Yesterday an advisory joint committee at the U.S. Food & Drug Administration voted to reject Nektar’s application for its new non-addictive opioid NKTR-181. The thinking–my thinking–was that the committee had structured the vote so that the most likely outcome was a narrow approval of the drug candidate that required further clinical trials by Nektar.
Nope. The advisory committee voted for an outright rejection and the vote wasn’t even close at 27-0 against.
Shock #1.
Shock #2. Â Nektar withdrew its application for NKTR-181. No “We’ll be back with more research.” No effort to turn the decision around. The company simply announced that it would withdraw the application and save the $80 million to $120 million that new trials for NKTR-181 would have cost.
The advisory committee vote isn’t binding on the FDA but it would extraordinary for the agency to overrule a 27-0 negative vote.
Nektar shares fell on the news–dropping 15.99% at the close to $23.49.
That’s a painful loss–Nektar is a member of several of my online portfolios including my Volatility Portfolio and my Jubak Picks Portfolio–but it’s smaller than the loss you’d see if this was a one-drug company that would rise or fall on the success or failure of NKTR-181 alone.
Truth is that this potential new opioid was somewhat outside the company’s focus on immuno-oncology drugs and its huge partnership with Bristol Myers Squibb (BMY). Much of the gain for Nektar in 2020 to date have been on positive news on that partnership and the drugs that Nektar is developing for treating cancer rather than on the prospects for NKTR-181. For example, last Friday the two companies announced that they would expand the Phase III trials for a Bempeg (NKTR-214)/Opdivo (Bristol Myers lead immuno-oncology drug) to five trials from three.
There’s lasting value, in my opinion, in Nektar’s pipeline of oncology drug candidates that include NKTR-214, NKTR-255, and NKTR-262, especially since much of this pipeline is wholly-owned by Nectar. The company also has a new drug candidate in Phase 2 trials for autoimmune disease.
The biggest drawback to the news from my point of view is that it removes a potential revenue stream from Nektar’s near future and makes the stock a riskier play on the success of these immuno-oncology drug candidates.
Nektar remains a high-risk, high (potential) reward biotech. I would use the drop from the bad news on NKTR-181 to buy more shares for the potential in the immune-oncology pipeline.
