KURA ONCOLOGY, INC. The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed financial
statements and related notes included in this Quarterly Report on Form 10-Q, or
Quarterly Report, and the audited financial statements and notes thereto as of
and for the fiscal year ended
This Quarterly Report includes forward-looking statements and information within
the meaning of Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, which are subject to the "safe harbor" created by
those sections, that involve a number of risks, uncertainties and assumptions.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as "may," "will," "intend,"
"plan," "believe," "anticipate," "expect," "seek", "estimate," "predict,"
"potential," "continue," "likely," or "opportunity," the negative of these words
or other similar words. Similarly, statements that describe our plans,
strategies, intentions, expectations, objectives, goals or prospects and other
statements that are not historical facts are also forward-looking statements.
For such statements, we claim the protection of the Private Securities
Litigation Reform Act of 1995. Readers of this Quarterly Report are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the time this Quarterly Report was filed with the
References to "we," "us" and "our" refer to
Overview
We are 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 presently have two clinical-stage product candidates for which we own global commercial rights, tipifarnib and KO-539, as well as additional programs that are at a discovery stage. We plan to advance our product candidates through a combination of internal development and strategic partnerships while maintaining significant development and commercial rights.
Our first product candidate, tipifarnib, is a potent, selective and orally bioavailable inhibitor of farnesyl transferase that has been previously studied in more than 5,000 cancer patients and demonstrated compelling and durable anti-cancer activity in certain patients with a manageable side effect profile. We are currently evaluating tipifarnib in multiple solid tumor and hematologic indications.
Our most advanced solid tumor indication for tipifarnib is in patients with head
and neck squamous cell carcinoma, or HNSCC, that carry mutations in the HRAS
gene. In
11
--------------------------------------------------------------------------------
anti-tumor activity, and we believe further supports the design of our amended
AIM-HN registration-directed trial in HRAS mutant HNSCC. On
In
On
In addition to evaluating tipifarnib as a monotherapy in patients with recurrent or metastatic HRAS mutant HNSCC, we have also been evaluating the use of tipifarnib in combination with other oncology therapeutics to address larger patient populations and to pursue earlier lines of therapy. Among these potential combinations, we have prioritized the combination of tipifarnib and an inhibitor of the PI3 Kinase alpha enzyme for clinical evaluation in patients with HNSCC. In particular, we are planning to commence a Phase 1/2 open-label, biomarker-defined cohort study in the second half of 2021 to evaluate the safety and tolerability of the combination, determine the recommended dose and schedule for the combination, and assess early antitumor activity of tipifarnib and a PI3 kinase alpha inhibitor for the treatment of adult participants who have HRAS-overexpressing, PIK3CA-mutated and/or PIK3CA-amplified HNSCC.
While we believe tipifarnib has potential to modulate the CXCR4-expressing primary tumor cells in AITL, PTCL and other diseases such as relapsed or refractory acute myeloid leukemia, or AML, chronic myelomonocytic leukemia, or CMML, diffuse large B-cell lymphoma, cutaneous T-cell lymphoma and pancreatic cancer, we suspended the initiation of a planned registration directed study for tipifarnib in T-cell lymphoma and of a planned Phase 2 clinical trial for tipifarnib in pancreatic cancer as a result of a strategic review conducted in the spring of 2020. We have continued preclinical work to validate tipifarnib in the CXCR4 receptor pathway and to assess the timing and strategy for further development.
Our second product candidate, KO-539, is a potent, selective, reversible and
oral small molecule inhibitor of the mixed-lineage leukemia 1, or MLL1, gene
(now renamed Lysine K-specific Methyltransferase 2A, or KMT2A), or menin-KMT2A,
protein-protein interaction. We have generated preclinical data that support the
potential anti-tumor activity of KO-539 in genetically defined subsets of acute
leukemia, including those with rearrangements or partial tandem duplications in
the KMT2A gene as well as those with oncogenic driver mutations in genes such as
nucleophosmin 1, or NPM1. The novel mechanism of action targets epigenetic
dysregulation and removes a key block to cellular differentiation to drive
anti-tumor activity. We believe KO-539 has the potential to address
approximately 35% of acute myeloid leukemia, or AML, including NPM1-mutant AML
and KMT2A-rearranged AML. In the pediatric population,
KMT2A-rearranged leukemias make up approximately 10% of acute leukemias in all
age groups and in the case of infant leukemias, the frequency
of KMT2A rearrangements is 70-80%. These pediatric leukemia sub-types portend a
poorer prognosis and five-year survival rate that is lower than other leukemia
sub-types and therefore represent significant unmet medical needs given the lack
of curative therapeutic options. In
12
--------------------------------------------------------------------------------
We received orphan drug designation for KO-539 for the treatment of acute
myeloid leukemia, or AML, from the FDA in
On
On
Liquidity Overview
As of
Financial Operations Overview
Research and Development Expenses
We focus on the research and development of our product programs. Our research
and development expenses consist of costs associated with our research and
development activities including salaries, benefits, share-based compensation
and other personnel costs, clinical trial costs, manufacturing costs for
non-commercial products, fees paid to external service providers and
consultants, facilities costs and supplies, equipment and materials used in
clinical and preclinical studies and research and development. All such costs
are charged to research and development expense as incurred. Payments that we
make in connection with in-licensed technology for a particular research and
development project that have no alternative future uses in other research and
development projects or otherwise and therefore, no separate economic values,
are expensed as research and development costs at the time such costs are
incurred. As of
We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we are unable to estimate with any certainty the costs we will incur and the timelines we will require in the continued development of our product candidates and our other pipeline programs. Clinical and preclinical
13
--------------------------------------------------------------------------------
development timelines, the probability of success and development costs can differ materially from expectations. Our future research and development expenses will depend on the preclinical and clinical success of each product candidate that we develop, as well as ongoing assessments of the commercial potential of such product candidates. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
Completion of clinical trials may take several years or more, and the length of time generally varies according to the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:
• managing the impact of COVID-19 pandemic and related precautions on the
operation of our clinical trials;
• per patient clinical trial costs;
• the number of clinical trials required for approval;
• the number of sites included in the clinical trials;
• the length of time required to enroll suitable patients;
• the number of doses that patients receive;
• the number of patients that participate in the clinical trials;
• the drop-out or discontinuation rates of patients;
• the duration of patient follow-up;
• potential additional safety monitoring or other studies requested by
regulatory agencies;
• the number and complexity of analyses and tests performed during the
clinical trial;
• the phase of development of the product candidate; and
• the efficacy and safety profile of the product candidate.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits, share-based compensation and other personnel costs for employees in executive, finance, business development and support functions. Other significant general and administrative expenses include the costs associated with obtaining and maintaining our patent portfolio, professional services for audit, legal, pre-commercial planning, investor and public relations, corporate activities and allocated facilities.
