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Investing.com - Jefferies downgraded Kezer Life Sciences (NASDAQ:KZR) from Buy to Hold and slashed its price target to $7.00 from $18.00 after the company failed to secure FDA agreement on a registration pathway for its zetomipzomib drug in autoimmune hepatitis. According to InvestingPro data, the stock currently trades at $4.17, down nearly 49% over the past year, with analyst targets ranging from $7 to $18.
The downgrade follows Kezer’s announcement that it has initiated a formal process to explore strategic alternatives after being unable to align with regulators on a path forward for the drug candidate. Jefferies reduced the probability of success for zetomipzomib to 10% from its previous estimate of 25%.
Kezer reported approximately $90 million in cash at the end of the third quarter, with Jefferies estimating about $25 million in restructuring and closing costs, including $9.7 million in debt repayment. The new $7 price target essentially values the company at its cash per share. InvestingPro analysis shows the company maintains a strong current ratio of 7.29, though it’s quickly burning through cash. The company’s market capitalization stands at approximately $30.5 million.
The company has also extended its rights plan, commonly known as a poison pill, to at least its 2026 annual meeting, potentially indicating concerns about unwanted acquisition attempts during its strategic review.
Kezer provided no guidance regarding future expenses or specific objectives and timelines for its strategic alternatives process, which aims to maximize shareholder value.
In other recent news, Kezar Life Sciences Inc. is exploring strategic alternatives after encountering regulatory challenges with its lead drug candidate, zetomipzomib. The company announced this decision following the U.S. Food and Drug Administration’s (FDA) cancellation of a planned Type C meeting intended to discuss a potential registrational trial for the drug in patients with relapsed and refractory autoimmune hepatitis (AIH). Instead, the FDA has requested that Kezar conduct a separate study to better understand the pharmacokinetics of zetomipzomib in subjects with significant hepatic impairment before proceeding with another AIH trial. This development has prompted Kezar to seek ways to maximize shareholder value amid these regulatory hurdles. The company has not yet disclosed specific strategic alternatives it is considering. These recent developments reflect Kezar’s ongoing efforts to navigate the regulatory landscape and address the FDA’s requirements.
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