Nektar Therapeutics (NKTR +1.37%) was a big winner in 2025. The clinical-stage biotech saw its shares soar on positive clinical developments. Let's give credit where credit is due. Nektar's rezpegaldesleukin is a promising clinical asset that could make waves in one of the largest therapeutic areas in the industry: immunology. And provided it can follow up recent clinical trial wins with more of the same, the stock could, once again, soar in 2026.
However, Nektar Therapeutics is still a very risky stock. For a better and less volatile option in the same realm, investors should consider Madrigal Pharmaceuticals (MDGL +0.76%) instead. Here's why.
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Nektar Therapeutics' shares could plunge
Nektar Therapeutics produced strong phase 2b data for rezpegaldesleukin in treating eczema this year. That's a vast market where some of the world's best-selling drugs compete, including Dupixent and Rinvoq.
However, without a single product on the market and consistent net losses -- the basic profile of a pre-commercial biotech -- Nektar Therapeutics looks risky. Even with strong mid-stage results, rezpegaldesleukin could fail in late-stage studies, which could send its stock price plummeting and potentially render Nectar Therapeutics a completely irrelevant company on the verge of bankruptcy.
NASDAQ: NKTR
Key Data Points
These things do happen in the biotech industry. Consider aTyr Pharmaceuticals, a company that had produced strong mid-stage data for its lead asset, which ended up failing in phase 3 studies this past September. The stock plummeted and is unlikely to recover. Nektar Therapeutics may have considerable upside potential, but the downside risk is substantial as well.
Why Madrigal Pharmaceuticals is a better buy
It wasn't that long ago that Madrigal Pharmaceuticals was in a similar situation. A pre-commercial biotech with a promising asset in clinical trials. Madrigal managed to earn approval in 2024 for this medicine, Rezdiffra, which became the first indicated to treat metabolic dysfunction-associated steatohepatitis (MASH) in the U.S.
Since then, Rezdiffra has performed extremely well. In the third quarter, it generated $287.3 million in net sales. It should land in blockbuster territory next year. And with millions of potential MASH patients in the U.S. and little competition, Madrigal Pharmaceuticals might just be getting started.
NASDAQ: MDGL
Key Data Points
There are some risks. For instance, Rezdiffra is still under accelerated approval and will have to prove its efficacy in confirmatory trials to remain on the market. However, the strong demand and prescription trends for the medicine so far indicate a great deal about its effectiveness.
And since it is targeting an area with unmet needs, regulators will be more lenient with it than they would be for a medicine like rezpegaldesleukin that is looking to enter a crowded market. Madrigal Pharmaceuticals is still somewhat risky, but it's a safer pick right now than Nektar Therapeutics.
