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Kezar Life Sciences, Inc. (KZR)·Q4 2024 Earnings Summary

Executive Summary

  • Kezar reported Q4 2024 GAAP net loss of $20.2M and diluted EPS of $2.77 loss per share; R&D fell to $16.0M from $22.6M YoY, and cash/marketable securities ended the year at $132.2M .
  • PORTOLA Phase 2a topline showed steroid-sparing complete biochemical remissions in refractory AIH: 31.3% (5/16) CR with taper ≤5 mg/day in ITT and 36% (5/14) in the pre-specified steroid subgroup, with no disease flares among CR patients; safety was primarily Grade 1–2 ISRs/SIRs .
  • Versus Wall Street: Q4 EPS missed consensus by $0.05 (actual -$2.77 vs -$2.72*); revenue in Q4 was zero vs consensus zero*, while Q3 EPS beat by $0.37 (actual -$2.78 vs -$3.15*) .
  • Management plans to respond to FDA partial clinical hold and align with FDA/EMA on a potential registrational AIH study; this de-risks the path and frames upcoming catalysts (hold removal, pivotal trial design) .

What Went Well and What Went Wrong

  • What Went Well

    • PORTOLA efficacy in hard-to-treat AIH with steroid-sparing remissions and durability; “We are encouraged by the safety and efficacy data… durable and steroid-sparing remissions” — Christopher Kirk (CEO) .
    • No disease flares among patients achieving CR; biochemical remissions correlated with histologic improvement and better FibroScan elastography in exploratory endpoints .
    • Safety consistent with prior programs: AEs were primarily ISRs/SIRs, all Grade 1–2; opportunistic infections were 0% in both arms .

  • What Went Wrong

    • Q4 EPS modestly missed consensus (-$2.77 actual vs -$2.72* estimate), leaving little near-term P&L leverage without revenue .
    • FDA partial clinical hold constraints in PORTOLA’s OLE (e.g., prednisone not below 5 mg/day) add procedural friction ahead of pivotal study planning .
    • Broader program risk backdrop from PALIZADE LN termination due to Grade 5 SAEs in ex-U.S. sites (including one placebo), increasing regulatory sensitivity around zetomipzomib safety in other indications .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
R&D Expense ($USD Millions)$16.30 $16.24 $16.03
G&A Expense ($USD Millions)$5.60 $5.71 $5.55
Total Operating Expenses ($USD Millions)$23.38 $21.95 $21.56
Net Loss ($USD Millions)$21.55 $20.31 $20.22
Diluted EPS ($USD)$(0.30) (pre-split) $(2.78) $(2.77)
Balance Sheet & SharesQ2 2024Q3 2024Q4 2024
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$164.18 $148.39 $132.25
Shares Outstanding (Millions)72.85 (pre-split) 7.30 (post-split) 7.30 (post-split)
Actual vs ConsensusQ3 2024 ActualQ3 2024 Consensus*Beat/MissQ4 2024 ActualQ4 2024 Consensus*Beat/Miss
Revenue ($USD Millions)$0.00 $0.67*Miss (modeled small rev., none realized)*
Diluted EPS ($USD)$(2.78) $(3.15)*Beat by $0.37*$(2.77) $(2.72)*Miss by $0.05*

Values marked with * retrieved from S&P Global.

Clinical KPIs (PORTOLA AIH)Value
ITT CR without regard to taper50.0% (8/16)
ITT CR with steroid taper ≤5 mg/day31.3% (5/16)
ITT CR with steroid taper to 0 mg/day18.8% (3/16)
Steroid-based subgroup CR with taper ≤5 mg/day35.7% (5/14) vs 0% placebo
Median duration of CR27.6 weeks (incl. OLE); no flares in CRs
Most common TEAEsISRs, SIRs (all Grade 1–2)
Opportunistic infections0% zetomipzomib, 0% placebo

