Why Nektar Therapeutics' Shares Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of clinical-stage biopharmaceutical company Nektar Therapeutics (Nasdaq: NKTR  ) dove 13% on Monday after the company received an analyst downgrade from Jefferies and unveiled late-stage results for its opioid-induced constipation drug, Naloxegol, that was developed in collaboration with AstraZeneca (NYSE: AZN  ) .

So what: Earlier on Monday, AstraZeneca reported positive phase 3 trial results for Naloxegol with regard to opioid-induced constipation, noting no adverse side effects with the drug, including no clinically relevant cardiovascular events during trials. This comes in direct contrast to the Food and Drug Administration's recent stance on opioid-induced constipation, or OIC, drugs. Salix Pharmaceuticals (Nasdaq: SLXP  ) and Progenics (Nasdaq: PGNX  ) disclosed last week the need to do a large, long-term safety study on the effects of their OIC drug Relistor because of safety concerns raised by the FDA. These concerns from Nextar and AstraZeneca's peers led Jefferies to downgrade Nektar to "hold" from "buy" and lower its price target by 20% to $8, albeit that was before its clinical data was released.

Now what: Nektar has a relatively robust pipeline of collaborative agreements, so its pocketbook won't be hurting for a while, but investors have to be getting tired of either safety concerns or poor drug launches spoiling their performance. Nektar, for instance, receives royalties from Affymax's (Nasdaq: AFFY  ) recently approved anemia drug Omontys, whose sales have been less than impressive thus far. Given the sheer scope of its trials, I happen to like Nektar's long-term outlook, but I'd temper your near-term expectations.

Craving more input? Start by adding Nektar Therapeutics to your free and personalized watchlist so you can keep up with the latest news on the company.


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  • Report this Comment On November 13, 2012, at 12:54 PM, Hope4GoodFuture wrote:

    Check out Adam Feuerstein's comment from The Street.com

    "Faced with a failed phase III trial of its critically important opioid constipation drug, AstraZeneca may have embarked on a hunt to retrieve additional data from the "non-retrievable" patient. "Retrieved" data found. Database unlocked. "Retrieved" data added."

    Also, "The 12.5 mg dose of naloxegol failed badly with a p value of 0.202 while the 25 mg dose barely squeaked into victory lane with a p value of 0.021. [The trial required a p value less than 0.025 to reach statistical significance.]"

    The issue may be much worse for NKTR than simply being tainted by other companies' FDA issues.

    If NKTR is actually monkeying around with the data set this way, that would lead many investors to question management's credibility every time they open their mouths.

  • Report this Comment On November 14, 2012, at 12:09 AM, mbracket123 wrote:

    Please guys, why would you even bring up Affymax as a negative contributor to the earnings. Did you not read/listen to the quarterly report - Affy beat the consensus estimate and stock has risen more than 10% in a week. The are poised to blow out next year numbers and have all metrics pegged. Please do your homework instead of continually mouthing for the likes of Amgen and other large contributors. Its so patently obvious its embarrassing.

    Just take a few minutes to fact check would be helpful. Thanks, Mike.

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