Kezar Life Sciences, Inc. (KZR)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered a cleaner P&L post-LN wind-down: net loss narrowed to $16.6M and GAAP EPS improved to -$2.27 from -$2.98 YoY as R&D and G&A stepped down; cash was $114.4M, down from $132.2M at YE due to operating burn .
• Clinical narrative advanced: PORTOLA Phase 2a topline showed steroid‑sparing complete biochemical remissions in treatment‑refractory AIH with durable responses and favorable safety; FDA partial clinical hold remains in place while KZR works toward alignment on registrational design .
• Versus Wall Street, Q1 “Primary EPS” beat S&P Global consensus (−$2.00 actual vs −$2.60 est; +$0.60) and revenue was in‑line at $0; emphasize that KZR is pre‑commercial and revenues are not expected in near term. Values retrieved from S&P Global*
• Near-term stock catalysts center on regulatory dialogue to lift the PORTOLA partial hold and define Phase 3 AIH trial endpoints, plus fuller data disclosures later in 2025 .

What Went Well and What Went Wrong

What Went Well

• PORTOLA achieved meaningful steroid‑sparing CRs in refractory AIH: ITT CR+steroid ≤5mg/day 31.3% for zetomipzomib vs 12.5% placebo; durability 27.6 weeks with no flares among CRs; favorable safety profile (ISRs/SIRs Grade 1–2) .
• Management tone confident: “We shared exciting results… the first successful randomized study in treatment‑refractory AIH… encouraged by durable and steroid-sparing remissions” — Chris Kirk, CEO .
• Opex discipline: R&D down $5.0M YoY to $12.2M and G&A down $1.1M YoY to $5.4M after PALIZADE termination; net loss improved YoY .

What Went Wrong

• FDA partial clinical hold persists on PORTOLA OLE (prednisone not to taper <5mg/day; final four DBTP patients restricted from OLE), injecting regulatory risk into timing of registrational path .
• Cash decline quarter-on-quarter ($114.4M vs $132.2M) underscores ongoing burn absent revenue; loss from operations equaled total opex, confirming no operating revenue .
• LN program terminated; historical safety events in PALIZADE (including fatalities across arms) require continued context setting with investors, even though causality not attributed to zetomipzomib in PORTOLA .

Financial Results

P&L and Cash (quarters ordered oldest → newest)

Margins (not meaningful due to zero revenue)

KPIs (Clinical and Operating)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We shared exciting results this quarter from the PORTOLA trial, the first successful randomized study in treatment‑refractory AIH… durable and steroid‑sparing remissions… working toward achieving alignment on an appropriate trial design…” — Chris Kirk, CEO .
• “Zetomipzomib represents a potent and targeted therapy for patients… results will positively contribute to the design of a registrational trial…” — Gideon Hirschfield, Toronto General Hospital .
• “We hope… pending removal of [the FDA] hold, we will be able to… align… on a potential registrational study… biochemical remission with steroid taper… will be a key endpoint…” — Chris Kirk .

Q&A Highlights

• Safety and SIRs management: Physicians reported ISRs/SIRs largely mild and manageable; PALIZADE severe events had confounders; PORTOLA showed no opportunistic infections and balanced infection profile .
• Steroid tapering approach: Taper was suggested not mandated; future Phase 3 may formalize taper to demonstrate steroid‑sparing efficacy more rigorously .
• Patient heterogeneity and tolerability: AIH is heterogeneous; patients desire corticosteroid‑sparing, biologic‑like options; current AE profile would not deter participation; longer duration datasets will refine risk‑benefit .
• Phase 3 design expectations: Endpoints likely to center on biochemical remission with mandated taper, supported by histology; regulators to guide final design given lack of precedent in AIH .

Estimates Context

• Q1 2025 results vs S&P Global consensus: Primary EPS actual −$2.00 vs consensus −$2.60; beat of +$0.60. Revenue actual $0 vs consensus $0; in‑line. Values retrieved from S&P Global*

Note: GAAP diluted EPS reported was −$2.27 (different methodology vs “Primary EPS”) .

Key Takeaways for Investors

• PORTOLA’s steroid‑sparing CRs in refractory AIH and durable, flare‑free responses de‑risk the mechanism and strengthen the registrational case; expect Phase 3 endpoint discussions to focus on CR with mandated taper and histology .
• Regulatory removal of the partial hold is the next key catalyst; continued constructive FDA/EMA engagement is critical for time‑to‑Phase 3 clarity .
• P&L is trending leaner post LN wind‑down: R&D and G&A both down YoY, narrowing net loss; cash declined to $114.4M, implying continued burn monitoring into 2026 absent partnerships or financing .
• Q1 “Primary EPS” beat vs consensus provides a modest near‑term optics benefit, but valuation remains tied to clinical/regulatory milestones rather than earnings power. Values retrieved from S&P Global*
• Risk management: History of PALIZADE safety events necessitates ongoing communication; PORTOLA safety data in AIH remains favorable with low severe infections and no opportunistic infections .
• Trading setup: Stock reactions likely hinge on (1) FDA feedback on hold removal and Phase 3 design, and (2) fuller PORTOLA data later this year; watch for mandated steroid taper inclusion and histology signals .
• Medium‑term thesis: If Phase 3 aligns on clinically meaningful, steroid‑sparing endpoints with supportive histology and safety, zetomipzomib could pioneer first‑in‑class therapy in AIH where unmet need and corticosteroid burden are high .

S&P Global disclaimer: Asterisked values were retrieved from S&P Global (Capital IQ) consensus and may reflect “Primary EPS” methodology distinct from GAAP diluted EPS.