Kezar Life Sciences Downgraded to Hold from Buy with PT Cut to $7.

Kezar Life Sciences Downgraded to Hold from Buy with PT Cut to $7.

Kezar Life Sciences (NASDAQ: KZR) has faced a significant regulatory setback, which has led to a strategic review and a downgrade of its stock from Buy to Hold by investment bank Jefferies. The company announced that the FDA canceled a key meeting and imposed new trial requirements for its lead drug zetomipzomib in autoimmune hepatitis, delaying the program by about two years, according to a TS2.tech report.

In response to this regulatory hurdle, Kezar is exploring "strategic alternatives" (including a potential sale or merger) and implementing cost-cutting measures . Despite the setback, KZR's stock surged ~40% on the news, jumping from the mid-$4 range to around $6 per share on Oct. 17 .

Jefferies downgraded KZR from Buy to Hold and slashed its price target to $7 (from $18), essentially valuing the company at just its cash on hand . Wells Fargo likewise cut its target from $7 to $5 while maintaining an "Equal-Weight" (neutral) rating . William Blair downgraded the stock to Market Perform (no target given) after the news .

Kezar reported approximately $90.2 million in cash as of Sept. 30, 2025 , giving it some runway. However, the FDA’s demands would add costly studies and monitoring, and the firm is quickly burning cash (about $64M in negative free cash flow over the last year) . The Board has extended a stockholder "poison pill" rights plan into 2026 to fend off unwanted takeovers during this review period .

The FDA's demands include a new standalone study to characterize zetomipzomib’s pharmacokinetics in patients with severe liver impairment and 48-hour in-patient monitoring for future trials . These requirements would delay any new AIH trial by roughly two years, the company warned . Kezar’s board and management have decided to explore “a full range of strategic alternatives” to maximize shareholder value .

Kezar has retained investment bank TD Cowen as a financial advisor and initiated a restructuring plan with workforce reductions and other cost-cutting to conserve cash during the process . The company also extended its limited-duration stockholder rights plan (often called a "poison pill") through at least the 2026 annual meeting . This move is intended to prevent any hostile takeover attempts – a real consideration since Tang Capital’s Concentra Biosciences already owns ~9.9% of Kezar and made an unsolicited bid last year .

The stock soared on buyout speculation, jumping by roughly 38–46% in after-hours trading on Oct. 16 and into the morning of Oct. 17 . The stock, which closed around $4.14 on Oct. 13 prior to the announcement , surged to approximately $5.70–$6.20 per share on Friday, hitting its highest levels in months .

Analysts swiftly revised their outlook on Kezar in light of the FDA impasse and strategic uncertainty. Jefferies, Wells Fargo, and William Blair all downgraded the stock, with Jefferies moving KZR from a Buy to a Hold rating and cutting the 12-month price target from $18 down to $7 . The broader analyst community has shifted to a more guarded stance, with a consensus rating of "Reduce" (effectively a cautious Hold) .