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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, 2020

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)

 

 

(Former Name, Former Address or Former Fiscal Year If Changed Since Last Report)

 

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 August 3, 2020, the registrant had 56,283,079 shares of Common Stock ($0.0001 par value) outstanding.

 

 

 


KURA ONCOLOGY, INC.

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

Condensed Balance Sheets − As of June 30, 2020 (unaudited) and December 31, 2019

1

 

 

 

 

Condensed Statements of Operations and Comprehensive Loss – Three and Six Months Ended June 30, 2020 and 2019 (unaudited)

2

 

 

 

 

Condensed Statements of Stockholders’ Equity – Three and Six Months Ended June 30, 2020 and 2019 (unaudited)

3

 

 

 

 

Condensed Statements of Cash Flows – Six Months Ended June 30, 2020 and 2019 (unaudited)

5

 

 

 

 

Notes to Condensed Financial Statements (unaudited)

6

 

 

 

 

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

13

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

20

 

 

 

 

Item 4. Controls and Procedures

21

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

22

 

 

 

 

Item 1A. Risk Factors

22

 

 

 

 

Item 6. Exhibits

60

 

 

Signatures

61

 

 

 

 


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KURA ONCOLOGY, INC.

Condensed Balance Sheets

(In thousands, except par value data) 

 

 

 

 

June 30,

2020

 

 

December 31,

2019

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

134,758

 

 

$

26,135

 

Short-term investments

 

 

204,111

 

 

 

210,756

 

Prepaid expenses and other current assets

 

 

3,317

 

 

 

2,712

 

Total current assets

 

 

342,186

 

 

 

239,603

 

Property and equipment, net

 

 

1,652

 

 

 

44

 

Restricted cash

 

 

210

 

 

 

 

Operating lease right-of-use assets

 

 

7,108

 

 

 

234

 

Other long-term assets

 

 

1,844

 

 

 

2,091

 

Total assets

 

$

353,000

 

 

$

241,972

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

16,801

 

 

$

15,314

 

Current portion of long-term debt, net

 

 

1,750

 

 

 

250

 

Total current liabilities

 

 

18,551

 

 

 

15,564

 

Long-term debt, net

 

 

5,750

 

 

 

7,250

 

Operating lease liabilities, long-term

 

 

6,019

 

 

 

 

Other long-term liabilities

 

 

306

 

 

 

377

 

Total liabilities

 

 

30,626

 

 

 

23,191

 

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;

     56,214 and 45,384 shares issued and outstanding as of

     June 30, 2020 and December 31, 2019, respectively

 

 

6

 

 

 

5

 

Additional paid-in capital

 

 

574,385

 

 

 

431,322

 

Accumulated other comprehensive income

 

 

557

 

 

 

331

 

Accumulated deficit

 

 

(252,574

)

 

 

(212,877

)

Total stockholders' equity

 

 

322,374

 

 

 

218,781

 

Total liabilities and stockholders' equity

 

$

353,000

 

 

$

241,972

 

 

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development (includes related party

     amounts of $63 and $98 for the three months

     ended June 30, 2020 and 2019, respectively,

     and $195 and $151 for the six months ended

     June 30, 2020 and 2019, respectively)

 

$

13,697

 

 

$

11,440

 

 

$

26,272

 

 

$

21,822

 

General and administrative (includes related party

     amounts of $76 and $88 for the three months

     ended June 30, 2020 and 2019, respectively,

     and $187 and $175 for the six months ended

     June 30, 2020 and 2019, respectively)

 

 

7,476

 

 

 

4,451

 

 

 

15,101

 

 

 

9,020

 

Total operating expenses

 

 

21,173

 

 

 

15,891

 

 

 

41,373

 

 

 

30,842

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fee income, related party

 

 

12

 

 

 

74

 

 

 

27

 

 

 

200

 

Interest income

 

 

818

 

 

 

1,022

 

 

 

1,937

 

 

 

