On Monday, Jones Trading maintained a Hold rating on Kezar Life Sciences (NASDAQ:KZR) following the company's announcement to halt enrollment and dosing in a Phase 2b study of their drug zetomipzomib for lupus nephritis. The decision was based on a recommendation from an Independent Data Monitoring Committee (IDMC) after observing four fatal serious adverse events (SAEs) in patients from the Philippines and Argentina.
The nature of these fatalities has not been disclosed, but three of them reportedly exhibited common symptom patterns. Additional non-fatal SAEs also showed a proximity to dosing.
Kezar Life Sciences reported that this is the first occurrence of deaths or serious opportunistic infections associated with zetomipzomib, which acts as a selective immunoproteasome inhibitor. During the Phase 2 MISSION study, there were two SAEs, one of which was treatment-related. In the Phase 2 PRESIDIO study, serious treatment-emergent adverse events (TEAEs) were considered unrelated to the treatment.
Regulatory agencies, including the FDA and EMA, have been informed about the safety findings, though no clinical hold has been placed on the drug at this time. As of the second quarter of 2024, Kezar Life Sciences reported having $164 million in cash and cash equivalents. The recent developments have prompted close monitoring of the situation by investors and stakeholders, as the company navigates through the implications of the safety data.
In other recent news, Kezar Life Sciences has paused its Phase 2b PALIZADE clinical trial for lupus nephritis following four fatal serious adverse events among trial participants. The company is currently assessing the safety data and considering potential risk mitigation strategies. Kezar Life Sciences has also reported a second-quarter net loss of $22 million and cash reserves of $164 million, projected to last until late 2026. The company has adjusted the timeline for its Autoimmune Hepatitis treatment data, now expected in the first half of 2025.
In terms of clinical trials, the first patient in China has been dosed with zeto, the drug candidate for Lupus Nephritis, under a licensing agreement with Everest Medicines. Kezar has decided to discontinue the development of another drug candidate, KZR-261, to focus its resources on zeto's trials. Following these recent developments, TD Cowen reiterated a Buy rating for Kezar Life Sciences.
InvestingPro Insights
The recent developments at Kezar Life Sciences (NASDAQ:KZR) have significant implications for the company's financial outlook. According to InvestingPro data, KZR's market capitalization stands at $52.61 million, reflecting the market's reaction to the halted Phase 2b study. The company's revenue for the last twelve months as of Q2 2023 was $7 million, with a concerning gross profit margin of -1040.71%.
InvestingPro Tips highlight that KZR holds more cash than debt on its balance sheet, which could provide some financial stability during this challenging period. This aligns with the reported $164 million in cash and cash equivalents as of Q2 2023. However, another tip warns that the company is quickly burning through cash, which is particularly relevant given the recent study setback.
Analysts anticipate sales growth in the current year, but they do not expect the company to be profitable. This forecast is consistent with the current situation, as the halted study may impact future revenue streams while research and development costs continue.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into KZR's financial health and market position.
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