Laidlaw & Co. Initiates Coverage On Kazia Therapeutics (KZIA) With Buy Recommendation
We are initiating coverage on Kazia Therapeutics with a Buy rating and 12-month $25 price target. KZIA is a clinical stage biotech company focusing on developing paxalisib, a novel dual PI3K/mTOR inhibitor, as a potential triple negative breast cancer (TNBC) treatment. Paxalisib also has potential in treating BRAC mutated and HR+/HER2- breast cancers. Paxalisib already demonstrated promising early signs of clinical efficacy in TNBC and we anticipate 2026/2027 could be a catalyst-rich period for presenting more clinical data. Paxalisib is an orally administrated, selective orthosteric pan-inhibitor against PI3K and against mTOR with brain penetrance capability. KZIA conducted a Phase Ib study with encouraging early interim data showing all three treated patients demonstrated efficacy (2PR, 1 CR). The study is ongoing and we anticipate more data readouts in 2026/2027. Supported by strong preclinical and clinical data from others, a paxalisib in BRACm study could start in 2H26 with data readouts in 2027. Paxalisib potentially could also participate in an HR+/HER2- BC study later. KZIA is well differentiated from other PI3K focused peers by prioritizing its development in smaller, less competitive, but still substantial large commercial opportunities of TNBC and BRACm. The potential entry of HR+/HER2- BC could be an upside if clinically successful. This would be a larger but more competitive space. Of the remaining pipeline, the preclinical NDL2 targets intracellular PD-L1s (cPD-L1 and nPD-L1) and preclinical data have shown multiple anti-tumor effects, including significant tumor volume reduction both as a monotherapy and in combination with anti-PD-1. Intracellular PD-L1s are associated with chemotherapy/radiation resistance and immune-suppression enhancement. KZIA is scheduled to start a Phase I study in 2027, potentially treating TNBC or NSCLC. Further, KZIA just added preclinical SETDB1-targeted epigenetic drug, MSETC recently to its pipeline and with potential Phase I study to start in 2027/2028. Our 12-month $25 price target is based on our NPV DCF, forward P/E and peer comparable analyses.