Full Press Release Details
Financial Statements
| Report of Independent Registered Public Accounting Firm | F-1 | |||
| Balance Sheet | F-2 | |||
| Statement of Operations and Comprehensive Loss | F-3 | |||
| Statement of Stockholders Deficit | F-4 | |||
| Statement of Cash Flows | F-5 | |||
| Notes to Financial Statements | F-6 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
We have audited the accompanying balance sheet of Kura Oncology, Inc. as of December 31, 2014, and the related statement of operations and
comprehensive loss, stockholders deficit, and cash flows for the period from August 22, 2014 (Inception) to December 31, 2014. These financial statements are the responsibility of the Company s management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit
of the Company s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kura
Oncology, Inc. at December 31, 2014 and the results of its operations and its cash flows for the period from August 22, 2014 (Inception) to December 31, 2014, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
San Diego, California
| December 31, 2014 | ||||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 1,123,864 | ||
| Accounts receivable, related party | 30,139 | |||
| Prepaid expenses | 42,562 | |||
| Total current assets | 1,196,565 | |||
| Property and equipment, net | 26,646 | |||
| Prepaid expenses | 149,949 | |||
| Other long-term assets, related party | 4,680 | |||
| Total assets | $ | 1,377,840 | ||
| Liabilities and Stockholders Deficit | ||||
| Current liabilities: | ||||
| Accounts payable and accrued expenses | $ | 832,933 | ||
| Accounts payable, related party | 134,563 | |||
| Convertible notes payable, related party, current | 2,035,565 | |||
| Other current liabilities | 12,786 | |||
| Total current liabilities | 3,015,847 | |||
| Convertible notes payable, related party | 493,418 | |||
| Other long-term liabilities | 1,294,559 | |||
| Other long-term liabilities, related party | 7,500 | |||
| Total liabilities | 4,811,324 | |||
| Commitments and contingencies (Note 8) | ||||
| Stockholders deficit: | ||||
| Common stock, $0.001 par value; 50,000,000 shares authorized; 9,887,000 shares issued and 821,252 shares outstanding, excluding 9,065,748 shares subject to repurchase | 821 | |||
| Additional paid-in capital | 236,961 | |||
| Accumulated deficit | (3,671,266 | ) | ||
| Total stockholders deficit | (3,433,484 | ) | ||
| Total liabilities and stockholders deficit | $ | 1,377,840 |
See accompanying notes to financial statements.
STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
| Period From | ||||
| August 22, 2014 (Inception) to | ||||
| December 31, 2014 | ||||
| Operating expenses: | ||||
| Research and development | $ | 2,028,227 | ||
| Research and development, related party | 624,565 | |||
| General and administrative | 1,261,621 | |||
| General and administrative, related party | 19,734 | |||
| Total operating expenses | 3,934,147 | |||
| Other income (expense): | ||||
| Management fee income, related party | 300,000 | |||
| Interest expense, related party | (37,119 | ) | ||
| Total other income | 262,881 | |||
| Net loss and comprehensive loss | $ | (3,671,266 | ) | |
| Net loss per share, basic and diluted | $ | (12.99 | ) | |
| Weighted average number of shares used in computing net loss per share, basic and diluted | 282,613 |
See accompanying notes to financial statements.
STATEMENT OF STOCKHOLDERS DEFICIT
Period from August 22, 2014 (Inception) to December 31, 2014
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance as of August 22, 2014 (Inception) | $ | $ | $ | $ | ||||||||||||||||
| Share-based compensation expense | 236,618 | 236,618 | ||||||||||||||||||
| Issuance of restricted stock awards | 821,252 | 821 | 343 | 1,164 | ||||||||||||||||
| Net loss and comprehensive loss | (3,671,266 | ) | (3,671,266 | ) | ||||||||||||||||
| Balance as of December 31, 2014 | 821,252 | $ | 821 | $ | 236,961 | $ | (3,671,266 | ) | $ | (3,433,484 | ) |
See accompanying notes to financial statements.
