What happened

An abstract released today for Nektar Therapeutics(NKTR -4.00%) immuno-oncology drug, NKTR-214, did little to reverse pessimism that's been weighing shares down since a disappointing update in June. As a result, Nektar Therapeutics' shares fell 9.8% on Tuesday.

So what

Bristol-Myers Squibb (BMY 0.81%) inked a blockbuster deal with Nektar Therapeutics in February, nabbing rights to 35% of NKTR-214's future profits for $1 billion and acquiring 8.3 million shares in Nektar Therapeutics for $850 million. 

A man holding his head in his hands in front of a wall displaying a declining price chart.


The deal followed news of a 64% overall response rate in stage 1 of a trial evaluating NKTR-214 in combination with Bristol-Myers' multibillion blockbuster checkpoint inhibitor Opdivo in melanoma patients. Unfortunately, its efficacy has faded since then.

In June, updated results presented at the annual American Society of Clinical Oncology (ASCO) showed a response rate of only 50%, and today's data for presentation at the Society for Immunotherapy of Cancer (SITC) meeting on Nov. 9 shows the response rate remains 50% after including 10 more patients. So far, a total of 19 of 38 patients have responded to the NKTR-214-plus-Opdivo approach.

Arguably, that's not good enough, because Opdivo has also produced 50% response rates in trials as a monotherapy. 

Now what

Nektar's abstract reflects data through July, so it's possible the presentation this week will include more recently compiled data that could help or hurt response rates.

The stakes are undeniably high. It's been hoped that as a long-lasting formulation of IL-2, NKTR-214 could broaden Opdivo's use by turning cold tumors that don't respond to Opdivo hot. An inability to improve upon Opdivo's monotherapy crimps NKTR-214's opportunity and casts doubt on Bristol-Myers' decision to bet so heavily on NKTR-214's success.

Because the full presentation later this week may offer additional insight that investors will want to see, I think it's wise to stay on the sidelines on this stock a bit longer.