Wells Fargo Analyst Has Questions On Kezar's Lupus Nephritis Data Readout, Stock Plunges

Wells Fargo is reiterating its Overweight rating after Kezar Life Sciences Inc's KZR zeto (KZR-616) Phase 2 trial in dermatomyositis/polymyositis failed to top placebo on the trial's primary endpoint of mean total improvement score (TIS).
The analysts had viewed the program as a free call option for shares at these levels and argued that there should be a limited downside for shares on the news.
The analysts have reduced the price target to $14 (from $19), removing myositis from the model.
When talking with Wells Fargo, Kezar management highlighted that they have yet to fully unpack the data to see if zeto may have affected any TIS subscores. It is unclear when or if they will present this data in the future.
One bright spot from PRESIDIO was that the zeto's safety continues to look good.
Now, the big question is how does the PRESIDIO failure read through to the MISSION study in Lupus Nephritis (LN) with data expected in June.
The analysts expect that the read-through is likely limited, but it's a "show me story" now. No activity in PRESIDIO likely raises whether the positive interim data in a handful of LN patients is real.
Price Action: KZR shares are down 43.50% at $6.96 during the market session on the last check Wednesday.

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