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What changed in Kezar Life Sciences, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Kezar Life Sciences, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+406 added−395 removedSource: 10-K (2024-12-31) vs 10-K (2024-03-14)

Top changes in Kezar Life Sciences, Inc.'s 2024 10-K

406 paragraphs added · 395 removed · 300 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+47 added−46 removed171 unchanged
Biggest changeIn addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or the civil monetary penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent. 15 Table of Contents Federal false claims laws, including the federal civil False Claims Act, and the civil monetary penalties prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
Biggest changeIn addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or the civil monetary penalties statute, which imposes penalties against any person who is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.
If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant penalties, including administrative, criminal and civil monetary penalties, damages, fines, disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.
If our operations 16 Table of Contents are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant penalties, including administrative, criminal and civil monetary penalties, damages, fines, disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations.
We also contract with additional third parties for the filling, labeling, packaging, storage and distribution of our investigational drug products. We maintain manufacturing agreements with our CMOs that include confidentiality and intellectual property provisions to protect our proprietary rights related to zetomipzomib and KZR-261.
We also contract with additional third parties for the filling, labeling, packaging, storage and distribution of our investigational drug products. We maintain manufacturing agreements with our CMOs that include confidentiality and intellectual property provisions to protect our proprietary rights related to zetomipzomib .
In over 15 peer-reviewed publications, our selective inhibitors of the immunoproteasome and related compounds have demonstrated strong therapeutic potential by blocking disease progressions in animal models multiple immune-mediated diseases. Additionally, this immunomodulatory response was broadly seen across many cell types of the immune system, including 6 Table of Contents both T-cells and B-cells, and was demonstrated in a non-immunosuppressive manner.
In over 15 peer-reviewed publications, our selective inhibitors of the immunoproteasome and related compounds have demonstrated strong therapeutic potential by blocking disease progressions in animal models multiple immune-mediated diseases. Additionally, this immunomodulatory response was broadly seen across many cell types of the immune system, including both T-cells and B-cells, and was demonstrated in a non-immunosuppressive manner.
Item 1A titled “Risks Related to Our Intellectual Property.” 10 Table of Contents Trademarks and Know-How In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate.
Item 1A titled “Risks Related to Our Intellectual Property.” Trademarks and Know-How In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate.
It is unclear how any such challenges and the healthcare reform measures of the Biden administration will impact the PPACA. In addition, other legislative changes have been proposed and adopted since the PPACA was enacted.
It is unclear how any such challenges and the healthcare reform measures of the current administration will impact the PPACA. In addition, other legislative changes have been proposed and adopted since the PPACA was enacted.
Orphan drug exclusivity could block the approval of one of our products for seven years if a competitor obtains approval for a drug with the same active moiety intended for the same indication before we do, unless we are able to demonstrate that grounds for withdrawal of the orphan drug exclusivity exist, or that our product is clinically superior.
Orphan drug exclusivity could block the approval of one of our products for seven years if a competitor obtains approval for a drug with the same active moiety intended for the same indication before we do, unless we are able to demonstrate that grounds for withdrawal 13 Table of Contents of the orphan drug exclusivity exist, or that our product is clinically superior.
Commencing upon the first commercial sale of a licensed product, we must make royalty payments to Onyx on net sales of such licensed products based on tiered annual net sales thresholds at varying royalty rates ranging in the mid to high single digits, subject to certain customary reductions.
Commencing upon the first commercial sale of a licensed product, we must make royalty payments to Onyx on net sales of such licensed products based on tiered annual net sales thresholds at 7 Table of Contents varying royalty rates ranging in the mid to high single digits, subject to certain customary reductions.
An IND sponsor must submit the results of the nonclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND application. Some nonclinical testing may continue even after the IND application is submitted.
An IND sponsor must submit the results of the nonclinical tests, together with 11 Table of Contents manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND application. Some nonclinical testing may continue even after the IND application is submitted.
The process required by the FDA before a drug may be marketed in the United States generally involves: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice regulations; • submission to the FDA of an Investigational New Drug Application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled clinical trials, in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drug for each indication; • submission to the FDA of a New Drug Application, or NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • satisfactory completion of an FDA inspection of selected clinical sites to assure compliance with GCP and the integrity of the clinical data; • payment of user fees; and • FDA review and approval of the NDA. 11 Table of Contents Preclinical Studies Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy.
The process required by the FDA before a drug may be marketed in the United States generally involves: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice regulations; • submission to the FDA of an Investigational New Drug Application, or IND, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled clinical trials, in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drug for each indication; • submission to the FDA of a New Drug Application, or NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • satisfactory completion of an FDA inspection of selected clinical sites to assure compliance with GCP and the integrity of the clinical data; • payment of user fees; and • FDA review and approval of the NDA.
In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and 14 Table of Contents these state agencies for compliance with cGMP requirements.
In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements.
Our discovery-stage Sec61 inhibitors have shown to induce anti-tumor activity against multiple hematologic tumor types without inducing cell death in normal cells or significant toxicity in animals. Our tool compounds also block inflammation in animal models of autoimmunity at doses of less than 1/8th the maximum tolerated dose.
Our discovery-stage Sec61 inhibitors were shown to induce anti-tumor activity against multiple hematologic tumor types without inducing cell death in normal cells or significant toxicity in animals. Our tool compounds also blocked inflammation in animal models of autoimmunity at doses of less than 1/8th the maximum tolerated dose.
In cells of the immune system, the immunoproteasome is the predominant form. While both forms of the proteasome mediate protein degradation, the two forms of the proteasome accomplish this utilizing different active sites. These active sites are responsible for cleaving and degrading proteins.
In cells of the immune system, the immunoproteasome is the predominant form. While both forms of the proteasome mediate protein degradation, the two forms of the proteasome accomplish this utilizing 6 Table of Contents different active sites. These active sites are responsible for cleaving and degrading proteins.
For more information on our 7 Table of Contents intellectual property, see “Business — Intellectual Property.” Upon the expiration of such royalty term in such country, our license to such product will become fully paid-up, irrevocable, and non-exclusive.
For more information on our intellectual property, see “Business — Intellectual Property.” Upon the expiration of such royalty term in such country, our license to such product will become fully paid-up, irrevocable, and non-exclusive.
Item 1. B usiness. Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases and cancer. We believe therapies that inhibit multiple drivers of disease by targeting fundamental upstream control processes within the cell have the potential for profound therapeutic benefit in a number of difficult-to-treat diseases.
Item 1. Business. Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases. We believe therapies that inhibit multiple drivers of disease by targeting fundamental upstream control processes within the cell have the potential for profound therapeutic benefit in a number of difficult-to-treat diseases.
Our ability to compete will significantly depend upon our ability to complete necessary clinical trials and regulatory approval processes, and effectively market any drug that we may successfully develop. Our current and potential future competitors include pharmaceutical and biotechnology 8 Table of Contents companies, academic institutions and government agencies.
Our ability to compete will significantly depend upon our ability to complete necessary clinical trials and regulatory approval processes, and effectively market any drug that we may successfully develop. Our current and potential future competitors include pharmaceutical and biotechnology companies, academic institutions and government agencies.
In addition to patent and trademark protection, we rely upon know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants, and invention assignment agreements with our employees and consultants.
In addition to patent and trademark protection, we rely upon know-how and continuing technological innovation to develop and maintain our competitive position. We seek 10 Table of Contents to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants, and invention assignment agreements with our employees and consultants.
In addition, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or IRA, into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in PPACA marketplaces through plan year 2025.
For example, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in PPACA marketplaces through plan year 2025.
In total, our patent portfolio, including patents licensed from Onyx, comprises more than 10 different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for selective immunoproteasome inhibitors and protein secretion inhibitors.
In total, our patent portfolio, including patents licensed from Onyx, comprises more than five different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for selective immunoproteasome 9 Table of Contents inhibitors and protein secretion inhibitors.
Such obligations may include, without limitation, the 16 Table of Contents Federal Trade Commission Act, the Telephone Consumer Protection Act of 1991, the California Consumer Privacy Act of 2018, the European Union’s General Data Protection Regulation 2016/679, or EU GDPR, the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018, or UK GDPR.
Such obligations include, without limitation, the Federal Trade Commission Act, the Telephone Consumer Protection Act of 1991, the European Union’s General Data Protection Regulation 2016/679, or EU GDPR, the EU GDPR as it forms part of United Kingdom, or UK, law by virtue of section 3 of the European Union (Withdrawal) Act 2018, or UK GDPR.
Additionally, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024.
Additionally, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, previously set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, effective January 1, 2024.
If zetomipzomib or KZR-261 are approved by any regulatory agency, we intend to enter into agreements with one or more CMOs for their commercial production. We are currently administering zetomipzomib as a lyophilized product candidate, meaning it is freeze-dried and must be reconstituted with water prior to delivery to a patient.
If 8 Table of Contents zetomipzomib is approved by any regulatory agency, we intend to enter into agreements with one or more CMOs for its commercial production. We are currently administering zetomipzomib as a lyophilized product candidate, meaning it is freeze-dried and must be reconstituted with water prior to delivery to a patient.
Employees and Human Capital Resources As of December 31, 2023, we had 58 full-time employees, 39 of whom were primarily engaged in research and development activities and 14 of whom had an M.D. or Ph.D. degree. None of our employees is represented by a labor union and we consider our employee relations to be good.
Employees and Human Capital Resources As of December 31, 2024, we had 55 full-time employees, 38 of whom were primarily engaged in research and development activities and 11 of whom had an M.D. or Ph.D. degree. None of our employees is represented by a labor union and we consider our employee relations to be good.
We cannot predict the full impact the longer-term shift towards value-based reimbursement will have on any of our product candidates in either the Medicare program, or in any other third-party payor programs that may similarly tie payment to provider quality. We expect additional healthcare reform initiatives to be adopted in the future.
We cannot predict the full impact the longer-term shift towards value-based reimbursement will have on any of our product candidates in either the Medicare program, or in any other third-party payor programs that may similarly tie payment to provider quality.
We also expect these initiatives to increase pressure on drug pricing. Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our product candidates.
Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our product candidates.
This is distinct from other agents currently used to treat autoimmunity, which typically target a single cytokine or immune cell type or are broadly immunosuppressive. KZR-261: A First-In-Class Protein Secretion Inhibitor KZR-261 is a novel, first-in-class protein secretion inhibitor and the first clinical candidate nominated from our protein secretion platform. KZR-261 acts through direct interaction and inhibition of Sec61translocon activity.
This is distinct from other agents currently used to treat autoimmunity, which typically target a single cytokine or immune cell type or are broadly immunosuppressive. KZR-261: First-in-Class Protein Secretion Inhibitor KZR-261 is a novel, first-in-class protein secretion inhibitor that acts through direct interaction and inhibition of Sec61 translocon activity.
We have paid $5.0 million in milestone payments to date under the Onyx License Agreement, and we are obligated to pay Onyx additional milestone payments of up to $167.5 million in the aggregate upon the achievement of certain development, regulatory and sales milestones.
Patent coverage for zetomipzomib extends to at least 2034. We have paid $5.0 million in milestone payments to date under the Onyx License Agreement, and we are obligated to pay Onyx additional milestone payments of up to $167.5 million in the aggregate upon the achievement of certain development, regulatory and sales milestones.
In August 2011, then President Obama signed into law the Budget Control Act of 2011, as amended, which, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which began in 2013 and, following passage of subsequent legislation, including the BBA, will continue until 2032 unless additional Congressional action is taken.
In August 2011, the Budget Control Act of 2011 was signed into law which, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year beginning in 2013 and, following passage of subsequent legislation, including the Bipartisan Budget Act of 2015, will continue until 2032 unless additional Congressional action is taken.
We are aware of one company currently engaged in drug discovery and development of selective inhibitors of the immunoproteasome. IpiNovyx Bio, founded in 2021, is engaged in preclinical research focused on small molecule immunoproteasome therapies for the treatment of autoimmune and inflammatory diseases. Currently, SLE is treated with corticosteroids and immunosuppressive agents such as azathioprine.
We are aware of one company currently engaged in drug discovery and development of selective inhibitors of the immunoproteasome. IpiNovyx Bio, founded in 2021, is engaged in preclinical research focused on small molecule immunoproteasome therapies for the treatment of autoimmune and inflammatory diseases.
In October 2023, we paused our preclinical research and drug discovery activities on the protein secretion pathway to focus resources on clinical development of zetomipzomib and KZR-261.
We suspended preclinical research and drug discovery activities on the protein secretion pathway in 2023 to focus resources on clinical development of zetomipzomib.
Our product candidates may not be considered medically necessary or cost-effective. A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one third-party payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product.
A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one third-party payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product.
In addition, various other states within the United States have enacted or proposed data privacy laws. For example, Virginia passed the Consumer Data Protection Act, and Colorado passed the Colorado Privacy Act. Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security.
In addition, various other states within the United States have enacted or proposed data privacy laws. Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and security.
Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs.
Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement 18 Table of Contents methodologies for drugs. For example, the IRA, among other things, (i) directs the U.S.
We have seen encouraging clinical activity and biomarker data in the SLE and LN patients who received zetomipzomib in our MISSION trial. The safety and tolerability profiles of zetomipzomib has been favorable and consistent with the needs for a long-term therapy.
We have observed encouraging clinical activity and biomarker data in the SLE and LN patients who received zetomipzomib in our MISSION Phase 1b/2 clinical trial. The safety and tolerability profile of zetomipzomib observed in the MISSION Phase 1b/2 clinical trial was favorable and consistent with the needs for a long-term therapy.
Our patent portfolio includes issued patents in, among other jurisdictions, the United States, Australia, Canada, 9 Table of Contents China, Europe, Japan, Mexico, Singapore and South Korea with expiration dates ranging from 2034 to 2039, absent any patent term extensions available.
Our patent portfolio includes issued patents in, among other jurisdictions, the United States, Australia, Canada, China, Europe, Japan, Mexico, Singapore and South Korea with expiration dates ranging from 2034 to 2039, absent any patent term extensions available. We have additional patent assets related to our research and discovery efforts.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
There also are continuing annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as application fees for supplemental applications with clinical data. 14 Table of Contents Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
In addition, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S.
These and other healthcare reform initiatives may result in additional reductions in Medicare and other healthcare funding. In addition, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S.
In addition, the IRA, among other things, (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and 18 Table of Contents biologics covered under Medicare, and subject drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is not equal to or less than the negotiated “maximum fair price” for such drugs and biologics under the law, and (ii) imposes rebates with respect to certain drugs and biologics covered under Medicare Part B or Medicare Part D to penalize price increases that outpace inflation.
Department of Health and Human Services, or HHS, to negotiate the price of certain high-expenditure, single-source drugs and biologics that have been on the market for at least seven years, covered under Medicare, and subject drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is not equal to or less than the negotiated “maximum fair price” for such drugs and biologics under the law, or the Medicare Drug Price Negotiation Program, and (ii) imposes rebates with respect to certain drugs and biologics covered under Medicare Part B or Medicare Part D to penalize price increases that outpace inflation.
We cannot provide any assurances that we will be able to obtain and maintain third-party payor coverage or adequate reimbursement for our product candidates in whole or in part. 17 Table of Contents Impact of Healthcare Reform on our Business The United States and some foreign jurisdictions are considering enacting or have enacted a number of additional legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our product candidates profitably, if approved.
Impact of Healthcare Reform on our Business The United States and some foreign jurisdictions are considering enacting or have enacted a number of additional legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our product candidates profitably, if approved.
AIH is a rare, chronic disease in which the immune system attacks the liver and causes inflammation and tissue damage, severely impacting patients’ physical health and quality of life. Lifelong maintenance therapy is required to avoid relapse and burdensome adverse effects. If left untreated, AIH can lead to cirrhosis, liver failure and hepatocellular carcinoma.
Clinical Development of Zetomipzomib We are focusing the development of zetomipzomib in autoimmune hepatitis, or AIH, a rare, chronic disease in which the immune system attacks the liver and causes inflammation and tissue damage, severely impacting patients’ health and quality of life. Lifelong maintenance therapy is required to avoid relapse and burdensome adverse effects.
Further, if a designated orphan drug receives marketing approval for an indication broader than the rare disease or condition for which it received ODD, it may not be entitled to exclusivity. 13 Table of Contents Special FDA Expedited Review and Approval Programs The FDA has various programs, including fast track designation, accelerated approval, priority review, and breakthrough therapy designation, which are intended to expedite or simplify the process for the development and FDA review of drugs that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs.
Special FDA Expedited Review and Approval Programs The FDA has various programs, including fast track designation, accelerated approval, priority review, and breakthrough therapy designation, which are intended to expedite or simplify the process for the development and FDA review of drugs that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs.
The PPACA became law in March 2010 and substantially changed the way healthcare is financed by both governmental and private insurers.
The PPACA became law in March 2010 and substantially changed the way healthcare is financed by both governmental and private insurers. There have been executive, judicial and Congressional challenges and amendments to certain aspects of the PPACA.
PORTOLA Phase 2a Trial PORTOLA is a Phase 2a placebo-controlled, double-blind clinical trial evaluating the safety and efficacy of zetomipzomib in patients with AIH who are insufficiently responding to standard of care or have relapsed.
The safety profile of zetomipzomib in PALIZADE was similar across both dose levels. 4 Table of Contents PORTOLA Phase 2a Trial PORTOLA is a placebo-controlled, double-blind Phase 2a clinical trial of zetomipzomib in patients with AIH that were insufficiently responding to standard of care or have relapsed.
The cost containment measures that third-party payors and healthcare providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approved product candidates.
Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our products and product candidates or exclusion of our product candidates from coverage. The cost containment measures that third-party payors and healthcare providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approved product candidates.
The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.
Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.
Our Pipeline The following table sets forth the status of our product candidates and discovery programs: 4 Table of Contents Zetomipzomib: Selective Immunoproteasome Inhibitor We believe that zetomipzomib is the only selective immunoproteasome inhibitor that is in clinical trials for the treatment of autoimmune disorders.
Zetomipzomib: Selective Immunoproteasome Inhibitor We believe that zetomipzomib is the only selective immunoproteasome inhibitor that is in clinical trials for the treatment of autoimmune disorders.
Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the FDA approvals.
We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the FDA approvals. Our product candidates may not be considered medically necessary or cost-effective.
We plan to provide a data update from this trial by the end of 2024. KZR-261 was discovered from our novel platform targeting the Sec61 translocon and the protein secretion pathway.
KZR-261 was discovered from our novel platform targeting the Sec61 translocon and the protein secretion pathway.
We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process. Many inflammatory disorders are currently treated one cytokine or cell type at a time, but the immunoproteasome affects a broad spectrum of immune regulators.
Many inflammatory disorders are currently treated one cytokine or cell type at a time, but the immunoproteasome affects a broad spectrum of immune regulators. Based on clinical data generated to date, we believe that zetomipzomib has the potential to address multiple chronic immune-mediated diseases.
Target enrollment will be 24 patients, who will be randomly assigned (2:1) to receive either zetomipzomib or placebo in addition to background corticosteroid therapy for 24 weeks and includes a protocol-mandated steroid taper by Week 14.
Enrollment was 24 patients, randomly assigned (2:1) to receive either 60 mg of zetomipzomib or placebo in addition to background therapy for 24 weeks, with a protocol-suggested steroid taper to 5 mg/day or less.
Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries. The approval process varies from country to country and can involve additional product testing and additional administrative review periods.
For example, in the EU, we must obtain authorization of a clinical trial application in each member state in which we intend to conduct a clinical trial. 19 Table of Contents Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries.
By focusing on such ESG policies and practices, we believe we can affect a meaningful and positive change in our community and maintain an open, collaborative and positive corporate culture.
By focusing on such ESG policies and practices, we believe we can affect a meaningful and positive change in our community and maintain an open, collaborative and positive corporate culture. We are developing zetomipzomib as a potential therapeutic for autoimmune disorders that disproportionately impact underserved communities and in orphan indications where there is a high unmet medical need.
PALIZADE Phase 2b Trial PALIZADE is a Phase 2b global, placebo-controlled, double-blind clinical trial evaluating the efficacy and safety of two dose-levels of zetomipzomib in patients with active LN.
PALIZADE was a Phase 2b global, placebo-controlled, double-blind clinical trial evaluating the efficacy and safety of two dose-levels of zetomipzomib in patients with active LN. Target enrollment was 279 patients, randomly assigned (1:1:1) to receive 30 mg of zetomipzomib, 60 mg of zetomipzomib or placebo subcutaneously once weekly for 52 weeks, in addition to standard background therapy.
For example, federal and state governments reimburse covered prescription drugs at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of healthcare services and products. Third-party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drug products for a particular indication.
For example, federal and state governments reimburse covered prescription drugs at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of 17 Table of Contents healthcare services and products.
Our oncology product candidate, KZR-261, is a small molecule agent being studied in an open-label Phase 1 clinical trial designed to evaluate safety and tolerability, pharmacokinetics and pharmacodynamics, as well to explore preliminary anti-tumor activity.
In addition, KZR-261 modulates the tumor microenvironment by reducing angiogenic factor expression (e.g., VEGF) and reducing immune checkpoint expression. We studied KZR-261 in an open-label Phase 1 clinical study designed to evaluate safety and tolerability, pharmacokinetics and pharmacodynamics, as well to explore preliminary anti-tumor activity.
We are developing zetomipzomib as a potential therapeutic for autoimmune disorders that disproportionately impact underserved communities and in orphan indications where there is a high unmet medical need. 19 Table of Contents To ensure our ongoing success, we are committed to promoting and maintaining an inclusive, high-performing culture where all team members embrace and leverage each other's talents and backgrounds.
To ensure our ongoing success, we are committed to promoting and maintaining an inclusive, high-performing culture where all team members embrace and leverage each other's talents and backgrounds. We are proud to actively support mentoring programs and internships for students in underserved communities as well as those interested in pursuing degrees in science and technology.
Adequate third-party payor reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development. Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our products and product candidates or exclusion of our product candidates from coverage.
Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Adequate third-party payor reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development.
To that end, we are advancing two drug development programs that harness different regulators of cellular function: the first targets the immunoproteasome which is responsible for protein degradation in cells of the immune system and drives many key aspects of immune cell function, and the second targets the Sec61 translocon, which is located on the endoplasmic reticulum and represents the beginning of the protein secretion pathway.
To that end, we are advancing a drug development program that harnesses a key regulator of cellular function by targeting the immunoproteasome, which is responsible for protein degradation in cells of the immune system and drives many key aspects of immune cell function. We believe targeting this fundamental regulator of cellular function offers an attractive approach to treating autoimmune diseases.
Targeting these fundamental regulators of cellular function offers an attractive approach to treating many diseases. Our lead product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor that has successfully completed Phase 1a testing in healthy volunteers and a Phase 1b/2a clinical trial in patients with systemic lupus erythematosus, or SLE, with or without lupus nephritis, or LN (the MISSION trial).
Zetomipzomib has completed testing in healthy volunteers in multiple Phase 1a clinical studies and in the MISSION Phase 1b/2 clinical trial in patients with systemic lupus erythematosus, or SLE, with or without lupus nephritis, or LN.
On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges. It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry.
On August 15, 2024, HHS announced the agreed-upon price of the first ten drugs that were subject to price negotiations, although the Medicare Drug Price Negotiation Program is currently subject to legal challenges. On January 17, 2025, HHS selected fifteen additional products covered under Part D for price negotiation in 2025.
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We are now conducting PALIZADE, a global, placebo-controlled, double-blind Phase 2b clinical trial evaluating zetomipzomib in patients with LN. In addition, we are leveraging the broad therapeutic potential of zetomipzomib in other severe autoimmune diseases of high unmet medical need. Our PORTOLA trial is a placebo-controlled, double-blind Phase 2a clinical trial evaluating zetomipzomib in patients with autoimmune hepatitis, or AIH.
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Our product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor that we are evaluating for the treatment of severe autoimmune diseases of high unmet medical need. We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process.
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We are also continuing to explore development opportunities for zetomipzomib in patients with SLE. Based on clinical data generated to date with zetomipzomib, we believe that zetomipzomib has the potential to address multiple chronic immune-mediated diseases.
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If left untreated, AIH can lead to cirrhosis, liver failure and hepatocellular carcinoma. Standard of care treatment for AIH involves daily corticosteroid use and/or chronic treatment with broad-based immunosuppressants, which together are associated with significant toxicities and often result in inadequate response or relapse after treatment withdrawal.
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This study is being conducted in two parts: dose escalation in patients with locally advanced or metastatic solid malignancies, and dose expansion in patients with selected tumor types. KZR-261 was discovered from our novel research platform targeting the Sec61 translocon and the protein secretion pathway.
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There is a significant need for treatment regimens that reduce or remove patients’ dependency on daily corticosteroids and broad-based immunosuppressants.
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KZR-261 has demonstrated broad anti-tumor activity in preclinical models of both solid and hematologic malignancies by targeting multiple pathways driving tumor growth and survival.
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The American Association for the Study of Liver Diseases, or AASLD, has established treatment guidelines for AIH that recommend an initial prednisone (or equivalent) dose of 20-40 mg/day to achieve a normalization of biochemical laboratory values, including alanine aminotransferase, or ALT, aspartate aminotransferase, or AST, and Immunoglobulin G, or IgG (if elevated), values, also known as a complete biochemical remission, or CR.
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Clinical Development of Zetomipzomib We are focusing the development of zetomipzomib in chronic and severe immune-mediated diseases where limited treatment options exist. Due to its broad immunomodulatory profile, we believe that zetomipzomib has the potential to address multiple chronic-immune mediated diseases.
