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On Monday, Stifel, a financial services firm, downgraded Kura Oncology (NASDAQ:KURA)'s stock from Buy to Hold and reduced the price target from $26.00 to $19.00. The adjustment comes as the firm anticipates challenges for Kura's cancer drug, ziftomenib, in gaining market share against its competitors.
Stifel's valuation reflects an expectation for the menin inhibitor class to exceed $1 billion in market value, yet predicts that Kura's ziftomenib will only capture a minority share. The concerns stem from ziftomenib's delay in pivotal data and commercial launch in comparison to Syndax's revumenib, its main competitor in the relapsed/refractory NPM1-mutated acute myeloid leukemia (R/R NPM1m AML) market.
The firm believes that the two drugs, ziftomenib and revumenib, appear similar in monotherapy effectiveness. This similarity could disadvantage Kura as Syndax is likely to reach the market first. While optimistic about the potential of ziftomenib in combination therapies, Stifel does not see upcoming phase 1 updates sufficiently offsetting the challenges faced in monotherapy trials.
Stifel also suggests that Kura Oncology's valuation will continue to be heavily influenced by its developments in menin inhibition and AML treatments. The market's expectation for strong data from Kura's farnesyl transferase inhibitor (FTI) is high, and robust results are necessary to justify risk-adjusted valuations. However, such data may not be reported until after 2025, adding to the uncertainty around Kura's stock value.
In other recent news, Kura Oncology has been making significant advancements in its oncology pipeline, particularly with its flagship drug, ziftomenib. The company completed enrollment for the registration-directed portion of the KOMET-001 trial for ziftomenib, with over 85 patients enrolled.
Ziftomenib also received a breakthrough therapy designation for relapsed/refractory NPM1-mutant acute myeloid leukemia and FDA clearance for an Investigational New Drug application in combination with imatinib.
Despite this progress, Kura Oncology reported a net loss of $50.8 million for the quarter, largely due to increased research and development expenses. However, the company's strong cash position of $491.5 million is expected to fund operations into 2027.
Kura Oncology also recently welcomed Michael J. Vasconcelles, M.D., to its Board of Directors and Compensation Committee. Dr. Vasconcelles brings over 25 years of oncology drug development experience, having served in leadership roles at several biopharmaceutical firms. He will receive an annual cash retainer of $40,000 for his service on the Board and an additional $7,500 for his role on the Compensation Committee.
Looking ahead, Kura Oncology plans to present updated data from the KOMET-007 trial, report topline data from the ziftomenib registration-directed trial, initiate a proof-of-concept study for ziftomenib and imatinib in advanced GIST, and nominate a next-generation menin inhibitor development candidate for diabetes. These recent developments highlight Kura Oncology's commitment to advancing its oncology pipeline.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Kura Oncology's financial position and market performance. Despite the downgrade from Stifel, the company's stock has shown remarkable resilience over the past year, with a 120.14% price total return. This impressive performance aligns with one of the InvestingPro Tips, which highlights Kura's "high return over the last year."
However, investors should note that Kura Oncology is not currently profitable, as indicated by its negative P/E ratio of -7.5 for the last twelve months. This is consistent with another InvestingPro Tip stating that analysts do not anticipate the company will be profitable this year. The company's focus on developing cancer treatments like ziftomenib explains its current lack of profitability, which is common for biotech firms in the research and development phase.
On a positive note, Kura Oncology maintains a strong liquidity position. An InvestingPro Tip reveals that the company "holds more cash than debt on its balance sheet" and that its "liquid assets exceed short term obligations." This financial stability could provide Kura with the runway needed to continue its drug development efforts, particularly important given Stifel's concerns about market competition.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips on Kura Oncology, providing deeper insights into the company's financial health and market position.
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