If London is a watercolor, New York is an oil painting.” ― Peter Shaffer
Today, we update the investment thesis on Kura Oncology (KURA) after it recently provided some new trial results and received some new analyst commentary.
Kura Oncology is a San Diego based company that is focused on creating precision medicines for patients with cancer. The company came public just under four years. The stock currently trades at $19.50 a share and has market cap of approximately $700 million. The shares have done well so far in 2019.
Early yesterday, the company disclosed Phase II data around its drug candidate tipifarnib in patients with relapsed or refractory peripheral T-cell lymphoma. Kura stated that it believes the data support the potential to register tipifarnib in both the AITL (angioimmunoblastic T-cell lymphoma) and PTCL-NOS (Peripheral T-cell lymphoma not otherwise specified) patient populations as 'the trial showed ongoing anti-tumor activity and a manageable safety profile'. The next step for management is to meet with the FDA to seek regulatory feedback on next steps for the program.
Analyst Commentary & Balance Sheet:
H.C. Wainwright ($31 price target), Leerink Partners ($27 price target, up from $25 previously), Wedbush ($30 price target, up from $23 previously) and Cowen & CO. have all reiterated Buy ratings on Kura Oncology over the past few days. Here is the commentary from Wainwright's analyst
The company announced positive follow-up data from the ongoing Phase 2 clinical trial addressing the anti-tumor role of tipifarnib in PTCL patients and met the primary endpoint. Kura reported a crucial biomarker set of data, the enrichment of high rate of mutation/variation of the killer cell immunoglobulin-like receptors, including KIR3DL2 in AITL patients and its role in tipifarnib outcome. Kura's targeted approaches could generate fast and meaningful information on crucial tumor indications and patient cohorts where tipifarnib may see more robust clinical outcomes, increasing his confidence on tipifarnib's likelihood of success'
The company ended the first quarter with some $165 million in cash and marketable securities on the books. It currently is burning just less than $15 million a quarter in cash to fund all activities. Leadership has stated that funding in place will be sufficient to fund current operations into 2021.
The company has couple of other earlier stage compounds in development. However, in the near and the medium term the stock will properly move on the success or failure of tipifarnib. We have a couple of potential catalysts on the horizon in the second half of the year. The FDA should provide input on the next steps for tipifarnib in the near future around AITL and PTCL-NOS. In addition, study data from an ongoing Phase 2 trial of tipifarnib in HRAS mutant HNSCC and other SCCs is anticipated before year end.
The company has multiple 'shots on goal', is well funded, has some additional milestones upcoming in 2019 and is getting an increasingly positive analyst support. While the shares have appreciated nicely this year, Kura's risk/reward profile still looks attractive after these latest trial results.
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An efficient way to add exposure or to Kura is via a Buy-Write order. Using the October $20 call strikes, fashion a Buy-Write order with a net debit in the $16.40 to $16.60 range (net stock price - option premium). This mitigates considerable some downside risk and sets up a more than solid potential return for its approximate four month hold period.
Paris is a woman but London is an independent man puffing his pipe in a pub.” ― Jack Kerouac, Lonesome Traveler
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Thank You & Happy Hunting,
Disclosure: I am/we are long KURA.