Kura Oncology’s (NASDAQ:KURA) stock value has surged 54% this year, mainly due to expectations that the company’s developmental leukemia drug has blockbuster potential. With growing speculations that the company might be a compelling acquisition target by a larger pharmaceutical company, investors’ enthusiasm for the stock has risen.
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The drug still has a long way to go in clinical trials to realize its full potential, and M&A rumors are ephemeral, making this a speculative play.
Kura Oncology’s Attractive Pipeline
Kura Oncology is a clinical-stage biopharmaceutical firm focused on developing precision cancer medicine. The firm’s pipeline comprises small-molecule drugs targeted at cancer signaling pathways. Chief among these is Ziftomenib, an oral drug candidate which has recently received a Breakthrough Therapy Designation (BTD) for the treatment of R/R NPM1-mutant AML, a severe and potentially life-threatening condition.
In addition to Ziftomenib, Kura is advancing several other product candidates through internal development and strategic partnerships. These include Tipifarnib, currently being tested in a Phase 1/2 trial in combination with alpelisib for patients with PIK3CA-dependent HNSCC. The firm is also evaluating KO-2806, in a Phase 1 dose-escalation trial as a monotherapy and in combination with targeted therapies.
The potential market for Kura’s products is significant. The global market for oncology drugs is projected to grow at a CAGR of 7.83% to $323 billion in 2028. This growth rate outpaces other therapeutic areas and indicates a substantial opportunity for oncology-focused biopharmaceutical companies like Kura.
Kura’s Recent Financials
Kura Oncology recently disclosed a greater-than-anticipated quarterly loss of $49.5 million in the first quarter of 2024, a substantial increase compared to the net loss of $34.1 million reported in the corresponding quarter of 2023. Meanwhile, earnings per share of -$0.59 missed analyst expectations of -$0.55 per share.
With that in mind, Kura’s financial health appears otherwise stable, with cash, cash equivalents, and short-term investments totaling $527 million as of March 31, 2024. This represents a substantial increase from the $424 million cash flow of December 2023. This is partly due to net proceeds amounting to approximately $145.8 million from a private placement in January 2024. According to their current operating model, Kura’s management anticipates that these funds will be able to support ongoing operations until 2027.
Is KURA Stock a Buy?
Analysts following the company have been bullish on the stock; Bank of America analyst Jason Zemansky recently issued a price target of $33 and a Buy rating on the shares, noting the company’s promising developments and future prospects.
Kura Oncology is rated a Strong Buy based on the recommendations and price targets issued by 11 Wall Street analysts over the past three months. The average price target for KURA stock is $31.00, representing a 39.83% upside from current levels.
The stock has shown upward momentum, climbing over 9.5% in the past 90 days. It sits at the high end of its 52-week price range of $7.41-$24.17 and continues to demonstrate positive price momentum, trading above the 20-day (20.66) and 50-day (20.15) moving averages.
Bottom Line on KURA
Kura Oncology has promising prospects in the pipeline, particularly its developmental leukemia drug, Ziftomenib. The company’s financial health remains resilient, with enough backup to support ongoing operations until 2027. This strong position, combined with the fast growth of the global market for oncology drugs, points towards significant opportunities for Kura Oncology to capitalize on. Yet, the journey ahead is uncertain, suggesting it’s only for investors willing to embrace the speculative nature of this play.
