kzr-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_______________________________________________________________________________________________

FORM 10-Q

_______________________________________________________________________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 001-38542

_______________________________________________________________________________________________

Kezar Life Sciences, Inc.

(Exact Name of Registrant as Specified in its Charter)

_______________________________________________________________________________________________


Delaware			47-3366145
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

4000 Shoreline Court, Suite 300

South San Francisco, CA, 94080

(650) 822-5600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

_______________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	KZR	The Nasdaq Stock Market LLC
Preferred Share Purchase Rights		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 8, 2025, the registrant had 7,305,800 shares of common stock, $0.001 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statement of Stockholders’ Equity	1
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 5.	O ther Information	69
Item 6.	Exhibits	70

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “should,” “would,” “potential,” “project,” “plan,” “expect,” “seek,” “target” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include statements concerning the following:

•our plans to develop and commercialize our product candidates;

•the initiation, timing, progress and expected results of our current and future clinical trials and our research and development programs;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our ability to maintain and establish collaborations or strategic relationships or obtain additional funding;

•the timing and likelihood of obtaining regulatory approval of our current and future product candidates;

•the potential milestone and royalty payments under certain of our license agreements;

•our expectations regarding the potential market size and the rate and degree of market acceptance of such product candidates;

•our ability to fund our working capital requirements and expectations regarding the sufficiency of our capital resources;

•the implementation of our business model and strategic plans for our business and product candidates;

•the scope of protection we are able to establish and maintain for intellectual property rights and the duration of our patent rights covering our product candidates;

•developments or disputes concerning our intellectual property or other proprietary rights;

•the scalability and commercial viability of our manufacturing methods and processes;

•our expectations regarding government and third-party payor coverage and reimbursement;

•our ability to compete in the markets for our product candidates;

•general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad, including as a result of bank failures, public health crises or geopolitical tensions;

•the impact of government laws and regulations;

•developments relating to our competitors and our industry; and

•other factors that may impact our financial results.

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements in this report, whether as a result of new information, future events or otherwise, after the date of this report.

Unless the context otherwise requires, the terms “Kezar,” “Kezar Life Sciences,” “the Company,” “we,” “us,” “our” and similar references in this Quarterly Report on Form 10-Q refer to Kezar Life Sciences, Inc. and our wholly owned Australian subsidiary, Kezar Life Sciences Australia Pty Ltd.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)


	March 31, 2025		December 31, 2024
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	37,002	$	41,749
Marketable securities	77,359		90,496
Prepaid expenses and other current assets	5,957		5,243
Total current assets	120,318		137,488
Property and equipment, net	2,650		2,893
Operating lease right-of-use asset	1,618		1,886
Other assets	674		2,415
Total assets	$	125,260	$	144,682
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,966	$	3,651
Accrued and other current liabilities	6,115		7,935
Operating lease liabilities, current	3,665		3,526
Debt, current	5,217		5,217
Total current liabilities	16,963		20,329
Operating lease liabilities, noncurrent	1,354		2,326
Debt, noncurrent	3,874		5,111
Total liabilities	22,191		27,766
Stockholders' equity:
Common stock, $0.001 par value, 250,000,000 shares authorized as of March 31, 2025 (unaudited) and December 31, 2024; 7,305,800 and 7,303,629 shares issued and outstanding as of March 31, 2025 (unaudited) and December 31, 2024, respectively	7		7
Preferred stock, $0.001 par value, 10,000,000 shares authorized; zero shares issued and outstanding as of March 31, 2025 (unaudited) and December 31, 2024	—		—
Additional paid-in capital	554,349		551,570
Accumulated other comprehensive loss	(232)		(162)
Accumulated deficit	(451,055)		(434,499)
Total stockholders' equity	103,069		116,916
Total liabilities and stockholders' equity	$	125,260	$	144,682

See accompanying notes to the unaudited condensed consolidated financial statements

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KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended March 31,
	2025		2024
Operating expenses:
Research and development	12,180		17,172
General and administrative	5,449		6,539
Total operating expenses	17,629		23,711
Loss from operations	(17,629)		(23,711)
Interest income	1,420		2,453
Interest expense	(347)		(400)
Net loss	$	(16,556)	$	(21,658)
Net loss per common share, basic and diluted	$	(2.27)	$	(2.98)
Weighted-average shares used to compute net loss per common share, basic and diluted	7,305,658		7,279,991

See accompanying notes to the unaudited condensed consolidated financial statements

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KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2025		2024
Net loss	$	(16,556)	$	(21,658)
Other comprehensive income (loss):
Foreign currency translation adjustments	5		(29)
Unrealized loss on marketable securities	(75)		(196)
Total other comprehensive loss, net of tax	(70)		(225)
Comprehensive loss	$	(16,626)	$	(21,883)