STATEMENT OF CASH FLOWS
| Period From | ||||
| August 22, 2014 | ||||
| (Inception) to | ||||
| December 31, 2014 | ||||
| Operating activities | ||||
| Net loss | $ | (3,671,266 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Share-based compensation expense | 236,618 | |||
| Depreciation expense | 1,466 | |||
| Issuance of convertible note for acquisition of license | 500,000 | |||
| Changes in operating assets and liabilities: | ||||
| Accounts receivable, related party | (30,139 | ) | ||
| Prepaid expenses | (42,562 | ) | ||
| Other long-term assets | (149,949 | ) | ||
| Other long-term assets, related party | (4,680 | ) | ||
| Accounts payable and accrued expenses | 832,933 | |||
| Accounts payable, related party | 134,563 | |||
| Accrued interest, related party | 36,483 | |||
| Other liabilities | 1,307,345 | |||
| Net cash used in operating activities | (849,188 | ) | ||
| Investing activities | ||||
| Purchases of property and equipment | (28,112 | ) | ||
| Net cash used in investing activities | (28,112 | ) | ||
| Financing activities | ||||
| Proceeds from issuance of related party convertible notes | 2,000,000 | |||
| Proceeds from the issuance of restricted stock awards | 1,164 | |||
| Net cash provided by financing activities | 2,001,164 | |||
| Net increase in cash | 1,123,864 | |||
| Cash at beginning of period | ||||
| Cash at end of period | $ | 1,123,864 |
See accompanying notes to financial statements.
Notes to Financial Statements
1. Organization and Basis of Presentation
Kura Oncology, Inc. (the Company ), a privately held company incorporated in Delaware, is a clinical stage
biopharmaceutical company discovering and developing personalized therapeutics for the treatment of solid tumors and blood cancers. The Company focuses on the development of small molecule drug candidates that target cell signaling pathways that are
important to driving the progression of certain cancers. The Company aims to employ molecular diagnostics to identify patients with cancers who are likely to benefit from our targeted drug candidates.
From August 22, 2014 (inception) through December 31, 2014, the Company has devoted substantially all of its efforts to research,
product development, raising capital, and building infrastructure. The Company has a limited operating history and the sales and income potential of the Company s business and market are unproven. The Company has experienced net losses and
negative cash flows from operating activities, and had an accumulated deficit of $3,671,266 as of December 31, 2014.
expects to continue to incur net losses into the foreseeable future. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support the Company s cost structure. The Company plans to
continue to fund its losses from operations and capital funding needs through future debt and equity financing or through collaborations or partnerships with other companies. If the Company is not able to secure adequate additional funding, the
Company may be forced to make reductions in spending, liquidate assets where possible, or suspend or curtail planned programs. Any of these actions could materially harm the Company s business, results of operations and future prospects. The
Company believes that its existing cash resources will be sufficient to fund its operations through at least December 31, 2015.
2. Summary of Significant Accounting Policies
The Company s financial statements are prepared in accordance with accounting principles generally accepted in the United States
( GAAP ). The preparation of the Company s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses during the reporting period.
Reported amounts and note
disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ materially from those estimates. All revisions to accounting estimates are recognized
in the period in which the estimates are revised and in any future periods affected.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. The Company
maintains deposits in federally insured financial institutions in excess of federally insured limits and limits its exposure to cash risk by placing its cash with credit quality rating financial institutions.
Property and Equipment
and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets which is three years for each asset class.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an
asset may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived asset, including its eventual residual value, is compared to the carrying value to determine
whether impairment exists. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their estimated fair values. While the Company s current and historical
operating losses and negative cash flows are indicators of impairment, the Company believes that future
cash flows to be received support the carrying value of its long-lived assets and, accordingly, has not recognized any impairment losses through December 31, 2014.
Convertible Notes and Derivative Accounting
At inception, the Company performs an assessment of all embedded features of a debt instrument to determine if (1) such features should be
bifurcated and separately accounted for, and (2) if bifurcation requirements are met, whether such features should be classified and accounted for as equity or liability. The fair value of the embedded feature is measured initially, included as
a liability on the balance sheet, and remeasured each reporting period. Any changes in fair value are recorded in the statement of operations. The Company monitors, on an ongoing basis, whether events or circumstances could give rise to a change in
its classification of embedded features.
