Nektar - New position discussion

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.

  1. 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.

  2. 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

  1. 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.

  2. 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


  • 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,


For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776.
We had to post it in three parts this time.

A link to the Knowledgebase is also at the top of the Announcements column
that is on the right side of every page on this board



Do you feel that your previous life as an MD aids in evaluating opportunities in the biopharma space?

My take (Saul) was: This could be very, VERY big. This could become a HUGE company. I will buy back in.

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.

The price anchoring effect with this one could be very strong if a person were to focus too much on looking back at the price at the beginning of November (under $25/share!!), which was part of my problem with this one (along with spending my attention units elsewhere). However, looking forward is all that should matter. Sounds like 214 especially could have a massive impact on the world…in which case the present $105-106/share will have been a bargain.

I’m leaning strongly towards finally starting a position, partially because of Saul’s post, and partially because I saw a very interesting chart over the weekend associated with the progress of cancer treatments. Here’s a link to my tweet(s) associated with the chart of cancer treatments (first link can quickly get you to the other 2).

Also for quick reference, here are GauchoChris’s 2 threads on NKTR from back in early November.
Nov. 7, 2017:…
Nov. 8, 2017:…


I’m leaning strongly towards finally starting a position,

The deed is done…and in conjunction with my starter position (under 2.3%; not a medium position like Saul’s, which I would guess is likely in the 5-8% range), I have finally expunged Under Armor from my portfolio. UA had been my worst-performing Motley Fool recommendation by quite a bit.

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I flushed UA when I heard that teenagers preferred other brands.

Sounds like 214 especially could have a massive impact on the world…

Hi volfan. And that’s if we’re only half right.

in which case the present $105-106/share will have been a bargain

That’s the way I’m thinking. It may require some patience though.

Saul, maybe you want to wait until the end of the month, but what existing position(s) did you reduce to buy a mid position in NKTR?

Saul, maybe you want to wait until the end of the month, but what existing position(s) did you reduce to buy a mid position in NKTR?

I’d rather wait, because I didn’t have good reasons for trimming any of them, I just liked the idea of getting into Nektar better, and I don’t want to have anyone panic because I may have trimmed one of his or her favorite stocks.




Now I’m panicking because you won’t tell us…okay, just sold everything. I feel better now.

I’m kidding, not panicking, but I am eager to see which you trimmed (I trimmed a couple as well and want to see if I’m learning the Saul way!).


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You really should do you own DD and not as Saul has mentioned on numerous occasions to blindly just follow him, it puts him on the spot.


It’s not about blindly following him. But not all of us have a finance background or the ability to evaluate companies on our own. Part of being a smart investor is knowing what you don’t know. And that means making a judgment about whose advice to follow… whether that’s Saul, David and Tom, Warren Buffet etc.

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You can definitely get into trouble when you think you are smarter than you are. I am very grateful for this board and use it as an educational tool. I’m not the smartest but I do have some degree of determination and try to judge companies myself and see if it match’s up with what some more experienced/smarter guy’s have on here. Not being in the investing business this is a GREAT opportunity to learn! So do your self a favor and don’t take the easy road, do the work and take advantage of the situation. Hopefully someday I can be so confident with my results and analysis to help out too.


In my post you referred to I said I wasn’t adding anymore for now. Well, for now ended. It is now a 5.8% position for me after adding at $103. After much thought, I believe this is a good place to buy in given that the Bristol deal provides a decent psychological “floor” if you will, given their purchase price at $102.60. It may go sideways for a while from here barring any news. Heck, there may even be a better entry position along the way and if there is I’ll likely add more but will limit it to 8% or less going forward until we start to see some more data. I sold some Netflix and Amazon which were both at or near all time highs to add to my Nektar position. Those Netflix shares were hard to depart with as I’ve owned them since 2006 (and it’s still a 18% position for me) but that’s how much I like Nektar.


Long all stocks mentioned


Congrats on sticking with a big NFLX position all this time. I bought in 2008 and more in 2011 (on the dip), but sold half in 2015 figuring it was overpriced. D’oh! It will take a lot to get me to sell the other half. When I want to buy something I don’t even consider selling it.


