Wells Fargo Downgrades Kezar Life Sciences to Equal-Weight, PT to $5.

Wells Fargo Downgrades Kezar Life Sciences to Equal-Weight, PT to $5.

Wells Fargo & Company has downgraded Kezar Life Sciences (NASDAQ: KZR) to "Equal-Weight" from "Outperform" and reduced the price target to $5. The downgrade comes amid ongoing regulatory challenges faced by the biopharmaceutical company.

Kezar Life Sciences, valued at $30.5 million and trading nearly 50% below its year-ago levels, has been grappling with regulatory setbacks. 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), according to an Investing.com report. Instead, the FDA proposed a stand-alone trial to assess the drug's pharmacokinetics in patients with significant hepatic impairment, delaying future AIH studies by approximately two years.

Due to resource constraints, Kezar management has initiated a process to explore strategic alternatives rather than pursuing the FDA’s proposed path forward. This regulatory setback occurred despite positive Phase II trial results in AIH and a tolerable safety profile in patients not on background high-dose steroids.

In response to these challenges, 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%.

Despite these hurdles, Kezar Life Sciences' stock saw a significant increase as the company announced its plans to explore strategic options. This series of events underscores the company’s ongoing efforts to navigate regulatory challenges and explore avenues for growth.