The Company accounts for its convertible notes, that may be settled in cash upon conversion
(including partial cash settlement), by separating the liability and equity components of the instruments in a manner that reflects the Company s nonconvertible debt borrowing rate. The Company determines the carrying amount of the liability
component by measuring the fair value of similar debt instruments that do not have the conversion feature. If a similar debt instrument does not exist, the Company estimates the fair value by using assumptions that market participants would use
in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatilities. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and
assumptions are judgmental in nature and could have a significant impact on the determination of the debt component and the associated non-cash interest expense.
consists of the difference between cash payments and the recognition of rent expense on a straight-line basis for the facilities the Company occupies. The Company s lease for its facilities provides for fixed increases in minimum annual rental
payments. The total amount of rental payments due over the lease term is being charged to rent expense ratably over the life of the lease. The Company s deferred rent balance is contained within other long-term liabilities on the Company s
Research and Development Costs
Research and development costs are expensed as incurred. Research and development costs consist of direct and indirect internal costs related
to specific projects as well as fees paid to other entities that conduct certain research activities on the Company s behalf. Payments that the Company makes in connection with in-licensed technology for a particular research and development
project that have no alternative future uses (in other research and development projects or otherwise) and therefore no separate economic values are expensed as research and development costs at the time such costs are incurred. As of
December 31, 2014, the Company has no in-licensed technologies that have alternative future uses in research and development projects or otherwise.
The Company expenses
all costs as incurred in connection with patent applications, including direct application fees, and the legal and consulting expenses related to making such applications, and such costs are included in general and administrative expenses within the
Company s Statement of Operations and Comprehensive Loss.
Share-Based Compensation
Restricted stock awards are valued based on the fair value on the grant date. The fair value of restricted stock awards expected to vest are
recognized and amortized on a straight-line basis over the requisite service period of the award, which is generally four years. Restricted stock awards granted to non-employees are recorded at their fair value on the earlier of the performance
commitment date or the date the services required are completed and are marked to market during the service period. Non-employee restricted stock awards are remeasured and expensed as they vest based on the intrinsic value method.
The Company s equity incentive plan allows for the issuance of restricted stock awards to employees and non-employee consultants that may
be subject to vesting. The unvested shares of any restricted stock awards are held in escrow as the stock award vests or until award holder termination, whichever occurs first. In the event of a termination, the Company has the right of repurchase,
at its option, for the portion of unvested stock awards from the terminated award holder. The repurchase price for unvested stock awards will be the lower of (i) the fair market value of the shares of common stock on the date of repurchase or
(ii) their original purchase price. For all unvested stock awards, a liability is established related to the cash received for the unvested portion of the stock award, which represents the Company s obligation if all award holders were to
be terminated, and is recorded within other long-term liabilities on the Company s Balance Sheet.
Income taxes have been accounted for using the asset and liability method. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment date. A valuation allowance against deferred tax assets is recorded if, based upon the weight of all available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. For uncertain tax positions that meet a more likely than not threshold, the Company recognizes the benefit of uncertain tax positions in the financial statements.
required to report all components of comprehensive loss, including net loss, in the financial statements in the period in which they are recognized. Comprehensive loss is defined as the change in equity during a period from transactions and other
events and circumstances from non-owner sources, including unrealized losses on investments. Net loss and comprehensive loss were the same for the period presented, therefore, a separate statement of comprehensive loss is not included in the
accompanying financial statements.
Operating segments are components of an enterprise about which separate discrete financial information is available for evaluation by the chief
operating decision-maker for purposes of making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and managed its business as one segment operating primarily in the United States.
Fair Value Measurements
Company categorizes its assets and liabilities measured at fair value in accordance with the authoritative accounting guidance that establishes a consistent framework for measuring fair value, and expands disclosures for each major asset and
liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction