What changed in this filing

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Item 1. Financial Statements

2020-08-06 compared with 2020-05-04 · 126 added, 77 removed, 230 unchanged (47% of the section changed)

6 unchanged sentences

Short-term investments

Accounts receivable, related party

Prepaid expenses and other current assets

2 unchanged sentences

Restricted cash

Operating lease right-of-use assets

Other long-term assets

5 unchanged sentences

Long-term debt, net

Operating lease liabilities, long-term

Other long-term liabilities

7 unchanged sentences

56,214 and 45,384 shares issued and outstanding as of

March 31, 2020 and December 31, 2019, respectively

June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Operating Expenses:

Research and development (includes related party

amounts of $ 132 and $ 53 for the three months ended

March 31, 2020 and 2019, respectively)

amounts of $ 63 and $ 98 for the three months

ended June 30, 2020 and 2019, respectively,

and $ 195 and $ 151 for the six months ended

June 30, 2020 and 2019, respectively)

General and administrative (includes related party

amounts of $ 111 and $ 87 for the three months ended

March 31, 2020 and 2019, respectively)

amounts of $ 76 and $ 88 for the three months

ended June 30, 2020 and 2019, respectively,

and $ 187 and $ 175 for the six months ended

June 30, 2020 and 2019, respectively)

Total operating expenses

5 unchanged sentences

Net loss per share, basic and diluted

Weighted average number of shares used in computing

net loss per share, basic and diluted

Weighted average number of shares used in

computing net loss per share,

basic and diluted

Comprehensive Loss:

Other comprehensive income:

Unrealized gain on marketable securities

and foreign currency

Other comprehensive income (loss):

Unrealized gain (loss) on marketable

securities and foreign currency

Comprehensive Loss

7 unchanged sentences

Balance at December 31, 2019

Issuance of common stock, net of offering costs

Share-based compensation expense

Issuance of common stock from exercise of options

and employee stock purchase plan

Other comprehensive income

Balance at June 30, 2020

Comprehensive

Stockholders'

Income (Loss)

Balance at March 31, 2020

Issuance of common stock, net of offering costs

Share-based compensation expense

Issuance of common stock from exercise of options

and employee stock purchase plan

Other comprehensive loss

Balance at June 30, 2020

See accompanying notes to unaudited condensed financial statements.

KURA ONCOLOGY, INC.

Condensed Statements of Stockholders’ Equity

(In thousands)

Comprehensive

2 unchanged sentences

Balance at December 31, 2018

Issuance of common stock, net of offering costs

Share-based compensation expense

Issuance of common stock from exercise of options

and employee stock purchase plan

Other comprehensive income

Balance at June 30, 2019

Comprehensive

Stockholders'

Income (Loss)

Balance at March 31, 2019

Issuance of common stock, net of offering costs

Share-based compensation expense

Issuance of common stock from exercise of options

and employee stock purchase plan

Other comprehensive income

Balance at June 30, 2019

See accompanying notes to unaudited condensed financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended

Operating Activities

1 unchanged sentence

Share-based compensation expense

Depreciation expense

Amortization of premium and accretion of discount on

1 unchanged sentence

Changes in operating assets and liabilities:

Accounts receivable, related party

Prepaid expenses and other current assets

9 unchanged sentences

Financing Activities

Proceeds from exercise of stock options

Proceeds from issuance of common stock, net

Proceeds from exercise of stock options and

purchases under employee stock purchase plan

Net cash provided by financing activities

31 unchanged sentences

Under the terms of an office lease entered into in March 2020, we are required to maintain a standby letter of credit during the term of the lease.

As of March 31, 2020, restricted cash of $ 0.2 million was pledged as collateral for the letter of credit.

As of June 30, 2020, restricted cash of $ 0.2 million was pledged as collateral for the letter of credit.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the unaudited condensed balance sheets that sum to the total of the amounts shown in the unaudited condensed statements of cash flows, in thousands:

March 31, 2020

June 30, 2020

December 31, 2019

March 31, 2019

June 30, 2019

December 31, 2018

6 unchanged sentences

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the antidilutive effect of the securities.

More specifically, for the three months ended March 31, 2020 and 2019 , outstanding stock options, an outstanding warrant and employee stock purchase plan rights totaling approximately 5,368,000 shares and 4,383,000 shares, respectively, were excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive.

More specifically, for the three and six months ended June 30, 2020 and 2019 , outstanding stock options, an outstanding warrant and employee stock purchase plan rights totaling approximately 5,141,000 shares and 4,140,000 shares, respectively, were excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive.