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The AASLD also recommends a taper of corticosteroid therapy to 5-10 mg/day and withdrawal if appropriate in patients achieving a CR. In accordance with the AASLD treatment guidelines, and supported by our PORTOLA results described below, we expect to design our next AIH clinical trial to have an efficacy endpoint of patients achieving a CR with a successful steroid taper.
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Target enrollment will be 279 patients, who will be randomly assigned (1:1:1) to receive 30 mg of zetomipzomib, 60 mg of zetomipzomib or placebo subcutaneously once weekly for 52 weeks, in addition to standard background therapy. Background therapy can, but will not be mandated to, include standard induction therapy.
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Following the completion of the MISSION trial, we initiated the PALIZADE trial, which compared the safety and efficacy of two dose levels of zetomipzomib to placebo in patients with active, proliferative LN who were receiving standard of care therapy, namely high dose prednisone and mycophenylate mofetil (CellCept™).
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Over the initial 16 weeks, there will be a mandatory corticosteroid taper to 5 mg per day or less. End-of-treatment assessments will occur at Week 53, and the end-of-study assessments will occur at Week 57. The primary efficacy endpoint is the proportion of patients who achieve a complete renal response, or CRR, at Week 37.
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PALIZADE was a global trial that enrolled 84 patients prior to termination in 2024. The study was placed on clinical hold by the U.S.
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CRR is defined as a urine protein-to-creatine ratio, or UPCR, of 0.5 or less and stable estimated glomerular filtration rate, or eGFR, in patients who have not received rescue or prohibited medications.
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Food and Drug Administration, or FDA, Division of Rheumatology and Transplant Medicine following recommendation from the independent safety monitoring committee, based on review of 15 serious adverse events, or SAEs, including four fatalities: one in the placebo arm, two in the 30 mg zetomipzomib arm, and one in the 60 mg zetomipzomib arm.
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Key secondary endpoints include: the proportion of patients achieving partial renal response, or PRR, at Weeks 25, 37 and 53 and the number of CRRs at Weeks 25 and 53.
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Results from this early terminated trial provide evidence that the four fatalities occurred in patients with significant disease manifestations (pulmonary hypertension and anti-phospholipid syndrome), co-morbidities due to disease treatment (adrenal insufficiency) and/or the presence of systemic infections or septic shock.
Removed
PRR is defined as a fifty percent or greater reduction in UPCR from baseline, as well as an absolute reduction of UPCR at or below 1.0, if the baseline is less than 3.0, or an absolute reduction of UPCR below 3.0, if the baseline is 3.0 or greater. The primary safety endpoint is the incidence and severity of adverse events.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

172 edited+51 added−37 removed388 unchanged
Biggest changeWe have experienced and may in the future experience numerous unforeseen events that may prevent the timely and successful completion of our clinical trials, or result in the termination of such clinical trials prior to their completion, including: • failure to recruit suitable patients to participate in a clinical trial, enrollment in these clinical trials may be slower than we anticipate, and participants may drop out during the course of these trials at a higher rate than we anticipate; • delays in manufacturing, testing, releasing, validating and shipping stable quantities of our product candidates and placebo for our clinical trial sites; • delays in reaching a consensus with the FDA and foreign regulatory authorities on the design of our clinical trials; • the number of patients required for clinical trials to produce statistically meaningful data may be larger than we anticipate; • the costs of clinical trials of our product candidates may be greater than we anticipate, which may be more likely as a result of increased price inflation worldwide; • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; • regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site, or may otherwise suspend our clinical trials at any time if it appears we are or our collaborators are failing to conduct a trial in accordance with regulatory requirements; • delays in identifying and recruiting suitable clinical investigators or reaching agreement on acceptable terms with prospective clinical trial sites; • clinical trials of our product candidates may produce negative or inconclusive results, such as the topline data from our PRESIDIO Phase 2 clinical trial of zetomipzomib in patients with dermatomyositis and polymyositis, in which zetomipzomib did not demonstrate significant differentiation from placebo; • failure to perform our clinical trials in accordance with current Good Clinical Practice, or cGCP, or regulations required by the FDA or foreign regulatory authorities; • changes in regulatory requirements and guidance or other unforeseen regulatory developments that require amending or submitting new clinical protocols; • we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; or • business interruptions resulting from geo-political actions, war, terrorism, natural disasters or public health crises. 30 Table of Contents Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates, if approved, or allow our competitors to bring competing drugs to market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business, financial condition, results of operations and prospects.
Biggest changeWe have experienced and may in the future experience numerous unforeseen events that may prevent the timely and successful completion of our clinical trials, or result in the termination of such clinical trials prior to their completion, including: • failure to recruit suitable patients to participate in a clinical trial, enrollment in these clinical trials may be slower than we anticipate, and participants may drop out during the course of these trials at a higher rate than we anticipate; • delays in manufacturing, testing, releasing, validating and shipping stable quantities of our product candidates and placebo for our clinical trial sites; • delays in reaching a consensus with the FDA and foreign regulatory authorities on the design of our clinical trials; • the number of patients required for clinical trials to produce statistically meaningful data may be larger than we anticipate; • the costs of clinical trials of our product candidates may be greater than we anticipate, which may be more likely as a result of increased price inflation worldwide; • occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; • imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, such as the clinical hold imposed by the FDA on our PALIZADE Phase 2b clinical trial of zetomipzomib in patients with LN following four patient deaths in the Philippines and Argentina, concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; • regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site, or may otherwise suspend our clinical trials at any time if it appears we are or our collaborators are failing to conduct a trial in accordance with regulatory requirements; • delays in identifying and recruiting suitable clinical investigators or reaching agreement on acceptable terms with prospective clinical trial sites; • clinical trials of our product candidates may produce negative or inconclusive results, such as the topline data from our PRESIDIO Phase 2 clinical trial of zetomipzomib in patients with dermatomyositis and polymyositis, in which zetomipzomib did not demonstrate significant differentiation from placebo; • failure to perform our clinical trials in accordance with current Good Clinical Practice, or cGCP, or regulations required by the FDA or foreign regulatory authorities; • changes in regulatory requirements and guidance or other unforeseen regulatory developments that require amending or submitting new clinical protocols; • we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; or • business interruptions resulting from geo-political actions, war, terrorism, natural disasters or public health crises.
Any inability to timely and successfully complete clinical development will increase our costs, slow our development plans and impair our ability to generate revenue from our product candidates.
Any inability to timely and successfully complete clinical development will increase our costs, slow our development plans and impair our ability to generate revenue from our product candidates.
For example, the European Union’s General Data Protection Regulation, or EU GDPR and the United Kingdom’s GDPR, or UK GDPR impose strict requirements for processing the personal data of individuals located, respectively within the European Economic Area, or EEA and the United Kingdom, or UK.
For example, the European Union’s General Data Protection Regulation, or EU GDPR and the United Kingdom’s GDPR, or UK GDPR impose strict requirements for processing the personal data of individuals located, respectively within the European Economic Area, or EEA and the United Kingdom.
If we encounter such difficulties, or fail to meet quality standards, our ability to meet clinical timelines and expand our development strategy could be impacted. • Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval. • We may not be able to obtain or maintain orphan drug designations or exclusivity for our product candidates, which could limit the potential profitability of our product candidates. • Even if our product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success. • We face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us. 21 Table of Contents • We are dependent upon Everest for the further development and commercialization of zetomipzomib in the greater China region, South Korea and certain Southeast Asian countries. • Our relationships with customers, physicians, and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations.
If we encounter such difficulties, or fail to meet quality standards, our ability to meet clinical timelines and expand our development strategy could be impacted. • Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval. • We may not be able to obtain or maintain orphan drug designations or exclusivity for our product candidates, which could limit the potential profitability of our product candidates. • Even if our product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success. • We face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us. 21 Table of Contents • We are dependent upon our collaboration with Everest for the further development and commercialization of zetomipzomib in the greater China region, South Korea and certain Southeast Asian countries. • Our relationships with customers, physicians, and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, transparency laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations.
Failure to obtain this necessary capital when needed may force us to delay, reduce or terminate certain of our product development programs or other operations. • Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights. • Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of zetomipzomib and KZR-261, as well as any future product candidates. • We may explore strategic collaborations, which would require us to relinquish important rights to and control over the development and commercialization of our product candidates to any future collaborators. • Success in preclinical studies or earlier clinical trials may not be indicative of future clinical trial results, and we cannot assure you that any clinical trials will lead to results sufficient for the necessary regulatory approvals. • Clinical trials are very expensive, time consuming and difficult to design and implement. • Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control. • We may encounter substantial delays or difficulties in enrolling and retaining patients in our clinical trials. • The manufacture of our product candidates is complex and uncertain, and until we develop a validated manufacturing process, we may encounter difficulties in supplying our planned and future clinical trials.
Failure to obtain this necessary capital when needed may force us to delay, reduce or terminate certain of our product development programs or other operations. • Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish proprietary rights. • Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of zetomipzomib, as well as any future product candidates. • We may explore strategic collaborations, which would require us to relinquish important rights to and control over the development and commercialization of our product candidates to any future collaborators. • Success in preclinical studies or earlier clinical trials may not be indicative of future clinical trial results, and we cannot assure you that any clinical trials will lead to results sufficient for the necessary regulatory approvals. • Clinical trials are very expensive, time consuming and difficult to design and implement. • Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control. • We may encounter substantial delays or difficulties in enrolling and retaining patients in our clinical trials. • The manufacture of our product candidates is complex and uncertain, and until we develop a validated manufacturing process, we may encounter difficulties in supplying our planned and future clinical trials.
The following examples are illustrative: • others may be able to make compounds or formulations that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or control; • we or any strategic partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or control; • we might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or control may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; 49 Table of Contents • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use the information learned from such activities to develop competitive drugs for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • the patents of others may prevent us from fully exploiting our product candidates or technologies.
The following examples are illustrative: • others may be able to make compounds or formulations that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or control; • we or any strategic partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or control; • we might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or control may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; • our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use the information learned from such activities to develop competitive drugs for sale in our major commercial markets; 52 Table of Contents • we may not develop additional proprietary technologies that are patentable; and • the patents of others may prevent us from fully exploiting our product candidates or technologies.
Entering into future collaborations could subject us to a number of risks, including: • we may be required to relinquish important rights to and control over the development and commercialization of our product candidates; • we may be required to undertake the expenditure of substantial operational, financial and management resources; • we may be required to issue equity securities that would dilute our stockholders’ percentage ownership of our company; • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization of our product candidates; • strategic collaborators may select indications or design clinical trials in a way that may be less successful or slower than if we were doing so; • strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; • strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangement or may elect to discontinue research and development programs; • strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; • disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; 28 Table of Contents • strategic collaborators may experience financial difficulties; • strategic collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; • business combinations or significant changes in a strategic collaborator’s business strategy may adversely affect a strategic collaborator’s willingness or ability to complete its obligations under any arrangement; • strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and • strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates.
Entering into future collaborations could subject us to a number of risks, including: • we may be required to relinquish important rights to and control over the development and commercialization of our product candidates; • we may be required to undertake the expenditure of substantial operational, financial and management resources; • we may be required to issue equity securities that would dilute our stockholders’ percentage ownership of our company; • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization of our product candidates; • strategic collaborators may select indications or design clinical trials in a way that may be less successful or slower than if we were doing so; • strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; • strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangement or may elect to discontinue research and development programs; • strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; • disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; • strategic collaborators may experience financial difficulties; • strategic collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; • business combinations or significant changes in a strategic collaborator’s business strategy may adversely affect a strategic collaborator’s willingness or ability to complete its obligations under any arrangement; • strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and • strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates.
If we breach our exclusive license agreement with Onyx Therapeutics, Inc., we could lose the ability to continue the development and commercialization of zetomipzomib. • If we are unable to obtain and maintain patent protection for zetomipzomib, KZR-261 or any future product candidate, if the scope of patent protection is not sufficiently broad, or if our patents are insufficient to protect our product candidates for an adequate amount of time, we may not be able to compete effectively in our markets. • Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. • We are highly dependent on the services of our executive officers, and if we are not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business will be harmed. • If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports, about our business or our market, our stock price and trading volume could decline. • Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
If we breach our exclusive license agreement with Onyx Therapeutics, Inc., we could lose the ability to continue the development and commercialization of zetomipzomib. • If we are unable to obtain and maintain patent protection for zetomipzomib or any future product candidate, if the scope of patent protection is not sufficiently broad, or if our patents are insufficient to protect our product candidates for an adequate amount of time, we may not be able to compete effectively in our markets. • Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. • We are highly dependent on the services of our executive officers, and if we are not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business will be harmed. • If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports, about our business or our market, our stock price and trading volume could decline. • Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
Furthermore, if we or others identify undesirable side effects caused by our product candidates during development or after obtaining U.S. regulatory approval, several potentially significant negative consequences could result, including: • regulatory authorities may not permit us to initiate our studies or could put them on hold; • regulatory authorities may not approve, or may withdraw, their approval of the product; • regulatory authorities may require us to recall the product; • regulatory authorities may add new limitations for distribution and marketing of the product; 32 Table of Contents • regulatory authorities may require the addition of warnings in the product label or narrowing of the indication in the product label; • we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way the product is administered or modify the product in some other way; • we may be required to implement a REMS program; • the FDA may require us to conduct additional clinical trials or costly post-marketing testing and surveillance to monitor the safety or efficacy of the product; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer.
Furthermore, if we or others identify undesirable side effects caused by our product candidates 33 Table of Contents during development or after obtaining U.S. regulatory approval, several potentially significant negative consequences could result, including: • regulatory authorities may not permit us to initiate our studies or could put them on hold; • regulatory authorities may not approve, or may withdraw, their approval of the product; • regulatory authorities may require us to recall the product; • regulatory authorities may add new limitations for distribution and marketing of the product; • regulatory authorities may require the addition of warnings in the product label or narrowing of the indication in the product label; • we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients; • we may be required to change the way the product is administered or modify the product in some other way; • we may be required to implement a REMS program; • the FDA may require us to conduct additional clinical trials or costly post-marketing testing and surveillance to monitor the safety or efficacy of the product; • we could be sued and held liable for harm caused to patients; and • our reputation may suffer.
Item 1A. Ris k Factors. An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this Annual Report on Form 10-K, including our financial statements and related notes hereto, before deciding to invest in our common stock.
Item 1A. Risk Factors. An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this Annual Report on Form 10-K, including our financial statements and related notes hereto, before deciding to invest in our common stock.
Our obligations related to data privacy and security are quickly changing and are becoming increasingly stringent, and creating uncertainty. These obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources, including, without limitation, financial and time-related resources.
Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating uncertainty. These obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources, including, without limitation, financial and time-related resources.
The degree of market acceptance of zetomipzomib, KZR-261 and any future product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: • the efficacy and potential advantages compared to alternative treatments and therapies; • the effectiveness of sales and marketing efforts; • the strength of our relationships with patient communities; • the cost of treatment in relation to alternative treatments and therapies, including any similar generic treatments; • our ability to offer such drug for sale at competitive prices; • the convenience and ease of administration compared to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of marketing and distribution support; • the availability of third-party coverage and adequate reimbursement; • the prevalence and severity of any side effects; and • any restrictions on the use of the drug together with other medications.
The degree of market acceptance of zetomipzomib and any future product candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to: • the efficacy and potential advantages compared to alternative treatments and therapies; • the effectiveness of sales and marketing efforts; • the strength of our relationships with patient communities; • the cost of treatment in relation to alternative treatments and therapies, including any similar generic treatments; • our ability to offer such drug for sale at competitive prices; • the convenience and ease of administration compared to alternative treatments and therapies; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • the strength of marketing and distribution support; • the availability of third-party coverage and adequate reimbursement; • the prevalence and severity of any side effects; and • any restrictions on the use of the drug together with other medications.
If we seek to commercialize our product candidates outside of the United States, we expect that we will be subject to additional risks including: • different regulatory requirements for approval of therapies in foreign countries; • reduced protection for intellectual property rights; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, war, terrorism, natural disasters and public health epidemics.
If we seek to commercialize our product candidates outside of the United States, we expect that we will be subject to additional risks including: • different regulatory requirements for approval of therapies in foreign countries; • reduced protection for intellectual property rights; • unexpected changes in tariffs, trade barriers and regulatory requirements; 38 Table of Contents • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, war, terrorism, natural disasters and public health epidemics.
Federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, implicate the federal civil False Claims Act; • the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal civil and criminal statutes that prohibit, among other things, a person from knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any healthcare benefit program, or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information on health plans, health care clearinghouses and certain healthcare providers, known as covered entities, and their respective business associates and their subcontractors that perform certain services involving the use or disclosure of individually identifiable health information; • federal transparency laws, including the federal Physician Payments Sunshine Act, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to: (i) payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals; and (ii) ownership and investment interests held by physicians and their immediate family members; and • state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to payments and other "transfers of value" to physicians and other healthcare providers, marketing expenditures, or drug pricing, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and state and local laws that require the registration of pharmaceutical sales representatives, or that otherwise restrict payments that may be made to healthcare providers; as well as state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, implicate the federal civil False Claims Act; • HIPAA, which created additional federal civil and criminal statutes that prohibit, among other things, a person from knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any healthcare benefit program, or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g., public or private); 40 Table of Contents • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information on health plans, health care clearinghouses and certain healthcare providers, known as covered entities, and their respective business associates and their subcontractors that perform certain services involving the use or disclosure of individually identifiable health information; • federal transparency laws, including the federal Physician Payments Sunshine Act, that require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS, information related to: (i) payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals; and (ii) ownership and investment interests held by physicians and their immediate family members; and • state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to payments and other "transfers of value" to physicians and other healthcare providers, marketing expenditures, or drug pricing, state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and state and local laws that require the registration of pharmaceutical sales representatives, or that otherwise restrict payments that may be made to healthcare providers; as well as state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Disputes may arise between us and any of these counterparties regarding intellectual property rights that are subject to such agreements, including, but not limited to: • the scope of rights granted under the agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the agreement; • our right to sublicense patent and other rights to third parties; 43 Table of Contents • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations; • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; • our right to transfer or assign our license; and • the effects of termination.
Disputes may arise between us and any of these counterparties regarding intellectual property rights that are subject to such agreements, including, but not limited to: • the scope of rights granted under the agreement and other interpretation-related issues; • whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the agreement; • our right to sublicense patent and other rights to third parties; • our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our product candidates, and what activities satisfy those diligence obligations; • the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; • our right to transfer or assign our license; and • the effects of termination.
If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory authority may: • issue an untitled letter or warning letter asserting that we are in violation of the law; • seek an injunction or impose administrative, civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; • suspend any ongoing clinical trials; • refuse to approve a pending NDA or comparable foreign marketing application or any supplements thereto submitted by us or our partners; • restrict the marketing or manufacturing of the drug; • seize or detain the drug or otherwise require the withdrawal of the drug from the market; • refuse to permit the import or export of product candidates; or • refuse to allow us to enter into supply contracts, including government contracts.
If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory authority may: • issue an untitled letter or warning letter asserting that we are in violation of the law; • seek an injunction or impose administrative, civil or criminal penalties or monetary fines; • suspend or withdraw regulatory approval; 35 Table of Contents • suspend any ongoing clinical trials; • refuse to approve a pending NDA or comparable foreign marketing application or any supplements thereto submitted by us or our partners; • restrict the marketing or manufacturing of the drug; • seize or detain the drug or otherwise require the withdrawal of the drug from the market; • refuse to permit the import or export of product candidates; or • refuse to allow us to enter into supply contracts, including government contracts.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Furthermore, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
If the patent applications we hold or have in-licensed with respect to our development programs and product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for zetomipzomib, KZR-261 or any future product candidates, it could dissuade companies from collaborating with us to develop and commercialize product candidates and future drugs and threaten our ability to commercialize, future drugs.
If the patent applications we hold or have in-licensed with respect to our development programs and product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for zetomipzomib or any future product candidates, it could dissuade companies from collaborating with us to develop and commercialize product candidates and future drugs and threaten our ability to commercialize, future drugs.
In some cases, the price that we intend to charge for any product candidates, if approved, is also subject to approval. Obtaining approval for zetomipzomib and KZR-261 in the European Union from the European Commission following the opinion of the European Medicines Agency, if we choose to submit a marketing authorization application there, would be a lengthy and expensive process.
In some cases, the price that we intend to charge for any product candidates, if approved, is also subject to approval. Obtaining approval for zetomipzomib in the European Union from the European Commission following the opinion of the European Medicines Agency, if we choose to submit a marketing authorization application there, would be a lengthy and expensive process.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation; 38 Table of Contents • federal civil and criminal false claims laws, including, without limitation, the federal civil False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • federal civil and criminal false claims laws, including, without limitation, the federal civil False Claims Act, and civil monetary penalty laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
Upon the expiration of patent protection for zetomipzomib, KZR-261 or any future product candidates, we may be open to competition from generic versions of such drugs. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting our product candidates might expire before or shortly after such candidates are commercialized.
Upon the expiration of patent protection for zetomipzomib or any future product candidates, we may be open to competition from generic versions of such drugs. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting our product candidates might expire before or shortly after such candidates are commercialized.
Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with any future collaborative partners, to successfully complete the development of and obtain the regulatory approvals necessary to commercialize zetomipzomib, KZR-261 and any future product candidates. We do not anticipate generating revenue from product sales for the next several years, if ever.
Our ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with any future collaborative partners, to successfully complete the development of and obtain the regulatory approvals necessary to commercialize zetomipzomib and any future product candidates. We do not anticipate generating revenue from product sales for the next several years, if ever.
Even if we eventually complete clinical testing and receive approval of a new drug application, or NDA, or foreign marketing application for zetomipzomib, KZR-261 or any future product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials.
Even if we eventually complete clinical testing and receive approval of a new drug application, or NDA, or foreign marketing application for zetomipzomib or any future product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials.
If we are unable to successfully commercialize zetomipzomib, KZR-261 and any future product candidates, we may not be able to generate sufficient revenue to continue our business. Clinical trials are very expensive, time consuming and difficult to design and implement. Our product candidates will require clinical testing before we are prepared to submit an NDA for regulatory approval.
If we are unable to successfully commercialize zetomipzomib and any future product candidates, we may not be able to generate sufficient revenue to continue our business. Clinical trials are very expensive, time consuming and difficult to design and implement. Our product candidates will require clinical testing before we are prepared to submit an NDA for regulatory approval.
If additional clinical experience indicates that zetomipzomib, KZR-261 or any future product candidates has side effects or causes serious or life-threatening side effects, the development of the product candidate may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may be revoked, which would harm our business, prospects, operating results and financial condition.
If additional clinical experience indicates that zetomipzomib or any future product candidates has side effects or causes serious or life-threatening side effects, the development of the product candidate may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may be revoked, which would harm our business, prospects, operating results and financial condition.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of zetomipzomib, KZR-261 and any future product candidates in certain countries. Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of zetomipzomib and any future product candidates in certain countries. Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries.
We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our development programs and product candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to zetomipzomib, KZR-261 and any future product candidates.
We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our development programs and product candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to zetomipzomib and any future product candidates.
Even if we complete the development and regulatory processes necessary to obtain marketing approval, we anticipate incurring significant costs associated with launching and commercializing zetomipzomib, KZR-261 and any future product candidates. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Even if we complete the development and regulatory processes necessary to obtain marketing approval, we anticipate incurring significant costs associated with launching and commercializing zetomipzomib and any future product candidates. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. Given the amount of time required for the development, testing and regulatory review of new product candidates such as zetomipzomib and KZR-261, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. Given the amount of time required for the development, testing and regulatory review of new product candidates such as zetomipzomib, patents protecting such candidates might expire before or shortly after such candidates are commercialized.
Any changes to the manufacturing processes carry the risk that they will not achieve these intended objectives, or that the product candidates may not meet the rigorous quality standards necessary for use in our clinical trials. We are continuing to manufacture zetomipzomib and placebo in support of our PALIZADE and PORTOLA trials.
Any changes to the manufacturing processes carry the risk that they will not achieve these intended objectives, or that the product candidates may not meet the rigorous quality standards necessary for use in our clinical trials. We are continuing to manufacture zetomipzomib and placebo in support of trials.
If we are unable to obtain and maintain patent protection for zetomipzomib, KZR-261 or any future product candidates, or if the scope of the patent protection obtained is not sufficiently broad, or if our patents are insufficient to protect our product candidates for an adequate amount of time, we may not be able to compete effectively in our markets.
If we are unable to obtain and maintain patent protection for zetomipzomib or any future product candidates, or if the scope of the patent protection obtained is not sufficiently broad, or if our patents are insufficient to protect our product candidates for an adequate amount of time, we may not be able to compete effectively in our markets.
Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could have a negative impact on our ability to commercialize zetomipzomib, KZR-261 or any future product candidates.
Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could have a negative impact on our ability to commercialize zetomipzomib or any future product candidates.
Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize zetomipzomib, KZR-261 or any future product candidates that we develop.
Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize zetomipzomib or any future product candidates that we develop.
Sales of zetomipzomib and KZR-261 outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a product candidate, comparable foreign regulatory authorities also must approve the manufacturing and marketing of the product candidate in those countries.
Sales of zetomipzomib outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a product candidate, comparable foreign regulatory authorities also must approve the manufacturing and marketing of the product candidate in those countries.
In addition, we will collaborate with Everest on the PALIZADE trial, where Everest will have primary responsibility for clinical development and regulatory activities in the licensed territory and will reimburse the Company for clinical trial costs incurred in the licensed territory. Everest will also have the opportunity to participate in the Company’s future global clinical trials involving zetomipzomib.
In addition, we agreed to collaborate with Everest on the PALIZADE trial, where Everest would have primary responsibility for clinical development and regulatory activities in the licensed territory and would reimburse the Company for clinical trial costs incurred in the licensed territory. Everest will also have the opportunity to participate in the Company’s future global clinical trials involving zetomipzomib.
If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, fail to comply with regulatory requirements, or if the quality or accuracy of the clinical data they obtain is compromised 42 Table of Contents due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, the product candidate being developed.
If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, fail to comply with regulatory requirements, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, the product candidate being developed.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize zetomipzomib, KZR-261 or any future product candidates.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize zetomipzomib or any future product candidates.
We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to zetomipzomib, KZR-261 and any future product candidates and technology, including interference proceedings, post grant review and inter partes review before the USPTO.
We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to zetomipzomib and any future product candidates and technology, including interference proceedings, post grant review and inter partes review before the USPTO.
We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business. Filing, prosecuting and defending patents covering zetomipzomib, KZR-261 and any future product candidates throughout the world would be prohibitively expensive.
We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business. Filing, prosecuting and defending patents covering zetomipzomib and any future product candidates throughout the world would be prohibitively expensive.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. 30 Table of Contents We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all.
The failure to obtain an orphan drug designation for any product candidates we may develop, the inability to maintain that designation for the duration of the applicable period, or the inability to obtain or maintain orphan drug exclusivity could reduce our ability to make sufficient sales of the applicable product candidate to balance our expenses incurred to develop it, which would have a negative impact on our operational results and financial condition.
The failure to obtain an orphan drug designation for any product candidates we may develop, the inability to 34 Table of Contents maintain that designation for the duration of the applicable period, or the inability to obtain or maintain orphan drug exclusivity could reduce our ability to make sufficient sales of the applicable product candidate to balance our expenses incurred to develop it, which would have a negative impact on our operational results and financial condition.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. Item 1B. Unresolved Staff Comments. None.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business. Item 1B. Unresolved Staff Comments. None. 62 Table of Contents
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation, including class-related claims and mass arbitration demands; additional reporting requirements and/or oversight; bans on processing personal data; orders to destroy or not use personal data; and imprisonment of company officials.
If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation, including class-related claims and mass arbitration demands; additional reporting requirements and/or oversight; bans on processing personal data; orders to destroy or not use personal data; and imprisonment of company officials.
In any event, we will require substantial additional capital to develop a delivery system for zetomipzomib, conduct additional clinical trials, seek regulatory approval and commence commercialization of zetomipzomib, KZR-261 or any future product candidates.
In any event, we will require substantial additional capital to develop a delivery system for zetomipzomib, conduct additional clinical trials, seek regulatory approval and commence commercialization of zetomipzomib or any future product candidates.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we 34 Table of Contents may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.
In addition, our collaboration with Everest may be unsuccessful due to other factors, including, without limitation, the following: • Everest may terminate the agreement for convenience following completion, suspension or termination of the PALIZADE trial; • Everest may change the focus of its development and commercialization efforts or prioritize other programs more highly and, accordingly, reduce the efforts and resources allocated to zetomipzomib; • Everest may, within its commercially reasonable discretion, choose not to develop and commercialize zetomipzomib in any part of the licensed territory or for one or more indications, if at all; and • If Everest is acquired during the term of our collaboration, the acquirer may have competing programs or different strategic priorities that could cause it to reduce its commitment to our collaboration or to terminate the collaboration.
In addition, our collaboration with Everest may be unsuccessful due to other factors, including, without limitation, the following: • Everest may terminate the agreement for convenience at any time following the October 2024 termination of the PALIZADE trial; • Everest may change the focus of its development and commercialization efforts or prioritize other programs more highly and, accordingly, reduce the efforts and resources allocated to zetomipzomib; • Everest may, within its commercially reasonable discretion, choose not to develop and commercialize zetomipzomib in any part of the licensed territory or for one or more indications, if at all; and • if Everest is acquired during the term of our collaboration, the acquirer may have competing programs or different strategic priorities that could cause it to reduce its commitment to our collaboration or to terminate the collaboration.
Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the 37 Table of Contents associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.
Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.
We anticipate that our expenses will increase substantially if, and as, we: • continue the ongoing and planned development of zetomipzomib, KZR-261 and future product candidates from our protein secretion program; • seek to discover and develop additional product candidates, including preclinical studies and clinical trials for such product candidates; • maintain, protect and expand our portfolio of intellectual property rights, including patents, trade secrets and know-how; • seek marketing approvals for zetomipzomib, KZR-261 and any future product candidates that successfully complete clinical trials; • establish a sales, marketing, manufacturing and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval; • continue to build a portfolio of product candidates through the acquisition or in-license of drugs, product candidates or technologies; • implement operational, financial, management and compliance systems; and 22 Table of Contents • attract, hire and retain additional administrative, clinical, regulatory and scientific personnel.
We anticipate that our expenses will increase substantially if, and as, we: • continue the ongoing and planned development of zetomipzomib and future product candidates; • seek to discover and develop additional product candidates, including preclinical studies and clinical trials for such product candidates; • maintain, protect and expand our portfolio of intellectual property rights, including patents, trade secrets and know-how; • seek marketing approvals for zetomipzomib and any future product candidates that successfully complete clinical trials; • establish a sales, marketing, manufacturing and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval; 22 Table of Contents • continue to build a portfolio of product candidates through the acquisition or in-license of drugs, product candidates or technologies; • implement operational, financial, management and compliance systems; and • attract, hire and retain additional administrative, clinical, regulatory and scientific personnel.
Moreover, we may not be able to obtain any required license on commercially reasonable terms or at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and more established companies may also pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary.
Moreover, we may not be able to obtain any required license on commercially reasonable terms or at all. 49 Table of Contents The licensing or acquisition of third-party intellectual property rights is a competitive area, and more established companies may also pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary.
However, while investigator-initiated clinical trials may provide us with 31 Table of Contents clinical data that can inform our development strategy, we are not the sponsors of such trials, and therefore, we do not control the protocols, administration, quality or conduct of these trials, including follow-up with patients and ongoing data collection.
However, while investigator-initiated clinical trials may provide us with clinical data that can inform our development strategy, we are not the sponsors of such trials, and therefore, we do not control the protocols, administration, quality or conduct of these trials, including follow-up with patients and ongoing data collection.
In addition, periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and applications will have to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned and licensed patents and applications and any patent rights we may own or license in the future.
In addition, periodic 48 Table of Contents maintenance fees, renewal fees, annuity fees and various other government fees on patents and applications will have to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned and licensed patents and applications and any patent rights we may own or license in the future.
Our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: • inability to meet our product specifications and quality requirements consistently; • delay or inability to procure or expand sufficient manufacturing capacity; • issues related to scale-up of manufacturing; • costs and validation of new equipment and facilities required for scale-up; • our third-party manufacturers may not be able to execute our manufacturing procedures and other logistical support requirements appropriately; • our third-party manufacturers may fail to comply with cGMP and other inspections by the FDA or comparable foreign regulatory authorities; 41 Table of Contents • our inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; • breach, termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; • reliance on single sources for drug components; • lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • our third-party manufacturers may not devote sufficient resources to our product candidates; • we may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our product candidates; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier; and • carrier disruptions or increased costs that are beyond our control.
We also expect to rely on third-party manufacturers to supply us with sufficient quantities of our product candidates to be used, if approved, for commercialization. 43 Table of Contents Our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: • inability to meet our product specifications and quality requirements consistently; • delay or inability to procure or expand sufficient manufacturing capacity; • issues related to scale-up of manufacturing; • costs and validation of new equipment and facilities required for scale-up; • our third-party manufacturers may not be able to execute our manufacturing procedures and other logistical support requirements appropriately; • our third-party manufacturers may fail to comply with cGMP and other inspections by the FDA or comparable foreign regulatory authorities; • our inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; • breach, termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; • reliance on single sources for drug components; • lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; • our third-party manufacturers may not devote sufficient resources to our product candidates; • we may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our product candidates; • operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier; and • carrier disruptions or increased costs that are beyond our control.
Neither we nor any future collaborator is permitted to market zetomipzomib or KZR-261 in the United States or abroad until we receive regulatory approval from the FDA or the applicable foreign regulatory authority.
Neither we nor any future collaborator is permitted to market zetomipzomib in the United States or abroad until we receive regulatory approval from the FDA or the applicable foreign regulatory authority.
In addition, we may be reliant on CROs and clinical trial sites to ensure proper and timely conduct of our clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance. 29 Table of Contents We may encounter substantial delays or difficulties in our clinical trials.
In addition, we may be reliant on CROs and clinical trial sites to ensure proper and timely conduct of our clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance. We may encounter substantial delays or difficulties in our clinical trials.
If the patent protection 45 Table of Contents provided by our patents is not sufficiently broad to impede such competition, or if the breadth, strength or term (including any extensions or adjustments) of protection provided by our patents is successfully challenged, our ability to successfully commercialize our product candidates could be negatively affected, which would harm our business.
If the patent protection provided by our patents is not sufficiently broad to impede such competition, or if the breadth, strength or term (including any extensions or adjustments) of protection provided by our patents is successfully challenged, our ability to successfully commercialize our product candidates could be negatively affected, which would harm our business.
For example, under GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros under the EU GDPR or 17.5 million pounds sterling under the UK GDPR, or, in each case, 4% of annual global revenue, whichever is greater.
Under the EU and UK GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros under the EU GDPR or 17.5 million pounds sterling under the UK GDPR, or, in each case, 4% of annual global revenue, whichever is greater.
If we become subject to new data privacy laws, at the state level, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase (including individuals, via a private right of action, and state actors).
If we become subject to new data privacy or security laws, the risk of enforcement action against us could increase because we may become subject to additional obligations, and the number of individuals or entities that can initiate actions against us may increase (including individuals, via a private right of action, and state actors).
Any additional capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize zetomipzomib, KZR-261 and any future product candidates.
Any additional capital raising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize zetomipzomib and any future product candidates.
Similar provisions of state tax law may also apply to limit our use of 25 Table of Contents accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Risks Related to the Development and Commercialization of Our Product Candidates Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of zetomipzomib and KZR-261. If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be adversely affected.
Risks Related to the Development and Commercialization of Our Product Candidates Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates. If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be adversely affected.
If securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of our common stock. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings.
If securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of our common stock. 50 Table of Contents We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings.
In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts.
In addition, data privacy and security laws have been proposed at the federal, state, and local levels in recent years, which could further complicate compliance efforts and increase compliance costs.
For example, in September 2023, we entered into a collaboration and license agreement with Everest granting it exclusive license to develop and commercialize zetomipzomib in the greater China region, South Korea and certain Southeast Asian countries in exchange for an upfront payment and potential milestone and royalty payments. We cannot predict what form such a strategic collaboration might take.
For example, in September 2023, we entered into a collaboration and license agreement with Everest granting it exclusive license to develop and commercialize zetomipzomib in the greater China region, South Korea and certain Southeast Asian countries in exchange for an upfront payment and potential milestone and royalty payments. We cannot predict what form any other strategic collaborations might take.
The processes involved in manufacturing the active drug substance and finished drug product of zetomipzomib and KZR-261 are complex, expensive, highly regulated and subject to multiple risks and uncertainties.
The processes involved in manufacturing the active drug substance and finished drug product of zetomipzomib are complex, expensive, highly regulated and subject to multiple risks and uncertainties.
Further, we may not be able to obtain 48 Table of Contents adequate remedies for any breach. In addition, our confidential information may otherwise become known or be independently discovered by competitors, in which case we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.
Further, we may not be able to obtain adequate remedies for any breach. In addition, our confidential information may otherwise become known or be independently discovered by competitors, in which case we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and more onerous than, those in the United States, including additional preclinical studies or clinical trials. In 33 Table of Contents many countries outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that country.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and more onerous than, those in the United States, including additional preclinical studies or clinical trials. In many countries outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that country.
In addition, if we enter into a strategic collaboration regarding any of our product candidates, our rights to receive milestone payments and royalties related to such product candidates will depend on our collaborators’ abilities to achieve market acceptance of those product candidates.
In addition, if we enter into a strategic collaboration regarding any of our product candidates, our rights to receive milestone payments and royalties related to 36 Table of Contents such product candidates will depend on our collaborators’ abilities to achieve market acceptance of those product candidates.
Everest will be responsible for, at its own cost, and is required to use commercially reasonable efforts to, develop and commercialize zetomipzomib in the licensed territory.
Everest is responsible for, at its own cost, and is required to use commercially reasonable efforts to, develop and commercialize zetomipzomib in the licensed territory.