Other Income (Expense)
Other income (expense) consists primarily of management fee income, interest
income and interest expense. Management fee income is earned in accordance with
the management services agreement, as amended, with
Income Taxes
We have incurred net losses and have not recorded any
14
--------------------------------------------------------------------------------
Results of Operations
Comparison of the Three Months Ended
The following table sets forth our results of operations for the periods
presented, in thousands:
Three Months Ended March 31,
2021 2020 Change
Research and development expenses
10,572 7,625 2,947
Other income, net 202 990 (788 )
Research and Development Expenses. The following table illustrates the
components of our research and development expenses for the periods presented,
in thousands:
Three Months Ended March 31,
2021 2020 Change
Tipifarnib-related costs $ 10,177 $ 5,793 $ 4,384
KO-539-related costs 2,661 888 1,773
KO-947-related costs 108 769 (661 )
Discovery stage programs 770 399 371
Personnel costs and other expenses 5,237 3,556 1,681
Share-based compensation expense 1,371 1,170 201
Total research and development expenses
The increase in tipifarnib-related research and development expenses for the
three months ended
General and Administrative Expenses. The increase in general and administrative
expenses for the three months ended
Other income, net. The decrease in other income, net, for the three months ended
Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through equity and debt financings. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities.
15
--------------------------------------------------------------------------------
In
In
Our obligations under the SVB Loan Agreement are secured by substantially all of our assets other than our intellectual property, but including proceeds from the sale, licensing or other disposition of our intellectual property. Our intellectual property is subject to negative covenants, which, among other things, prohibit us from selling, transferring, assigning, mortgaging, pledging, leasing, granting a security interest in or otherwise encumbering our intellectual property, subject to limited exceptions.
We have incurred operating losses and negative cash flows from operating
activities since inception. As of
As of
• the scope, progress, results and costs of drug discovery, preclinical
development, laboratory testing and clinical trials for our product
candidates;
• the costs, timing and outcome of regulatory review of our product candidates;
• the costs of establishing or contracting for sales, marketing and
distribution capabilities if we obtain regulatory approvals to market our
product candidates;
• the costs of securing and producing drug substance and drug product
material for use in preclinical studies, clinical trials and for use as
commercial supply;
• the costs of securing manufacturing arrangements for development
activities and commercial production;
• the scope, prioritization and number of our research and development
programs;
• the extent to which we are obligated to reimburse, or entitled to
reimbursement of, clinical trial costs under future collaboration
agreements, if any;
• the extent to which we acquire or in-license other product candidates and
technologies;
• the success of our current or future companion diagnostic test
collaborations for companion diagnostic tests; and
• the costs of preparing, filing and prosecuting patent applications,
maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims.
16
--------------------------------------------------------------------------------
To date, we have not generated any revenues from product sales, and we do not have any approved products. We do not know when, or if, we will generate any revenues from product sales. We do not expect to generate significant revenues from product sales unless and until we obtain regulatory approval of and commercialize one of our current or future product candidates. We are subject to all of the risks incident in the development of new therapeutic products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of stock offerings, debt financings, collaborations, strategic partnerships or licensing arrangements. We do not have any committed external source of funds. Additional capital may not be available on reasonable terms, if at all. Subject to limited exceptions, our term loan facility also prohibits us from incurring indebtedness without the prior written consent of the Lender. To the extent that we raise additional capital through the sale of stock or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include increased fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, selling or licensing intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, including our other technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be unable to carry out our business plan. As a result, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our product candidates even if we would otherwise prefer to develop and commercialize such product candidates ourselves, and our business, financial condition and results of operations would be materially adversely affected.
The following table provides a summary of our net cash flow activities for the periods presented, in thousands:
Three Months Ended March 31,
2021 2020 Change
Net cash used in operating activities
(186,220 ) 27,461 (213,681 )
Net cash provided by financing activities 79 247 (168 )
Operating Activities. The increase in net cash used in operating activities for
the three months ended
Investing Activities. The increase in net cash used in investing activities for
the three months ended
Financing Activities. The decrease in net cash provided by financing activities
for the three months ended
Contractual Obligations
There were no material changes in contractual obligations from the amounts
disclosed in our Annual Report on Form 10-K for the fiscal year ended
Off-Balance Sheet Arrangements
As of
17
--------------------------------------------------------------------------------
Critical Accounting Policies and Management Estimates
The
There have been no material changes to our critical accounting policies and
estimates from the information provided in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Critical Accounting Policies and Management Estimates," included in our Annual
Report on Form 10-K for the fiscal year ended
© Edgar Online, source
