Nektar blows away revenue projections, gives very positive guidance on drug pipeline

Shares of Nektar Therapeutics (NKTR) finished up 21.67% today to $102.87 after the biotech company announced after the close yesterday a smaller than expected fourth quarter 2017 loss of 21 cents a share (versus the Wall Street consensus projection of a 36 cents a share loss) and a surge in revenue to $95.47 million  (against the Wall Street estimate of $36.96 million.) The year over year growth in revenue came to 154.9%.

But it was the company’s outlook on its drug pipeline that really drove the share price today. On the conference call the company noted that it had two positive pre-new-drug-application meetings with the U.S. Food & Drug Administration about its new non-addictive opioid pain killer NKTR 181. The focus of the discussions was data showing the non-addictive nature of NKTR-181 and the potential for getting an approval with a less restrictive use indication than that given to addictive opioids. Nektar said that it will file for approval in the second quarter with data from 2,100 patients and that the company is in active negotiations with potential marketing partners for NKTR 181. The company’s other big near-to-filing drug is its cancer drug NKTR 214. The company recently struck a multi-billion deal with Bristol Myers Squibb (BMS) for use in combination therapies with that company’s cancer drugs. The first trial for that combination therapy will be for melanoma and kidney cancer. Nektar reminded analysts on the call that it retains the right to strike other deals with companies with other immuno-oncology drugs and that it is looking forward to announcing more partnerships in 2018. Nektar also reported that the efficacy data for NKTR 214 has improved since it was initially reported at the JPMorgan healthcare conference in December. The response rate has climbed to 71% in kidney cancer trials.

The next market moving events for Nektar are the American Association for Cancer Research Annual Meeting in mid-April and the American Academy of Pain Medicine Annual Meeting at the end of April. And, of course, the actual filing on NKTR 181 with the FDA.

I own August 18, 2018 call options with a strike price of $90 on Nektar in my Volatility Portfolio. I will, as you might imagine, continue to hold those options. This position is up 56% since I rebalanced this portfolio on February 25, 2018.

I also own Nektar shares in my Jubak Picks portfolio. That position is up 177.28% since I added it to the portfolio on November 13, 2017. As of today I’m raising my target price to $130 from the previous $115.

Full disclosure: I own shares of Nektar and Nektar call options in my personal portfolios.