From Saul’s post
“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.”

So I went hear to see what a pivotal trial is:…

If I am understanding this correctly a pivotal trial will make a drug available to market while phase III trials are ongoing, is that correct? Or more directly I am wondering how long it might be before this will be approved by the FDA.
I am also trying to determine how common failures are when a drug reaches this point, still researching that.


so I went here not hear
My lame excuse is that it’s early HERE

I just bought in a starter 2% position. My rationale was threefold:

  1. I’m under-weighted in medical or medical technology companies
  2. Saul likes it
  3. I have a close family member who’s spent 30+ years in pharmacology/chemistry research - and most recently been the CRO for a drug discovery company. Although he knows even less than I do about investing, he knows his drugs. He was quite optimistic on the long term prospects for the kinds of drugs that Nektar is designing.

This is what he told me…

(Their drugs) activate T cells and make them grow … to attack cancers, so overall it’s a good long-term strategy … I think that these new drugs are actually antibodies, which are large proteins (not small chemical molecules) that stimulate T cells.

With my luck, I bought at today’s high - but maybe my next 2% purchase will be below $100 :-).



Apologies for the shortness and lack of additional insight that will be included in this post, but I saw that Nektar is presenting at the Cowen Medical conference that is occurring this week. Per their IR webpage, they present tomorrow morning at 8 am.

Could be a slight potential catalyst, I would think, depending on what all their presentation includes.

Louisiana Fool,

I think you are correct that a pivotal phase II trial could lead to approval for clinical use. I think the results have to be quite compelling since they are foregoing a (hopefully) rigorously powered comparison with either placebo or an active agent.

Clinical trials site:

Page for this trial:…

From the trial page:
Actual Study Start Date : October 2016
Estimated Primary Completion Date : October 2018
Estimated Study Completion Date : October 2018

I am not familiar enough with studies / approval to know if anything is likely to come out before then.




Thank you for the informative (if not passionate) write-up on NKTR. It is clear you are experienced in this field, and can use that experience in your drug/company/investment analysis. Very interesting, and trying to assess/justify my own investment thesis further.

After I read your post, and the resultant thread, I was feeling there was a relative void of financial data/projections supporting the investment thesis. When reading your investment rationales, I am accustomed to hearing you reference the company’s financial model, results and run rate as the core backbone of your investment thesis. Unless I am missing something, I do not see that type of data in your investment dialogue for NKTR. I do realize that is somewhat par for the course in biotech/pharma investing.

This is not to say you ignored the financial analysis, or are acting less than the logical investor you are, but I thought I would ask about how you are thinking about your financial analysis and a 3-5X+ return on this investment. I remember back when many of us invested, perhaps aspirationally, in Solazyme. There was much commercialization and financial execution pending, and the investment itself was not dissimilar to earlier stage biotech investing. I reference that investment not to suggest this has those speculative traits, or to suggest I invest in more proven, later stage companies as I most certainly do not (as TSLA, OKTA, AYX, ANET, UBNT, SHOP, BZUN are some of my current core investments). I am rather wondering how to think about NKTR’s current valuation (>$16.5B) in relation to the company’s pending commercialization of its pipeline and regualtory risk. I am trying to better grasp the path for our stock investment’s material appreciation from here. Ultimately I too would love to complete my analysis and conclude that the valuation is cheap now given the (a) massive potential of its drugs, pipeline and (b) Bristol’s enormous investment, but still feeling like I to model out the financial reality and potential more before pulling the trigger.

Hope this makes sense and thanks again for your willingness to share your investment decision and context.



This is not to say you ignored the financial analysis, or are acting less than the logical investor you are, but I thought I would ask about how you are thinking about your financial analysis and a 3-5X+ return on this investment.

Hi Vic,
Little bio-techs are never more than a small part of my portfolio, and since they usually have little or no revenue except grants and up-front payments from large pharmas, I do actually ignore the financial numbers and invest based on how successful I think the company can be. (And I can always change my mind).

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