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Why NantKwest Is Jumping Today

By George Budwell - Dec 21, 2020 at 12:49PM

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A merger agreement with a fellow immunotherapy company is exciting investors today.

What happened

Shares of the cancer immunotherapy company NantKwest ( NK ) are up by a healthy 36.6% as of 11:20 a.m. EST Monday morning. The biotech's shares are moving north today for two key reasons:

  1. Prior to the opening bell, NantKwest announced a stock-for-stock merger agreement with the privately held immunotherapy company ImmunityBio. Both companies are the brainchildren of billionaire surgeon Dr. Patrick Soon-Shiong.
  2. In a follow-up press release, ImmunityBio also announced that its IL-15 fusion protein known as Anktiva passed muster in a Phase II/III trial for patients with unresponsive non-muscle invasive bladder cancer. The drug reportedly produced a 72% complete response in this hard-to-treat indication after 12 months of treatment.
A businessman wearing a rocket jet pack.

Image source: Getty Images.

So what

Prior to this merger agreement, NantKwest's quest to become a leader in immuno-oncology through its natural killer cell therapy platform wasn't going quite as planned. The biotech's shares, in fact, were down by almost 60% since their initial public offering (IPO) last Friday, all thanks to a lack of substantial progress in the clinic.

This much-needed merger agreement could breathe new life into NantKwest's long-term prospects, however, because this combined immunotherapy entity will end up sporting a whopping 13 clinical assets across both oncology and infectious diseases.  

Now what

The two companies reportedly expect the merger to close during the first half of 2021 -- pending shareholder approval by a majority of unaffiliated shareholders of NantKwest. Upon closing, the new company will retain the ImmunityBio name and trade on the Nasdaq stock exchange under the ticker IBRX.  

Will this newly reworked biotech entity be a worthwhile growth stock? While a lot more info still needs to be unveiled before a buy, hold, or sell decision can be evaluated properly, this forthcoming company will have an impressively diverse immunotherapy pipeline. As such, it might be a good idea to keep a close watch on this developing story. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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