Positive Catalysts Are Intact For Nektar Therapeutics

Shares of biotech rocket Nektar Therapeutics (NKTR) are down 23.25% since they traded at $106.91 on March 21, 2018.

I can’t find evidence that the positive catalysts that led me to recommend the stock for my Jubak Picks portfolio and the options for my Volatility Portfolio have disappeared or weakened.

My conclusion is that the stock is giving back some of its huge gains (387% in 2017 and 40.1% in 2018 through today’s (April 30) close of $83.66), which is perfectly understandable since investors and traders do tend to take profits after a run like that. And that the stock has sold off in sympathy with other biotech stocks, such as Incite (INCY) and NewLink Genetics (NLNK) that have run into real problems with their new drug candidates.

We’re about to move into the heart of medical conference season so this is a good time to check in with what I’ve identified as Nektar catalysts.

First up, and the reason that I initially got interested in Nektar, is the filing for approval with the U.S. Food and Drug Administration for NKTR-181, the company’s non-addictive opioid pan killer.

The drug has met its endpoints for efficacy and safety, in my opinion (but hey, I don’t run the FDA that I know of) in its Phase III trials and the company will be submitting NKTR-181 for approval any day now with a ruling from the FDA expected in June or so (since the agency granted the drug fast track status given the seriousness of the opioid epidemic the the country.)

The big plus for NKTR-181 is that it does not produce the high levels of euphoria that lead to abuse and addiction with standard opioid drugs. In 2016, doctors in the United States wrote 230 million prescriptions for opioids. In 2015 prescription opioids were involved in 22,000 deaths in the United Stats and it’s estimated that for every one death from prescription opioids, there are 10 admissions for treatment for abuse, 32 emergency room  visits and 130 people who are dependent on prescription opioids.

Second, at the upcoming American Society for Clinical Oncology annual meeting (June 1-6) Nektar is expected to present positive results from its Phase I/II trails of NKTR 214 with Bristol-Myers Squibb’s (BMY) Opdivo and in a separate Phase I/II trial  for NKTR with Merck’s Keytruda.

Third, Nektar continues to sign new deals for drugs in its immuno-oncology pipeline at very favorable terms. The most recent is with Japan’s Takeda to trial NKTR-214 with Takeda’s TAK-659 against multiple cancers. In the deal Nektar and Takeda will earn retain global commercial rights to their respective investigative medicines and split the costs for the clinical trials that are expected to start in the second half of 2018.

I am keeping shares of Nektar in my Jubak Picks portfolio with a target price of $130 a share. The stock is up 125.5% since I added it to the portfolio on November 13, 2017.

I am also keeping the Nektar August 17, 2018 Call options with a strike price of $90 in my Volatility Portfolio. These options are down 24% since I added them to this portfolio on February 25, 2018.

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