2,052

 

Interest expense

 

 

(144

)

 

 

(148

)

 

 

(288

)

 

 

(293

)

Total other income

 

 

686

 

 

 

948

 

 

 

1,676

 

 

 

1,959

 

Net Loss

 

$

(20,487

)

 

$

(14,943

)

 

$

(39,697

)

 

$

(28,883

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.40

)

 

$

(0.38

)

 

$

(0.82

)

 

$

(0.75

)

Weighted average number of shares used in

     computing net loss per share,

     basic and diluted

 

 

51,633

 

 

 

38,928

 

 

 

48,522

 

 

 

38,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(20,487

)

 

$

(14,943

)

 

$

(39,697

)

 

$

(28,883

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable

     securities and foreign currency

 

 

(4

)

 

 

143

 

 

 

226

 

 

 

292

 

Comprehensive Loss

 

$

(20,491

)

 

$

(14,800

)

 

$

(39,471

)

 

$

(28,591

)

 

 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, 2019

 

45,384

 

 

$

5

 

 

$

431,322

 

 

$

331

 

 

$

(212,877

)

 

$

218,781

 

Issuance of common stock, net of offering costs

 

10,465

 

 

 

1

 

 

 

134,923

 

 

 

 

 

 

 

 

 

134,924

 

Share-based compensation expense

 

 

 

 

 

 

 

5,705

 

 

 

 

 

 

 

 

 

5,705

 

Issuance of common stock from exercise of options

     and employee stock purchase plan

 

365

 

 

 

 

 

 

2,435

 

 

 

 

 

 

 

 

 

2,435

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

226

 

 

 

 

 

 

226

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(39,697

)

 

 

(39,697

)

Balance at June 30, 2020

 

56,214

 

 

$

6

 

 

$

574,385

 

 

$

557

 

 

$

(252,574

)

 

$

322,374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at March 31, 2020

 

45,430

 

 

$

5

 

 

$

434,722

 

 

$

561

 

 

$

(232,087

)

 

$

203,201

 

Issuance of common stock, net of offering costs

 

10,465

 

 

 

1

 

 

 

134,923

 

 

 

 

 

 

 

 

 

134,924

 

Share-based compensation expense

 

 

 

 

 

 

 

2,552

 

 

 

 

 

 

 

 

 

2,552

 

Issuance of common stock from exercise of options

     and employee stock purchase plan

 

319

 

 

 

 

 

 

2,188

 

 

 

 

 

 

 

 

 

2,188

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,487

)

 

 

(20,487

)

Balance at June 30, 2020

 

56,214

 

 

$

6

 

 

$

574,385

 

 

$

557

 

 

$

(252,574

)

 

$

322,374

 

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, 2018

 

38,148

 

 

$

4

 

 

$

310,849

 

 

$

(131

)

 

$

(149,737

)

 

$

160,985

 

Issuance of common stock, net of offering costs

 

6,785

 

 

 

1

 

 

 

108,108

 

 

 

 

 

 

 

 

 

108,109

 

Share-based compensation expense

 

 

 

 

 

 

 

4,518

 

 

 

 

 

 

 

 

 

4,518

 

Issuance of common stock from exercise of options

     and employee stock purchase plan

 

256

 

 

 

 

 

 

1,560

 

 

 

 

 

 

 

 

 

1,560

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

292

 

 

 

 

 

 

292

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,883

)

 

 

(28,883

)

Balance at June 30, 2019

 

45,189

 

 

$

5

 

 

$

425,035

 

 

$

161

 

 

$

(178,620

)

 

$

246,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at March 31, 2019

 

38,169

 

 

$

4

 

 

$

313,220

 

 

$

18

 

 

$

(163,677

)

 

$

149,565

 

Issuance of common stock, net of offering costs

 

6,785

 

 

 

1

 

 

 

108,108

 

 

 

 

 

 

 

 

 

108,109

 

Share-based compensation expense

 

