I recently took a starter position in Nektar Therapeutics (NKTR) after hearing about it on this board (GauchoChris). I did this to put pressure on me to do some DD.
As a start I listened live to the CEO presentation that just occurred at teh JPM conference. I was thoroughly impressed and did not fully appreciate the opportunities that lie ahead for this company in numerous areas (immuno-oncology and pain management). I was particularly impressed and excited about their Nektar 214 compound that may revolutionize cancer treatment in populations in which therapeutic options are very limited (this drug can produce profound responses to treatment with other compounds). To me this has potential to open avenues to being an agent used in co treatment of numerous forms of cancer and could be an absolute game changer in cancer treatment.
For anyone interested in this CO I think 30 minutes spent listening to the webcast is a good use of time including the separate Q&A session.
Woah, from about $25 in early November (after being essentially in the $17-18 to maybe $26/share range since mid-March 2017) to now being well above $65/share. Big ramp up started November 7th, and has been pretty steady since until today’s huge spike.
What was the early November catalyst?
When did Nektar first get brought to this board?
Somehow I missed putting this one on my watch list (partially due to not wanting to simply blindly follow Saul), but a 150% gain since early-November is impossible not to induce a smidgen of FOMO (fear of missing out) and definitely makes me want to better refine my own radar/stock-picking-process. Of course, I have to remember that I can’t own everything, and keeping a streamlined/concentrated portfolio will mean missing out on a ton of great companies/ideas, keeping the FOMO to reasonably low levels.
NKTR is about 6% of my portfolio, but it was closer to 3% when I bought it. I didn’t have any deep insight. I just thought that their pain drug will probably get FDA approval (I think sometime in April is the speculative date). With more folks dying of opioid addiction than car crashes I figured that they won’t be able to make enough of the stuff to meet demand.
After Bulwnkl introduced FMI to the board I took a small position in it. It’s now about 3.25% of my portfolio. I also bought calls which I’ve cashed at over 350% profit at the close of the market last year. They expired on Jan 19, but I wanted to cash them before January. I think there’s a psychological thing about what happens to time value once an option enters its expiry month. Its end date just seems more imminent. Gut feeling, I’ve never studied it to see if this is true. I don’t trade options often enough to bother with the research.
Nectar has a market cap of around $9B, that makes it quite a stretch as an acquisition target. Foundation comes in about $2.4B, a likely target.
Just for giggles, I also hold a 0.25% position in VBIO. A biopharm that uses the active ingredients in marijuana (THC and CBD) to formulate prodrugs (a substance that becomes therapeutic once in enters the body. Also, their process either reduces or eliminates the psychotropic qualities of THC). They’ve developed what appears to be an effective orally administered treatment for IBD. They also have a pain medication in the works which is supposed to be particularly effective for neuropathic pain (that’s what I’ve had for about 20 years), but it requires IV administration. Vitality has a market cap under $500M.
In general, I’m very leery of pharma companies. But I did cash in with Kite last year. I don’t know how these developmental drug companies really operates, but it seems like most of them are invitation to lose money. IMO, they’re nothing but a black hole that sucks up money if and until they produce something marketable.
I just listened to the NKTR presentation by the CEO (at JPM Healthcare Conference today in SF). All good news. All clinical programs are on track with good efficacy and minimal side effects. the presentation provides a great overview of the clinical program so it’s a must-listen to any investor or prospective investor.
Brittlerock suggested that a $9B valuation may be too rich. I think he may have meant that his reason is that it would be too expensive to acquire or not offer enough upside if it is acquired. I’m not sure if I agree. I don’t think the one can compare GILD’s acquisition of KITE for about $12B as a benchmark.
How is NKTR different?
NKTR has just about finished clinical work on NKTR-181 for pain and I think it’s very likely that NKTR will get FDA approval this year. This could be a blockbuster because it offers an effective, non-addictive drug for pain which does not exist (and there seems to be no competition close to approval). Not only is this market enormous ($60B/year), but addiction and deaths from opioid meds is an epidemic.
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 (like KITE’s and JUNO’s therapist do). NKTR has a chance to partner with any or all of the biopharmas that are developing checkpoint inhibitors. Also, the trials can
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 an important cell receptor that been important to be there for other therapies to work well. This means that NKTR can enable other drugs to work better: more co-therapies, more partnerships in the future.
NKTR can also target a multitude of autoimmune diseases (Lupus, RA, psoriasis, etc.) by keeping the immune system from going haywire without shutting it down. Many of the current therapies reduce the effectiveness of the immune system in order to control the symptoms of the autoimmune disease. NKTR’s early data looks compelling.
If you listen to Howard Robin’s presentation the above (1-4 will become clear). GILD paid $12B for one approved drug that costs a fortune to manufacture because it must be customized for every patient. I think NKTR’s I-O program alone is worth more than $12B in an acquisition. I have no idea how much NKTR-181 for pain will be worth if approved but I wouldn’t be terribly surprised if that drug will be worth several multiples over the current market cap (I’m guessing). The autoimmune potential is a bonus but if it turns out to work well with a good safety profile then you have potentially a number of blockbuster indications.
