Nektar - Where I stand currently.

Nektar, where I stand currently:

I bought back into Nektar at about $103 in the beginning of March. In May it fell into the $70’s due to what seemed to be irrelevant negative results by other companies spilling over, and Nektar started bouncing back. There had been no negative company-specific news from Nektar, or about Nektar, or any news yet from the key study that has just begun. They had had a terrific conference call when they released March quarter results, which which I wrote up on the board. I was feeling more and more confident. When the price fell on what we considered to be that misunderstanding in May, I added small amounts at around $79. But then they reported preliminary results at the ASCO conference in early June, and the price sold off again, enormously, into the low $50 range. Again we felt, for what still seems like good reasons, that Nektar’s results had been misunderstood, and I added some more more on the way down.

Then I started thinking about it, and I decided that one misunderstanding was one thing, but two misunderstanding was something else again. And here was Nektar, with what was an 8% position in my portfolio, with hopes of becoming a category killer some day (and which may well become one but who knows for sure), and MongoDB, with only a 3.7% position, which already was a category killer, and was proving it. That didn’t make sense to me. I decided to sell back all I had added to Nektar on the basis of the “misunderstandings” and add it to MongoDB instead, which I did in the last few days.

So right now I have a 5.8% position in Mongo, and a 4.0% in Nektar, and that suits me better. If N-214 comes through Nektar will probably triple in short order, and 4% will be quite enough. If N-214 doesn’t come through, Nektar has multiple other possibilities in its pipeline, and I don’t see it really dropping much from here, but I could see it stagnant for some time while we wait for intermediate study results. (Personally, I believe N-214 will do just fine, but this is June, and the next test results aren’t even scheduled to be released until November. Yes, 4.0% is probably enough for now.)

And I am happy to currently be up almost 49% year-to-date in spite of the 50% haircut on Nektar.

Best,

Saul

70 Likes

Biotechs suck! It is why I held Nektar for two days and then let it go. I can no longer stomach owning a developmental stage biotech. KITE was a rare exception to the rule of the cycle of developmental biotechs, that almost always involve a precipitous crash that I call the Martha Stewart phase of the cycle.

There is too much dicing of data that we are not experts to dice, and then the experts who do dice the data use too much rule of thumb and overlook real opportunity often, and then there is sitting around and waiting, waiting, waiting, waiting, and besides the volatility being off the chart, it just is plain not fun!

The only successful biotech investing I have ever done (with one exception - and I have done 4 or 5 very successful biotech investments, most had more drama then you will find on an hour of Dynasty) involved buying during the bottoms of the Martha Stewart phase, going against the conventional wisdom due not so much completely to the experts being wrong in the data, but being wrong on the drug’s place in the world.

Such as with Tysabri with ELAN, it produces, too often, a killer virus that attacked the brain. Yet, at the time, there was nothing even close to treating MS, and it is a patients choice whether to let MS destroy their bodies, or take the risk (relatively small risk still, but material) to slow down or even stop (and in some cases reverse) the MS damage. The drug had to be approved, and one could see that in MS social forums.

Vertex was the one exception where you buy it low, and it never hit the Martha Stewart phase.

Still, as Cramer said, “everyone has already sold.” I am not sure of that, as there are boring streaks of time with nothing happening and share prices of stagnant developmental biotechs had drift lower, but then you get pissed when unexpected good news comes out.

The nature of biotechs. The next phase, and the phase that usually follows an accomplished biotech is a huge recovery. But I am not ready to even look at that possibility at this time. There is time. And as you say Saul, with companies that already are category killers (and I have called it the Mauser doctrine, why investing in biotechs when we have nascent category killers to invest in, not to mention monsters like say a Nvidia (for those choosing to do so) I am not too motivated to go through the emotional rollercoaster and pain that biotech investing entails.

Kite was a very rare exception. I have not looked, but I have read a few posts that indicate Kite’s drug has, to date, not sold well, but that is irrelevant to the shareholders here who did very well (post approval biotechs creates yet another phase in the developmental biotech life stage - and I won’t bore people with what that stage entails).

Tinker

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Biotechs suck!

I learned my lesson with ACUS. You don’t invest in biotech startups… you gamble.

I hope you’re right, Saul. I came to the same conclusion a short while back and reduced my full position to a rare 1% lottery ticket “just in case.”

I’m used to betting against the herd, but I try not to bet with insufficient evidence the herd is wrong, and that’s what I determined I was doing with NKTR. Anyway I feel I’m now on more stable footing with my NKTR proceeds in a new-to-me position in TWIL, in spite of it’s huge recent runup.

