Kezar Life Sciences: William Blair Downgrades to Market Perform from Outperform.

Kezar Life Sciences: William Blair Downgrades to Market Perform from Outperform.

William Blair has downgraded Kezar Life Sciences (NASDAQ:KZR) from "Outperform" to "Market Perform," reflecting recent regulatory challenges faced by the company, according to an Investing.com report. The downgrade comes after Kezar announced that the U.S. Food and Drug Administration (FDA) canceled a scheduled Type C meeting intended to discuss pivotal trial design for zetomipzomib in autoimmune hepatitis (AIH). Instead, the FDA proposed a stand-alone trial in patients with significant hepatic impairment, delaying future AIH studies by approximately two years.

Kezar Life Sciences, currently valued at $30.5 million and trading nearly 50% below its year-ago levels, maintains a strong balance sheet with more cash than debt. Despite the regulatory setback, the company has initiated a process to explore strategic alternatives rather than pursuing the FDA’s proposed path forward. The regulatory hurdle occurred despite positive Phase II trial results in AIH and a tolerable safety profile in patients not on background high-dose steroids, the report noted.

Jefferies also downgraded Kezar Life Sciences from "Buy" to "Hold," reducing the price target from $18.00 to $7.00. The downgrade reflects a decrease in the estimated probability of success for zetomipzomib from 25% to 10%. Nevertheless, Kezar Life Sciences’ stock saw a significant increase as the company announced its plans to explore strategic options, underscoring its ongoing efforts to navigate regulatory challenges and explore avenues for growth, according to the same report.