On May 7, 2020 Kezar Life Sciences, Inc. (Nasdaq: KZR), a clinical-stage biotechnology company discovering and developing novel small molecule therapeutics to treat unmet needs in autoimmunity and cancer, reported its first quarter 2020 financial results and corporate highlights (Press release, Kezar Life Sciences, MAY 7, 2020, View Source [SID1234557272]).

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"During this unprecedented health crisis, I’ve been deeply impressed by our team’s focus and continued execution across both of our programs," said John Fowler, Kezar’s Chief Executive Officer. "We are working closely with all the sites participating in our trials with KZR-616 and look forward to sharing new data from the Phase 1b portion of our MISSION study next month. In addition, we will present more preclinical data on our novel protein secretion inhibitor, KZR-261, in an e-poster during ASCO (Free ASCO Whitepaper) 2020 and remain on track for an IND submission in the first quarter of 2021."

Recent Clinical and Business Highlights

Appointment of Chief Medical Officer

Kezar appointed Noreen Roth Henig, MD as Chief Medical Officer. Dr. Henig is a seasoned leader whose career spans clinical practice, academic medicine, translational science, clinical development, medical and regulatory affairs. As an integral member of the Company’s Executive Leadership team, Dr. Henig will oversee all aspects of the Company’s clinical development, regulatory strategy, and medical affairs.

KZR-616 – Selective Immunoproteasome Inhibitor

On April 9, 2020, Kezar provided a statement on the impact of the COVID-19 pandemic to its clinical operations relating to KZR-616:

Kezar’s three clinical trials with KZR-616 (MISSION, MARINA, and PRESIDIO) remain active, but due to the unprecedented impact of the COVID-19 pandemic on the healthcare system, delays are anticipated for Phase 2 clinical development and data release milestones.

Kezar’s clinical team is working closely with clinical trial sites around the world to provide them with guidance for patients to safely enroll and continue on study.

Home health care services are available for patients participating in clinical trials with KZR-616.

Virtual site initiations and patient visits are being conducted where applicable.

As the Phase 1b portion of the MISSION study is open-label, the next updated data release is expected by the end of the second quarter in conjunction with a major medical conference.

KZR-261 – Protein Secretion Program

KZR-261, a first-in-class protein secretion inhibitor, has demonstrated broad anti-tumor activity in preclinical models of both solid and hematologic malignancies. Additional preclinical data will be presented in an e-poster during the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) (ASCO20) Virtual Scientific Program at the end of May.

Preclinical work with KZR-261 remains on track towards the anticipated submission of an Investigational New Drug application in the first quarter of 2021.

Business Update

On February 4, 2020, Kezar closed an underwritten public offering with gross proceeds of approximately $56.8 million, before deducting underwriting discounts and offering expenses. In the public offering, Kezar sold 16,115,385 shares of common stock at $2.60 per share and pre-funded warrants to purchase 2,884,615 shares of common stock at $2.599 per share, each with an exercise price of $0.001 per share. In addition, the underwriters exercised in full an option to purchase an additional 2,850,000 shares of common stock in the offering.

Financial Results

Cash, cash equivalents and marketable securities totaled $123.4 million as of March 31, 2020, compared to $78.2 million as of December 31, 2019. The increase in cash, cash equivalents and marketable securities was primarily attributable to the net proceeds from the underwritten public offering in February 2020, net of cash used by the Company in operations to advance its clinical stage programs and preclinical research and development. The Company believes that its current cash, cash equivalent and marketable securities are sufficient to fund planned operations into the third quarter of 2022.

Research and development expenses for the first quarter of 2020 increased by $1.6 million to $7.5 million, compared to $5.9 million in the first quarter of 2019. This increase was primarily related to advancing both the KZR-616 clinical program in multiple indications and the protein secretion preclinical program.

General and administrative expenses for the first quarter of 2020 increased by $0.6 million to $3.0 million, compared to $2.4 million in the first quarter of 2019. The increase was primarily due to an increase in personnel expenses, including non-cash stock-based compensation.

Net loss for the first quarter of 2020 was $10.0 million, or $0.30 per basic and diluted common share, compared to a net loss of $7.6 million, or $0.40 per basic and diluted common share, for the first quarter of 2019.

Total shares of common stock outstanding were 38.2 million as of March 31, 2020. Additionally, there were outstanding pre-funded warrants to purchase 2.9 million shares of common stock at an exercise price of $0.001 per share and options to purchase 4.1 million shares of common stock at a weighted average exercise price of $6.21 per share as of March 31, 2020.

About KZR-616

KZR-616 is a novel, first-in-class, selective immunoproteasome inhibitor with broad therapeutic potential across multiple autoimmune diseases. Preclinical research demonstrates that selective immunoproteasome inhibition results in a broad anti-inflammatory response in animal models of several autoimmune diseases, while avoiding immunosuppression. Data generated from Phase 1a and 1b trials provide evidence that KZR-616 potentially avoids adverse effects caused by currently marketed non-selective proteasome inhibitors, which we believe prevent them from being utilized as a chronic treatment in autoimmune disorders. Phase 2 trials are underway for the treatment of lupus nephritis (MISSION), dermatomyositis and polymyositis (PRESIDIO), and autoimmune hemolytic anemia and immune thrombocytopenia (MARINA).

About KZR-261

KZR-261, a novel, first-in-class protein secretion inhibitor, is the first clinical candidate to be nominated from Kezar’s research and discovery efforts targeting protein secretion pathways. KZR-261 is a broad-spectrum anti-tumor agent that acts through direct interaction and inhibition of Sec61 activity. The compound was discovered at Kezar through a robust medicinal chemistry campaign in which several scaffolds were progressed through the company’s proprietary platform evaluating Sec61 modulation. As a result, Kezar has established a broad library of protein secretion inhibitors. KZR-261 has demonstrated several encouraging properties that lead to its potential to be an anti-cancer agent for the treatment of solid and hematologic malignancies. IND-enabling activities are currently underway, and an IND submission in solid tumors is expected to be filed in the first quarter of 2021.