Nektar's financial performance wasn't the issue. However, the company announced in its Q2 conference call that it had discovered manufacturing issues with two batches of experimental drug bempegaldesleukin used in early clinical studies. These issues also appeared to contribute to a delay in finalizing the development program for bempeg and Opdivo with Nektar's partner, Bristol-Myers Squibb (NYSE:BMY).
The discovery of manufacturing issues with an important pipeline candidate understandably generated worries among investors. It even led to three analysts downgrading Nektar stock from a buy to a hold. So how bad were these issues? It's a little murky.
Importantly, Nektar CEO Howard Robin said that no material from either of the two impacted manufacturing lots is currently being used in any ongoing clinical studies. He also stated that these lots weren't used at all in any ongoing registrational clinical trials. Robin emphasized that Nektar has "developed a comprehensive control strategy" to prevent manufacturing issues and has submitted this plan to the U.S. Food and Drug Administration (FDA) in collaboration with BMS.
Nektar Therapeutics Chief Research and Development Officer Steve Doberstein stated that the company actually saw that patients receiving bempeg from the two problematic lots as their first dose had a lower clinical benefit than patients receiving other lots for their first dose. He added that Nektar "observed no meaningful differences in safety" between the lots.
How does all of this impact Nektar's partnership with BMS? Robin said that "BMS has communicated to us that they remain very committed to the bempeg development program, particularly in light of the recent breakthrough designation in melanoma and the tremendous opportunity for both companies." However, there are big questions about how interested BMS is in moving forward with additional indications beyond the ones that it's already committed to.
It's now a waiting game to find out how BMS decides to proceed with its partnership with Nektar on bempeg. Robin hinted that the decision might not be announced until October.
In the meantime, Nektar hopes to have some good news. An FDA approval decision on pain drug NKTR-181 is scheduled for Aug. 29. That decision could be moved back, however, since the FDA postponed an advisory committee meeting to review the drug.