Nektar Hammered On Multiple Setbacks; Core Efficacy Questions Remain Open

The last three months have been rough for Nektar Therapeutics (NKTR) and its shareholders, as the company announced significant manufacturing issues with its key lead drug, as well as a substantially reduced clinical partnership program with Bristol-Myers (BMY). On top of all that, there are still valid open questions as to whether that lead drug (bempegaldesleukin, or “bempeg”) even has a durable clinical effect.

There are very few sure things in biotech, and Nektar is no exception. I’m guardedly positive on the potential of bempeg in melanoma, but cannot rule out the risk that the ongoing pivotal study results in failure. Likewise with other late-stage clinical programs like renal cell carcinoma. While Nektar does have other products in the pipeline, they’re all early-stage and unproven, with relatively low risk-weighted probabilities of success. I do believe a risk-weighted approach still suggests Nektar is undervalued, but this is a high-risk biotech and a lot is riding on incremental clinical updates between now and the end of the year.

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Nektar Hammered On Multiple Setbacks; Core Efficacy Questions Remain Open