Recent Accounting Pronouncements

4 unchanged sentences

The adoption of the new standard did not have a material impact on our unaudited condensed financial statements.

We will continue to actively monitor the impact of the recent coronavirus (COVID-19) pandemic on expected credit losses.

We invest in available-for-sale securities consisting of money market funds, corporate debt securities, U.S.

Treasury securities and commercial paper.

We will continue to actively monitor the impact of the ongoing coronavirus (COVID-19) pandemic on expected credit losses.

We invest in available-for-sale securities consisting of money market funds, U.S.

Treasury securities, corporate debt securities and commercial paper.

Available-for-sale securities are classified as part of either cash and cash equivalents or short-term investments on our unaudited condensed balance sheets.

The following tables summarize, by major security type, our investments that are measured at fair value on a recurring basis, in thousands:

March 31, 2020

June 30, 2020

Cash equivalents:

1 unchanged sentence

Short-term investments:

Corporate debt securities

Treasury securities

Corporate debt securities

Commercial paper

4 unchanged sentences

Short-term investments:

Corporate debt securities

Treasury securities

Corporate debt securities

Commercial paper

1 unchanged sentence

The available-for-sale investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund our operations, as necessary.

As of March 31, 2020, $ 173.0 million of our short-term investments had maturities less than one year, and $ 10.1 million had maturities between one to two years.

Realized gains and losses were de minimus for the three months ended March 31, 2020.

As of June 30, 2020, all of our short-term investments had maturities less than one year.

Realized gains and losses were de minimus for the three and six months ended June 30, 2020.

We evaluate our available-for-sale debt securities for credit losses when the amortized cost basis exceeds fair value.

2 unchanged sentences

When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made.

We recorded no allowance for credit losses in the statement of operations and comprehensive loss during the three months ended March 31, 2020.

As of June 30, 2020, marketable securities with a fair market value of $ 40.7 million were in immaterial gross unrealized loss positions.

Based on our review of these securities, we believe none of the unrealized loss is a result of a credit loss as of June 30, 2020 because we do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities prior to recovery of their amortized cost basis.

Fair Value Measurements

As of March 31, 2020 and December 31, 2019, we had cash equivalents and short-term investments measured at fair value on a recurring basis.

As of June 30, 2020 and December 31, 2019, we had cash equivalents and short-term investments measured at fair value on a recurring basis.

Available-for-sale marketable securities consist of U.S.

4 unchanged sentences

The following tables summarize, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy, in thousands:

March 31, 2020

June 30, 2020

Cash equivalents:

1 unchanged sentence

Short-term investments:

Corporate debt securities

Treasury securities

Corporate debt securities

Commercial paper

4 unchanged sentences

Short-term investments:

Corporate debt securities

Treasury securities

Corporate debt securities

Commercial paper

4 unchanged sentences

Property and equipment consisted of the following, in thousands:

March 31, 2020

June 30, 2020

December 31, 2019

5 unchanged sentences

Property and equipment, net

Furniture and fixtures and leasehold improvements are being constructed for our new office facilities and have not been placed in to service as of March 31, 2020 .

Accounts payable and accrued liabilities consisted of the following, in thousands:

March 31, 2020

June 30, 2020

December 31, 2019

2 unchanged sentences

Accrued compensation and benefits

Lease liability, current portion

Other accrued expenses

Total accounts payable and accrued expenses

We have a sublease with a related party for office space in San Diego, California, or Sublease, and a lease for office space in Cambridge, Massachusetts, that existed before January 1, 2019 and were classified as operating leases.

Long-Term Debt

On April 3, 2020, we entered into the First Amendment to Loan and Security Agreement with Silicon Valley Bank to extend the additional draw period.

Under the terms of the loan and security agreement, as amended, we may, at our sole discretion, borrow up to an additional $ 12.5 million at any time until November 30, 2020.

There were no other changes to the terms of the loan and security agreement.

We had a sublease with a related party for office space in San Diego, California, or Sublease, and a lease for office space in Cambridge, Massachusetts, that existed before January 1, 2019 and were classified as operating leases.

In March 2019, the Sublease was amended to extend the expiration date from October 31, 2019 to April 30, 2020 with the monthly rent increased from approximately $ 16,000 to approximately $ 24,000 per month effective November 1, 2019 .

