WB starts Kezar Life Sciences at OP and FVE of $25


William Blair initiated coverage of Kezar Life Sciences (NASDAQ:KZR) with an “outperform” rating and fair value estimate of $25. The stock closed at $16.50 on July 13.

Analyst Matthew Phipps writes the company’s novel platform of immunoproteasome inhibitors has significant potential in treating underserved autoimmune diseases. 

Kezar’slead immunoproteasome inhibitor, KZR-616, is currently in a Phase 1b dose escalation study in lupus patients, with initial results expected in the first half of 2019. 

Mr. Phipps said a clinical trial with Velcade, a multiple myeloma therapy capable of inhibiting the constitutive proteasome and the immunoproteasome, demonstrated positive proof-of-concept data in patients with refractory lupus, but the poor tolerability of Velcade resulted in 58% of patients discontinuing as a result of adverse events. 

“We believe KZR-616 has the potential to demonstrate similar levels of efficacy with reduced potential of adverse events based on the mechanism of action and initial safety data in healthy volunteers,” he said.

Kezar plans to initiate Phase 2 trials with KZR-616 in lupus nephritis, idiopathic inflammatory myopathies, and up to three additional underserved autoimmune indications in 2019, further expanding the total market potential, he added.

Stephen Kilmer