Shares of Nektar Therapeutics (NKTR) have been bumping along between $32 and $34 for two months now, but the company continues to take steps to prepare for the likely August approval of NKTR-181, a new non-addictive opioid. Nektar has formed Inheris Biopharma, a wholly-owned subsidiary of Nektar, to handle the launch preparation and commercialization of NKTR-181, the first opioid molecule designed to provide the extremely effective pain relief of an opioid without the high levels of euphoria of existing opioids that lead to addiction. NKTR is currently under review at the U.S. Food & Drug Administration with an FDA advisory panel meeting in early August ahead of an August 29 hearing that I expect to result in approval for the new drug.
The Advisory Committee meeting is actually a sign that the FDA is likely to approve NKTR-181, according to the Medical Technology Stock Letter. The “meeting is to showcase that they [the FDA] can approve novel opioid/pain drugs that have significantly less abuse/addiction potential than the ones currently prescribed. The opioid abuse problem has become a major healthcare epidemic that the FDA desperately wants to help solve.”
I’d expect that an approval for NKTR-181 would move Nektar shares higher but that a realization of my full target price will require more positive news on clinical trials from Nektar’s immuno-oncology drug candidates in 2020.
The whole biotechnology sector has been in a downward trend since mid-April as investors and traders have decided that the sector has too much risk for current market conditions. It’s hard for any individual stock to buck that trend so even good news in August will require patience from investors. Traders looking for a quick kill are likely to be disappointed.
I’m lowering my target price for Nektar to $110 a share from a prior $130 a share. The stock is a member of my Jubak Picks Portfolio. It is down 9.35% since I added it to the portfolio on November 13, 2017.
Full disclosure: I own Nektar shares and call options in my personal portfolios.
