Kura Oncology tumbles as Kyowa collaboration seen hitting M&A prospects

Investing.com -- Kura Oncology (NASDAQ:KURA ) shares plummeted more than 36% Thursday following the announcement of a strategic collaboration with Japan's Kyowa Kirin for the development and commercialization of ziftomenib , Kura’s lead drug candidate for acute myeloid leukemia (AML).

The deal, valued at over $1.5 billion, includes a $330 million upfront payment, up to $420 million in near-term milestones, and additional potential milestones totaling $741 million.

It is reported that under the agreement, Kura will retain responsibility for development and commercialization in the U.S., where it will also manufacture ziftomenib . Kyowa Kirin will lead the program outside the U.S.

The companies aim to file a New Drug Application (NDA) for ziftomenib in 2025, with the drug having already received FDA breakthrough designation.

While the collaboration provides financial stability for Kura, allowing it to fund pivotal trials and future development through 2028, analysts believe it may have dampened investor enthusiasm for potential mergers or acquisitions.

BTIG analysts attributed the stock’s sharp decline to “ the Street's view of Kura's lowered prospects as an M&A candidate ” but noted the deal’s advantages, including Kyowa Kirin’s expertise in hematology-oncology.

BTIG reiterated a “ Buy ” rating and a $32 price target on the stock .

Wedbush analysts echoed the sentiment, emphasizing the partnership’s ability to de-risk Kura’s financials in the medium term. However, they acknowledged the potential limitation on upside revenue as the companies share profits and costs.

Wedbush maintained its “ Outperform ” rating with a $34 price target, calling the deal terms “ acceptable ” for supporting Kura's long-term development.

Despite optimism from some analysts, the market reaction highlights concerns over Kura’s standalone growth prospects and its ability to compete in an increasingly crowded landscape.

Source: Investing.com