In April 2020, the Sublease was amended to extend the expiration date from April 30, 2020 to June 30, 2020 with no change to the amount of monthly rent.

The Sublease was terminated in June 2020 .

See Note 10, Related Party Transactions, for further details of the Sublease.

In January 2020, we entered into an office lease agreement for our future corporate offices in San Diego, California, or San Diego Lease, which would have commenced on May 1, 2020 .

In May 2020, the commencement date has subsequently been amended to August 1, 2020 , as described in Note 9, Subsequent Events .

The San Diego Lease term is five years and four months and provides for a one -time option to extend for a period of five additional years.

The lease for office space in Cambridge, Massachusetts expired on July 31, 2020 .

In January 2020, we entered into an office lease agreement for our corporate offices in San Diego, California, which would have commenced on May 1, 2020 .

In May 2020, we entered into an amendment to such office lease agreement that subsequently amended the commencement date to August 1, 2020 and extended the lease expiration to November 30, 2025 .

We refer to such office lease agreement, as amended, as the San Diego Lease.

The San Diego Lease provides for a one -time option to extend for a period of five additional years.

The monthly base rent is approximately $ 58,000 for the first year, which amount will increase by 3.0 % per year over the initial term.

In addition, the lease is subject to charges for common area maintenance and other costs.

The lease provides four month rent abatement periods during the first year of the lease and approximately $ 1.0 million in reimbursement for allowable tenant improvements, which effectively reduce the total lease payments owed for the lease.

The San Diego Lease is considered to be an operating lease.

In addition, the San Diego Lease is subject to charges for common area maintenance and other costs.

The San Diego Lease provides a four-month rent abatement period during the first year of the San Diego Lease and approximately $ 1.0 million in reimbursement for allowable tenant improvements, which effectively reduce the total lease payments owed for the San Diego Lease.

For accounting purposes, the lease commencement date was determined to be March 2020 when we had control of the office space.

We recorded operating lease right-of-use, or ROU, asset and operating lease liability of approximately $ 2.2 million on our unaudited condensed balance sheet.

In March 2020, we entered into a lease for office space in Boston, Massachusetts, or the Boston Lease, commencing on April 1, 2020 and expiring on July 31, 2024 .

The lease provides for one option to extend the lease for a period of five additional years .

The monthly base rent will be approximately $ 105,500 for the first year, which amount will increase by 2.0 % per year over the initial term.

In addition to base monthly rent, we will be obligated to pay for common area maintenance and other costs.

We recorded an operating lease right-of-use, or ROU, asset and operating lease liability of approximately $ 2.1 million on our unaudited condensed balance sheet.

In March 2020, we entered into a lease agreement for office space in Boston, Massachusetts, or the Boston Lease, which commenced on April 1, 2020 and expires on July 31, 2024 .

The Boston Lease provides for a one -time option to extend the Boston Lease for a period of five additional years after the expiration of the initial lease term .

Under the terms of the Boston Lease, monthly base rent is approximately $ 105,500 for the first year, subject to an annual fixed percentage increase of 2.0 % on April 1 st of each year.

In addition, we are obligated to pay for common area maintenance and other costs.

Under the terms of the Boston Lease, we are required to maintain a standby letter of credit of approximately $ 0.2 million during the term of the lease.

As of March 31, 2020, we had not taken control of the space and the lease term had not commenced;

therefore, no ROU asset or lease liability has been recorded.

Maturities of lease liabilities as of March 31, 2020 are as follows, in thousands:

We recorded an operating lease ROU asset and operating lease liability of approximately $ 5.1 million on our unaudited condensed balance sheet.

In May 2020, we entered into a two-year sublease for certain designated lab space in San Diego, California, which commenced on June 9, 2020 .

Under the terms of the sublease, the monthly base rent is approximately $ 12,500 in the first year, subject to an annual fixed percentage increase of 5.0 % in June of the following year.

We are not obligated to pay for common area maintenance and other costs.

We recorded an operating lease ROU asset and operating lease liability of approximately $ 0.3 million on our unaudited condensed balance sheet.

Maturities of lease liabilities as of June 30, 2020 are as follows, in thousands:

Year Ending December 31,

3 unchanged sentences

Total operating lease liabilities

Includes tenant incentives of $ 1.0 million to be received from the landlord in 2020.

Includes the remaining tenant incentives of $ 0.5 million to be received from the landlord in 2020.

As of December 31, 2019, we had remaining lease liabilities of approximately $ 0.3 million which will mature in 2020.