Was there a post on here months ago that mentioned how promising and diverse all those paths for Nektar sound? I must have missed it.
Yes, I agree that it sounds more promising, and the data that has come out since I bought make me feel more confident that several of their drugs will get approval within the next 2 years. I posted my portfolio on 9/14/17 and someone asked about NKTR. I had purchased all my NKTR shares between Aug 28th and Sept 7th at prices between $18.97 and $22. I have not bought or sold any since then. It was my smallest position (I think around 1.5% or so), but it’s now at more than 4% just due to price appreciation.
There have been several threads on this stock since November, GC was the first I remember. After a lot of reading and talking with professionals (med and science not stock) I became very intrigued, especially with NKTR-181.
NKTR has partnered with several larger pharma companies on compounds but is the sole owner of NKTR 181. The FDA fast tracked the study. Those I have talked with indicate this could be a blockbuster.
As an MU-Opioid, if it can addresses many of the uses of existing addictive opioids such as Oxycodone it could have a very large TAM. NKTR could get the bulk of the profits not just royalties.
Currently I think NKTR has finished last patient/last treatment part of phase three and has locked its database. It is preparing results from its 600+ patient study with an April target.
A non addictive pain opioid, if approved, could be huge.
NKTR is not a one trick pony it has multiple trials various stages with multiple drugs. It is also the sole owner of NKTR 214 which is also in phase 3.
I took a half position in mid November, it has grown to a full position. Because of the risk I usually trim these types of stocks by now. I may get slaughtered but I want to see the story play out.
November conference call and the JPM conference slide both confirm that they still plan to find a partner for 181
I can tell you that as I said earlier, we’ve had discussions – intense discussions with the White House Members of Congress and all the parties that are principally involved in dealing with his opioid crisis and I think there’s a general high level of interest in Nektar-181.
That said Nektar has evolved into an immuno oncology company if you look at our portfolio in immune on immuno oncology with 214 and 262 and 255 and I’m not even discussing the things that we have at the preclinical stage prior to that. I think we clearly plan to find a partner for Nektar-181.
We don’t intend to become a pain company. We’re focused on immuno oncology and therefore a partnership on 181 is still absolutely in the plans.
That said, 181 is a potential blockbuster. Hopefully they can negotiate a great deal for 181 and retain the bulk of the profits rather than a few % from royalties.
They’ve got an incredibly exciting pipeline. With 181 looking like it could come to market relatively soon (in relative terms here!), that should put a massive damper on the cash-burn from R&D and allow NKTR’s IO pipeline to develop.
the first long-acting, selective mu-opioid agonist designed to provide potent pain relief without the inherent high levels of euphoria which lead to abuse and addiction with standard opioids. The novel molecular structure of NKTR-181 is designed to have low permeability across the blood-brain barrier in order to slow its rate of entry into the brain and attenuate the dopamine release that underlies euphoria. NKTR-181 is the first opioid molecule to exhibit reduction in specific CNS-mediated side effects, like euphoria and sedation, through the strategic alteration of brain-entry kinetics. In addition, NKTR-181 is designed with an inherent 12-hour elimination half-life to enable twice-daily dosing with continuous pain control.
IOW , it is an opiate
Paste history shows that several opiates were introduced as “non habit forming non addicting” but later turned out to indeed be addicting. Even if only very slightly so, or if so only when overdosed. The Federal bureaucrats will seize any opportunity to increase their power by over regulation.
I guess I wasn’t very clear. I didn’t really mean that at $9B NKTR was out of reach as an acquisition. Most certainly there have been a ton of M&A with higher price tags. What I did mean was that the field of suitors is rather reduced at that market cap. a 50% premium would put the price tag over $13B. There’s just a lot fewer companies that can come up with that.
Long-time biotech investor here and I have had my fair share of FOMO moments with NKTR. I haven’t been able to pull the trigger. Here’s why: if I am the CEO of a company that is several months out from a phase III trial on a drug that has been fast-tracked by FDA, a speculated $60B TAM, in the midst of a national epidemic of opioid abuse, and I believe in the drug, I AM a pain company. Bird in the hand thinking on my part, I suppose. Of course, maybe that is why nobody has ever asked me to be CEO of their company!
So maybe somebody can help me out here. What differentiates NKTR-181 from the TRVN Mu-opioid antagonist (with FDA breakthrough status) that failed a few months back and lost around 80% of its value? I mean at the receptor level, not the design of the trial. Is there biochemical evidence that 181 is best-in-class compared to TRVNs drug…affinity, selectivity, etc.? TRVN is still in the game with their drug, but the market gives them only about $160M of love.
In the meantime, NKTR does have a pipeline full of very interesting IO assets, but they are all Phase I or II, I believe, and they are in a very crowded (around 2500 IO trials, complex, and moving space.
