NKTR

It’s my smallest position. I do want some exposure to the I-O space. I think it will transform cancer treatment. My bet on I-O was KITE which I sold the day of the GILD buyout announcement. I put a portion of my KITE funds into JUNO (3.3% position). I then bought some NKTR which I think is low risk, high reward stock. By low risk I mean that I see that the company value even if none of their I-O things hit will still be worth close to the current price. NKTR has its own I-O therapy (NKTR-214) in clinical trials. Last year NKTR entered into a partnership with BMS for a joint therapy (see below). This year they entered into a partnership with Takeda (see below).

Bristol-Myers Squibb: NKTR-214
On September 21, 2016, we entered into a Clinical Trial Collaboration Agreement (BMS Agreement) with Bristol-Myers Squibb Company, a Delaware corporation (BMS), pursuant to which we and BMS are collaborating to conduct Phase 1/2 clinical trials evaluating our IL-2-based CD122-biased agonist, known as NKTR-214, and BMS’ human monoclonal antibody that binds PD-1, known as Opdivo® (nivolumab), as a potential combination treatment regimen in five tumor types and eight potential indications,
and such other clinical trials evaluating the combined therapy as may be mutually agreed upon by the parties (each, a “Combination Therapy Trial”).

We are acting as the sponsor of each Combination Therapy Trial. Under the BMS Agreement, BMS is responsible for 50% of all out-of-pocket costs reasonably incurred in connection with third party contract research organizations, laboratories, clinical sites and institutional review boards and we record cost reimbursement payments to us from BMS as a reduction to research and development expense. Each party will otherwise be responsible for its own internal costs, including internal personnel costs, incurred in connection with each Combination Therapy Trial. Nektar and BMS will use commercially reasonable efforts to manufacture and supply NKTR-214 and Opdivo® (nivolumab), respectively, for each Combination Therapy Trial with each party bearing its own costs related thereto. The parties formed a joint development committee to oversee clinical trial design, regulatory strategy, and other activities necessary to conduct and support the Combination Therapy Trials.

Ownership of, and global commercial rights to, NKTR-214 remain solely with us under the BMS Agreement. If we wish to license the right to commercialize NKTR-214 in one of certain major market territories prior to September 30, 2018 (Exclusivity Expiration Date), we must first negotiate with BMS, for a period of three months (Negotiation Period), to grant an exclusive license to develop and commercialize NKTR-214 in any of these major market territories. If we do not reach an agreement with BMS for an exclusive license within the Negotiation Period, we will be free to license any right to NKTR-214 to other parties in any territory worldwide except that in the event that we receive a license offer from a third party during a period of 90 calendar days after the end of the Negotiation Period, we will provide BMS ten business days to match the terms of such third-party offer. After the Exclusivity Expiration Date, we are free to license NKTR-214 without any further obligation to BMS. Each party grants to the other party a non-exclusive, worldwide (subject to certain exceptions in the case of the license granted by BMS), non-transferable and royalty-free research and development license to such licensing party’s patent rights, technology and regulatory documentation to use its compound solely to the extent necessary to discharge its obligations under the BMS Agreement with respect to the conduct of the Combination Therapy Trials.

Takeda
On May 22, 2017, we announced a research collaboration that will allow Nektar and Takeda Pharmaceutical Company Limited (Takeda) to evaluate NKTR-214 with five oncology compounds from Takeda’s cancer portfolio.

NKTR has a lot of other programs and partnerships, and while I didn’t buy NKTR for their approved drugs and non-I-O programs, they have some value and I think they limit the downside risk. I believe that NKTR may have something (NKTR-214) that can generally enhance I-O therapies by making the immune system even more effective. Thus, I think that NKTR has the potential to partner with many I-O therapy developers (co-therapy) and share in the revenue if any of these combination therapies hit. I like that they are increasing their odds of success by have more shots on goal. I’m not going to go into the details and recommend that if anyone is interested in learning more that they read the recent 10-Qs and 10-Ks.

Chris

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