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.

| More on:
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

Three business people join hands in strength and unity
Share Market News

Here are 3 ASX blue-chip shares reporting this week

Keep your eyes peeled for reports from these ASX heavyweights.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Share Market News

5 things to watch on the ASX 200 on Monday

The ASX 200 is expected to have a strong day on Monday...

Read more »

Two men lok sxcited on the trading floor.
Share Market News

5 ASX directors loading up on their companies’ shares in August

Who is buying more shares in Straker Translations, Eagers Automotive, and United Malt Group?

Read more »

A woman is excited as she reads the latest rumour on her phone.
Share Market News

‘Strongest tailwinds in a decade’: Morgans tips Telstra shares as a buy

Morgans is bullish on Telstra's shares...

Read more »

Top ten gold trophy.
Share Market News

Here are the top 10 ASX 200 shares today

These ASX 200 shares ended the week on a high.

Read more »

a shiba inu dog looks happily at eh camera with his tongue out while his owner hods him on his chest as he sleeps on a hammock.
Cryptocurrencies

Here’s why the Dogecoin price has had such a great week

Economic data out of the United States and a surprise announcement by BlackRock offered some healthy tailwinds to cryptos over…

Read more »

A pair of legs can bee seen on the floor buried under a pile of paperwork, indicating a high volume day
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Friday

Our most traded ASX 200 share today has lost more than 10%. Ouch.

Read more »

A futuristic view of electric vehicle technology with speeding bright light trails indicating power.
Resources Shares

New records and looming deficits. Why ASX lithium stocks are in the spotlight

Demand for lithium is booming alongside rocketing growth in EV production, sending the price of the battery critical metal up…

Read more »