We face an inherent risk of product liability exposure related to the testing of our product candidates in clinical trials, both within and outside of the United States, and may face an even greater risk if we commercialize any product candidate that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in clinical trials, both within and outside of the United States, and may face an even greater risk if we commercialize any product candidate that 39 Table of Contents we may develop.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws, and other similar laws.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised. 52 Table of Contents While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
The clinical trial process is expensive, time consuming, difficult to design and implement, and subject to uncertainty. We estimate that the successful completion of clinical trials of our product candidates will take several years to complete.
The clinical trial process is expensive, time consuming, difficult to design and implement, and subject to uncertainty. We 27 Table of Contents estimate that the successful completion of clinical trials of our product candidates will take several years to complete.
These include provisions that affect the way patent applications are prosecuted and may affect the scope, strength and enforceability of our patent rights or the nature of proceedings that may be brought by or against us related to our patent rights.
These include provisions that affect the way patent applications are prosecuted and may 47 Table of Contents affect the scope, strength and enforceability of our patent rights or the nature of proceedings that may be brought by or against us related to our patent rights.
Our ability to generate revenue from product sales depends heavily on our, or any future collaborators’, success in: • timely and successfully completing preclinical and clinical development of zetomipzomib, KZR-261 and any future product candidates; • obtaining regulatory approvals for zetomipzomib, KZR-261 and any future product candidates for which we successfully complete clinical trials; • launching and commercializing any product candidates for which we obtain regulatory approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • qualifying for and obtaining coverage and adequate reimbursement by government and third-party payors for any product candidates for which we obtain regulatory approval, both in the United States and internationally; • developing, validating and maintaining commercially viable, sustainable, scalable, reproducible and transferable manufacturing processes for zetomipzomib, a self-administered dual-chamber system for administering zetomipzomib and any future product candidates that are compliant with current good manufacturing practices, or cGMP; • establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate amount and quality of starting materials, drug substance, drug product and drug delivery devices and services to support clinical development, as well as the market demand for zetomipzomib, KZR-261 and any future product candidates, if approved; • obtaining market acceptance, if and when approved, of zetomipzomib, KZR-261 or any future product candidate as a viable treatment option by physicians, patients, third-party payors and others in the medical community; • effectively addressing any competing technological and market developments; • implementing additional internal systems and infrastructure, as needed; • negotiating favorable terms in any collaboration, licensing, spin-off or other arrangements into which we may enter and performing our obligations pursuant to such arrangements; • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and • securing appropriate pricing in the United States and internationally. 23 Table of Contents We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.
Our ability to generate revenue from product sales depends heavily on our, or any future collaborators’, success in: • timely and successfully completing preclinical and clinical development of zetomipzomib and any future product candidates; • obtaining regulatory approvals for zetomipzomib and any future product candidates for which we successfully complete clinical trials; • launching and commercializing any product candidates for which we obtain regulatory approval by establishing a sales force, marketing and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • qualifying for and obtaining coverage and adequate reimbursement by government and third-party payors for any product candidates for which we obtain regulatory approval, both in the United States and internationally; • developing, validating and maintaining commercially viable, sustainable, scalable, reproducible and transferable manufacturing processes for zetomipzomib, a self-administered dual-chamber system for administering zetomipzomib and any future product candidates that are compliant with current good manufacturing practices, or cGMP; • establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate amount and quality of starting materials, drug substance, drug product and drug delivery devices and services to support clinical development, as well as the market demand for zetomipzomib and any future product candidates, if approved; • obtaining market acceptance, if and when approved, of zetomipzomib or any future product candidate as a viable treatment option by physicians, patients, third-party payors and others in the medical community; 23 Table of Contents • effectively addressing any competing technological and market developments; • implementing additional internal systems and infrastructure, as needed; • negotiating favorable terms in any collaboration, licensing, spin-off or other arrangements into which we may enter and performing our obligations pursuant to such arrangements; • maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and • securing appropriate pricing in the United States and internationally.
Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any 44 Table of Contents product candidates or companion diagnostic that we may develop.
Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates or companion diagnostic that we may develop.
If these payments become due, we may not have sufficient funds available to meet our obligations and our development efforts may be harmed. Our ability to use net operating losses and certain other tax attributes to offset future taxable income may be subject to limitation.
If these payments become due, we may not have sufficient funds available to meet our obligations and our development efforts may be harmed. 25 Table of Contents Our ability to use net operating losses and certain other tax attributes to offset future taxable income may be subject to limitation.
For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, imposes specific requirements relating to the privacy, 50 Table of Contents security, and transmission of individually identifiable health information.
For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health information.
These developments may further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties upon whom we rely. Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
These developments may further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties with whom we work. Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
If our CMOs are unable to successfully manufacture our product candidates in sufficient quantity in a timely manner, our planned clinical trials may be delayed or modified and we may also be unable to fulfill our obligations under the Everest License Agreement, giving rise to the ability of Everest to terminate its collaboration or other potential adverse consequences as provided in the Everest License Agreement.
If our CMOs are unable to successfully manufacture our product candidates in sufficient quantity in a timely manner, our planned clinical trials may be delayed or modified and we may also be unable to fulfill our obligations under the Everest License Agreement, allowing Everest to terminate its collaboration or other potential adverse consequences as provided in the Everest License Agreement.
If we or our CROs fail to comply with GCP, the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.
If we or our CROs fail to comply with GCP, the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our 44 Table of Contents marketing applications.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−0 removed9 unchanged
Biggest changeItem 1A titled “Risks Related to Our Business Operations, Employee Matters and Managing Growth.” Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function. The Audit Committee of our board of directors is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
Biggest changeFor a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part I. Item 1A titled “Risks Related to Our Business Operations, Employee Matters and Managing Growth.” Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Our IT manager and our third-party information technology service provider are together responsible for helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. Our cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to key members of management depending on the circumstances.
Our IT manager and our third-party information technology service provider are together responsible for helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. 63 Table of Contents Our cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to key members of management depending on the circumstances.
The Company’s Chief Financial Officer (“CFO”), Information Technology (“IT”) manager, legal function and external information technology and cybersecurity service provider help to identify, assess and manage our cybersecurity threats and risks.
The Company’s Chief Financial Officer, or CFO, Information Technology, or IT, manager, legal function and external information technology and cybersecurity service provider help to identify, assess and manage our cybersecurity threats and risks.
Our IT manager has approximately seven years of experience with testing, implementing and maintaining our information technology systems and security. Our CFO is responsible for hiring appropriate personnel, retaining third-party information technology service providers, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, communicating key priorities to relevant personnel and approving budgets.
Our CFO is responsible for hiring appropriate personnel, retaining third-party information technology service providers, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, communicating key priorities to relevant personnel and approving budgets.
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, we may involve different levels of assessment designed to help identify cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider. 58 Table of Contents For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part I.
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, we may involve different levels of assessment designed to help identify cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our CFO and IT manager. Our CFO has overseen and been responsible for the Company's information technology and cybersecurity programs since 2018, and before that held equivalent responsibilities at another public company.
Our CFO has overseen and been responsible for the Company's information technology and cybersecurity programs since 2018, and before that held equivalent responsibilities at another public company. Our IT manager has approximately seven years of experience with testing, implementing and maintaining our information technology systems and security.
Added
The Audit Committee of our board of directors is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of Company management, including our CFO and IT manager.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeWe are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition. Item 4. Mine Safety Disclosures. Not Applicable. 59 Table of Contents PART II
Biggest changeWe are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition. Item 4. Mine Safety Disclosures. Not Applicable. 64 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders As of February 28, 2024, there were approximately 10 stockholders of record. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Biggest changeThe actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved]. 65 Table of Contents
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never declared or paid any cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future.
Dividend Policy We have never declared or paid any cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock began trading on The Nasdaq Global Select Market under the symbol “KZR” following our IPO on June 21, 2018. Prior to our IPO, there was no public market for our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “KZR.” Holders As of February 28, 2025, there were approximately 9 stockholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

51 edited+6 added−12 removed29 unchanged
Biggest changeThe increase was primarily due to an increase of $17.8 million in clinical trial costs primarily related to increased activities for the PALIZADE and PORTOLA trials, an increase of $5.4 million in research expenses primarily related to the milestone payment under Onyx License Agreement, an increase of $3.0 million in facility-related expenses due to the expansion of our headquarters, an increase of $2.4 million in personnel-related expenses due to increased headcount prior to the Workforce Reduction, an increase of $2.0 million in stock-based compensation primarily due to incremental expenses from the option repricing, an increase of $1.6 million in pre-clinical expenses related to the protein secretion program, an increase of $1.4 million in drug manufacturing expenses and an increase of $0.9 million in consulting expenses.
Biggest changeAs the result of the restructuring, there was a decrease of $10.4 million in stock-based compensation and personnel-related expenses, a decrease of $5.9 million in research and pre-clinical expenses, a $5.0 million milestone payment made in 2023 under the Onyx License Agreement, a decrease of $1.7 million in facility-related expenses and a decrease of $1.1 million in consulting expense offset by an increase of $4.1 million in clinical expenses primarily related to increased activities for the PALIZADE and PORTOLA trials and an increase of $0.2 million in manufacturing.
In connection with the Workforce Reduction, we committed to a plan to sublease Suite 400 of our corporate headquarters, which resulted in an impairment to the right-of-use asset and certain property and equipment no longer utilized under current or expected future operations.
In connection with the Workforce Reduction, we committed to a plan to sublease Suite 400 of our corporate headquarters, which resulted in an impairment to the right-of-use asset and certain property and equipment no longer utilized under then-current or expected future operations.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include: • employee-related expenses, which include salaries, benefits and stock-based compensation; • fees paid to consultants for services directly related to our product development and regulatory effort; • expenses incurred under agreements with third-party contract organizations, investigative clinical trial sites and consultants that conduct research and development activities on our behalf; • costs associated with preclinical studies and clinical trials; 62 Table of Contents • costs associated with technology and intellectual property licenses; • the costs related to production of clinical supplies; and • facilities and other allocated expenses, which include expenses for rent and other facility related costs and other supplies.
Research and Development Expenses Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include: • employee-related expenses, which include salaries, benefits and stock-based compensation; • fees paid to consultants for services directly related to our product development and regulatory effort; • expenses incurred under agreements with third-party contract organizations, investigative clinical trial sites and consultants that conduct research and development activities on our behalf; • costs associated with preclinical studies and clinical trials; 67 Table of Contents • costs associated with technology and intellectual property licenses; • the costs related to production of clinical supplies; and • facilities and other allocated expenses, which include expenses for rent and other facility related costs and other supplies.
Cash Flows from Financing Activities During the year ended December 31, 2023, cash provided by financing activities was $0.6 million from the issuance of common stock pursuant to our employee equity plans.
During the year ended December 31, 2023, cash provided by financing activities was $0.6 million from the issuance of common stock pursuant to our employee equity plans.
If a milestone being reached is considered probable, and if it is probable that a significant revenue reversal would not occur, the associated milestone amount would also be included in the transaction price.
If a milestone being reached is considered probable of being reached, and if it is probable that a significant revenue reversal would not occur, the associated milestone amount would also be included in the transaction price.
At-the-Market Offering Program In December 2021, we entered into a Sales Agreement (the “December 2021 ATM Agreement”) with Cowen and Company, LLC, or Cowen, pursuant to which we can offer and sell, from time to time at our sole discretion through Cowen, as our sales agent, shares of common stock having an aggregate offering price of up to $200.0 million.
At-the-Market Offering Program In December 2021, we entered into a Sales Agreement, or December 2021 ATM Agreement, with Cowen and Company, LLC, or Cowen, pursuant to which we can offer and sell, from time to time at our sole discretion through Cowen, as our sales agent, shares of common stock having an aggregate offering price of up to $200.0 million.
Debt Facility In November 2021, we entered into the Loan Agreement with Oxford Finance LLC, or Oxford Finance, which provided for up to $50.0 million in borrowing capacity across five potential tranches. The initial tranche of $10.0 million was funded at the closing of the Loan Agreement. The remaining tranches were dependent on achieving certain clinical trial milestones.
Debt Facility In November 2021, we entered into the Loan Agreement with Oxford Finance, which provided for up to $50.0 million in borrowing capacity across five potential tranches. The initial tranche of $10.0 million was funded at the closing of the Loan Agreement. The remaining tranches were dependent on achieving certain clinical trial milestones.
For additional information relating to our leases or debt, see notes 6 and 7 to our audited consolidated financial statements founded elsewhere in this Annual Report. We have no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis.
For additional information relating to our leases or debt, see Notes 6 and 7 to our audited consolidated financial statements found elsewhere in this Annual Report. We have no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis.
Cash Flows Discussion of our cash flow activities for the year ended December 31, 2021 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 14, 2023.
Cash Flows Discussion of our cash flow activities for the year ended December 31, 2022 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 14, 2024.
We believe that our existing cash, cash equivalents and marketable securities as of December 31, 2023 will be sufficient to meet our projected operating requirements through at least the next 12 months from the date the financial statements were issued.
We believe that our existing cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient to meet our projected operating requirements through at least the next 12 months from the date the financial statements were issued.
We anticipate that a substantial portion of our capital resources and efforts in the foreseeable future will be focused on completing the necessary development, obtaining regulatory approval and preparing for potential commercialization of our product candidates. 61 Table of Contents We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
We anticipate that a substantial portion of our capital resources and efforts in the foreseeable future will be focused on completing the necessary development, obtaining regulatory approval and preparing for potential commercialization of our product candidates. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
Our future funding requirements will depend on many factors, including the following: • the progress, timing, scope, results and costs of our clinical trials and preclinical studies for our product candidates, including the ability to enroll patients in a timely manner for our clinical trials; 65 Table of Contents • the costs of obtaining clinical and commercial supplies for zetomipzomib, KZR-261 and any other product candidates we may identify and develop; • the cost, timing and outcomes of regulatory approvals; • the extent to which we may acquire or in-license other product candidates and technologies; • the cost of attracting, hiring and retaining qualified personnel; • our ability to successfully commercialize any product candidates for which we obtain regulatory approval; and • the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
Our future funding requirements will depend on many factors, including the following: • the progress, timing, scope, results and costs of our clinical trials and preclinical studies for our product candidates, including the ability to enroll patients in a timely manner for our clinical trials; • the costs of obtaining clinical and commercial supplies for zetomipzomib and any other product candidates we may identify and develop; • the cost, timing and outcomes of regulatory approvals; • the extent to which we may acquire or in-license other product candidates and technologies; • the cost of attracting, hiring and retaining qualified personnel; • our ability to successfully commercialize any product candidates for which we obtain regulatory approval; and • the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights.
We expect that any collaboration revenue we generate from the Everest License Agreement, and from any future collaboration partners, will fluctuate as a result of the timing and amount of upfront, milestones and other collaboration agreement payments and other factors.
We expect that any collaboration revenue we generate from the Everest License Agreement, and from any future collaboration partners, will fluctuate as a result of the timing and amount of upfront, milestone and other collaboration agreement payments and other factors.
If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our preclinical studies, clinical trials, research and development programs or commercialization efforts.
If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of 71 Table of Contents our preclinical studies, clinical trials, research and development programs or commercialization efforts.
F inancial Operations Overview Collaboration Revenue We have no products approved for commercial sale and, to date, have not generated any revenue from the sale of products, and we do not expect to generate any revenue from the sale of products in the near future.
Financial Operations Overview Collaboration Revenue We have no products approved for commercial sale and, to date, have not generated any revenue from the sale of products, and we do not expect to generate any revenue from the sale of products in the near future.
As of December 31, 2023, we declined these tranches in borrowing capacity available to us under the Loan Agreement.
As of December 31, 2024, we declined these tranches in borrowing capacity available to us under the Loan Agreement.
Our material cash requirements through fiscal year 2027 are expected to total approximately $22.5 million, which includes debt payments, including principal, future interest payments and the final payment fee due on maturity, and amounts due under our operating leases.
Our material cash requirements through fiscal year 2027 are expected to total approximately $17.8 million, which includes debt payments, including principal, future interest payments and the final payment fee due on maturity, and amounts due under our operating leases.
General and Administrative Expenses Our general and administrative expenses consist primarily of personnel expenses, allocated facilities costs and fees for outside consulting and professional services, including legal, human resource, information technology and audit services. Personnel expenses consist of salaries, benefits and stock-based compensation.
General and Administrative Expenses Our general and administrative expenses consist primarily of personnel expenses, allocated facilities costs and fees for outside consulting and professional services, including legal, human resource, information technology and audit services. Personnel expenses consist of salaries, benefits and stock-based compensation. We may incur additional expenses to support the growth of our business.
Our net losses were $101.9 million, $68.2 million and $54.6 million for the years ended December 31, 2023, 2022 and 2021, respectively, and we expect to continue to incur significant losses for the foreseeable future. As of December 31, 2023, we had an accumulated deficit of $350.8 million.
Our net losses were $83.7 million, $101.9 million and $68.2 million for the years ended December 31, 2024, 2023 and 2022, respectively, and we expect to continue to incur significant losses for the foreseeable future. As of December 31, 2024, we had an accumulated deficit of $434.5 million.
As of December 31, 2023, we have sold an aggregate of 11,986,003 shares of our common stock for gross proceeds of approximately $131.7 million at a weighted average purchase price of $10.98 per share pursuant to the ATM Agreement. As of December 31, 2023, approximately $68.3 million remains available under the ATM Agreement.
As of December 31, 2024, we have sold an aggregate of 1,198,601 shares of our common stock for gross proceeds of approximately $131.7 million at a weighted average purchase price of $109.84 per share pursuant to the ATM Agreement. As of December 31, 2024, approximately $68.3 million remains available under the ATM Agreement.
Cash Flows from Investing Activities During the year ended December 31, 2023, net cash provided by investing activities was $76.0 million primarily relating to the maturities of marketable securities exceeding purchases of such marketable securities. Payments for the purchases of property and equipment was $1.8 million during the year ended December 31, 2023.
During the year ended December 31, 2023, net cash provided by investing activities was $76.0 million primarily relating to the maturities of marketable securities exceeding purchases of such marketable securities.
Comparison of the Years Ended December 31, 2023 and 2022 Year Ended December 31, (dollars in millions) 2023 2022 Increase (decrease) Collaboration revenue $ 7.0 $ — $ 7.0 Operating expenses: Research and development 85.7 51.0 34.7 General and administrative 26.5 20.1 6.4 Restructuring and impairment charges 6.2 — 6.2 Total operating expenses 118.4 71.1 47.3 Loss from operations (111.4 ) (71.1 ) (40.3 ) Interest income 11.1 4.1 7.0 Interest expense (1.6 ) (1.2 ) (0.4 ) Net loss $ (101.9 ) $ (68.2 ) $ (33.7 ) Collaboration Revenue Collaboration revenue increased by $7.0 million in 2023 compared to 2022 due to the upfront payment under the Everest License Agreement.
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 Year Ended December 31, Increase (decrease) (dollars in millions) 2024 2023 Collaboration revenue $ — $ 7.0 $ (7.0) Operating expenses: Research and development 65.7 85.7 (20.0) General and administrative 23.4 26.5 (3.1) Restructuring and impairment charges 1.5 6.2 (4.7) Total operating expenses 90.6 118.4 (27.8) Loss from operations (90.6) (111.4) 20.8 Interest income 8.5 11.1 (2.6) Interest expense (1.6) (1.6) — Net loss $ (83.7) $ (101.9) $ 18.2 Collaboration Revenue Collaboration revenue decreased by $7.0 million in 2024 compared to 2023 due to the upfront payment under the Everest License Agreement realized in September 2023.
Restructuring and Impairment Charges In October 2023, we announced a strategic restructuring and workforce reduction (the “Workforce Reduction”) to prioritize our clinical-stage assets and extend our cash runway, reducing our workforce by approximately 40%.
Restructuring and Impairment Charges In October 2023, we announced a strategic restructuring and workforce reduction, or Workforce Reduction, to prioritize our clinical-stage assets and extend our cash runway, reducing our workforce by approximately 40%. All employees affected by the Workforce Reduction separated from the Company by December 31, 2023.
Our revenue to date has been generated from the upfront payment pursuant to our collaboration with Everest under the Everest License Agreement. We recognize collaboration revenue when the performance obligation is satisfied. In addition to receiving the upfront payment, we may also be entitled to milestones and other contingent payments upon achieving predefined objectives.
We recognize collaboration revenue when the performance obligation is satisfied. In addition to receiving the upfront payment, we may also be entitled to milestones and other contingent payments upon achieving predefined objectives.
During the year ended December 31, 2022, cash used in operating activities was $58.8 million, which consisted of a net loss of $68.2 million and a net change of $4.5 million in our net operating assets and liabilities, and adjusted by non-cash charges of $13.8 million.
During the year ended December 31, 2023, cash used in operating activities was $81.6 million, which consisted of a net loss of $101.9 million and a net change of $4.7 million in our net operating assets and liabilities, and adjusted by non-cash charges of $15.5 million.
The following summarizes our cash flows for the periods indicated: Year Ended December 31, 2023 2022 (dollars in millions) Net cash used in operating activities $ (81.6 ) $ (58.8 ) Net cash provided by (used in) investing activities 76.0 (91.4 ) Net cash provided by financing activities 0.6 127.9 Effect of exchange rate changes on cash and cash equivalents — (0.1 ) Net decrease in cash and cash equivalents $ (5.0 ) $ (22.4 ) 66 Table of Contents Cash Flows from Operating Activities During the year ended December 31, 2023, cash used in operating activities was $81.6 million, which consisted of a net loss of $101.9 million and a net change of $4.7 million in our net operating assets and liabilities, and adjusted by non-cash charges of $15.5 million.
The following summarizes our cash flows for the periods indicated: Year Ended December 31, (dollars in millions) 2024 2023 Net cash used in operating activities $ (74.2) $ (81.6) Net cash provided by investing activities 80.4 76.0 Net cash provided by financing activities 0.1 0.6 Net increase (decrease) in cash and cash equivalents $ 6.3 $ (5.0) Cash Flows from Operating Activities During the year ended December 31, 2024, cash used in operating activities was $74.2 million, which consisted of a net loss of $83.7 million and a net change of $1.3 million in our net operating assets and liabilities, adjusted by non-cash charges of $10.8 million.
A portion of the interest expense is non-cash expense relating to the accretion of the final payment fees and amortization of debt discount and debt issuance costs associated with the Loan Agreement.
A portion of the interest expense is non-cash expense relating to the accretion of the final payment fees and amortization of debt discount and debt issuance costs associated with our loan agreement, or the Loan Agreement, that we entered into in November 2021 with Oxford Finance, LLC, or Oxford Finance.
We believe therapies that inhibit multiple drivers of disease by targeting fundamental upstream control processes within the cell have the potential for profound therapeutic benefit in a number of difficult-to-treat diseases.
Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases. We believe therapies that inhibit multiple drivers of disease by targeting fundamental upstream control processes within the cell have the potential for profound therapeutic benefit in a number of difficult-to-treat diseases.
The non-cash charges consisted of $14.0 million for stock-based compensation expense, $1.4 million of amortization of premium and discounts on marketable securities, $1.0 million for depreciation, and $0.2 million of non-cash interest expense.
The non-cash charges consisted of $13.0 million for stock-based compensation expense, $1.5 million for impairment loss of long-lived assets, $1.0 million for depreciation, and $0.3 million of non-cash interest expense, offset by $5.0 million of amortization of premium and discounts on marketable securities.
LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (ii) 0.08%, plus (b) 7.87%.
LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (ii) 0.08%, plus (b) 7.87%. We are required to make monthly interest-only payments prior to the amortization 70 Table of Contents date of January 1, 2025.
The following table summarizes our research and development expenses for the years ended: Year Ended December 31, 2023 2022 2021 (dollars in millions) (unaudited) Research and development expenses by program: Zetomipzomib $ 56.1 $ 29.6 $ 24.6 KZR-261 15.6 11.5 7.8 Other protein secretion discovery programs 14.0 9.9 6.5 Total research and development expenses $ 85.7 $ 51.0 $ 38.9 We expect our research and development expenses to increase substantially for the foreseeable future as our product candidates advance into later stages of development.
The following table summarizes our research and development expenses for the years ended: Year Ended December 31, 2024 2023 2022 (dollars in millions) (unaudited) Research and development expenses by program: Zetomipzomib $ 54.2 $ 56.1 $ 29.6 KZR-261 11.2 15.6 11.5 Other protein secretion discovery programs 0.3 14.0 9.9 Total research and development expenses $ 65.7 $ 85.7 $ 51.0 In August 2024, we made the strategic decision to halt enrollment in our Phase 1 clinical trial of KZR-261 and discontinue development of this product candidate.
Results of Operations 63 Table of Contents A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 14, 2023.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 14, 2024.
The change in our net operating assets and liabilities was primarily due to an increase of $5.8 million in prepaid expenses and other current assets driven by the start-up clinical activities related to PALIZADE and PORTOLA clinical trials, an increase of $0.4 million of other assets due to increased deposit from the lease modification for our headquarters, and a decrease of $0.1 million in operating lease asset and liabilities, offset by an increase of $1.8 million in accounts payable and accrued expenses due to timing of payments and increased clinical and manufacturing expenditures.
The change in our net operating assets and liabilities was primarily due to a decrease of $3.2 million in other assets and a decrease of $0.3 million in prepaid expenses and other current assets, offset by a decrease of $3.1 million in accounts payable and accrued expenses driven by the timing of payments and reduced clinical expenditures from the termination of PALIZADE clinical trial in October 2024, and a decrease of $1.7 million in operating lease asset and liabilities.
During the year ended December 31, 2022, net cash used in investing activities was $91.4 million primarily relating to the purchases of marketable securities exceeding maturities of such marketable securities. Payments for the purchases of property and equipment was $1.6 million during the year ended December 31, 2022.
Cash Flows from Investing Activities During the year ended December 31, 2024, net cash provided by investing activities was $80.4 million primarily relating to the maturities of marketable securities exceeding purchases of such marketable securities.
The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain.
Given our strategic focus, we expect our research and development expenses to remain stable for the foreseeable future even as zetomipzomib advances into later stages of development. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain.
General and Administrative Expenses General and administrative expenses increased by $6.4 million in 2023 compared to 2022.
General and Administrative Expenses General and administrative expenses decreased by $3.1 million in 2024 compared to 2023.
We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process. Many inflammatory disorders are currently treated one cytokine or cell type at a time, but the immunoproteasome affects a broad spectrum of immune regulators.
Many inflammatory disorders are currently treated one cytokine or cell type at a time, but the immunoproteasome affects a broad spectrum of immune regulators. Based on clinical data generated to date, we believe that zetomipzomib has the potential to address multiple chronic immune-mediated diseases.
We have incurred operating losses and experienced negative operating cash flows since our inception and anticipate that we will continue to incur losses for at least the foreseeable future. Our net loss was $101.9 million for the year ended December 31, 2023, and we had an accumulated deficit of $350.8 million as of December 31, 2023.
As of December 31, 2024, our cash equivalents and marketable securities had a weighted-average maturity of approximately five months and the longest maturity was 12 months. We have incurred operating losses and experienced negative operating cash flows since our inception and anticipate that we will continue to incur losses for at least the foreseeable future.
There are no warrants or financial covenants associated with the Loan Agreement. A LIBOR transition event occurred effective July 1, 2023 and Oxford Finance revised the Loan Agreement to replace the LIBOR rate with the 1-month CME term SOFR plus 0.1%.
A LIBOR transition event occurred effective July 1, 2023 and Oxford Finance revised the Loan Agreement to replace the LIBOR rate with the 1-month CME term SOFR plus 0.1%. The rate change did not require contract remeasurement at the effective date of the change or a reassessment of any previous accounting determinations pertaining to the facility.
Funding Requirements We believe that our available cash, cash equivalents and short-term investments are sufficient to fund existing and planned cash requirements. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, clinical costs, legal and other regulatory expenses and general overhead costs.
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, clinical costs, legal and other regulatory expenses and general overhead costs. We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect.
Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles.
Critical Accounting Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. 66 Table of Contents The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
We will incur additional expenses as we increase the size of our administrative function to support the growth of our business. Interest Income Our interest income consists of interest income earned on our cash, cash equivalents and marketable securities. Interest Expense Our interest expense consists of interest expense related to our debt facility.
Interest Income Our interest income consists of interest income earned on our cash, cash equivalents and marketable securities. 68 Table of Contents Interest Expense Our interest expense consists of interest expense related to our debt facility.
Interest Income Interest income increased by $7.0 million in 2023 compared to 2022. The increase was primarily attributable to higher cash equivalent and marketable securities balances and increased interest rates. Interest Expense Interest expense increased by $0.4 million in 2023 compared to 2022.
The decrease was primarily attributable to the decrease in our cash equivalent and marketable securities balances. Interest Expense Interest expense stayed at $1.6 million in 2024 compared to $1.6 million in 2023.
During the year ended December 31, 2022, cash provided by financing activities was $127.9 million, consisting of $126.5 million of net proceeds received from the at-the-market offering program described above and $1.3 million from the issuance of common stock pursuant to our employee equity plans.
Payments for the purchases of property and equipment was $1.8 million during the year ended December 31, 2023. 72 Table of Contents Cash Flows from Financing Activities During the year ended December 31, 2024, cash provided by financing activities was $0.1 million from the issuance of common stock pursuant to our employee equity plans.
To that end, we are advancing two drug development programs that harness different regulators of cellular function: the first targets the immunoproteasome which is responsible for protein degradation in cells of the immune system and drives many key aspects of immune cell function, and the second targets the Sec61 translocon, which is located on the endoplasmic reticulum and represents the beginning of the protein secretion pathway.
To that end, we are advancing a drug development program that harnesses a key regulator of cellular function by targeting the immunoproteasome, which is responsible for protein degradation in cells of the immune system and drives many key aspects of immune cell function. We believe targeting this fundamental regulator of cellular function offers an attractive approach to treating autoimmune diseases.
The interest expense was composed of the contractual coupon interest expense, the amortization of the debt discount and issuance costs and the accretion of the final payment fee associated with the Oxford Loan Agreement. 64 Table of Contents Liquidity and Capital Resources Overview As of December 31, 2023, we had $35.5 million in cash and cash equivalents and $165.9 million of marketable securities invested in a U.S.
The interest expense was composed of the contractual coupon interest expense, the amortization of the debt discount and issuance costs and the accretion of the final payment fee associated with the Oxford Loan Agreement.
Restructuring and impairment charges Restructuring and impairment charges increased by $6.2 million in 2023 compared to 2022. The increase was primarily related to one-time severance-related costs of $3.3 million and an impairment loss of $2.9 million due to the ROU asset and certain property and equipment no longer utilized.
The decrease was primarily related to one-time severance-related costs of $3.3 million recognized in 2023 and higher impairment costs recognized in 69 Table of Contents 2023 than 2024 on the right-of-use asset for the vacated floor in the leased office facility and certain equipment no longer utilized. Interest Income Interest income decreased by $2.6 million in 2024 compared to 2023.
We are required to make monthly interest-only payments prior to the amortization date of January 1, 2025, subject to a potential one-year extension upon satisfaction of certain conditions. The loan facility is secured by all assets except intellectual property, which is subject to a negative pledge, and will mature on November 1, 2026.
The loan facility is secured by all assets except intellectual property, which is subject to a negative pledge, and will mature on November 1, 2026. There are no warrants or financial covenants associated with the Loan Agreement.
Treasury money market fund, U.S. Treasury securities, U.S. agency bonds, commercial paper and certificate of deposit. As of December 31, 2023, our cash equivalents and marketable securities had a weighted average maturity of approximately six months and the longest maturity was 16 months.
Liquidity and Capital Resources Overview As of December 31, 2024, we had $41.7 million in cash and cash equivalents and $90.5 million of marketable securities invested in a U.S. Treasury money market fund, U.S. Treasury securities, U.S. agency bonds, commercial paper and corporate debt securities.
Research and Development Expenses Research and development expenses increased by $34.7 million in 2023 compared to 2022.
Restructuring and impairment charges Restructuring and impairment charges decreased by $4.7 million in 2024 compared to 2023.
The increase was primarily due to an increase of $2.1 million in stock-based compensation primarily related to incremental expenses from option repricing, an increase of $1.6 million in personnel-related expenses due to increased headcount prior to the Workforce Reduction, an increase of $2.0 million in consulting and professional service fees in connection with the Everest License Agreement and business development activities, and an increase of $0.7 million in facility-related expenses primarily due to the expansion of our headquarters.
The decrease was primarily due to a decrease of $2.0 million in legal and professional services in connection with the negotiation and implementation of the Everest License Agreement in 2023, a decrease of $0.5 million in stock-based compensation and personnel-related expenses, a decrease of $0.3 million in consulting expenses and a decrease of $0.3 million in D&O insurance premiums.
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Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” Overview We are a clinical-stage biotechnology company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases and cancer.
Added
Our product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor that we are evaluating for the treatment of severe autoimmune diseases of high unmet medical need. We believe that the immunoproteasome is a validated target for the treatment of a wide variety of immune-mediated diseases given its ability to regulate multiple drivers of the inflammatory disease process.
Removed
Targeting these fundamental regulators of cellular function offers an attractive approach to treating many diseases. Our lead product candidate, zetomipzomib, is a first-in-class selective immunoproteasome inhibitor that has completed Phase 1a testing in healthy volunteers and a Phase 1b/2 clinical trial in patients with SLE, with or without LN (the MISSION trial).
Added
Our revenue to date has been generated from the upfront payment pursuant to our collaboration with Everest Medicines II (HK) Limited, or Everest, under our license agreement with them, or the Everest License Agreement. Collaboration revenue consists of revenue received from upfront, milestone and contingent payments received from the strategic partner.
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We are conducting PALIZADE, a global, placebo-controlled, double-blind Phase 2b clinical trial evaluating zetomipzomib in patients with LN. In addition, we are leveraging the broad therapeutic potential of zetomipzomib in other severe autoimmune diseases of high unmet medical need. PORTOLA is a placebo-controlled, double-blind Phase 2a clinical trial evaluating zetomipzomib in patients with AIH.
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In October 2024, we made the strategic decision to terminate the PALIZADE Phase 2b clinical trial in patients with active LN and focus our clinical development efforts on zetomipzomib for the treatment of AIH.
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We are also continuing to explore development opportunities for zetomipzomib in patients with SLE. Based on clinical data generated to date with zetomipzomib, we believe that zetomipzomib has the potential to address multiple chronic immune-mediated diseases.
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Research and Development Expenses Research and development expenses decreased by $20.0 million in 2024 compared to 2023. The decrease was primarily due to our October 2023 strategic restructuring to prioritize clinical-stage programs, reduce our headcount and pause early-stage research and discovery activities.
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We have seen encouraging clinical activity and biomarker data in the SLE and LN patients who received zetomipzomib in our MISSION trial. The safety and tolerability profiles of zetomipzomib has been favorable and consistent with the needs for a long-term therapy.
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Our net loss was $83.7 million for the year ended December 31, 2024, and we had an accumulated deficit of $434.5 million as of December 31, 2024.
Removed
Our oncology product candidate, KZR-261, is a small molecule agent being studied in an open-label Phase 1 clinical trial designed to evaluate safety and tolerability, pharmacokinetics and pharmacodynamics, as well to explore preliminary anti-tumor activity.
Added
The rate change did not have a material impact on our financial statements. Funding Requirements We believe that our available cash, cash equivalents and short-term investments are sufficient to fund existing and planned cash requirements for the next 12 months.
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This study is being conducted in two parts: dose escalation in patients with locally advanced or metastatic solid malignancies, and dose expansion in patients with selected tumor types. KZR-261 was discovered from our novel research platform targeting the Sec61 translocon and the protein secretion pathway.
Removed
KZR-261 has demonstrated broad anti-tumor activity in preclinical models of both solid and hematologic malignancies by targeting multiple pathways driving tumor growth and survival.
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The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods.
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All employees affected by the Workforce Reduction were eligible to receive, among other things, severance payments and the continuation of group health insurance coverage for a specified time period post-termination.
Removed
The rate change did not require contract remeasurement at the effective date of the change or a reassessment of any previous accounting determinations pertaining to the facility. The rate change did not have a material impact on the Company’s financial statements.
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We have based our estimates on assumptions that may prove to be incorrect, and we could use our capital resources sooner than we currently expect.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA 10% increase or decrease in current exchange rates would not have a material effect on our consolidated financial results. 67 Table of Contents
Biggest changeA 10% increase or decrease in current exchange rates would not have a material effect on our consolidated financial results. Item 8. Financial Statements and Supplementary Data. The financial statements required by this item are set forth beginning on page F-1 of this Annual Report on Form 10-K. Item 9.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. The primary objectives of our investment activities are to ensure liquidity and to preserve capital. The market risk inherent in our financial instruments and in our financial position reflects the potential losses arising from adverse changes in interest rates and concentration of credit risk.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The primary objectives of our investment activities are to ensure liquidity and to preserve capital. The market risk inherent in our financial instruments and in our financial position reflects the potential losses arising from adverse changes in interest rates and concentration of credit risk.
We have the ability to hold our cash equivalents and marketable securities until maturity, and we therefore do not expect a change in market interest rates to affect our operating results or cash flows to any significant degree. Approximately $0.7 million of our cash and marketable securities balance was located in Australia as of December 31, 2023.
We have the ability to hold our cash equivalents and marketable securities until maturity, and we therefore do not expect a change in market interest rates to affect our operating results or cash flows to any significant degree. Approximately $0.6 million of our cash balance was located in Australia as of December 31, 2024.
Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. As of December 31, 2023, our cash equivalents and marketable securities had a weighted average maturity of approximately six months and the longest maturity was 16 months.
Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. As of December 31, 2024, our cash equivalents and marketable securities had a weighted average maturity of approximately five months and the longest maturity was 12 months.
We had cash, cash equivalents and marketable securities of $201.4 million as of December 31, 2023, which consisted of bank deposits, highly liquid U.S. Treasury money market funds, U.S. Treasury securities, U.S. agency bonds, commercial paper and certificate of deposit.
We had cash, cash equivalents and marketable securities of $132.2 million as of December 31, 2024, which consisted of bank deposits, highly liquid U.S. Treasury money market funds, U.S. Treasury securities, U.S. agency bonds, commercial paper and corporate debt securities.
Added
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.

Other KZR 10-K year-over-year comparisons