Maxim Group initiated coverage of Kazia Therapeutics (NASDAQ:KZIA) with a “buy” rating and $18 price target. The stock closed at $10.71 on Oct. 13.
Kazia is developing two oncology drug candidates: paxalisib, for brain cancers, and EVT801, for solid tumors.
Kazia’s lead drug candidate, paxalisib, is a small molecule inhibitor of the PI3K- AKT-mTOR pathway. Since the accelerated approval of TG Therapeutics’ umbralisib on Feb. 5, there are now five approved PI3K inhibitors on the market, writes analyst Naureen Quibria, Ph.D.
“But paxalisib could be ‘best-in-breed’ with a differentiated PI3K profile,” she added. “While most PI3K inhibitors cannot cross the blood-brain-barrier and have been plagued with safety issues, paxalisib’s safety profile has been modest to date.”
Dr. Quibria said that having garnered considerable traction among clinicians at prominent academic institutions, paxalisib is currently in nine trials for CNS-based cancers, including the ground-breaking pivotal GBM AGILE study in glioblastoma multiforme. “We think continued positive readout[s] in GBM could read positive to other CNS indications, such as brain metastases.”
Dr. Quibria acknowledged that GBM represents a challenging indication, and the current stock price reflects the risks around GBM, but not the upside potential. Several interim/final readouts for paxalisib are expected before year-end. “We believe more positive data from the ongoing studies in 2021/2022 should further de-risk the drug’s safety/efficacy profile and, accordingly support a higher valuation,” she added.