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
PORTOLA topline data timingAIH Phase 2a“First half 2025” (Q2/Q3 guidance) Reported March 25, 2025 Achieved earlier end of window
PORTOLA trial status (FDA)OLE constraintsNot applicable (pre-hold)Partial clinical hold; OLE limits incl. prednisone ≥5 mg/day; DBTP completion allowed New restrictions applied
PALIZADE (LN)Phase 2b timeline“Topline mid-2026” Discontinued; will unblind and investigate safety events Lowered (terminated)
Registrational path (AIH)Next stepsNot setEngage FDA/EMA on pivotal design post-hold removal New development step identified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 & Q-1)Current Period (Q4 2024)Trend
R&D execution (PORTOLA)Enrollment completed; topline H1’25 Steroid-sparing remissions; durable CRs; histology and elastography signals Positive inflection (proof-of-concept success)
Regulatory/legalLN clinical hold; PORTOLA partial hold; reverse split for Nasdaq compliance Plan to respond to hold; align on registrational AIH study Moving toward resolution and pivotal planning
Safety profileIDMC favorable PORTOLA review; no Grade 4/5 SAEs ISRs/SIRs Grade 1–2; infections lower in zeto vs placebo (small N) Stable, manageable profile (trial context)
Steroid taperingProtocol suggested taper; partial hold required ≥5 mg/day in OLE Meaningful steroid sparing achieved; potential to mandate taper in future pivotal Becoming a key endpoint and design feature
Capital/structureReverse split and regained Nasdaq compliance YE cash $132.2M supporting AIH focus Runway supports next steps
Business developmentUnsolicited proposal; rights plan adopted Focus on internal AIH path; no active deal disclosed Independent path maintained

Management Commentary

  • “We are encouraged by the safety and efficacy data… specifically durable and steroid-sparing remissions… eager to work with the FDA… to remove the partial clinical hold and align on an appropriate trial design” — Christopher Kirk, CEO .
  • “Zetomipzomib represents a potent and targeted therapy… these results will positively contribute to the design of a registrational trial” — Prof. Gideon Hirschfield (Toronto General Hospital) .
  • “Quick, durable response with no flares… patient… tapered off steroid completely… suggests extended treatment could have disease-modifying impact” — Dr. Craig Lammert (Indiana University) .

Q&A Highlights

  • Steroid tapering policy: Protocol suggested (not mandated); future studies may mandate taper to rigorously demonstrate steroid-sparing benefit .
  • Safety/infections: Infection rates were higher in placebo vs zeto in this small dataset; clinicians emphasized corticosteroids as a key infection risk and welcomed steroid-sparing approaches .
  • Durability/longer treatment: KOLs expect greater separation and durable responses with longer therapy and controlled steroid tapering in registrational settings .
  • OLE discontinuations: Small number; reasons include grade 2 hives, fatigue, asthma-related shortness of breath; data cleaning ongoing .
  • LN program context: Company reiterated PALIZADE fatalities had confounding factors and occurred in ex-U.S. sites; PORTOLA safety profile remained acceptable with no Grade 4/5 SAEs .

Estimates Context

  • Q4 2024: EPS -$2.77 vs consensus -$2.72* (miss by $0.05); revenue $0 vs consensus $0* (inline)* .
  • Q3 2024: EPS -$2.78 vs consensus -$3.15* (beat by $0.37); revenue $0 vs consensus $0.67M* (miss; Street modeled minor collaboration inflows)* .
  • With AIH efficacy now demonstrated, Street models will likely shift from binary risk to probability-weighted development timelines; near-term EPS remains driven by OpEx until registrational path clarity and any partnership/out-licensing.
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • PORTOLA delivered the first randomized success in refractory AIH with steroid-sparing remissions and durable CRs; this is a narrative catalyst toward registrational development and eventual label discussions .
  • Safety profile continues to look manageable in AIH (ISRs/SIRs Grade 1–2, no opportunistic infections); expect pivotal designs to standardize tapering to highlight steroid-sparing benefits .
  • Near-term equity drivers: FDA response and removal of partial clinical hold, FDA/EMA alignment on pivotal endpoints (CR with mandated taper, histology), and medical meeting full data in 2H 2025 .
  • Financially, Kezar ended 2024 with $132.2M in cash and equivalents; operating expenses are trending down versus 2023, supporting AIH-focused runway .
  • EPS sensitivity remains limited without revenue; stock moves will be driven by regulatory updates, trial design, and KOL/peer feedback on the magnitude/durability of remissions .
  • Watch for business development optionality (partnering for pivotal execution/commercialization) once pivotal design is set; prior unsolicited interest underscores strategic value perceptions .
  • Risk monitoring: Ensure transparency on LN safety learnings and continued low severe AE rates in AIH; address taper standardization to convert physician “protectionism” into trial rigor and label-worthy evidence .
Notes:  
- Q2 2024 EPS was reported pre-reverse-split; Q3 and Q4 EPS reflect retroactive split adjustments as disclosed by management **[1645666_7b0ed7c389ae48f08fddb3a7f80f1291_5]** **[1645666_2cf9973a719d4cd5b4fb07d45e87cd51_5]** **[1645666_0001645666-25-000009_ex99-1pressreleasexportola.htm:5]**.  
- All consensus figures and beats/misses marked with * are values retrieved from S&P Global.