Hi everyone! I’m stepping out of the woodwork here from a recommendation by fellow CMF, CMFdrdm. I regularly lurk around this board because it is one of the more active ones in the public-facing side of the Fool, and I usually just try make sure that you guys don’t get too rowdy . Great discussion here, and it actually reminds me a bit of how the Fool was in the days of yore. Anyway, drdm asked me to look into Nektar Therapeutics. I had this one on my radar since 2016 or so, but when it looked like I missed the boat, I just put this into my mental “one that got away” pile. But the more I looked into it, the more intrigued I became about NKTR’s prospects, so I opened a small position to motivate me to do a deep dive.
By way of my background, I’m an immunologist by training and I started in industry in 2003 as a junior scientist at Idec Pharmaceuticals in San Diego. That merged with Biogen, then I went to Ionis in 2011 when Biogen shut down the West Coast research campus. In 2015, I transitioned from Ionis to Janssen (J&J) in the Bay Area and I am currently a Scientific Director leading a small team, working on immunomodulation for Infectious Diseases and Cancer.
I’ve been a Fool since 2003, and an investor since 1997 or so, first in mutual funds, then after I got my big-boy job, in actual stocks. Eventually, I joined the Community Fool program and I am currently a ticker guide for Biogen (BIIB), Ionis (IONS), Alnylam (ALNY) and Johnson & Johnson (JNJ), so if you’re a subscriber to some of the paid services, you may see my posts on the boards that support them.
Anyway, on to Nektar, and specifically NKTR-214. I wrote up this deep dive to try to crystallize my thoughts around the potential of this molecule. For that, I felt it necessary to explain where it fits in Cancer Immunology as we understand it, and also a little bit about why it looks like it will succeed where IL-2 failed. This is more like a blog post as opposed to a review being submitted to a journal (in other words, you get what you pay for!), so there may be some things that I didn’t recall correctly or things that I flat-out got wrong. It looks like the group has some trained scientists, doctors and industry experts, and I welcome any comments and corrections .
For a long time, there has been a hypothesis that a normal, healthy person actually develops cancerous cells at a regular rate. However, his immune system regularly recognizes then eliminates them so that he never actually notices that they were ever there. I believe this originated from studies of AIDS patients, who have a suppressed immune system and have a higher incidence of cancer. Subsequently, when we looked in some tumors, and specifically sorted out their cellular composition, there are immune cells present, yet they aren’t doing anything! When these immune cells are isolated from tumor biopsies, placed in culture, then poked and prodded as we scientists are wont to do, they seem to be in a state of suppression. So reports like these seem to build on the case that your immune system can react to cancerous cells, but in tumors, for some reason, they are inactivated.
Thus was born the field of immunomodulation. The theory was that if we could somehow restimulate the immune system, we could reawaken their reactivity to tumors. In the ‘80’s, Steve Rosenberg famously tested this hypothesis by treating cancer patients with a protein called Interleukin-2 (IL-2), which at the time, was characterized to be able to stimulate important cell types of the immune system called T cells. T cells love IL-2. It’s like sugar to a kid. Normally IL-2 activates T cells, makes them start dividing, and boosts them in their immune response against foreign pathogens. Also, subsequently, it was found that many other cells respond directly to IL-2.
T cells gobble up IL-2 by a receptor on the surface of the cell. The IL-2 receptor is actually made up of three components, the alpha, beta and gamma subunits. It’s like having three hands that all grab onto IL-2 to ensure that the cell takes it up. Although beta and gamma help in binding to IL-2, alpha has the tightest grip on the protein. The function of beta and gamma are to tell the cell that IL-2 has been found, and that it is OK for the cell to start getting excited.
The problem with simply infusing IL-2 into the patient is that there is no control where IL-2 goes. Ideally, you only want the cells that will respond just to the tumor to get activated. But the problem with a systemic exposure is that all the T cells throughout the body get activated, and that is not a good thing. Not only that, but IL-2 in its naked form does not survive very long in the body. It is rapidly consumed by cells or degraded. So in order to see efficacy, patients have to get dosed very frequently, and it is a tough treatment regime because of the side effects. Although IL-2 is approved for cancer treatment and is marketed as Proleukin, it cannot be dosed too high because of dose-limiting toxicities, or side-effects. Thus, Proleukin never really caught on.
