Thanks to HeartMD’s write-up of the Nektar Conference Call I decided to buy back in, and I took a new mid-size position all at once. And thanks to Chris for bringing Nektar to the board originally! I’m writing up a summary of my notes and why I am buying in. If you have any interest at all, or even any potential interest, I suggest you read through all the way to the end, as it makes an interesting read. We’ll start with:
A Post by Chris in September (with quotes from a conference call)
We’re very excited about the data from the ongoing trial for NKTR-214 in combination with nivolumab. As a T-cell growth factor, NKTR-214 provides a singular new mechanism in immuno-oncology. It acts as a biased agonist on the IL-2 pathway to expand specific cancer-fighting T cells and natural killer cells directly in the tumor microenvironment in cancer patients. It also increases expression of PD-1 on these immune cells
This positions NKTR-214 to provide clinical benefit to many patients who currently respond suboptimally to checkpoint inhibitors. Further, it can be administered on an antibody-like dosing schedule, with an exceptionally favorable tolerability profile in combination with a checkpoint inhibitor. There is simply no other IO cancer treatment of its kind in development.
The early data that show strong response rates in the first set of patients are exciting…
Nektar and Bristol are continuing to enroll patients in the expansion cohorts in the Phase 2 stage of the PIVOT trial across multiple tumor indications. Enrollment is proceeding rapidly, with approximately 50 patients already dosed in the expansion…
The preclinical data for the 214/262 combination are particularly compelling. We are on track to file the IND for the combination trial of NKTR-262 and NKTR-214 by the end of this year in order to dose our first patients in early 2018. As a novel small molecule TLR agonist, NKTR-262 was designed specifically to be administered with NKTR-214, and, most importantly, would give Nektar our first wholly owned combination regimen in IO.
Then, from a long MF article:
They reported some data for this drug for solid tumors in combination with a drug called Opdivo from Bristol-Myers.
NKTR-214 activates cancer-fighting T-cells, while
Opdivo unmasks the cancer cells by hijacking the PD-1 protein, which is what usually helps cancer cells hide from the immune system.
Thus Opdivo uncovers the cancer cells while NKTR-214 activates the T-cells.
Together, they’ve shown pretty stunning efficacy across a bunch of different cancers. There was 91% disease control rate in melanoma, 85% in kidney cancer. In lung cancer, 75% of the patients studied responded, with one complete response. And the safety looks good so far, which is pretty awesome…
And what’s really intriguing about this is, not only does NKTR-214 boost the T-cells and the natural killer cells in the tumor microenvironment to help destroy it, it also increases PD-1 expression, which helps make Opdivo work better….
The other thing that’s interesting were, these were Stage IV cancers. They weren’t easy to treat…
So, I think people are looking at this and saying, wow, if this NKTR-214 Phase II study keeps going as well as what we’ve seen …(we have to tamp down some of this enthusiasm, because we don’t really know for sure how it’s going to pan out over time)… it could be a really important and intriguing drug …
Another take by Chris
…2) NKTR has a VERY promising and broad I-O program. It has several drugs that can work in combination with other NKTR drugs or potentially with ANY checkpoint inhibitor for treating oncology. All of NKTR’s compounds are easy to produce and do not require customization for each patient (unlike KITE’s and JUNO’s). NKTR has a chance to partner with any or all of the biopharmas that are developing checkpoint inhibitors.
Many of NKTR’s drugs enhance the immune system to become more effective in fighting cancer without causing the cytotoxicity that plagues many I-O therapies. In fact, in partnering with NKTR, other companies’ CAR-T programs may be better tolerated.
NKTR’s approach includes making a tumor hot which means that the tumor becomes visible to the immune system so it can be targeted and destroyed. Interestingly, tumors can be made hot even if they lack the important cell receptor that other therapies have needed to be present. This means that NKTR can enable other drugs to work better: more co-therapies, more partnerships in the future…
Then in January, HeartMD discussed the mechanisms of these meds very cogently and Chris followed with
Of all the drugs in their pipeline, I think NKTR-214 offers the most promise. It can potentially work synergistically with many different checkpoint inhibitors and on top of that it can turn ineffective checkpoint inhibitors into effective therapies. There is potential for many partnerships here.
I haven’t considered NKTR as a buyout target. It’s possible, but I think NKTR can become much more valuable as a stand-alone company.
Then, a week and a half ago HeartMD summarized the most recent conference call. This was what decided me to go back in. Here are some excerpts from his post. Read them!
(I, Saul, am skipping the discussion of Nektar-181, the relatively non-addicting opiod, as a done deal at present, but peripheral to the story…)
NKTR-214 – CD122-biased agonist, designed to stimulate the patient’s immune system to fight cancer
Compelling results in clinical efficacy and safety has led to the collaboration with Bristol Myers Squib (BMS)
The collaboration will allow rapid and broad development as backbone of cancer care across multiple indications.
