What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 110 added, 59 removed, 231 unchanged (42% of the section changed)

28 unchanged sentences

66,296 and 66,194 shares issued and outstanding as of

March 31, 2021 and December 31, 2020, respectively

June 30, 2021 and December 31, 2020, 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:

1 unchanged sentence

amounts of nil and $ 63 for the three months

ended March 31, 2021 and 2020, respectively)

ended June 30, 2021 and 2020, respectively, and nil and $ 195 for the six months ended June 30, 2021 and 2020, respectively)

General and administrative (includes related party

amounts of nil and $ 76 for the three months

ended March 31, 2021 and 2020, respectively)

ended June 30, 2021 and 2020, respectively, and nil and $ 187 for the six months ended June 30, 2021 and 2020, respectively)

Total operating expenses

Other Income (Expense):

Management fee income, related party

Interest income, net

Interest and other income, net

Interest expense

Total other income

Total other income (expense)

Net loss per share, basic and diluted

16 unchanged sentences

Share-based compensation expense

Issuance of common stock from exercise of options

Issuance of common stock from exercises of options

and employee stock purchase plan

Other comprehensive loss

Balance at June 30, 2021

Comprehensive

Stockholders'

Income (Loss)

Balance at March 31, 2021

Share-based compensation expense

Issuance of common stock from exercises of options

and employee stock purchase plan

Other comprehensive loss

Balance at June 30, 2021

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, 2019

Issuance of common stock, net of offering costs

Share-based compensation expense

Issuance of common stock from exercise of options

Issuance of common stock from exercises 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 exercises of options

and employee stock purchase plan

Other comprehensive loss

Balance at June 30, 2020

See accompanying notes to unaudited condensed financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

1 unchanged sentence

Share-based compensation expense

Non-cash interest expense

Loss on extinguishment of debt

Depreciation expense

13 unchanged sentences

Financing Activities

Proceeds from exercise of stock options

Repayment of long-term debt

Net cash provided by financing activities

Payment of fees related to extinguishment of debt

Proceeds from exercises of stock options and purchases under employee stock purchase plan

Proceeds from issuance of common stock, net

Net cash (used in) provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

22 unchanged sentences

By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates.

The extent to which the COVID-19 pandemic may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with any confidence, such as the duration and severity of the COVID-19 pandemic, steps required or mandated by governments to mitigate the impact of COVID-19 or the effectiveness of actions to prevent, contain and treat COVID-19, particularly in the geographies where we, our third party manufacturers, contract research organizations or current and planned clinical trial sites operate.

The extent to which the COVID-19 pandemic has impacted and may continue to impact our business will depend on future developments, which are highly uncertain and cannot be predicted with any confidence, such as the duration and severity of the COVID-19 pandemic, steps required or mandated by governments to mitigate the impact of COVID-19 or the effectiveness of actions to prevent, contain and treat COVID-19, particularly in the geographies where we, our third party manufacturers, contract research organizations or current and planned clinical trial sites operate.

We cannot presently predict the scope and severity of any potential business disruptions, interruptions or shutdowns.

If we or any of the third parties with whom we engage, however, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on our business and our results of operation and financial condition.

Summary of Significant Accounting Policies

3 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, 2021, restricted cash of $ 0.2 million was pledged as collateral for the letter of credit.

As of June 30, 2021, 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, 2021

June 30, 2021

December 31, 2020

March 31, 2020

June 30, 2020

December 31, 2019

17 unchanged sentences

Common stock equivalents outstanding are comprised of stock options, restricted stock units, a warrant and employee stock purchase plan rights and are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive.

Because of our net loss for the three months ended March 31, 2021 and 2020 , outstanding common stock equivalents totaling approximately 6,834,000 and 5,368,000 , respectively, were excluded from the calculation of diluted net loss per common share because their effect was anti-dilutive.

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

Treasury securities.

Because of our net loss for the three and six months ended June 30, 2021 and 2020 , common stock equivalents outstanding at June 30, 2021 and 2020 totaling approximately 7,002,000 and 5,141,000 , respectively, were excluded from the calculation of diluted net loss per common share because their effect was anti-dilutive.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that we adopt as of the specified effective date.

We have evaluated recently issued accounting pronouncements and, based on our preliminary assessment, we do not believe any will have a material impact on our unaudited condensed financial statements or related footnote disclosures.

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

Treasury securities, commercial paper, non-U.S.

government debt securities, supranational debt securities and U.S.

Agency bonds.

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 short-term investments that are measured at fair value on a recurring basis, in thousands:

March 31, 2021

June 30, 2021

Cash equivalents:

1 unchanged sentence

Short-term investments:

Commercial paper

Corporate debt securities

Treasury securities

Commercial paper

government and supranational debt securities

Total short-term investments

5 unchanged sentences

Short-term investments:

Commercial paper

Corporate debt securities

Treasury securities

Commercial paper

Total short-term investments

Short-term 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, 2021 and December 31, 2020, short-term investments of $ 310.2 million and $ 242.6 million, respectively, had maturities less than one year, and short-term investments of $ 182.8 million and $ 65.2 million, respectively, had maturities between one to two years.