See accompanying notes to the unaudited condensed consolidated financial statements

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KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

(In thousands, except share amounts)


	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED OTHER COMPREHENSIVE LOSS		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS' EQUITY
	SHARES	AMOUNTS
Balance at December 31, 2024	7,303,629	$	7	$	551,570	$	(162)	$	(434,499)	$	116,916
Issuance of common stock under employee stock incentive plans	2,171	—		—		—		—		—
Stock-based compensation expense	—	—		2,779		—		—		2,779
Other comprehensive loss	—	—		—		(70)		—		(70)
Net loss	—	—		—		—		(16,556)		(16,556)
Balance as of March 31, 2025	7,305,800	$	7	$	554,349	$	(232)	$	(451,055)	$	103,069


	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		ACCUMULATED OTHER COMPREHENSIVE LOSS		ACCUMULATED DEFICIT		TOTAL STOCKHOLDERS' EQUITY
	SHARES	AMOUNTS
Balance at December 31, 2023	7,277,908	$	7	$	538,456	$	(130)	$	(350,763)	$	187,570
Issuance of common stock under employee stock incentive plans	2,228	—		—		—		—		—
Stock-based compensation expense	—	—		3,434		—		—		3,434
Other comprehensive loss	—	—		—		(225)		—		(225)
Net loss	—	—		—		—		(21,658)		(21,658)
Balance as of March 31, 2024	7,280,136	$	7	$	541,890	$	(355)	$	(372,421)	$	169,121

See accompanying notes to the unaudited condensed consolidated financial statements

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KEZAR LIFE SCIENCES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net loss	$	(16,556)	$	(21,658)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	251		260
Stock-based compensation	2,779		3,434
Amortization of premiums and discounts on marketable securities	(688)		(1,513)
Amortization of debt discount and issuance costs and other non-cash interest	159		64
Changes in operating assets and liabilities
Prepaid expenses and other current assets	(714)		(237)
Other assets	1,741		94
Accounts payable, accrued and other current liabilities	(3,597)		(3,009)
Operating lease assets and liabilities	(565)		(297)
Net cash used in operating activities	(17,190)		(22,862)
Cash flows from investing activities:
Purchases of property and equipment	(8)		—
Purchases of marketable securities	—		(17,342)
Maturities of marketable securities	13,750		37,750
Net cash provided by investing activities	13,742		20,408
Cash flows from financing activities:
Repayment of loan principal	(1,304)		—
Net cash used in financing activities	(1,304)		—
Effect of exchange rate changes on cash and cash equivalents	5		(7)
Net decrease in cash and cash equivalents	(4,747)		(2,461)
Cash and cash equivalents at the beginning of period	41,749		35,493
Cash and cash equivalents at the end of period	$	37,002	$	33,032
Supplemental disclosures
Cash paid for interest	$	189	$	336

See accompanying notes to the unaudited condensed consolidated financial statements

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Kezar Life Sciences, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. Organization and Description of the Business

Description of Business

Kezar Life Sciences, Inc. (the “Company,” “we,” “us,” or “our”) was incorporated in the state of Delaware in February 2015 and commenced operations in June 2015. The Company is a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases. The Company’s principal operations are in South San Francisco, California, and it operates in one segment.

Liquidity

Since commencing operations in mid-2015, substantially all of the Company’s efforts have been focused on research, development, and the advancement of the Company’s product candidates. The Company’s ultimate success depends on the outcome of these ongoing research and development activities. The Company has not yet generated product sales and as a result has experienced operating losses since inception and had an accumulated deficit of $451.1 million as of March 31, 2025. The Company expects to incur additional losses in the future to conduct research and development and will need to raise additional capital to fully implement management’s business plan. The Company intends to raise such capital through the issuance of additional equity, including through at-the-market offerings, and potentially through borrowings, strategic alliances with partner companies and other licensing transactions, such as our collaboration with Everest Medicines II (HK) Limited (“Everest”). However, if financing is not available at adequate levels, the Company may need to reevaluate its operating plans. Management believes that its existing cash, cash equivalents and marketable securities will be sufficient to fund the Company’s cash requirements for at least 12 months following the issuance of these financial statements.

2. Summary of Significant Accounting Policies

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2024 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 25, 2025 (the “Annual Report”), and there have been no material changes to such policies during the three months ended March 31, 2025.

Basis of Presentation and Consolidation

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the Company’s accounts and those of its wholly owned Australian subsidiary, Kezar Life Sciences Australia Pty Ltd., which is a proprietary company limited by shares. All intercompany balances and transactions have been eliminated upon consolidation.

