Nektar Therapeutics (NKTR): One Bull Is Still ‘Impressed’ Despite This Stock’s Worst Plunge on Record

Mizuho's Difei Yang offers a bullish take on NKTR stock in a week that saw Wall Street running for the hills on the drug maker.


Following the American Society of Clinical Oncology (ASCO) 2018 this weekend, which was packed with over 100 people, Nektar Therapeutics (NASDAQ:NKTR) dropped like a hot potato on Monday, practically 42% to the market floor. The bearish stampede boils down to the company’s skin cancer drug, which led to the worst one-day stumble in Nektar’s history.

Response rates in melanoma and kidney cancer patients in the drug maker’s data posted Saturday casts shadows of doubt upon NKTR’s experimental treatment NKTR-214. The Phase 1/2 PIVOT trial results reveal the immuno-oncology drug combined with Bristol-Myers Squibb’s checkpoint inhibitor Opdivo exposed patient response rates dipping.

Mizuho analyst Difei Yang makes a bullish defense for the drug maker, and as far as she is concerned, “NKTR-214 continues to impress.” After all, Netkar not only will step forward 1L melanoma into a pivotal study in the third quarter of this year with progression-free survival data ready by the second quarter of 2020, but additionally, two further pivotal trials are primed to start as soon as the trial design is finalized. The trials will be designed for bladder cancer and renal cell carcinoma. Regarding the NSCLC indication, the company indicated plans to seek out second line and third line indication.

Believing the company’s asset continues to be “best-in-class” with more upside “possible,” the analyst reiterates a Buy rating on NKTR stock with a $103 price target. This notably implies a close to 68% upside from current levels. (To watch Yang’s track record, click here)

“We continue to see NKTR-214 as the best combo agent in I-O at this time. With response rates deepening over time and consistent across various indications, we believe the proposed MoA is working and additional upside remains for Nektar,” asserts Yang.

The analyst continues, “Updated data presented by Nektar shows a deepening of responses over time in melanoma, RCC, UC and NSCLC. Response rates appear fairly consistent across tumor indications and we believe the data could continue to improve. Safety front: 14.1% of patients experienced grade 3 or higher AEs, comparable to Opdivo and Keytruda monotherapy, i.e., there appears to be minimal added SAEs due to NKTR-214.”

When contemplating a buyout, the analyst believes the chances of mechanism of action (MoA) have reasonable odds considering the following key insights: 1) Converting PD-L1 negative patients into PD-L1 positive patients down the line 2) Lymphocytes counts jump with NKTR-214 3) Objective response rate benefits over Opdivo as a standalone treatment on a slew of indications indicate “broad-based immune stimulation” 4) “IDO agent efficacy varied significantly from tumor types. Beyond melanoma, ORR was mediocre.”

Bottom line, the science here lends NKTR’s drug to have better probability for success, as the MoA “stands out” in immune-oncology, as far as Yang is concerned, which gives better upside favorability than downside risk for this biotech stock in the bigger picture.

TipRanks exhibits a strong bullish consensus backing the biotech player, with all 8 analysts polled in the last 3 months rating a Buy on the stock. With a return potential of 71%, the stock’s consensus target price stands at $102.57.

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