Realized gains and losses were de minimis for the three months ended March 31, 2021 and 2020.

As of March 31, 2021, 16 available-for-sale debt securities with a fair market value of $ 149.5 million were in gross unrealized loss positions, none of which were in such position for greater than 12 months.

As of June 30, 2021 and December 31, 2020, short-term investments of $ 282.5 million and $ 242.6 million, respectively, had maturities less than one year, and short-term investments of $ 246.0 million and $ 65.2 million, respectively, had maturities between one to three years.

We had no realized gains or losses for the three and six months ended June 30, 2021.

As of June 30, 2021, 20 available-for-sale debt securities with a fair market value of $ 200.3 million were in gross unrealized loss positions, none of which were in such position for greater than 12 months.

We do not intend to sell these available-for-sale debt 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.

Based on our review of these available-for-sale debt securities, no ne of the unrealized losses is the result of a credit loss.

As such, we have no allowance for credit losses as of March 31, 2021 and December 31, 2020.

As such, we have no allowance for credit losses as of June 30, 2021 and December 31, 2020.

Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive income (loss).

Fair Value Measurements

As of March 31, 2021 and December 31, 2020, 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.

Treasury securities, which are measured at fair value using Level 1 inputs, and commercial paper and corporate debt securities which are measured at fair value using Level 2 inputs.

As of June 30, 2021 and December 31, 2020, we had cash equivalents and short-term investments measured at fair value on a recurring basis.

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

Treasury securities, which are measured at fair value using Level 1 inputs, and corporate debt securities, commercial paper, non-U.S.

government debt securities, supranational debt securities and U.S.

Agency bonds, which are measured at fair value using Level 2 inputs.

We determine the fair value of Level 2 related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools.

2 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, 2021

June 30, 2021

Cash equivalents:

1 unchanged sentence

Short-term investments:

Commercial paper

Corporate debt securities

Treasury securities

Commercial paper

government and supranational debt securities

Total short-term investments

5 unchanged sentences

Short-term investments:

Commercial paper

Corporate debt securities

Treasury securities

Commercial paper

Total short-term investments

We believe that our term loan facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the term loan facility approximates fair value.

The fair value of our term loan facility is determined using Level 2 inputs in the fair value hierarchy.

Balance Sheet Detail

Property and equipment consisted of the following, in thousands:

March 31, 2021

June 30, 2021

December 31, 2020

6 unchanged sentences

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

March 31, 2021

June 30, 2021

December 31, 2020

6 unchanged sentences

Total accounts payable and accrued expenses

Long-Term Debt

In November 2018, we entered into a loan and security agreement with Silicon Valley Bank, or the SVB Loan Agreement, providing for up to $ 20.0 million in a series of term loans.

Upon entering into the SVB Loan Agreement, we borrowed $ 7.5 million, or the Term Loan.

The Term Loan had a scheduled maturity date of May 1, 2023 .

In May 2021, we paid $ 6.6 million to repay all amounts owed under the Term Loan, which included a final payment of $ 0.6 million, representing 7.75 % of the Term Loan which was being accrued through interest expense using the effective interest method, and a prepayment fee of $ 30,000 .

In accordance with ASC 470-50, Debt Modifications and Extinguishments , we accounted for the transaction as an extinguishment of debt.

Accordingly, we recorded a loss of approximately $ 0.2 million for each of the three and six months ended June 30, 2021, which is included in interest expense on the unaudited condensed statements of operations and comprehensive loss.

In January 2020, we entered into an office lease agreement for our corporate offices in San Diego, California.

2 unchanged sentences

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, with such amount increasing by 3.0 % per year over the initial term.

The monthly base rent was approximately $ 58,000 for the first year, with such amount increasing by 3.0 % per year over the initial term.

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 and approximately $ 1.0 million in reimbursements for allowable tenant improvements, which effectively reduce the total lease payments owed for the San Diego Lease.

The San Diego Lease provided a four-month rent abatement period during the first year and approximately $ 1.0 million in reimbursements for allowable tenant improvements, which effectively reduced 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.

2 unchanged sentences

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 was approximately $ 105,500 for the first year, subject to an annual fixed percentage increase of 2.0 % on April 1 st of each year.

Under the terms of the Boston Lease, monthly base rent was 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.

1 unchanged sentence

We recorded an operating lease ROU asset and operating lease liability of approximately $ 5.1 million on our unaudited condensed balance sheet on the lease commencement date during the quarter ended June 30, 2020 .

