What happened

Shares of Nektar Therapeutics (NKTR -1.06%), 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 -0.45%) 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 -0.39%) 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.