This was my biggest realized loss in years but looking to the bottom line, I have no reason to complain and have no regrets whatsoever.

What an exciting time to be an investor and what a great place this is to do it.

Dan

2 Likes

Yeh I don’t think I’d ever go that large in a discovery stage biotech. On MungoDB I’m waiting for Mungo DB 4 to get commercial release signs of success before I go all in as a category killer. I might miss out on some gains but at the moment version 4 is only on trial release.

A

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Ant

U r right MongoDB needs to make some more progress. Lots of red ink it mite b a better buy higher up.

Rizz

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As I’m slowly transforming my portfolio I jumped in on a ~1.5% position after the big drop. It’s speculative in my book, and would be the first biotech lottery ticket I’ve hit in three tries. But then one winner should cover several tickets…

Carpe Diem!

I only had a starter position in NKTR at 102.40 because I know biotechs are volatile. Having been through the DNDN wars I know I could lose a substantial amount. I never added on the way down. Today NKTR had a downgrade and it did not make new lows. So I doubled my position at 52.56 that brought my average down to about 77.50. This add is on a short leash with a stop loss at just under 50. I figure my risk for this tactic is about 2.50 to the downside and multiples of that amount upside. If I stop out I have not really lost much more. If the stock recovers from here getting to a profit at 77.50 is a lot more probable than 102.40. This stock is the only stock I have in a negative position. I think the risk reward for this strategy is good.

Rob

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Neat idea Rob, but couldn’t you find something that would gain more in the same time? I wouldn’t know, just thinking. I am stuck with an average of about $90 and I figure I’m just going to leave it to remind me never to buy biotech heh.
I’ll give it a year.

I’m at 19.41% year to date and 32.34% last 12 months. So by the end of the year I will be ok. Expecting more than 25%-30% for the year would be presumptuous seeing as how I just started on this wild ride of MF/Saul/NPI influenced decisions. I don’t regret one moment. I am grateful and slowly learning participant. Great place to be.

Rob,
also, I got slapped around for my little girlie idea of putting a stop over the Memorial Day at $90 when it was at $92. So I left it alone and glad I did because it dropped to $67 before the market opened. Which might happen with your stop. We assume a stop will sell at what we set it at, but not so.

Kite was a very rare exception. I have not looked, but I have read a few posts that indicate Kite’s drug has, to date, not sold well, but that is irrelevant to the shareholders here who did very well (post approval biotechs creates yet another phase in the developmental biotech life stage - and I won’t bore people with what that stage entails)…

There is too much dicing of data that we are not experts to dice, and then the experts who do dice the data use too much rule of thumb and overlook real opportunity often, and then there is sitting around and waiting, waiting, waiting, waiting, and besides the volatility being off the chart, it just is plain not fun!

Good point on the dicing! Perfect example was KITE! Kite was an example of investing in momentum, hype, & speculation; sound clinical efficacy or trials mmmmmmm not so much. To think that gains made in KITE were because of “good biotech investing” is incredibly dangerous, and a great way to lose money way more often than not!

The same can be said for CRISPR investing and many gene-editing companies. Sure, you can ride the wave / rumors, but eventually the shoe drops. Are you feeling lucky?!?!?

It ultimately remains to be seen where NKTR stands, and I think the next place to look where NKTR may truly be efficacious is to look at the prior IL2 data and where IL2 succeeded and where it failed; and how close NKTR mirrors their efficacy & timelines of “delayed response.” … I have yet to truly look at this, but if IL2 was fantastic save for ADRs and NKTR kept dropping, well then, there’s the WoW (or is it FUD now, I forget…) that NPI was famous for point out.

I’ll probably leave some momentum / speculative opportunity on the table, but I’m crappy at timing markets!

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Apparently some insider buying may indicate that there is a chance that FUD exists. I save WoW for less dire circumstances, say Nvidia and the worry of competitors interfering with a good thing. Still have not seen any. In fact Nvidia seems to be stretching its lead at a pretty dang good pace. As the worry of this slowly fades, little by little, Nvidia climbs that wall of worry, which, as our discussion on valuation indicates, there is quite a large Wall of Worry to climb at present despite Nvidia being near an all time high.

Pretty fantastic for a stock to get cheaper even as it climbs. Unbelievable that analysts still have EPS growth at 29% for this year and only 9% for next year.

But I am off biotech topic of course. As I have posted many times, we are in the Martha Stewart stage, and what happens almost every time with a biotech with real drugs, and multiple paths to market with multiple drugs and indications, within 18 months it suddenly seems silly that some idiot CEO and celebrity friend (over $150k, when one is a billionaire) sold out and went to jail, when the drug inevitably was approved and the share price soared within a year or so.

Happens most of the time with a company situated such as Nektar. That is unless the drugs really do not work. We know 181 works, but 181 does not support the current valuation, but does create a floor. But what most investors here do not understand is that 181 may not be as valuable as we think do to its drug category, and due to the extensive sales network and possible liability concerns associated with the drug.

The deal that NKTR is able to strike (if they are able to strike it) will tell the story on 181. Can they find a partner willing to go 50 50 instead of low to mid digit teens in royalties and milestones?

Given NKTR’s ability to hammer out incredible deals, if anyone can hammer out a great deal here it is probably NKTR.

Anyways, with NKTR, unlike the other biotech’s I have invested in, there were large unmet needs with either no real competitors or competition was inferior and over a year behind. Here NKRT is in a very crowded market, at least with 214.

All is to say, the stages will probably play out here. I am not wiling to invest at this valuation myself. But one good surprise on 181 or 214 will start the price to climb again. But not something I need in my life now.

Biotech’s suck!

Tinker

7 Likes

I must have read your mind Saul
I trimmed nktr to add to mdb a few days ago as well
Thanks for the update

I’m amazed but I just checked and I am up exactly the same as you in one account 49%
“Only” 26% in a smaller account
But I am over the moon with these results
Thanks again Saul (and all contributors to the board)

Here is a bullish Nektar article from Seeking Alpha. The author expects $200 within the next few years.

Nektar Therapeutics: In The Midst Of A Difficulty An Opportunity Arises https://seekingalpha.com/article/4180972?source=ansh $NKTR

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“Neat idea Rob, but couldn’t you find something that would gain more in the same time? I wouldn’t know, just thinking. I am stuck with an average of about $90 and I figure I’m just going to leave it to remind me never to buy biotech heh.
I’ll give it a year.”

MoneySlob,
I have excess cash and my original buy was small so this is just tactical. I am giving NKTR some time and will reassess if the $50 is broken. As I said I think the risk reward is good. I should know soon if this is going to work because price will likely either break the 50 or drift up in the next month at the most. So this is not going to tie up money for long unless she drifts up, then I am prepared to wait to the end of the year. On a related foray my FMI is up about $30 in less than 2 months which eases the pain.

Rob

1 Like

Moneyslob,

I daytrade besides being an investor. So this is my job and I am at my trading station from premarket to aftermarket every day. So I can adjust to changing situations. At Schwab stop losses do not trigger pre or post market so changes can be made before the market opens.

Rob

Hi Fellow Fools,

Long time lurker and learner here (RB subscriber since 2001). First time posting to this board. This place is remarkable, as we all know - but I’m going to say it one more time anyway. Thanks to Saul and all the regular posters. My portfolio is something I always felt I should pay more attention to and now I do, because this board has made it fun… a hobby really.

When I’m in the company of smart folks, I tend to keep my mouth shut. But! Here’s my meager contribution for today:

I stayed out of Nektar for 2 reasons:

  1. I’ve never been able to make money on a Biotech stock (unless you count ISRG - that’s my kids college tuition right there). The “lottery ticket” analogy seems right to me. But it was a popular stock on this board, so I looked into it. Which leads to…

  2. Investing Rule Breakers-style taught me that the leadership team/track record, is one of the most important things, especially investing in companies not making a profit yet. A search of the company that Nektar’s CEO founded and sold to Merck for a billion dollars (Sirna) showed it ended up being worthless. Maybe that’s not his fault, but the phrase “smoke and mirrors” came to mind.

Best,
Apt21

16 Likes

There is too much dicing of data that we are not experts to dice, and then the experts who do dice the data use too much rule of thumb and overlook real opportunity often, and then there is sitting around and waiting, waiting, waiting, waiting, and besides the volatility being off the chart, it just is plain not fun!

As I’ve been thinking about it more I think Tinker is correct. Even if in five months they have better results, the analysts will pick at it, and dice it, and find fault, and compare it to Merck’s compound, and on and on. And it will be a long time until Phase 3 studies are complete, and longer still until they can submit, and longer still until they get approved, and longer still until they start making significant money from N-214. I think I was carried away by visions of pie-in-the-sky.

Saul

18 Likes

That’s it
NKTR is gone from the portfolio.
But isn’t everything else sure looking purdy today!?