Thursday, UBS initiated coverage on Kura Oncology (NASDAQ: NASDAQ:KURA) stock, a biopharmaceutical company, with a Buy rating and a price target of $27.00. The firm's analysis suggests optimism about the company's lead drug program, ziftomenib, which targets acute myeloid leukemia (AML).
Ziftomenib, a menin inhibitor, has demonstrated significant efficacy and a clean safety profile according to the firm. The coverage initiation comes with the expectation that Kura's drug could capture a meaningful share of the AML market, despite competition from Syndax Pharmaceuticals (NASDAQ:SNDX)' revumenib.
The firm acknowledges the first-to-market advantage of revumenib for relapse/refractory KMT2A AML but sees potential for ziftomenib, particularly in relapse/refractory NPM1 AML and as a combination treatment with other standard care for first-line and maintenance AML. These applications are viewed as undervalued by the market, with UBS estimating peak risk-adjusted sales of $1.4 billion compared to a consensus of $1 billion.
The UBS report identifies several key developments expected in the near future that could influence Kura Oncology's valuation. These include the release of combination data for ziftomenib in first-line and relapse/refractory AML by the end of 2024, pivotal data in relapse/refractory NPM1 mutated AML in early 2025, and the potential approval of ziftomenib for this indication likely in the fourth quarter of 2025 or the first quarter of 2026.
In other recent news, Kura Oncology has been facing challenges with the delayed launch of its cancer drug, ziftomenib, in the acute myeloid leukemia market. Stifel, a financial services firm, downgraded Kura Oncology's stock from Buy to Hold, anticipating ziftomenib to capture only a minority share in the market.
Despite these challenges, Kura Oncology has made significant advancements in its oncology pipeline, particularly with ziftomenib, which received a breakthrough therapy designation and FDA clearance for an Investigational New Drug application.
The company reported a net loss of $50.8 million for the quarter due to increased research and development expenses, but its strong cash position of $491.5 million is expected to fund operations into 2027. In a move to bolster its board, Kura Oncology recently welcomed Michael J. Vasconcelles, M.D., who brings over 25 years of oncology drug development experience.
Looking ahead, Kura Oncology plans to present updated data from the KOMET-007 trial, report topline data from the ziftomenib registration-directed trial, and initiate a proof-of-concept study for ziftomenib and imatinib in advanced GIST. These recent developments underscore Kura Oncology's commitment to advancing its oncology pipeline.
InvestingPro Insights
Recent data from InvestingPro adds context to UBS's optimistic outlook on Kura Oncology. The company's market capitalization stands at $1.3 billion, reflecting investor interest in its potential. Despite the promising prospects of ziftomenib, it's important to note that Kura is not currently profitable, with a negative P/E ratio of -6.87 over the last twelve months as of Q2 2024.
InvestingPro Tips highlight that Kura holds more cash than debt on its balance sheet, which could provide financial flexibility as it advances its drug pipeline. Additionally, the company's liquid assets exceed short-term obligations, potentially offering a buffer as it navigates the capital-intensive process of drug development and potential commercialization.
Interestingly, while UBS sets a $27 price target, InvestingPro data shows a fair value based on analyst targets at $32, suggesting even more upside potential. However, investors should be aware that Kura's net income is expected to drop this year, and analysts do not anticipate profitability in the near term.
For those seeking a deeper dive into Kura Oncology's financial health and market position, InvestingPro offers 8 additional tips that could provide valuable insights for investment decisions.
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