ROU assets are recorded in other long-term assets on our unaudited condensed balance sheets.

Current and non-current lease

liabilities are recorded in accounts payable and accrued expenses and other long-term liabilities , respectively, on our unaudited condensed balance sheets.

As of March 31, 2020 and December 31, 2019 , total operating lease ROU assets were $ 2.2 million and $ 0.2 million, respectively.

As of March 31, 2020 and December 31, 2019, total operating lease liabilities were $ 2.2 million and $ 0.3 million, respectively, $ 1.8 million of which was recorded as noncurrent lease liability a s of March 31, 2020 .

As of March 31, 2020 and December 31, 2019, the weight ed -average discount rate was 5.6 % and 6.5 %, respectively.

As of March 31, 2020 and December 31, 2019, the weighted-average remaining lease term was 5.2 years and 0.5 years , respectively .

Total cash paid for amounts included in the measurement of lease liabilities was $ 0.2 million and $ 0.1 million for the three months ended March 31, 2020 and 2019, respectively.

ROU assets obtained in exchange for operating lease liabilities were $ 2.2 million and $ 0.7 million for the three months ended March 31, 2020 and 2019, respectively.

Total operating lease expense was approximately $ 0.2 million and $ 0.1 million for the three months ended March 31, 2020 and 2019, respectively.

Current and non-current lease liabilities are recorded in accounts payable and accrued expenses and other long-term liabilities, respectively, on our unaudited condensed balance sheets.

As of June 30, 2020 and December 31, 2019, total operating lease ROU assets were $ 7.1 million and $ 0.2 million, respectively.

As of June 30, 2020 and December 31, 2019, total operating lease liabilities were $ 7.8 million and $ 0.3 million, respectively, $ 6.0 million of which was recorded as noncurrent lease liability as of June 30, 2020.

As of June 30, 2020 and December 31, 2019, the weighted-average discount rate was 5.5 % and 6.5 %, respectively.

As of June 30, 2020 and December 31, 2019, the weighted-average remaining lease term was 4.5 years and 0.5 years, respectively.

Total cash paid for amounts included in the measurement of lease liabilities, net of tenant improvement reimbursements, was $ 0.1 million and $ 0.2 million for the six months ended June 30, 2020 and 2019, respectively.

ROU assets obtained in exchange for operating lease liabilities were $ 7.5 million and $ 0.7 million for the six months ended June 30, 2020 and 2019, respectively.

Total operating lease expense was approximately $ 0.6 million and $ 0.1 million for the three months ended June 30, 2020 and 2019, respectively.

Total operating lease expense was approximately $ 0.7 million and $ 0.2 million for the six months ended June 30, 2020 and 2019, respectively.

We have entered into short-term operating leases that are not recorded on the unaudited condensed balance sheet.

Total rent expense of all operating leases for the three months ended March 31, 2020 and 2019 was approximately $ 0.3 million and $ 0.1 million, respectively.

Total rent expense of all operating leases for the three months ended June 30, 2020 and 2019 was approximately $ 0.6 million and $ 0.1 million, respectively.

Total rent expense of all operating leases for the six months ended June 30, 2020 and 2019 was approximately $ 0.9 million and $ 0.3 million, respectively.

Stockholders’ Equity

In May 2020, we completed a public offering in which we sold an aggregate of 10,465,000 shares of common stock at a price of $ 13.75 per share.

Net proceeds from the public offering, after deducting underwriting discounts, commissions and offering expenses, were approximately $ 134.9 million.

In June 2019, we completed a public offering in which we sold an aggregate of 6,785,000 shares of common stock at a price of $ 17.00 per share.

Net proceeds from the public offering, after deducting underwriting discounts, commissions and offering expenses, were approximately $ 108.1 million.

Share-Based Compensation

The following table summarizes share-based compensation expense for all share-based compensation arrangements, in thousands:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Research and development

1 unchanged sentence

Total share-based compensation expense

As of March 31, 2020, unrecognized compensation costs related to employee stock options was approximately $ 30.5 million, which is expected to be recognized over a weighted average period of approximately 3.0 years.

As of June 30, 2020, unrecognized compensation costs related to employee stock options was approximately $ 28.6 million, which is expected to be recognized over a weighted average period of approximately 2.8 years.

Related Party Transactions

Our president and chief executive officer is also the sole managing member of Araxes Pharma LLC, or Araxes, and is a significant stockholder of each of us and Araxes.