Can anyone shed some light on this for me? Aside from the IO assets, what am I missing about the gap between these two companies on the Mu-opioid receptor side? So here is my interest in this…assuming similar biochemistry between the two pain compounds, one of these companies is extremely overvalued or the other is extremely undervalued…or both…
IMO, a lot of money to be gained and lost when I see a dichotomy of this magnitude…
Classic opioids cross the blood brain barrier readily (also travel everywhere else outside the central nervous system as well). Once inside the CNS they mediate central effects (euphoria; dopamine release), which humans like a lot(i.e., they are addictive) . The Nektar compound in question is a molecule that does not readily cross the blood brain barrier, but does bind peripherally very well to opioid receptors(the holy grail of pain management; good analgesic effects without the euphoria), thus reducing the likelihood that this drug would be the chose for euphoria seekers. Slides in the conference presentation yesterday touched upon this (see SA article below; again thought this talk was great). This is a game changer if what is being touted pans out to be the truth in reality. Also based on timing of events there will be pressure to get products like this out there to reduce the quantities of addictive products from being used legally/illegally (i.e. elicit use can occur after periods of justified use). I as one would prefer to receive a med that has lower abuse potential as you never know how you will respond.
The Nektar compound…is a molecule that does not readily cross the blood brain barrier, but does bind peripherally very well to opioid receptors. This is the holy grail of pain management; good analgesic effects without the euphoria, thus reducing the likelihood that this drug would be the choice for euphoria seekers.
Some opiates act very fast than others are more likely to produce a “buzz” . Some like tramadol are slow to act and produce little “buzz” . I doubt if there is much heavy duty addiction to Tramadol, making the big assumption that people do not exceed recommended dosage.
This is a game changer if what is being touted pans out to be the truth in reality. that is what worries me.In have a medical background and have seen similar claims before. Whatever, the feds will treat it as an opiate" bad boy" no matter what the truth
And is it not the peripheral effect that produces physiological addiction? As opposed to psychological addiction. Not sure. Most people take opiates to stop pain, not to get high.
… if I am the CEO of a company that is several months out from a phase III trial on a drug that has been fast-tracked by FDA, a speculated $60B TAM, in the midst of a national epidemic of opioid abuse, and I believe in the drug, I AM a pain company. Bird in the hand thinking on my part, I suppose. Of course, maybe that is why nobody has ever asked me to be CEO of their company!
I look at it like this:
NKTR-181 is the only drug that NKTR has in its entire pipeline for pain. On the other hand, NKTR has a multitude of I-O drugs in the pipeline include a number of partnerships for co-treatment with approved drugs. I think that there are also a number of IO partnerships are possible because their drug could be used in conjunction with many other drugs to enhance efficacy AND reduce severe adverse effects often associated with CAR-T. Also, their immunology program is more closely aligned with IO because they really are focused on reducing immune system overdrive (autoimmune) and enhancing immune system effectiveness (IO). The type of scientist that they need for these 2 focus areas has more crossover than either of those has with a pain focus. Also, if for some reason NKTR-181 flops then being a pain company is not so good because they have nothing else.
In addition, building out a commercial team to market and distribute the product is a huge investment and expense. Therefore, they really need a marketing and distribution partner for their SOLE pain drug. In contrast, with many IO trials, drugs, etc in the pipeline, it makes more sense for NKTR to build a commercial team (if they want to become a big biopharma). Alternatively, they can form partnerships or get acquired.
As an investor, I’d rather see them sell of the pain portion than spend a bunch on building out an organization to support pain (i.e. meaning probable stock issues and dilution). If they sell it then they get cash to focus on their IO franchise (i.e. less or no stock dilution).
Nicely put, Chris. Your research into this company is top-notch.
And I get your enthusiasm for the IO pipeline. 214 in particular is very exciting. I could open a lot of doors if it limits the off-target issues with standard IL-2 while providing increased signaling.
As far as 181, I get that it doesn’t cross the BB barrier. Very desirable. That said, nobody will have an opportunity to get addicted to it if it doesn’t provide the desired analgesia. TRVN recently failed on the same target. Granted 181 is a different drug, but the BB barrier issue likely has little to do with its effect on the target itself. Because of the pegylation of 181, it might be in the category of a superagonist (I spellchecked this manually ;-)). If that is the case, the TRVN fail may be irrelevant.
I am just suggesting caution with expectations for a company that that has an unpartnered PIII product when their history has largely been about partnering products. They partnered Movantik early, if I recall correctly. It’s also an opioid.
But more than that, this is a company that has had an incredible move over the last few months and mostly on catalysts that were based on presentations and CEOs comments. It’s in rarefied air. An $11B cap…nearly double Juno, for example…essentially zero room for a false step.
As I said earlier, very intriguing company, and one that I might like to own…just not at these levels. If my caution is misplaced, that’s OK. I’ve missed the boat on many, many biotechs over the years and I have never regretted it. Nor do I ever resent the success of others who got on board early.