The condensed consolidated balance sheet as of December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Annual Report.

Unaudited Condensed Consolidated Financial Statements

The accompanying financial information as of March 31, 2025 is unaudited. The condensed consolidated financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that our management considers necessary for the fair statement of the results of operations for the interim periods covered and of our financial condition at the date of the interim balance sheet. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto included in our Annual Report.

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One-for-Ten Reverse Stock Split

On October 29, 2024, the Company effected a one-for-ten reverse stock split (the “Reverse Stock Split”) of its issued and outstanding common stock such that each ten shares of common stock outstanding at the time the Reverse Stock Split was converted into one share of common stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders of record who otherwise were entitled to a fractional share of common stock as a result of the Reverse Stock Split were entitled to receive one full share of common stock in lieu of such fractional share. There were no changes in the total number of shares of common stock authorized for issuance by the Company, nor a change in par value per share. All share and share-related information presented in these condensed consolidated financial statements has been retroactively adjusted for all periods presented to reflect the decreased number of shares resulting from the Reverse Stock Split.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such judgments, estimates and assumptions include the valuation of marketable securities, impairment of long-lived assets, determining the fair-value of stock-based compensation, and evaluating the progress to completion of external research and development costs. Management bases its estimates on historical experience and on various other market-specific relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its judgments, estimates and assumptions or revise the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2024-03 Income Statement– Reporting Comprehensive Income – Expense Disaggregation Disclosures (“ASU 2024-03”), which requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement. In January 2025, the FASB issued Accounting Standards Update No. 2025-01 Income Statement– Reporting Comprehensive Income – Expense Disaggregation Disclosures – Clarifying the Effective Date (“ASU 2025-01”) to clarify the effective date of ASU 2024-03 for non-calendar year-end entities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update No. 2023-09 Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires entities to disclose specific categories in the income tax rate reconciliation annually and provide additional information for reconciling items that meet a qualitative threshold. ASU 2023-09 also requires that entities disclose annually additional information about income taxes paid and disaggregated information for certain items. ASU 2023-09 is effective for the Company beginning on January 1, 2025. The Company is currently evaluating the effect of adopting the update on its Annual Report on Form 10-K for the year ending December 31, 2025.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance that are expected to have a material impact on the Company’s condensed consolidated financial statements upon adoption.

3. Fair Value Measurements

Financial assets and liabilities are recorded at fair value. The carrying amount of certain financial instruments, including cash equivalents, other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair

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values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

The Company applies fair value accounting for all financial assets and liabilities and nonfinancial assets and liabilities that are required to be recognized or disclosed at fair value in the financial statements. The Company determines the fair value of Level 1 assets using quoted prices in active markets for identical assets. The Company reviews trading activity and pricing for Level 2 investments as of each measurement date. Level 2 inputs, which are obtained from various third-party data providers, represent quoted prices for similar assets in active markets and were derived from observable market data, or, if not directly observable, were derived from or corroborated by other observable market data.

In certain cases, where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3 within the valuation hierarchy. The Company did not have any financial assets or liabilities measured using Level 3 inputs as of March 31, 2025 or December 31, 2024.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above (in thousands):


	March 31, 2025
	Total		Level 1		Level 2		Level 3
Financial Assets:
Cash equivalents:
U.S. Treasury money market funds	$	36,388	$	36,388	$	—	$	—
Marketable securities:
Commercial paper	41,412		—		41,412		—
Corporate debt securities	15,237		—		15,237		—
U.S. Treasury securities	15,717		15,717		—		—
U.S. government agency bonds	4,993		—		4,993		—
Total	$	113,747	$	52,105	$	61,642	$	—

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	December 31, 2024
	Total		Level 1		Level 2		Level 3
Financial Assets:
Cash equivalents:
U.S. Treasury money market funds	$	37,177	$	37,177	$	—	$	—
Commercial paper	3,963		—		3,963		—
Marketable securities:
Commercial paper	42,919		—		42,919		—
Corporate debt securities	15,194		—		15,194		—
U.S. Treasury securities	27,391		27,391		—		—
U.S. government agency bonds	4,992		—		4,992		—
Total	$	131,636	$	64,568	$	67,068	$	—

4. Available-for-Sale Securities

The following table is a summary of available-for-sale securities recorded in cash and cash equivalents or marketable securities in the Company’s condensed consolidated balance sheets (in thousands):


	March 31, 2025
	Amortized Cost		Unrealized Gains		Unrealized Losses	Fair Value
Cash equivalents:
U.S. Treasury money market funds	$	36,388	$	—	$

SEC Form 10-Q filed by Kezar Life Sciences Inc.