Wedbush Rates Kura Oncology Outperform As Catalysts Loom

Kura Oncology Inc KURA announced Thursday it has been selected for addition to the Nasdaq Biotechnology Index.

The Analyst

Wedbush's Robert Driscoll and David Nierengarten initiated Kura Oncology at Outperform, with a price target of $19.

The Thesis

Driscoll and Nierengarten are valuing the stock on the opportunity in HRAS-mutant HNSCC alone, but they also see significant upside potential in additional indications for which tipifarnib is being studied, including PTCL, MDS and CMML. Further data for these indications are expected in 2018 and they could be catalysts for the upside.

Tipifarnib has demonstrated striking anti-tumor activity in r/r HRAS-mutant head and neck squamous cell carcinoma (HNSCC) patients, with impressive durability, the analysts said in a note. Driscoll and Nierengarten expect that additional data from the open-label Phase 2 is going to be available in February and it could further de-risk this pivotal study.

The analysts base their price target for the stock at 6 times multiple of estimated tipifarnib revenues in HRAS-mutant HNSCC in 2024, discounted back by 25 percent annually.

The Price Action

Kura Oncology is trading 6.6 percent higher Thursday.