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Monday, Feb 26, 2024

Kura Secures $125M Loan Facility

PHARMA: Firm Also Nets $25M from BMS

San Diego-based Kura Oncology, Inc., which develops targeted therapies for treating cancer, has targeted financial transactions with high-profile partners to help fund its programs for the next few years.

On Nov. 3,  Kura (NASDAQ: KURA) announced a $25 million equity investment from Bristol Myers Squibb (NYSE: BMY) and a term loan facility with access to up to $125 million from Hercules Capital, Inc. (NYSE: HTGC). If the term loan is fully drawn, proceeds from these two transactions together with existing cash are expected to fund Kura’s current operating plan into 2026.

Troy Wilson, Ph.D.
Kura Oncology, Inc.

“Bristol Myers Squibb has deep expertise and history in advancing transformational cancer treatments,” said Troy Wilson, Ph.D., J.D., president and CEO of Kura Oncology. “This equity investment strengthens the relationship between our organizations and enables Bristol Myers Squibb to provide valuable strategic input into our global development strategy. We are honored and excited to have their support and look forward to their input as we work to deliver innovative science with the potential to benefit patients.”

Wilson said that while Kura was already “well capitalized” before the deal with Bristol Myers Squibb (BMS), the two companies had been in discussions to see if there was potential for mutual benefit.

“What BMS gets is regular updates on our progress. What we get in return is a member of their clinical development leadership to sit on our steering committee,” he said, adding that BMS is a $180 billion company and are “pros” at drug development “It’s not so much about the money as it is about the relationship. It gave us an opportunity to get a little closer to an organization that is world-class. It’s great to have their input as we’re thinking about and planning for making larger investments in our programs.”

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Under the terms of the deal, Kura agreed to sell 1,370,171 shares of common stock in a registered direct offering to BMS at $18.25 per share for gross proceeds of $25 million. In connection with the equity investment, BMS will appoint a member to Kura’s Global Steering Committee.

Kura will maintain full ownership and control of its programs and operations.

In the days following the announced deal, Kura stock dipped slightly from $15.33 per share to $13.28 but has since rebounded to around $15.75.

‘Strategic Flexibility’

In addition to the equity deal with BMS, Kura further capitalized with a loan from Hercules Capital. Under the terms of the loan, $10 million will be drawn immediately after closing and an additional $15 million is immediately available to Kura at its discretion.

Kura may draw an additional $75 million in two separate tranches upon achievement of near-term clinical milestones. An additional $25 million may be drawn in a fourth tranche, subject to the approval of Hercules Capital.

The loan bears an initial interest rate of 8.65% and adjusts with future changes in the prime rate.

Kura will pay interest only for the first 24 months, extendable to up to 48 months on achievement of certain milestones. The loan matures 60 months from closing in November 2027.

Wilson described the deal with Hercules as “strategic” for Kura, adding that the company now has around $462 million pro forma, including the $25 million from BMS and the $10 million from Hercules.

Lake McGuire
Managing Director
Hercules Capital

“We can now say to Wall Street, ‘We have three years of cash so we can fund all the things we plan on investing in.’ It gives us flexibility. We’ve got a lot of things we can invest in. We’ve got a lot of areas where we think we can create value. We wanted to make sure we were not spending too much time looking at the gas gauge.”

Hercules Capital Managing Director Lake McGuire said the capital commitment from Hercules “aims to help Kura deliver new treatment options” to cancer patients and reflects Hercules’ “dedication to provide customized financing solutions to growth-stage life science companies.

“Hercules is pleased to enter into a strategic relationship with Kura as it advances its promising clinical-stage programs,” he added.

Promising Programs

Kura’s pipeline consists of small molecule drug candidates that target cancer signaling pathways.

Ziftomenib is currently in a Phase 1b clinical trial for patients with relapsed/refractory acute myeloid leukemia (AML).

Wilson said Kura will likely be meeting with FDA before the end of this year and hopes to file for Phase 2 studies to begin next year, including combination studies.

The drug furthest along in trials at Kura is Tipifarnib, a targeted small molecule therapy for head and neck cancer that is taken in combination with another drug.

Tipifarnib has been studied in more than 5,000 oncology patients and clinical and preclinical data suggest that, in certain selected patient populations, it has the potential to provide clinical benefit to cancer patients with limited treatment options.

Kura is also developing a new molecule intended to take existing targeted therapies and make them better, Wilson said.

Kura Oncology, Inc.

Founded: 2014
CEO: Troy Wilson
Business: Targeted therapies for treating cancer
Headquarters: San Diego
Employees: 130
Website: kuraoncology.com
Notable: Kura is named after an east-flowing  river  south of the Greater Caucasus mountains that drains into the Caspian Sea.


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