Nektar Boasts Strong Pipeline, Competition Remains A Woe

On Jan 16, 2018, we issued an updated report on Nektar Therapeutics (NASDAQ:NKTR) , a biopharmaceutical company, focused on developing treatments and utilizing PEGylation plus advanced polymer conjugate technology platforms.

The company’s portfolio comprises two drugs — Movantik for opioid-induced constipation (OIC) and Adynovate for treating hemophilia A. Both drugs are showing impressive performance.

Nektar shares a global license agreement with AstraZeneca (NYSE:AZN) which granted the latter worldwide, exclusive rights to develop, market and sell Movantik as well as fixed-dose combination products.

The company also has a licensing, collaboration and manufacturing contract with Shire plc (NASDAQ:SHPG) for Adynovate. It receives royalties and sales milestones related to both the drugs. These licensing agreements are expected to provide regular funds to the company.

Nektar’s shares have substantially outperformed the industry in a year, skyrocking 466.6% while the industry has registered a rise of 10.4%.

We are pleased with Nektar's efforts to build its pipeline. The company has a robust pipeline of early and late-stage candidates. Nektar has made a significant progress with its lead candidate Onzeald (formerly known as NKTR-102), currently under accelerated assessment in the EU for treating adults with advanced breast cancer as well as brain metastases. A response is anticipated within the first half of 2018.

Nektar has also initiated a randomized phase III confirmatory study (ATTAIN) on Onzeald compared with the single-agent chemotherapy of the respective physician’s choice. The trial is being conducted on patients with advanced breast cancer, who shortly complain of brain metastases. Positive results from this evaluation could support a regulatory filing in the United States.

The company is further developing several other candidates across important therapeutic areas including oncology, pain, anti-infectives and immunology. Interesting ones include NKTR-181 (phase III – chronic pain), NKTR-214 (phase I/II – solid tumor) and NKTR-358 (phase I-autoimmune disease).

We remind investors that in July 2017, Nektar had announced positive top-line results from an oral human abuse potential study on NKTR-181 in order to assess the abuse potential compared with oxycodone. Notably, the FDA granted a Fast Track designation to the NKTR-181 development program.

Successful development and commercialization of these candidates will in turn drive the company’s revenues, considering the lucrative markets they target.

Importantly, Nektar entered into a co-development deal with Eli Lilly and Company (NYSE:LLY) for NKTR-358 last July. Pursuant to this agreement, Nektar will be responsible for completing the ongoing phase I study on the candidate. However, going forward, with the phase II trial on the same, Lilly will be capturing 75% of the total costs, which should further lower Nektar’s development expenses on NKTR-358.

However, Nektar’s proprietary market products as well as its underdeveloped candidates are subject to stiff competition from various other pharmaceutical and biotechnology companies.

The company is expected to face intense rivalry in the pain market with several manufacturers developing pain therapies. Competitors include Collegium Pharmaceutical’s Xtampza and Teva Pharmaceutical’s naproxen to name a few. Also, players in PEGylation and polymer conjugate chemistry technology space are Biogen (NASDAQ:BIIB), Savient Pharmaceuticals, Dr. Reddy’s and Novo Nordisk (CO:NOVOb) among others.

Nektar’s heavy reliance on partners for revenues still remains a huge concern, since partnership-related setbacks may seriously weigh on the company.

Zacks Rank

Nektar carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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