NKTR: new data

Investment Analysis Clubs Saul’s Investing Discussions
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NKTR’s CTO presented yesterday at the Cowen and Company healthcare conference. The presentation including slides is available at NKTR IR webpage:

http://ir.nektar.com/events-and-presentations/events

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?

  1. KITE/JUNO: drug works on 1 type of cancer. NKTR: developing treatments with 20 different cancers using the same drug combo.

  2. 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.

  3. 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.

  4. KITE/JUNO: had several different drugs in development but each was a different program for each cancer type. NKTR: one drug for many diseases.

  5. 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.

  6. 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:

CELG: $69B
BIIB: $60B
AMGN: $137B

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.

Chris

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Excellent breakdown, Chris.

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).

I believe that was the 18-20 minute mark of the presentation I referred to. As Saul posted, this could be almost a “holy grail” of cancer treatment.

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Hi Chris,

Thank you very much for updating. The data is really amazing.

The most important thing that I have learned from you, Saul, and others from this board is that using data to talk and never fall in love with any stocks. In other words, dump a stock if the data goes against you, and buy it back when the data sings to you.

Alex

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Chris

Nice write up. What is the next catalyst to move the stock and when?

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Chris:

This is a gem of a post. Really boils down the thesis for a noob like me who does not understand the biotech language at all.

-Gaurav

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Rizz, in my humble opinion it will be FDA approval of NKTR 181 and the subsequent announcement of a marketing plan.  Late spring early summer (just my guess.)  

I think the market is most enamored, and rightfully so, with NKTR cancer treatments.  New announcements on partnerships will trigger additional excitement.

At present those are hard to predict.

As I have looked at NKTR's CAP (competitive advantage period) the potential of PARPS have surfaced. This is interesting technology that could impact NKTR's CAP. Layman's explanation, PARPS make existing cancer treatments more effective by reducing cancer cells ability to repair DNA breaks thereby making the cancer cell more vulnerable to being killed.  Just thought I would introduce this for everyone's consideration.
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Great post Chris. Haven’t had a chance to watch yet but I will tonight. The improving response rates over time were the clincher for me to add more NKTR recently.

MC

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Are parps a NKTR product?

If not how do parps enhance NKTR s cap?

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Margin requirements on NKTR r sky hi

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Another “forecast” is that NKTR is gonna see a lot of buying on Monday {19 Mar 2018} when it is added to the S&P 500 index. I also predict that a few more analysts will begin to follow it after that index addition happens.

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Anyone thinks this has any significance?

https://www.lifesciencesipreview.com/news/us-court-rejects-m…

In December 2016, Bayer filed a suit in the US District Court for the District of Delaware against Nektar Therapeutics and Baxalta, alleging that Baxalta’s factor VIII protein product, Adynovate, infringes Bayer’s US patent number 9,364,520.

…

Bayer claimed that its legal predecessor signed a confidential disclosure agreement with Nektar allowing Bayer to share information on its proprietary research with Nektar.
After further research, Bayer developed BAY 94, a pegylated recombinant human factor VIII. It filed Biologics License Application number 125661 for BAY 94 on August 30 2017 (the same day the lawsuit was filed), seeking approval for the treatment of haemophilia A.
One month later, in September 2017, Baxalta and Nektar filed a suit in Delaware, alleging that BAY 94 infringes Nektar’s patents.

The same month, Bayer dropped its claim based on the ‘749 patent and instead sought declaratory judgment on the Nektar patents asserted in Baxalta’s suit.

In the order denying the defendants’ motion to dismiss, District Judge Lucy Koh noted that the defendants’ contacts with California are not so substantial as to render Nektar Therapeutics and Baxalta “essentially at home” in California.

Bayer claimed that the court had specific jurisdiction because the Nektar patents had been commercialised in California and because of Baxalta’s ongoing obligations pursuant to a licensing agreement.

Koh said that efforts to commercialise a patent are not relevant contacts for the purposes of a specific jurisdiction analysis in the declaratory judgment context, and that the licensing agreement doesn’t confer jurisdiction.

“The court finds that it is in the interest of justice to transfer this case to Delaware so that it can be heard by the judge who is already hearing the parties’ two related Delaware actions,” she said.

Dominic
long NKTR

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I still do not know much about NKTR. I guess a simple look at 214 may be the place to start.

But I think there is an over-emphasis on what others may know that we do not know. Particularly when an established pharma passes on the option to partner with a drug. I read in a thread on NKTR that something like this may have happened, although someone ponied up a ton of $$$$s to obtain a 35% interest in the drug.

My sole interest is how much that pipeline is worth to see how much upside is here to see if it is worth the risk or not. But not discussing that here.

EXEL’s franchise drug was passed on by their big pharma partner. They had an option to commercialize. Actually took it, but then got out of it (as I recall). Of course there was talk of what do they know that we do not know. Apparently nothing. It was just a business decision to go another way. They actually had some drugs that may have been competitive and was a decision that it was not a good fit for the company.

Remember, big pharma companies are not in the business of taking flyers and hoping to make it big on hitting on one drug. They already have hit drugs. Their goal is to keep consistent growth in the company for shareholders at an excellent ROI. They therefore will pass on great drugs for many reasons other than the efficacy and market potential of the drug. If it does not comport with the company focus, and the internal ROI is not high enough because of risk, or other factor, then they will pass on even great drugs.

So I do not place much credence into what other drug companies pass on. Just consider it as part of the holistic landscape

Tinker

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I mentioned that I have a relative who is retired now after being the Chief Research Officer with a drug discovery company. He made this quick comment to me after he looked at this set of posts about Nextar’s drugs…

Their 214 and their 318 are likely promising, but their 181 on opioid is not promising.
I did ask him what his rationale was, but I frankly didn’t have enough time to take notes - I’ll try next time I see him.

Hopefully he’s underestimating 181!

…Marc