A recent breakthrough in immunomodulation was the checkpoint inhibitors, like Yervoy (anti-CTLA4) and Keytruda or Opdivo (they recognize the same target, PD-1). If you ever wondered what happens after the immune response gets activated after recognizing a foreign pathogen, the cells start dividing so that they can increase their numbers to combat the number of infected cells. But the response has to be turned off somehow, otherwise your body would fill up with immune cells! It was discovered that molecules like CTLA4 and PD-1 play an important role in shutting down the immune response, and they were nicknamed “checkpoint” because they keep the immune response in check.
Tumor cells seemed to have hijacked this checkpoint system, and they are able to shut the immune system down by activating CTLA-4 and PD-1. So what Yervoy, Keytruda and Opdivo do is to block the ability of the tumor to inhibit the immune cells through these molecules.
It’s important that you understand there are two forces at play here in immunomodulation. One is to release the brakes on the immune system, which is the role of the checkpoint modulators. The other force is to activate the immune system, and that is done through molecules like IL-2. This is an important concept because although there are a number of potential checkpoint proteins, it is believed that CTLA-4 and PD-1 are probably the strongest. And there are also a number of molecules that can activate the immune system, with IL-2 being one of the best studied activators. While either approach has efficacy, what you’ll be hearing about in the next wave of immunomodulation is the strategy of combining the two forces. This strategy is termed “push-and-pull.” The checkpoints like Yervoy, Keytruda and Opdivo “pull” the cells into the response, and the activators like IL-2 “push” the cells into activation.
Background on Discovery and MOA
I had to dig a little to find out exactly what NKTR-214 was. On the surface, the message is “a CD122 agonist” which translates to “something that activates IL-2 receptor, beta.” In the usual places I looked, I kept seeing this phrase, and I ended up wondering, “what the heck is this?” It’s like constantly referring to a “key” as “a small metal object that is inserted into a complementary slot, then when turned, unlocks the deadbolt.” And I kept wondering, why they didn’t just simply say “it’s IL-2” or “it’s a key?”
The most likely explanation is for the commercial message. Nektar wants to differentiate -214 from Proleukin. Not only in terms of pricing, but in terms of the stigma that is attached to IL-2 because of the adverse events. It looks like Nektar has a case that -214 is “IL-2 v2.0” because they have cleverly engineered a different therapeutic that they propose acts as a pro-drug which only becomes active when it gets into the tumors. So instead of distributing IL-2 all over the body, the message is that they are directly targeting IL-2 into the tumors, thus avoiding the toxicity issue that is seen with Proleukin. So as the -214 progresses in the clinic, you will see them craft this message in order to differentiate, and underscore superiority over Proleukin.
The way they accomplish this feat of tumor targeting is by attaching IL-2 to polyethylene glycol, or PEG. PEG is simply a long molecule, and we can use it to protect the drug, kind of like wrapping an object with a protective coating. We believe that PEG itself is biologically inert, and this has been pharma’s secret sauce to extend the blood half-life of some drugs in the circulation. For example, Plegridy is a second generation of Avonex where they’ve attached Interferon-beta to PEG; Pegasys is Interferon-alpha attached to PEG. But the way that Nektar attaches IL-2 to PEG is very clever. The side of the IL-2 molecule which attaches PEG is actually the same side that normally binds to the alpha chain of the IL-2 receptor. So the intact -214 molecule can’t easily bind to the receptor, thus avoiding most of the side effects of Proleukin.
When -214 is delivered to the active sites, as it is proposed by their model, it seems to be retained in the tumor. While in the tumor, the molecules of PEG get trimmed off IL-2, like peeling the skin off a banana. This mechanism concentrates the release of IL-2 within the tumor. That’s pretty cool in itself, but wait! There’s more! They are proposing that not only does -214 get into the tumor cells, but it doesn’t become fully active until it is bound to the T cells. Despite the fact that they are blocking its ability to bind to IL-2 receptor alpha, ie., the third “hand” of the receptor, -214 still manages to bind to the two other “hands.” Finally, the cells that are the ones you want to get activated predominantly express the beta and gamma chain, but not the alpha. So to summarize, -214 is deliver specifically to tumors, preferentially binds to the right cell types that fight the tumors, and specifically activates them to start killing off the tumor cells.
