Let me preface this by saying that I am not bearish on NKTR. I’m scientifically bullish but skeptical from the side of an investment at this time.
With that said, a few comments on some of the things that often come up in NKTR discussions that I think can be confusing to those less familiar with biotechs.
“BMS knows something we don’t.”
Don’t overestimate what BMS knows because the risk is that you underestimate what other smart IO groups know. 214 is not something that was discovered out of the blue. It is an alternate delivery system (and a great one, at that) of a drug that has been around for years. Please trust me on this, these groups are also aware of what NKTR is holding, and NKTR didn’t show their hand only to BMS. As discussed below, if BMS thinks that the combination of 214 and 262 can reproducibly induce an abscopal effect in 15 -20 tumor types of human metastatic disease, then it’s worth $185B, not $1.85B. I think it was Fuma who nailed it on this. This is an insurance policy for Opdivo, and a smart one, at that.
“The holy grail.”
Possible, but extremely unlikely. If it is, it is the Black Swan of Black Swans. An important piece to the puzzle? Yes.
“The largest deal ever for a single drug.”
Well, sort of, but not exactly. CELG bought Receptos a few years ago for $8B for what amounted to a single drug. Pharmacyclics was a company that Abbvie purchased for $21B for a single drug, Imbruvica. So yes, BMS investment in NKTR is a lot for “parts” of a drug, but nowhere near what companies have paid for what amount to single drugs.
“The Abscopal Effect.”
The concept and observations are not novel in the IO field. The concept of making tumors “hot” resurfaced by James Allisons’ lab with IPI maybe 10-12 years ago. It was also recently published with a combination of IO drugs including a CD40 agonist in combination with some (forget which one) toll-like receptor. Stanford group, I believe. At any rate, it has been largely limited to mouse models of cancer, not cancers. I know that both we and mice are animals, but the model, to my knowledge, has only been observed in mice that are injected with tumor cells from cultured cells. NOT spontaneous tumors. Cell lines are great models for experimentation, but spontaneous human tumors and the mets they give rise to are a lot more complex than cell lines. This is precisely the problem with treating metastatic disease: even within a given patient, there are multiple forms of the disease each in their own environment and they have evolved precisely to thrive and persist in that environment. If fact, some of the variants of the mets have already been selected for their ability to evade the immune system. The concept is called immunoediting or immunosculpting. Bottom line: enthusiasm should be tempered until and when a group describes a reproducible abscopal effect in humans.
“Increasing efficacy in additional trials.”
Be careful, this can be very seductive. To my knowledge, 214 has yet to be tested with a control arm, so the appearance of increased efficacy is derived by comparison to historical trials. If I had a dime for every time that something performed better with each subsequent trial, I wouldn’t be investing, because I would be fully vested. In fact, I would interpret these findings to be a signal that they are getting better at selection against non-responders. This is good, right? Well, yes and no. An alternate interpretation (and my hunch) would be that there are more non-responders than anticipated, and they are getting better at NOT enrolling them. Not very holy grail-like.
Look, I’m not playing the naysayer here for the sake of being contrary, just trying to add some words of reason to a discussion that I think can be confusing to those with less biotech experience. As Saul, HeartDoc, and Chris have acknowledged a number of times, this is a risky play and they are obviously sophisticated and well-informed investors. To those who are less informed, be careful and above all else, have an iron stomach if you decide to get in. As the saying goes, all that glitters is not gold.