Should You Pull the Trigger on Nektar (NKTR) Stock Following Updated Melanoma Data?

Nektar Therapeutics (NKTR) presented some updated results on Friday, November 9th from the melanoma expansion cohort of Phase II from PIVOT-02 study. The cancer-focused biotech is currently holding a trial for Opdivo, a drug aimed at overcoming immune suppression.

After observing the results, William Blair’s analyst Andy Hsieh says he feels positive about the medication’s chance at success (as well as success for the company’s stock) – even as the drug competes with another similar medicine, called Yervoy.

“Overall, we believe the objective response rate came in line with consensus while the rate of complete responses surprised to the upside. Comparisons to Opdivo plus Yervoy, based on the Phase III CheckMate-067 study, are difficult owing to the differences in patient baseline characteristics. As a result, the bull/bear debate will likely continue in the short to midterm. Following the update, we believe investors will likely turn their focus to duration data, which could ultimately affect the survival co-primary endpoints. Based on the data announced to date, we believe there is potential for NKTR-214 to confer a tolerability advantage against Yervoy,” Hsieh said.

The analyst notes he isn’t blind to some caveats. In order for the NKTR-214 and Opdivo combination to be successful on the efficacy front in the Phase III study, NKTR-214 will need to execute good results for PD-L1 negative patients, which serves only a small population that can’t be addressed by Opdivo monotherapy.

“On a high level, we believe the response rate of NKTR-214 plus Yervoy is comparable to Opdivo and Yervoy with potential advantage in complete response rate, which could translate into extended duration. However, we acknowledge the limitations of a small sample size and believe ultimately the final arbiter will likely be the ongoing Phase III study with NKTR-214 plus Opdivo that is on track to read out in July 2020,” Hsieh said.

Bottom line: The analyst reiterates an Outperform rating for the stock, without offering a price target. (To watch Hsieh’s track record, click here)

Other analysts think NKTR is a good choice, too. TipRanks surveyed five analysts who have been looking into NKTR stock over the past three months. Four of out five are bullish, while one is sidelined. With a consensus price target of $82.40, the stock shows a 116% upside from the current level. (See NKTR’s price targets and analyst ratings on TipRanks)

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