Kura Oncology’s (NASDAQ:KURA) recently announced deal with Kirin Kyowa (OTCPK:KNBWY) for its leukemia drug ziftomenib was viewed favorably by analysts on Thursday, despite shares plunging 38% on the news.

Under the deal, which was announced after market close on Wednesday, Kura (KURA) will receive $330M upfront, plus up to $1.2B in potential milestone payments, of which $420M would be near-term, in addition to profits and royalties from potential sales.

The deal also calls for Kura (KURA) to lead development and commercial activities in the United States. Kura (KURA) will also be responsible for manufacturing ziftomenib for the U.S. market, with both companies equally sharing profits and losses.

Kirin (OTCPK:KNBWY) will be responsible for developing and commercializing the product outside the U.S., with Kura (KURA) eligible to receive tiered double-digit royalties on net sales.

While investors reacted negatively to the news, analysts at H.C. Wainwright and Wedbush had a largely positive take on the deal.

“We believe that holding hands with a global specialty pharmaceutical company experienced in heme-onc is an important achievement for Kura and look forward to the progress of ziftomenib’s diverse ongoing and future trials,” H.C. Wainwright said in a note.

H.C. Wainwright also said it was increasing its estimated probability of success for ziftomenib in acute myeloid leukemia from 45% to 65% "based on clinical data to date, the Kirin partnership, and the approval comp Revuforj, where we believe ziftomenib is superior with the same molecular target.”

The investment bank maintained its buy rating on the stock and raised its price target to $37 from $32. Revuforj is marketed by Syndax (SNDX).

Wedbush also viewed the deal positively.

“Overall, we see a good deal for KURA (KURA), allowing for broad and aggressive zifto development at a time of required inflection to maximize commercial opportunity and removing financing risk from KURA (KURA) shares in the short/medium-term while retaining significant value,” Wedbush said in a note.

Wedbush maintained its outperform rating on the stock, but lowered its price target to $34 from $37.