Pretty bold claims.
There are two publications in peer-reviewed scientific journals:
Claim #1: NKTR-214 is delivered specifically to the tumor specific. Based on the data in these papers, they present a convincing case about how PEGylation improves the serum half-life of -214. Remember that -214 is actually a pro-drug of Proleukin, so the benefit of increased stability is that you don’t have to dose as often, and the fact that it is a pro-drug means that it doesn’t become active until it reaches the sites of interest. The end result of less frequent dosing and having a pro-drug is less adverse events. If this is true in patients, then these two characteristics already elevate -214 over Proleukin. I am not sure if I believe that they have tumor specific delivery, ie., they do not show data regarding organ distribution, particularly lymph nodes, spleen, and thymus are sites of T cells. I would like to see the relative concentrations in these organs compared to tumor tissue. The relevance of this point is that they still could be getting unwanted activation of T cells elsewhere that could lead to adverse events.
Claim #2: NKTR-214 preferentially binds to the right cell types. In this claim, they say that they have specific binding of -214 to CD8 cells and NK cells, which are seek and destroy soldiers of the immune system. Furthermore, they state that regulatory T cells, or T regs, do not bind to -214. Regulatory T cells a whole other topic of discussion, particularly their role in disease. The main data showing this is that in mouse tumor models, there is a specific expansion of the CD8 cells but not regulatory T cells. I have a few nits to pick about the interpretation of the data, but I can let it go because the main point is that we are getting activation and proliferation of CD8 cells, which is the important feature of this drug.
Claim #3: NKTR-214 activates cells and leads to the eradication of tumors. This is the most important claim, and the efficacy in the mouse tumor models is clear. Not much to argue here, but it would be nice to see the effect in other tumor models in addition to the one that they show.
The bottom line here is that they have taken IL-2, a therapeutic that has clinical proof of concept, and improved it by making it into a pro-drug. This dramatically improves its stability in the body, allowing less frequent dosing and improving efficacy. In addition, they show that efficacy is driven by selectively activating the right cell types in the tumor. Altogether, Nektar presents a compelling case for an improved, differentiated therapeutic. The data I will be on the lookout for is organ distribution of -214. This is important, because there is nothing about PEGylation that will result in specific delivery to tumors and not to other lymphoid organs such as the spleen and lymph nodes. But bottom line, as long as the adverse events can be controlled in the preclinical species and patients, -214 looks much better than Proleukin.
Clinical development and Clinical trials
On their website, NKTR-214 is described as being in several trials either as single agent or in combo with Opdivo, Keytruda or Tencentriq (all targeting the PD-1/PD-L1 axis) and with some undisclosed oncology drugs from Takeda. The CSO and Head of Research at Nektar, Jon Zelavsky used to lead Immunology at Takeda, so he probably has good insight on which combos he wanted to try from the Takeda portfolio.
EXCEL PhI/II Monotherapy Trial
These Phase I/II trials are designed primarily to set the dose and to assess safety. As a bonus, we get a glimpse into whether the compound has any activity. In the EXCEL trial, we have a dose escalation from 0.003, 0.006, 0.009 and 0.012 mpk, given every 3 weeks. There is a separate cohort testing 0.006 mpk every 2 weeks. In terms of safety, overall they see a much better profile than Proleukin. There is a trend to dose dependency on the Grade 3 AE, so it looks like they are settling on a safe dose of 0.006 mpk, every 3 weeks.
They are also presenting case studies of 4 patients that responded well to -214. Note that these are all RCC patients, which is an approved indication for Proleukin, so these patients are the best place to look for activity. There is encouraging signs showing tumor infiltration, activation and proliferation. After the NKTR-214 regimen, the patients presented in these case studies went onto Opdivo, then showed promising response to the follow on treatment, setting up the possibility that -214 and Opdivo may synergize if used in combination. Of course, the normal caveats of sample size, lack of control, etc all apply here (due to the constraints of a PhI/II design). But trust me, if they didn’t see any hints of activity, that would not give them a lot of confidence to proceed.
The main point of this trial, and it should be one that is emphasized, is that -214 is a much better alternative than Proleukin in terms of dosing frequency and safety, and it seems to behave in patients as it does in the animal models.
