Kezar Life Sciences recently summarized its Q1 2019 activities. Essentially a pre-revenue, publicly traded biotech venture based in South San Francisco, CA, as of this writing their share price is $20.27 for a market capitalization of $387.55 million. Based on cursory review of Yahoo Finance and SEC documentation they operate at a loss of between -$24 million EBITDA. They possess approximately $101.1 million cash so at current rates have some room (but not too much) to execute on their early-stage clinical agenda.
Founded in 2015 by a talented group of scientists from UCSF and Onyx, they focus on the discovery and development of drugs targeting protein homeostasis for autoimmune disorders. Their founders bring a passion and expertise involving protein degradation and protein secretion, two fertile areas for drug discovery with platform potential. They are committed to revolutionizing treatments for patients with autoimmune diseases and cancer. They are translating its innovative research on the immunoproteasome and protein secretion pathways to advance novel therapeutic approaches. Their KZR-616, a first-in-class selective immunoproteasome inhibitor, is being evaluated in severe and underserved autoimmune diseases. It touts that it will also “nominate an initial clinical candidate for the treatment of cancer from its protein secretion program before the end of year.” KZR-616 was acquired via license agreement with Onyx Therapeutics (Onyx), a wholly-owned subsidiary of Amgen in June 2015.
- Phase Ib systemic lupus erythematosus (SLE) top-line data release and Phase 2 lupus nephritis (LN) initiation on track in Q2 2019.
- They are currently selecting sites for Phase 2 trial on KZR-616 for the treatment of dermatomyositis (DM) and polymyositis (PM)—the trial is scheduled to being second half of 2019
- FDA accepted IND for KZR-616 for treatment of autoimmune hemolytic anemia (AIHA) and immune thrombocytopenia (ITP)—trial to being second half of 2019
- They propose they will nominate oncology clinical candidate from protein secretion program before 2020
First Quarter & Recent Clinical and Business Highlights
- US FDA accepts IND for KZR 615 for the treatment of AIHI and ITP; a Phase 2 trial for these indications in addition to Phase 2 trial in DM and PM anticipated to being second half 2019
- Their SLE and LN program advancing with enrollment continuing in the open-label dose escalation Phase 1b portion in SLE patients. They report to investors that they expect the data from the first two cohorts of this portion at a major medical conference later in the quarter in addition to initiating the Phase 2 portion of the trial in patients with active, proliferative LN.
- Sec61 translocon modulation—the Kezar protein secretion program—was showcased in two poster presentations at the American Association for Cancer Research (AACR)
- Kezar declares it is on track for an oncology candidate by end of year.
- They continued to add to their management team hiring a VP of Legal Affairs
- Cash position $101.1 million as of March 31, 2019—down from $107.4 million at end of Calendar 18. Decrease due to normal operations in pursuit of advancing its clinical stage programs as well as preclinical research and development.
- R&D expenses increase by $2.3 million to $5.9 million (from $3.6m) in Q1 2018. This increase is associated with advancing KZR-616 as well as costs associated with the protein secretion preclinical program.
- G&A increased by $900K to $2.4million from $1.5million in Q1 2018. This was due to A) stock compensation B) personnel expenses and C) costs associated to operating a public company.
- Net loss for Quarter was $7.6m or $.40 per basic and diluted common share—this compares to a net loss of $4.9million or $6.53 per basic and diluted common share for first quarter of 2018.
- Total shares outstanding 19.1 million as of March 31, 2019. Additionally there were 2.8 million outstanding options granted to purchase common stock at $7.73 weighted average exercise price as of March 31, 2019
Core Intellectual Property
KZR-616 is a novel selective immunoproteasome inhibitor with broad therapeutic potential across multiple autoimmune diseases, nonclinical research demonstrates that selective immunoproteasome inhibition results in broad anti-inflammatory response in animal models of several immune diseases while avoiding immunosuppression.
Presently, their patent portfolio, including patents from licensed from Onyx, comprises 11 different patent families, filed in jurisdictions worldwide—including families directed to composition of matter for selective immunoproteasome inhibitors and protein secretion inhibitors. Most recently, four additional patient filings for new composition of matter subject matter were filed in the first quarter 2019. Their patient portfolio is listed below from SEC filings:
PRTX-019—Initial composition of matter patent covering selective immunoproteasome inhibitors, which also covers ONX 0914, our tool compound found in multiple publications. We have issued patents in the United States, Australia, Canada, China, Europe, Japan, Mexico, Singapore and South Korea. The 20-year term of this family is June 2027, absent any patent term extensions available.