The following is a summary of related party transactions for the three months ended March 31, 2020 and 2019:

The following is a summary of related party transactions for the three and six months ended June 30, 2020 and 2019:

Facility Sublease

3 unchanged sentences

In April 2020, the Sublease was amended to extend the expiration date to June 30, 2020 with no change to the amount of monthly rent.

For the three months ended March 31, 2020 and 2019, rent expense, including operating costs, related to our sublease was approximately $ 0.1 million in both periods.

The Sublease was terminated in June 2020 .

For the three months ended June 30, 2020 and 2019, rent expense, including operating costs, related to our sublease was approximately $ 0.1 million in both periods.

For the six months ended June 30, 2020 and 2019, rent expense, including operating costs, related to our Sublease was approximately $ 0.2 million in both periods.

Management Fees

We have a management services agreement with Araxes pursuant to which Araxes pays us monthly fees for management services calculated based on costs incurred by us in the provision of services to Araxes, plus a reasonable mark-up.

For the three months ended March 31, 2020 and 2019, we recorded approximately $ 0.1 million in management fee income in both periods.

For the three months ended June 30, 2020 and 2019, we recorded approximately $ 0.1 million in management fee income in both periods.

For the six months ended June 30, 2020 and 2019, we recorded approximately $ 0.1 million and $ 0.2 million in management fee income, respectively.

In addition, the agreement allows for Araxes to reimburse us an amount equal to the number of full-time equivalents, or FTE, performing research and development services for Araxes, at an annual FTE rate of approximately $ 382,000 , plus actual expenses as reasonably incurred.

1 unchanged sentence

The agreement may be terminated by either party with a notice of at least 30 days prior to the expiration of the then-renewal term.

For the three months ended March 31, 2020 and 2019, we recorded reimbursements of nil and approximately $ 0.1 million, respectively, for research and development services

provided to Araxes, which was recorded as a reduction to research and development expenses, on our unaudited condensed statements of operations and comprehensive loss.

As of March 31, 2020 and December 31, 2019 , approximately $ 0.1 million in both periods related to management fees and reimbursements of research and development services , which are included in accounts receivable, related party on our unaudited condensed balance sheets.

For the three and six months ended June 30, 2020 and 2019, we recorded reimbursements of nil and approximately $ 0.1 million, respectively, for research and development services provided to Araxes, which was recorded as a reduction to research and development expenses, on our unaudited condensed statements of operations and comprehensive loss.

Services Agreement

We have a services agreement with Wellspring Biosciences, Inc., or Wellspring, pursuant to which we pay Wellspring for research and development services provided to us in an amount equal to the number of FTE’s performing the services, at an annual FTE rate of $ 400,000 , plus actual expenses as reasonably incurred.

We have a services agreement with Wellspring Biosciences, Inc., or Wellspring, a wholly owned subsidiary of Araxes, pursuant to which we pay Wellspring for research and development services provided to us in an amount equal to the number of FTE’s performing the services, at an annual FTE rate of $ 400,000 , plus actual expenses as reasonably incurred.

The initial term of this services agreement expired on December 31, 2015 but, pursuant to the terms of the agreement, renews automatically for additional consecutive one-year periods.

The agreement may be terminated by either party with a notice of at least 30 days prior to the expiration of the then-renewal term.

For the three months ended March 31, 2020 and 2019, we recognized approximately $ 0.1 million in both periods, from research and development services provided to us under this agreement as research and development expense on our unaudited condensed statements of operations and comprehensive loss.

As of March 31, 2020 and December 31, 2019, approximately $ 0.1 million and nil, respectively, related to research and development services under this agreement, which are included in accounts payable and accrued expenses on our unaudited condensed balance sheets.

Subsequent Events

On April 3, 2020, we entered into the First Amendment to Loan and Security Agreement with Silicon Valley Bank to extend the additional draw period.

Under the terms of the loan and security agreement, as amended, we may, at our sole discretion, borrow up to an additional $ 12.5 million at any time until November 30, 2020 .

On April 22, 2020, we entered into a Second Amendment to Sublease with Araxes to extend the expiration of the Sublease to June 30, 2020 .

On May 2, 2020, we entered into a First Amendment to the San Diego Lease, to amend the commencement date from May 1, 2020 to August 1, 2020 .

For the three and six months ended June 30, 2020 and 2019, we recognized approximately $ 0.1 million in each period, from research and development services provided to us under this agreement as research and development expense on our unaudited condensed statements of operations and comprehensive loss.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements