Why the Kazia Therapeutics (ASX:KZA) share price is rocketing 11%

The Kazia Therapeutics Ltd (ASX:KZA) share price is shooting for the moon after the company announced a licence agreement in Greater China.

Young doctor raising arms in air with hands in fists celebrating a new development

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Kazia Therapeutics Ltd (ASX: KZA) share price is shooting for the moon today. The positive movement comes after the company announced a licence agreement to sell a brain cancer treatment in Greater China.

Kazia is an oncology-focused biotech company. It is working on several forms of cancer treatment, including for brain cancer and ovarian cancer.

At the time of writing, shares in the medical company are trading at $1.61 – up 11.03%. By comparison, the All Ordinaries Index (ASX: XAO) is up 0.36%.

Let's take a closer look at Kazia's announcement.

Licence agreement in Greater China

The Kazia share price is rocketing after the dual-listed company revealed it has entered into a licensing agreement with Simcere Pharmaceutical Group Ltd. The purpose of the agreement is "to develop and commercialise Kazia's investigational new drug, paxalisib, in Greater China." Paxalisib is used in the treatment of brain cancer.

Under the deal, Simcere will develop, register, and commercialise paxalisib in Mainland China as well as in Hong Kong, Macau, and Taiwan. Kazia holds the rights to the drug in all other nations. Kazia will receive an upfront payment of US$11 million. Simcere will divide the payment into US$7 million in liquidity and a US$4 million equity investment. The equity investment is priced at a 20% premium on the most recent price.

Kazia also pointed out it retains the right to commercialise the drug in the United States, where profit margins are higher. 

Simcere will pay Kazia up to US$281 million, depending on milestones being met on the treatment of glioblastoma – an aggressive form of brain cancer. Further payments may be payable if the drug is found to be effective in other types of brain cancer.

Management commentary

Kazia CEO Dr James Garner spoke on the deal. He said:

China is one of the world's largest pharmaceutical markets, with specific requirements and opportunities for innovative oncology products. We are delighted to partner with Simcere to secure the commercial success of paxalisib in this critical territory. Simcere's track record of success is unrivalled, and they bring to paxalisib first-class capabilities in clinical development, regulatory affairs, and commercialisation. We look forward to working closely with our new partners to make paxalisib available for Chinese patients as swiftly as possible.

Dr Renhong Tang, Senior Vice-President at Simcere, added:

We are tremendously excited by the potential for paxalisib to make a difference in this very challenging disease. The need for new therapies in brain cancer is significant in China, and we share Kazia's commitment to bringing forward new treatment options for patients.

Kazia share price snapshot

Over the last 12 months, the Kazia share price has increased by around 335%. Just since the beginning of this year, Kazia shares have increased by more than 35%. The share price hit a 52-week high of $1.78 in November after the company released positive clinical data about paxalisib.

Kazia has a market capitalisation of around $184 million.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »