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Why NantKwest Shares Fell 41% in January

By Todd Campbell - Feb 2, 2016 at 6:03PM

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Billionaire Patrick Soon-Shiong hopes to change cancer treatment forever.

Cancer Moonshot 2020

What: Despite billionaire CEO Patrick Soon-Shiong outlining plans for a cancer moonshot program at the J.P. Morgan Healthcare Conference early last month, shares in Soon-Shiong's NantKwest (NK) toppled 40.6% in January, according to S&P Capital IQ.

So what: On January 12, Soon-Shiong announced an auspicious Moonshot 2020 collaboration that he hopes can reinvent cancer drug development and ultimately, cancer treatment.

The collaboration includes key drugmakers Celgene (CELG), Amgen (AMGN -0.41%), and his own NantKwest, as well as academia, doctors, and insurers.

Soon-Shiong's goal is to use the resources and clinical stage drugs under development at collaborators to create combination therapies targeting cancer. The focus will be on immunotherapy solutions that could reduce the use of side-effect laden chemotherapy. In particular, the collaboration will study if reengineering the immune system's natural killer cells and T-cells can save more lives.

Now what: Soon-Shiong hopes to initiate and complete clinical studies in up to 20 tumor types in as many as 20,000 patients by 2020.

That's a heady goal and it's not certain how big a role NantKwest will play, but if Soon-Shiong delivers, then it could clear the way for NantKwest's natural killer cell approach to become a standard in cancer treatment.

Admittedly, Moonshot 2020 and NantKwest's approach is in the early stages of research and that means investors have to recognize that a lot could go wrong that could derail shares.

January's sell-off shows just how risky these early stage biotech stocks can be.

Nevertheless, NantKwest's concept of reengineering natural killer cells to find and kill cancer is incredibly intriguing and if that concept succeeds, then the market opportunity could be big.

Given that Soon-Shiong's success includes creating Abraxane, a widely used cancer drug that was sold to Celgene in a deal worth nearly $3 billion, it may be worth adding this company to watch lists. 

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Stocks Mentioned

Celgene Corporation Stock Quote
Celgene Corporation
Amgen Inc. Stock Quote
Amgen Inc.
$245.73 (-0.41%) $-1.00
NantKwest, Inc. Stock Quote
NantKwest, Inc.

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