Why Nektar Therapeutics Inc. Shares Soared

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 Nektar Therapeutics (NASDAQ: NKTR  ) , a biopharmaceutical company that develops therapies along its PEGylation and polymer conjugate technology platforms, jumped as much as 22% after reporting better-than-expected third-quarter earnings results.

So what: For the quarter, Nektar reported a monstrous 231% increase in year-over-year revenue to $60.9 million, which it attributed to higher product sales and a $25 million milestone payment associated with Europe's acceptance of naloxegol's marketing authorization application filing. Net loss shrank dramatically despite higher research and development costs to just $16.5 million from $43.5 million in the year prior. On an adjusted basis, Nektar reported a loss of just $0.14 per share. Comparatively, Wall Street anticipated a much wider loss of $0.25 per share and just $51.4 million in revenue, so this was a sizable beat.

Now what: You often won't hear me say this often about biopharmaceutical companies operating in the red, but I'm a big fan of Nektar Therapeutics. The company offers investors so many ways to potentially make money through royalty revenue via its proprietary technology program, by developing wholly in-house therapies utilizing that platform, and by possibly selling its royalty streams to generate cash for future studies. Nektar also boasts a handful of partnerships with some of big pharma's largest names. In addition, it has an established product portfolio, as well as 19 compounds currently in the preclinical and/or clinical stage of the study process. Simply put, the more pitches you see, the more chances you have to hit a home run. With its diverse portfolio and solid earnings results, I see a lot of potential for Nektar moving forward.

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