The collaboration does not prevent other collaborations with other companies/cancer agents
Nektar will book all global revenues and keep 65% of global profits
Upfront payment of $1 billion and premium equity investment of $850 million at $102.60/sh
Nektar maintains pricing and distribution control
Collaboration commences 2Q 2018
The collaboration puts Nekatar in a very strong financial position to develop N-214, (and other meds in the pipeline)
It will initiate 20 studies with BMS, 15,000 patients in 9 tumor types
All will start within 14 months of collaboration commencement
First two Phase 3 studies will start 2Q 2018 in melanoma and renal cell carcinoma
They then gave updates on the response rates to N-214 in the PIVOT study, which improved from 46% at initial presentation last year to 57% later, but has now increased to 71%.
In all cancers studied, response rate is now 60% among all comers that are PD-L1 negative
NO DISCONTINUATION DUE TO ADVERSE EVENTS related to treatment!
2nd Phase involves 330 more patients with 5 different tumor types by end of Q3 2018
Adding 3 new cohorts in 2Q 2018: colorectal, gastric and small cell lung cancer
They plan to initiate additional collaborative agreements with other anti-cancer agents this year
Other potential uses for N-214 are promising in pre-clinical studies including vaccines
NKTR 262 - They also seemed very excited about the potential combination of N-214 and N-262 with and without Opdivo, and listening to them got me excited as well. 214/262 combo trial starts this month with plan to enroll 400 patients with 8 tumor types. Initial data expected 4Q 2018. They don’t talk much about NKTR-262. It’s difficult to find a lot of information on it.
NKTR-262 is a small molecule agonist that targets toll-like receptors (TLRs) found on immune cells. It is designed to overcome the body’s dysfunction of antigen-presenting cells (APC), such as dendritic cells, which are critical to adaptive immunity and create antigen-specific cytotoxic T cells. In preclinical, a single intra-tumoral dose of NKTR-262, administered in combination with NKTR-214, resulted in complete abscopal effects in multiple tumor models.
Saul’s comment: The abscopal effect is a phenomenon in the treatment of metastatic cancer, where localized treatment of a base tumor causes not only a shrinking of the treated tumor, but also a shrinking of metastases throughout the body. This is very exciting results!!!
My take (Saul) was: This could be very, VERY big. This could become a HUGE company. I will buy back in.
Look at the difference between this and Kite, for instance. Kite’s medication had to be custom made for each patient. This meant, they had to draw blood samples, send them back to a central lab, do whatever they had to do to the T-cells, and then send them back to be re-injected into the patient, some weeks later. This made the cost very high. It had dangerous, life-threatening side-effects potentially, and people who took the medication had to expect to get very sick from the medication for a while. This was pretty much their main medication that had made any progress. But they got bought out for $7 billion.
On the other hand, Nektar-214 can just be used off the shelf, in combination with a lot of other companies’ medications. It has practically no severe side-effects. It has a very high response rate. And in combination with Nektar’s own Nektar-262, it can potentially wipe out metastases throughout the body. Wow!!! If this pans out it will be a jet plane compared to Kite’s hand-cranked Model-T Ford.
And now, last Friday, in case you thought this was all a mirage, Nektar gets put into the S&P 500!!! Put into the S&P 500!!! You heard that right!!! This is no longer a little no-name company like Kite or Juno or whatever. It’s replacing Chesapeake Oil in the S&P ! Can you remember when Chesapeake was a big deal, and no-one had ever heard of Nektar? I can. How the world changes.
And let’s not forget that $1,000,000,000 up front payment from Bristol Myers! A billion dollars! That’s a thousand million. And it’s not even an exclusive! And Nektar retains control of just about everything. And Nektar gets 65% of global profits. It sure sounds like Bristol felt that Nektar had something valuable to sell, and that Nektar was in a good negotiating position, doesn’t it?
At any rate, after reading HeartMD’s post and reviewing my notes on Nektar, I started buying last Monday (Mar 5) at $96 for my lowest price. It was after I spent part of the weekend (Mar 3-4) evaluating all the above, especially HeartMD’s latest summary of the CC. I was fortunate because Nektar had pulled back some from its big run up after earnings. I kept adding all of last week, all the way up to $109. I added my last bit this morning in the pre-market.
I think my pattern of buying illustrated three things about my investing style.
First, I had sold out in February, but I didn’t hesitate to change my mind.
Second, on price anchoring. I knew that the prices I was buying at were higher than where I had sold out in February, but I didn’t even bother looking up where I had sold. It was irrelevant to my current decision. And I certainly wasn’t going to wait around in the hope that the price would get back down to take my position. (I just looked up my February exit position. It was roughly $76).
Third, I was happy to keep buying as the price moved up. It validated my decision to buy. After the run-up after the earnings report, some people took profits, pushing the price down to $96 from an intraweek high about $105 the week before, but then the upward movement started up again.
I hope that this will be a nice long ride.
Best to you all,
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