NKTR’s CTO presented yesterday at the Cowen and Company healthcare conference. The presentation including slides is available at NKTR IR webpage:
If you are invested or considering investing then I would listen/watch this presentation. When the CEO talks about NKTR’s pipeline and the clinical trials that are underway, it’s presented in a less technical manner. The CTO presented it in a more technical manner. It was very useful for me to hear it because it helped me to understand how their I-O drugs are actually working. Very good presentation.
Most of the information I knew already but there were a few updates to several clinical trials. The last presentation by NKTR was by the CEO at the Morgan Stanley Healthcare Conference in January. In that presentation, the CEO updated on patient responses in some of the trials. Basically, the response rate kept rising (more patients responding to therapy), adverse effects remained a non-issue as not patients dropped out, some patients had 100% response. Yesterday, the CTO reported another update (this was just about 2 months since the MS presentation); more patients responded, additional patients showed 100% response with about 1/3 show zero evidence of any cancer left. In addition, some data was shown that one patient with a baseball-sized lung tumor showed no signs of the tumor left (and a liver legion was gone too).
So what is different between NKTR’s I-O program/drug and KITE’s or JUNO’s?
KITE/JUNO: drug works on 1 type of cancer. NKTR: developing treatments with 20 different cancers using the same drug combo.
KITE/JUNO: custom treatment for each patient where the patients’ cells must be removed, sent to the lab for genetic engineering, and then sent back to the treatment facility for infusion into the patient. NKTR: same drug for everyone and same drug for many forms of cancer.
KITE/JUNO: treatment has major adverse effects in some patients and hospitalization is often required; some patients even died. NKTR: zero major adverse effects and drug can be administered in an outpatient setting.
KITE/JUNO: had several different drugs in development but each was a different program for each cancer type. NKTR: one drug for many diseases.
KITE/JUNO: I-O focus only. NKTR: a pain drug about to be approved in 2018; could be a blockbuster; NKTR’s I-O technology/approach that used for I-O can be reversed/flipped around to be used to treat autoimmune diseased including huge target markets including arthritis, psoriasis, lupus, and others.
JUNO/KITE therapy administered once so it works or not. NKTR therapy can be used repeatedly with many patients responding in subsequent treatments after showing no or little response initially. This reduces pricing/reimbursement challenges and can offer more opportunity for higher revenue per patient; also I believe that KITE/JUNO treatment won’t charge patients if treatment doesn’t work.
If KITE/JUNO were worth $12B or so then NKTR should be worth WAY more. I also expect NKTR to not get acquired as their success should drive the market cap up by several multiples over its current ~$17B. I expect KNTR may well become one of the biotech giants. Here are the market caps of some of the giant biotechs:
Bristol Meyer Squibb’s market cap is $108B and Lilly’s is $82B. These companies are partnered with NKTR and if NKTR’s market cap were to triple from here, I don’t see how it could be acquired (or why it would want to be acquired). NKTR now has enough cash and will continue to get milestone payments. Also, NKTR is only paying for 1/3 of the development costs for NKTR-214 so there’s not much need for NKTR to get acquired as NKTR can pay its own way going forward.
We are going to see more data several more times in 2018 when NKTR presents updates at medical conferences and at earnings calls. In 2019, there should be a ton of new data with 20 new trials being started.
NKTR-181, which I think will get approved in the second half of 2018, will probably be either sold off or spun out as a separate company. This drug doesn’t fit that well with the rest of NKTR’s pipeline but I expect NKTR to be able to extract a lot of value from NKTR-181.
Personally, I was baffled by Saul’s decision to sell NKTR, and I’m not at all surprised to see him buy back in after he had the opportunity to take a closer look under the hood.