PRTX-039—composition of matter patent covering selective immunoproteasome inhibitors, including selective LMP7 inhibitors and dual LMP7/LMP2 inhibitors. We have issued patents in the United States, Europe, Eurasia, Australia, China, Columbia, Saudi Arabia and Singapore. This patent covers KZR-616 and its closely related analogs. The 20-year term of this family is March 2034, absent any patent term extensions available.
PRTX-041—composition of matter patent covering selective immunoproteasome inhibitors of the LMP2 subunit. We have issued patents in the United States, Europe, Eurasia, China, Mexico and Singapore. The 20-year term of this family is March 2034, absent any patent term extensions available.
KZR-616 Synthetic Process – patent application pending in numerous jurisdictions, directed to process for preparing KZR-616. No patents have been issued yet, but the 20-year term for this family is expected to be June 2037, absent any patent term extensions available.
KZR-616 Salts and Polymorphs– patent application pending in numerous jurisdictions, directed to various salts and polymorphs of KZR-616, including the clinical salt form. No patents have been issued yet, but the 20-year term for this family is expected to be June 2037, absent any patent term extensions available.
Proteasome Inhibitor Combination Therapies – Two patent families directed to combination therapies for immunoproteasome inhibitors are pending, with no issued patents yet. A first, directed to the combination of selective LMP7 and LMP2 inhibitors, that is, the combination of PRTX-039 + PRTX-041 inhibitors, for the treatment of autoimmune diseases is expected to have a 20-year term of September 2038, absent any patent term extensions available. The second is directed to the combination of KZR-616 and related analogs and immunomodulator drugs, such as mycophenolate mofetil, for the treatment of lupus, lupus nephritis and other autoimmune diseases. The 20-year term of this family is expected to be August 2038, absent any patent term extensions available.
KZR-616 Formulation – patent application directed to formulations of KZR-616, filed provisionally in October 2018. We expect the non-provisional application to be filed in October 2019. No patents have issued yet, but the 20-year term of this family is expected to be October 2039, absent any patent term extensions available.
We expect to file future applications for new composition of matter for second generation selective inhibitors of the immunoproteasome pending results from ongoing drug discovery efforts.
Protein Secretion Modulators
Our scientists and the laboratory of our co-founder, Dr. Jack Taunton of UCSF, have developed a significant level of proprietary knowledge around Sec61 translocon biology, the pharmacology and toxicology of protein secretion inhibitors, and know-how for determination of optimal properties for product candidates. We have filed three applications around protein secretion inhibitors directed to different scaffolds currently being pursued by us alone or in collaboration with the Taunton Lab at UCSF and expect to file additional applications in this area in 2019.
Kezar is aware of two companies engaged in drug discovery and development of selective inhibitors of the immunoproteasome including 1) Principia Biopharma Inc. and 2) Merck KgaA.
Principia Biopharma Inc. is currently engaged in pre-clinical research focused on the discovery of orally bioavailable and selective inhibitors of the immunoproteasome. German Merck KgaA has recently disclosed an LMP7-selective inhibitor that has been nominated for clinical development in Multiple Myeloma. They have not mentioned clinical trials in autoimmune disorders as of yet.
For Lupus, it is currently treated with corticosteroids and immunosuppressive agents such as azathioprine. Current guidance for the treatment of proliferative lupus nephritis involves induction therapy with either CellCept or Cytoxan® (cyclophosphamide) and corticosteroids. Additionally, Benlysta, an anti-BAFF monoclonal antibody from GlaxoSmithKline is approved by the FDA for the treatment of moderate to severe lupus but not lupus nephritis. Other companies involved with R&D include AstraZeneca (anifrolumab) and Janssen Biotech, Inc. (J&J); Eli Lilly and Celgene as well as Merck KgaA. Moreover in active proliferative lupus nephritis, other companies are developing novel agents to add to the standard induction regimens and include Benlysta, anifrolumab and the investigational immunosuppressive agent voclosporin from Aurinia Pharmaceuticals, Inc.
Based in South San Francisco, the world’s biotech hub, Kezar is translating its innovative research on the immunoproteasome and protein secretion pathways to advance novel therapeutic approaches. Its KZR-6161 is a first-in-class immunoproteasome inhibitor and currently in Phase 1b trial, with a Phase 2 trial in lupus nephritis patients expected to initiate during the first half of 2019. The venture is also poised to expand its development programs throughout 2019 with plans to initiate multiple Phase 2 trials of KZR-616 in up to four additional autoimmune indications and to nominate an initial clinical candidate for the treatment of cancer from its protein secretion program. The executive team has provided considerable transparency as to their targeted milestones. They have made it relatively easy for those interested in the advance of new treatments (or investors) to monitor their progress.