Nektar, Bristol-Myers Tie-Up For Cancer Combos Drives Stock

Nektar Therapeutics' (NASDAQ:NKTR) shares increased more than 11% on Feb 14 after the company announced a global strategic collaboration agreement with Bristol-Myers Squibb (NYSE:BMY) . Per the agreement, both companies will jointly develop and commercialize the lead immuno-oncology candidate, NKTR-214, of the former in combination with the latter’s Opdivo (nivolumab) and Opdivo plus Yervoy (ipilimumab).

Pursuant to the contract, Nektar is entitled to receive an upfront payment of $1.85 billion, which includes a payment of $1 billion in cash and an equity investment of $850 million. Nektar will also get an additional $1.78 billion potential payment on achievement of certain developmental and sale-based milestones.

Both Nektar and Bristol-Myers will share profits in the respective ratios of 65% and 35% from the potential sales of NKTR-214, worldwide.

On a positive note, Nektar not only retains its ownership of the candidate but can also continue to collaborate with other companies for its further development. While Nektar will jointly commercialize NKTR-214/Opdivo combinations in the United States as well as major markets in the EU and Japan, Bristol-Myers is entitled to solely commercialize the combinations in the other global markets.

We remind investors that Nektar is already evaluating NKTR-214/Opdivo in phase I/II PIVOT studies across five tumor types (melanoma, kidney, colorectal, bladder and non-small cell lung cancer) and eight potential indications. With this latest deal with Bristol Myers, it has been agreed upon by both companies to evaluate NKTR-214/Opdivo and NKTR-214/Opdivo plus Yervoy combinations in more than 20 cancer indications across nine tumor types.

In November 2017, the two companies reported a positive interim data from dose-escalation part of the study, evaluating the safety and efficacy of the combo therapy on patients with melanoma, renal cell carcinoma and non-small cell lung cancers.

Nektar's shares have significantly outperformed the industry in a year's time. The stock has skyrocketed 513.2% compared with the industry’s 0.4% increase.

Importantly, Nektar is also conducting a phase I/II PROPEL study to evaluate the efficacy and safety of NKTR-214 in combination with Roche's (OTC:RHHBY) Tecentriq (atezolizumab) and Merck's (NYSE:MRK) Keytruda (pembrolizumab). Notably, this PROPEL study complements the company’s ongoing PIVOT trial.

Additionally, in May 2017, Nektar had entered into a research collaboration with Takeda Pharmaceuticals to explore the combination of NKTR-214 with five oncology compounds from Takeda’s cancer portfolio.

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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