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 for the first year, subject to an annual fixed percentage increase of 5.0 % in June of the following year.

In May 2020, we entered into a two-year sublease agreement, or the Sublease, for certain designated lab space in San Diego, California.

The Sublease commenced on June 9, 2020 .

In May 2021, the Sublease was amended to modify the lease expiration date to August 9, 2021 , with the monthly base rent increased from approximately $ 12,500 to approximately $ 16,000 effective June 2021.

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 on the lease commencement date during the quarter ended June 30, 2020.

Maturities of lease liabilities as of March 31, 2021 are as follows, in thousands:

In May 2021, we entered into an operating lease agreement for lab and office space in San Diego, California, or the Morehouse Lease, which is anticipated to commence on August 10, 2021 and expires on August 31, 2025 .

Under the terms of the Morehouse Lease, the monthly base rent is approximately $ 24,000 for the first year, subject to an annual fixed percentage increase of 3 % each year.

The Morehouse Lease provides approximately $ 106,000 in reimbursements for allowable tenant improvements, which effectively reduce the total lease payments owed for the Morehouse Lease.

The property is undergoing renovations for tenant improvements to install certain lab and office space upgrades.

We are obligated to pay for common area maintenance and other costs associated with the Morehouse Lease.

For accounting purposes, the lease commencement date is estimated to be July 2021 when we expect to have control of the lab and office space.

Maturities of lease liabilities as of June 30, 2021 are as follows, in thousands:

Year Ending December 31,

3 unchanged sentences

Total operating lease liabilities

As of March 31, 2021 and December 31, 2020, total operating lease ROU assets were $ 5.9 million and $ 6.3 million, respectively.

As of March 31, 2021, total operating lease liabilities were $ 7.3 million, of which $ 5.2 million were recorded as long-term lease liabilities.

As of June 30, 2021 and December 31, 2020, total operating lease ROU assets were $ 5.4 million and $ 6.3 million, respectively.

As of June 30, 2021, total operating lease liabilities were $ 6.7 million, of which $ 4.8 million were recorded as long-term lease liabilities.

As of December 31, 2020, total operating lease liabilities were $ 7.7 million, of which $ 5.6 million were recorded as long-term lease liabilities.

As of March 31, 2021 and December 31, 2020, the weighted-average discount rate was 5.5 %, and the weighted-average remaining lease term was 3.8 years and 4.1 years, respectively.

Total cash paid for amounts included in the measurement of operating lease liabilities was $ 0.5 million and $ 0.2 million for the three months ended March 31, 2021 and 2020, respectively.

There were no ROU assets obtained in exchange for operating lease liabilities for the three months ended March 31, 2021.

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

Total operating lease expense was approximately $ 0.5 million and $ 0.2 million for the three months ended March 31, 2021 and 2020, respectively.

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

Total rent expense for the three months ended March 31, 2021 and 2020 was approximately $ 0.5 million and $ 0.3 million, respectively.

As of June 30, 2021 and December 31, 2020, the weighted-average discount rate was 5.5 %, and the weighted-average remaining lease term was 3.7 years and 4.1 years, respectively.

Total cash paid for amounts included in the measurement of operating lease liabilities was $ 1.1 million for the six months ended June 30, 2021 and $ 0.1 million, net of tenant improvement reimbursements, for the six months ended June 30, 2020.

There were no ROU assets obtained in exchange for operating lease liabilities for the six months ended June 30, 2021.

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

Total operating lease expense was approximately $ 0.5 million and $ 0.6 million for the three months ended June 30, 2021 and 2020, respectively.

Total operating lease expense was approximately $ 1.0 million and $ 0.7 million for the six months ended June 30, 2021 and 2020, respectively.

We have also entered into short-term operating leases which expired in 2020 that are not recorded on the unaudited condensed balance sheets .

Total rent expense for the three months ended June 30, 2021 and 2020 was approximately $ 0.5 million and $ 0.6 million, respectively.

Total rent expense for the six months ended June 30, 2021 and 2020 was approximately $ 1.0 million and $ 0.9 million, respectively .

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

During the three months ended March 31, 2021, we began issuing restricted stock units, or RSUs.

As of March 31, 2021, unrecognized estimated compensation expense related to stock options and RSUs was approximately $ 61.4 million and $ 5.7 million, respectively, which is expected to be recognized over a weighted average period of approximately 2.9 years and 3.8 years, respectively.

Related Party Transactions

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

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, 2021 and 2020, we recorded $ 8,000 and $ 15,000 , respectively, in management fee income.

During 2021, we began issuing restricted stock units, or RSUs.

As of June 30, 2021, unrecognized estimated compensation expense related to stock options and RSUs was approximately $ 58.5 million and $ 5.3 million, respectively, which is expected to be recognized over a weighted average period of approximately 2.8 years and 3.6 years, respectively.

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