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Here's Why Nektar Therapeutics Surged Today

Cory Renauer, The Motley Fool

What happened

Shares of Nektar Therapeutics (NASDAQ: NKTR), a biopharmaceutical company, are on the move following its presentation at the J.P. Morgan Healthcare conference. The stock climbed 11.1% during Tuesday's session as investors cheered Nektar's 2019 to-do list.

So what

Nektar has commercial-stage drugs, but sales and royalty revenue from partners that market its treatments trickled in at just $41 million during the first nine months of 2019. Investors nervous about NKTR-214 and its ability to boost the efficacy of PD-1 checkpoint inhibitors have hammered the stock more than 60% lower since a peak last March.

Hand drawing an upward-sloping chart on a chalkboard

Image source: Getty Images.

Last year, Bristol-Myers Squibb (NYSE: BMY) paid Nektar $1.85 billion up front for rights to NKTR-214. Investors were encouraged to hear that the company finished 2018 with $1.92 billion in cash and investments, thanks largely to Bristol's contribution.

In 2019, Nektar has a lot of plans for that cash, including:

  • Potential approval and launch of NKTR-181, an abuse-deterrent opioid painkiller that doesn't induce an addictive state of euphoria.
  • Human proof-of-concept data from a potential new autoimmune drug, NKTR-358.
  • Two new phase 1b studies of NKTR-358 in autoimmune conditions, to be initiated by Eli Lilly.
  • A phase 1 study of NKTR-255 in multiple myeloma.

Now what

Although Nektar has lots of cash to develop new treatments, it looks like the company will shovel a lot of it toward NKTR-214 in 2019. The candidate combined with Opdivo has produced interesting tumor response rates among small groups of patients receiving both drugs, but there's a good chance that Opdivo is doing all the work.

Instead of waiting for controlled data to find out if NKTR-214's the real thing, the partners will expand the number of ongoing registrational studies from four to 18 by the end of June. The first study comparing NKTR-214 plus Opdivo to Opdivo on its own started in the third quarter. If the newly diagnosed melanoma patients given Nektar's drug don't show a clear benefit, the rest of the program will crash and burn.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.