Kazia Therapeutics’ scientific and clinical fundamentals remain strong: Edison Investment Research

Kazia Therapeutics Ltd’s (ASX:KZA) core business case remains strong as it is developing the only brain penetrating PI3K inhibitor agent in trials to treat glioblastoma, the most aggressive form of primary brain cancer.

The company recently released positive interim data from its ongoing phase II study of paxalisib (formerly GDC-0084).

Kazia’s potentially pivotal Phase III using the AGILE trial network is on track to start in the second half of this year.

Following is an extract from Edison Investment Research report on Kazia:

Progression to Phase III on track for H220

In the 20 February H120 results statement, the potentially pivotal study (AGILE) was scheduled for an H220 start. AGILE is a US study so might be restricted by the coronavirus pandemic if viral cases occupy the intensive care unit space and if it proves dangerous to conduct brain surgery. Currently, the AGILE study remains on track for a H220 start. New glioblastoma patients will continue to present and desperately need treatment options. In case the study is affected, given the US virus response is still patchy and limited, we have also modelled a scenario in which the trial effectively starts in H121. This would still make a 2025 launch after accelerated FDA review feasible and a deal in 2023–24 possible.

Valuation: Core value remains A$137m

Kazia is aiming for a 2024 paxalisib US launch and, assuming no trial delay, our valuation remains unchanged. In a possible six-month delay scenario, we assume 2020 cost reductions and estimate a slightly reduced value of A$130m. We note that scientific and clinical paxalisib fundamentals remain strong and Kazia quickly completed the current expansion cohort recruitment. Kazia had A$6.4m cash at 31 December 2019 and may conserve cash in the short term if needed. New Cantrixil data might be released by mid-2020; progression for this programme is assumed to require a partner. If the AGILE study runs as planned, Kazia will need further capital by H121.

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