Roth Capital Reinstates Buy On Nektar Therapeutics, Introduces $19 Price Target
In a research report issued August 11, Roth Capital analyst Debjit Chattopadhyay reinstated a Buy rating on Nektar Therapeutics (NKTR), and introduced a $19 price target.
The following bullets contain some highlights from that report:
- As NKTR continues its transition from product life-cycle management to a bio-pharmaceutical company, we expect three out of five late-stage studies to deliver a positive readout (in line with phase 3 attrition rate) and, in our opinion, Nektar’s current EV of $1.3B undervalues the company relative to its pipeline potential.
- Following a positive FDA advisory committee meeting in June 2014, we remain confident that the September 16, 2014, PDUFA date will deliver a positive approval recommendation. Movantik approval could deliver an additional $140M in 2015, up to $375M in sales milestones, and a ~20% royalty rate from partner AstraZeneca (AZN). A positive CHMP opinion is expected during 4Q14 followed by commercial launch in the U.S. and EU is during 2Q15. The launch could be robust as AZN appears to have a two-to-three year lead in the treatment of opioid induced constipation (OIC) with an oral, once daily treatment, targeting up to 17M patients.
- Phase 3 data from BAX855, during 3Q14: The key metric to watch is the incidence of bleeding rate in patients. A lower incidence of bleeding could set the stage for a commercial battle of convenience vs. safety, pitting Biogen Idec’s (BIIB) Eloctate vs. BAX855. Although Eloctate has an 18-month lead over BAX855, safety could trump convenience, in our opinion. Recall that BAX855 is a line-extension of the $2B/year Advate franchise, which has strong physician and patient loyalty. Assuming positive phase 3, BLA filing could be during 4Q14, and launch in 1Q16. We currently estimate ~40% of Advate patients to switch to BAX855, and low-teens royalties to Nektar. Nektar could receive $70M+ in remaining development and sales milestones.
- NKTR-102 phase 3 read during 1Q15: NKTR-102 (metastatic breast cancer) is the highest risk, wholly owned late-stage program in Nektar’s pipeline and we ascribe a 40% probability of success. NKTR-102 has robust activity in other tumors like ovarian, colon, and glioblastoma, and delivers continuous exposure of the active metabolite to tumors, which could drive an overall survival advantage in the phase 3. However, our tempered enthusiasm stems from the limited data (~37 patients at the phase 3 dose and an non-randomized phase 2).
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Debjit Chattopadhyay has a total average return of -0.3% and a 28.6% success rate. Chattopadhyay has a average return when recommending NKTR, and is ranked #2440 out of 3219 analysts.
To read more rating news on NKTR click here.