PIVOT-02 PhI/II Combo with Opdivo Trial
The trial that is furthest along is the PIVOT-02 PhI/II. This was a dose escalation of NKTR-214 in combination with Opdivo, in primarily renal cellular carcinoma, although other cancers were tested. It is difficult in a PhI dose escalation to draw definitive conclusions because of the numbers of patients involved. Furthermore, they are playing with the dosing regime to walk that thin line between efficacy and safety.
From the presentation, it looks like they settled on NKTR-214 0.006 mg/kg and Opdivo 360 mg, given every 3 weeks (Q3W). There is promising anti tumor effect overall, but it is difficult to tell whether efficacy is seen from -214 because Opdivo alone is effective in tumors. For a rough comparison, we can look at the Checkmate 025 trial, which is the Ph3 trial for Opdivo in RCC. Here, the dosing is 3 mg per kg, every 2 weeks, so a bit different from the PIVOT-02 trial. For an average 60 kg male, that works out to 180 mg, or half of the dose given in the PIVOT-02, but it is given more frequently. We can roughly estimate the dose per week. For PIVOT-02, it is 120 mg/week and for Checkmate 025, it is 90 mg/week. So generally speaking (without going into pharmacokinetics and pharmacodynamics of Opdivo) a bit more Opdivo is being given in PIVOT-02.
In terms of efficacy, in the PIVOT-02 trial, they are seeing very promising results. Overall Response Rate is higher than what they saw in the Checkmate 025 trial, but at this point, it is difficult to draw any firm conclusions whether NKTR-214 made any impact because the number of patients is so small and the dosing was different, with more drug being given in PIVOT-02. Really, it’s a glass half-empty/full situation here. It’s enough to give the believers hope, ie., if there ORRs were less than what was seen in Checkmate 025, you can bet we wouldn’t be discussing this right now. But there should be a big “buyer beware” here that anything can happen at this point. There are the difference in Opdivo dosing, small sample size and overlaying these results onto historical results. It is not uncommon to get one’s hopes up during a small trial, then in the PhIII, when we start applying those damned statistics, the promising differences evaporate in a puff of complicated formulas.
I’m not sure I can add anything new here because you guys probably know much better than I do after following this stock for so long. With NKTR-214, they have something that looks very promising. It’s not a sure-fire, big fat pitch, shot on an empty net situation here and there will be a lot of ups and downs as the story unfolds.
The other concern I have is that this “push-and-pull” strategy will be the next big wave coming down the line as the number of checkpoint molecules seems to have topped out. In terms of “push” therapies, like IL-2, there are others that may have more impact, such as the TLR7 agonists (like NKTR-262), STING agonists, etc. Where NKTR-214 may have an edge is that these other agonists are so potent that they are running into tolerability issues, for example Gilead’s oral TLR7 agonist had some safety problems where they reached DLTs in HBV trials. They were forced to go with a tolerated dose, which looked like it was too low to reach efficacy. In contrast NKTR-214 seems to have mitigated the tolerability issues seen in Proleukin. It is likely that these other push agonists will have to be dosed intratumorally in order to mitigate the toxicities. If that is the case, then NKTR-214 will also have an edge on dosing. The other edge is that IL-2 therapy is clinically validated, so they have that message that they can also push forward. It’s possible that they can sell NKTR-214 as front-line, or second line because of its safety and convenience. If that doesn’t pan out, then the stronger, less tolerable and less convenient dosing alternatives are available.
I am happy to open a small position here. The positives are that 1) IL-2 has clinical proof of concept; 2) they have improved the delivery of IL-2 to stabilize the molecule in the body, reduce the AEs and retain activity on the lymphocytes; 3) the strategy of “push-and-pull” is really the next logical step for immunomodulation. Given that IL-2 is clinically proven to provide the “push” it makes sense that NKTR-214 should work in these cancer trials.
We are in the late stages here, but there is still a ways to go. The best analogy I can make is to a football game, where the team you are rooting for has possession of the ball. They started on their 0 yard line and they are trying to march down the field, one 1st down at a time. So far, they are hitting all those first downs, but anything can happen at this point. I think we all wish that they would just go for that Hail Mary from their 0 yard line (I once saw the Philadelphia Eagles do that!), but that would of course be reckless because patients are involved. So at this point, all we can do as spectators is cheer as they get closer to the touchdown, and hope that they will eventually pull it off.