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Why Nektar Therapeutics Fell 36.5% in October

By Cory Renauer – Nov 7, 2018 at 8:23AM

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Investors are beginning to think Bristol-Myers Squibb made a bad decision.

What happened

Shares of Nektar Therapeutics (NKTR -2.48%), a commercial-stage biotechnology company, fell 36.5% in October, according to data from S&P Global Market Intelligence. The company didn't release any significant news regarding its lead cancer candidate, NKTR-214, but investors continued lowering their expectations.

So what 

A strong initial response rate among cancer patients treated with a combination of Opdivo from Bristol-Myers Squibb (BMY -0.81%) inspired the big pharma to sign a very lucrative deal for rights to NKTR-214. Results released following the deal, though, have investors wondering if Bristol-Myers made a huge mistake.

Man drawing a downward-sloping chart.

Image source: Getty Images.

Nektar's candidate is a pegylated version of another treatment that was shown to shrink tumors for around 15% of patients who took it. During an earlier study with NKTR-214 as a solo treatment for patients after they've had Opdivo or a similar drug, investigators couldn't confirm a tumor response among any of the 28 patients treated.

Now what

If response rates within the Pivot-2 combination study slide any further, Nektar's big partnership with Bristol-Myers isn't going anywhere. Luckily, Pfizer (PFE -1.10%) recently signed an agreement to test NKTR-214 in combination with Bavencio; Xtandi; and a recently approved PARP inhibitor, Talzenna.

If NKTR-214 is a total bust, the company will survive. Nektar's balance sheet had $1.8 billion in cash and short-term investments at the end of June courtesy of Bristol-Myers Squibb. Product sales and royalty revenue added $32 million to the company's top line in the first half of 2018, which gives a handful of additional new drug candidates in the company's clinical stage pipeline plenty of chances to shine.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Nektar Therapeutics Stock Quote
Nektar Therapeutics
NKTR
$3.14 (-2.48%) $0.08
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$44.08 (-1.10%) $0.49
Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
BMY
$70.71 (-0.81%) $0.58

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