Kura Oncology slammed the door on its takeover narrative Thursday, inking a deal for its leukemia treatment. In response, Kura stock crashed to an 11-month low.
Under the terms of the deal, Kura Oncology and Kyowa Kirin will jointly develop and commercialize ziftomenib in acute leukemias. Kyowa will pay Kura $330 million up front and up to $1.2 billion in total milestone payments. The latter includes $420 million in near-term payments. Kyowa can also opt in to developing ziftomenib in solid tumors for up to $228 million in payments to Kura.
"The deal provides a certain level of valuation," Mizuho Securities analyst Salim Syed said in a note to clients. "However, on the other hand, a collaboration here likely detracts from the near-term potential takeout narrative, which certainly has been something some investors had been articulating."
Kura stock collapsed 36.8% to 10.06 on Thursday. Shares hit their lowest point since last December.
Kura Oncology's 'Aggressive' Timeline
Kura Oncology and Kyowa Kirin will split profits equally in the U.S., while Kyowa had exclusive rights to commercialize ziftomenib abroad. Kura is eligible to receive tiered, double-digit royalties on sales outside the U.S.
The up-front payment and near-term milestones will help Kura run pivotal studies of ziftomenib in patients with never-before-treatment acute myeloid leukemias, Wedbush analyst Robert Driscoll said in a report.
He expects Kura to operate on a more aggressive timeline that competitor Syndax Pharmaceuticals. Syndax is also developing a drug that uses the same mechanism.
"Overall, we see a good deal for Kura, allowing for broad and aggressive zifto development at a time of required inflection to maximize commercial opportunity and removing financial risk from Kura shares in the short/medium-term while retaining significant value," he said.
Driscoll kept his outperform rating and 34 price target on Kura stock.
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