

 

2


KURA ONCOLOGY, INC.

Condensed Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

66,572

 

 

$

7

 

 

$

941,359

 

 

$

(1,789

)

 

$

(432,968

)

 

$

506,609

 

Share-based compensation expense

 

 

 

 

 

 

 

13,158

 

 

 

 

 

 

 

 

 

13,158

 

Issuance of common stock under equity plans

 

266

 

 

 

 

 

 

2,972

 

 

 

 

 

 

 

 

 

2,972

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

(6,026

)

 

 

 

 

 

(6,026

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(67,222

)

 

 

(67,222

)

Balance at June 30, 2022

 

66,838

 

 

$

7

 

 

$

957,489

 

 

$

(7,815

)

 

$

(500,190

)

 

$

449,491

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at March 31, 2022

 

66,636

 

 

$

7

 

 

$

948,312

 

 

$

(6,648

)

 

$

(465,421

)

 

$

476,250

 

Share-based compensation expense

 

 

 

 

 

 

 

6,508

 

 

 

 

 

 

 

 

 

6,508

 

Issuance of common stock under equity plans

 

202

 

 

 

 

 

 

2,669

 

 

 

 

 

 

 

 

 

2,669

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

(1,167

)

 

 

 

 

 

(1,167

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,769

)

 

 

(34,769

)

Balance at June 30, 2022

 

66,838

 

 

$

7

 

 

$

957,489

 

 

$

(7,815

)

 

$

(500,190

)

 

$

449,491

 

See accompanying notes to unaudited condensed financial statements.

 

 

3


KURA ONCOLOGY, INC.

Condensed Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

66,194

 

 

$

7

 

 

$

913,354

 

 

$

46

 

 

$

(302,502

)

 

$

610,905

 

Share-based compensation expense

 

 

 

 

 

 

 

11,068

 

 

 

 

 

 

 

 

 

11,068

 

Issuance of common stock under equity plans

 

102

 

 

 

 

 

 

1,374

 

 

 

 

 

 

 

 

 

1,374

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

(439

)

 

 

 

 

 

(439

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(64,357

)

 

 

(64,357

)

Balance at June 30, 2021

 

66,296

 

 

$

7

 

 

$

925,796

 

 

$

(393

)

 

$

(366,859

)

 

$

558,551

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at March 31, 2021

 

66,263

 

 

$

7

 

 

$

919,258

 

 

$

(82

)

 

$

(333,196

)

 

$

585,987

 

Share-based compensation expense

 

 

 

 

 

 

 

5,993

 

 

 

 

 

 

 

 

 

5,993

 

Issuance of common stock under equity plans

 

33

 

 

 

 

 

 

545

 

 

 

 

 

 

 

 

 

545

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

(311

)

 

 

 

 

 

(311

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(33,663

)

 

 

(33,663

)

Balance at June 30, 2021

 

66,296

 

 

$

7

 

 

$

925,796

 

 

$

(393

)

 

$

(366,859

)

 

$

558,551

 

See accompanying notes to unaudited condensed financial statements.

 

4


KURA ONCOLOGY, INC.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

 

2021

 

Operating Activities

 

 

 

 

 

 

Net loss

 

$

(67,222

)

 

$

(64,357

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Share-based compensation expense

 

 

13,158

 

 

 

11,068

 

Amortization of premium and accretion of discounts on
     marketable securities, net

 

 

1,894

 

 

 

1,987

 

Depreciation expense

 

 

360

 

 

 

232

 

Non-cash interest expense

 

 

 

 

 

399

 

Loss on extinguishment of debt

 

 

 

 

 

212

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(5,199

)

 

 

(2,166

)

Other long-term assets

 

 

(5

)

 

 

(1,178

)

Accounts payable and accrued expenses

 

 

(5,592

)

 

 

(2,688

)

Other long-term liabilities

 

 

84

 

 

 

(100

)

Net cash used in operating activities

 

 

(62,522

)

 

 

(56,591

)

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

Maturities of marketable securities

 

 

115,947

 

 

 

129,969

 

Purchases of marketable securities

 

 

(107,579

)

 

 

(353,088

)

Purchases of property and equipment

 

 

(233

)

 

 

(322

)

Net cash provided by (used in) investing activities

 

 

8,135

 

 

 

(223,441

)

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

Proceeds from issuance of stock under equity plans

 

 

2,972

 

 

 

1,374

 

Repayment of long-term debt

 

 

 

 

 

(7,250

)

Payment of fees related to extinguishment of debt

 

 

 

 

 

(611

)

Net cash provided by (used in) financing activities

 

 

2,972

 

 

 

(6,487

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(51,415

)

 

 

(286,519

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

90,882

 

 

 

325,703

 

Cash, cash equivalents and restricted cash at end of period

 

$

39,467

 

 

$

39,184

 

See accompanying notes to unaudited condensed financial statements.

 

5


KURA ONCOLOGY, INC.

Notes to Unaudited Condensed Financial Statements

 

1. Organization and Basis of Presentation

The Company

Kura Oncology, Inc. is a clinical-stage biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline consists of small molecule product candidates that target cancer signaling pathways where there is a strong scientific and clinical rationale to improve outcomes, and we intend to pair them with molecular or cellular diagnostics to identify those patients most likely to respond to treatment. We plan to advance our product candidates through a combination of internal development and strategic partnerships while maintaining significant development and commercial rights.

References in these Notes to Unaudited Condensed Financial Statements to the “Company,” “we,” “our” or “us,” refer to Kura Oncology, Inc.

Basis of Presentation

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the Securities and Exchange Commission on February 24, 2022, from which we derived our balance sheet as of December 31, 2021. The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

The preparation of the unaudited condensed financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the amounts reported on our unaudited condensed financial statements and accompanying notes. The amounts reported could differ under different estimates and assumptions. On an ongoing basis, we evaluate our estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to inform our critical accounting estimates. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates.

The extent to which the COVID-19 pandemic has impacted and may continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted with any confidence, such as the duration and severity of the COVID-19 pandemic, steps required or mandated by governments to mitigate the impact of COVID-19 or the effectiveness of actions to prevent, contain and treat COVID-19, particularly in the geographies where we, our third-party manufacturers, contract research organizations or current and planned clinical trial sites operate. We cannot presently predict the scope and severity of any potential business disruptions, interruptions or shutdowns. If we or any of the third parties with whom we engage, however, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on our business and our results of operations and financial condition.

6


2. Summary of Significant Accounting Policies

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation.

Restricted Cash

Under the terms of an office lease entered into in March 2020, we are required to maintain a standby letter of credit during the term of the lease. As of June 30, 2022, restricted cash of $0.2 million was pledged as collateral for the letter of credit.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the unaudited condensed balance sheets that sum to the total of the amounts shown in the unaudited condensed statements of cash flows, in thousands:

 

 

June 30, 2022

 

 

December 31, 2021

 

 

June 30, 2021

 

 

December 31, 2020

 

Cash and cash equivalents

 

$

39,257

 

 

$

90,672

 

 

$

38,974

 

 

$

325,493

 

Restricted cash

 

 

210

 

 

 

210