 

 

 

 

 

 

2,249

 

 

 

 

 

 

 

 

 

2,249

 

Issuance of common stock from exercise of options

     and employee stock purchase plan

 

235

 

 

 

 

 

 

1,458

 

 

 

 

 

 

 

 

 

1,458

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

143

 

 

 

 

 

 

143

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,943

)

 

 

(14,943

)

Balance at June 30, 2019

 

45,189

 

 

$

5

 

 

$

425,035

 

 

$

161

 

 

$

(178,620

)

 

$

246,581

 

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,

 

 

 

2020

 

 

2019

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(39,697

)

 

$

(28,883

)

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

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

5,705

 

 

 

4,518

 

Depreciation expense

 

 

12

 

 

 

 

Amortization of premium and accretion of discount on

     marketable securities, net

 

 

(134

)

 

 

(859

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(367

)

 

 

(13

)

Other long-term assets

 

 

533

 

 

 

(215

)

Accounts payable and accrued expenses

 

 

(537

)

 

 

(3,300

)

Other long-term liabilities

 

 

(71

)

 

 

70

 

Net cash used in operating activities

 

 

(34,556

)

 

 

(28,682

)

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Maturities and sales of marketable securities

 

 

103,823

 

 

 

126,556

 

Purchases of marketable securities

 

 

(96,818

)

 

 

(101,872

)

Purchases of property and equipment

 

 

(1,231

)

 

 

 

Net cash provided by investing activities

 

 

5,774

 

 

 

24,684

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net

 

 

135,180

 

 

 

108,399

 

Proceeds from exercise of stock options and

     purchases under employee stock purchase plan

 

 

2,435

 

 

 

1,560

 

Net cash provided by financing activities

 

 

137,615

 

 

 

109,959

 

Net increase in cash, cash equivalents and restricted cash

 

 

108,833

 

 

 

105,961

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

26,135

 

 

 

16,119

 

Cash, cash equivalents and restricted cash at end of period

 

$

134,968

 

 

$

122,080

 

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, 2019, as filed with the Securities and Exchange Commission on February 25, 2020, from which we derived our balance sheet as of December 31, 2019. 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 may 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 operation 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, 2020, 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, 2020

 

 

December 31, 2019

 

 

June 30, 2019

 

 

December 31, 2018

 

Cash and cash equivalents

 

$

134,758

 

 

$

26,135

 

 

$

122,080

 

 

$

16,119

 

Restricted cash

 

 

210

 

 

 

 

 

 

 

 

 

 

Total

 

$

134,968

 

 

$

26,135

 

 

$

122,080

 

 

$

16,119

 

 

Net Loss per Share

Net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common shares and common stock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, outstanding stock options, an outstanding warrant and employee stock purchase plan rights are excluded from the calculation of diluted net loss per common share for the periods presented as their effect would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the antidilutive effect of the securities. More specifically, for the three and six months ended June 30, 2020 and 2019, outstanding stock options, an outstanding warrant and employee stock purchase plan rights totaling approximately 5,141,000 shares and 4,140,000 shares, respectively, were excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, in order to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses, and establishes additional disclosures related to credit risks. We adopted ASU 2016-13 on January 1, 2020. The adoption of the new standard did not have a material impact on our unaudited condensed financial statements. We will continue to actively monitor the impact of the ongoing coronavirus (COVID-19) pandemic on expected credit losses.

 

 


7


3. Investments

We invest in available-for-sale securities consisting of money market funds, U.S. Treasury securities, corporate debt securities and commercial paper. Available-for-sale securities are classified as part of either cash and cash equivalents or short-term investments on our unaudited condensed balance sheets.

The following tables summarize, by major security type, our investments that are measured at fair value on a recurring basis, in thousands:

 

 

 

 

June 30, 2020

 

 

Maturities

(years)

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

1 or less

 

$

129,433

 

 

$

 

 

$

 

 

$

129,433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments: