Here's Why Nektar Therapeutics Jumped 23% Higher in March

What happened

Shares of Nektar Therapeutics (NASDAQ: NKTR), a mid-sized biotech developing novel drugs to address unmet needs, had another great month. It rose 22.8% in March, according to data from S&P Global Market Intelligence. The company's fourth-quarter earnings call contained a couple of positive updates that encouraged investors to push the stock.

So what

The company shared some positive results from a kidney cancer trial with NKTR-214, an experimental immune-response simulator that appears to work well with Opdivo from Bristol-Myers Squibb (NYSE: BMY). In February, the big pharma signed a gargantuan deal that leaves Nektar eligible for $1.78 billion in various milestones plus 65% of any global profits that emerge from the tie-up. Updated results from 14 kidney cancer patients treated with the combination suggest there could be a lot of profits to split down the road.

In November, Nektar showed us an early 46% response rate among a small group of kidney cancer patients treated with NKTR-214 in combination with Opdivo. That response rate had risen to 57% in January, and an additional couple of patients brought the response rate to 71%, with all responses confirmed.

Nektar also announced plans to submit an application package for a chronic pain candidate with limited abuse potential. NKTR-181 aced a back-pain study last year and a pivotal human-abuse liability trial, both of which will support an application package that management plans to submit in the second quarter.

Now what

Demand for effective pain relief with low abuse potential is as strong as ever. If Nektar earns approval to market its painkiller specifically as an abuse-deterrent solution, blockbuster sales probably wouldn't be far behind.

On the oncology front, Incyte's unfortunate epacadostat failure makes NKTR-214 a lot more attractive to Bristol-Myers and several peers that have drugs like Opdivo that could use a boost. Nektar and Bristol will begin trials expected to enroll around 15,000 patients across nine tumor types. If positive results keep rolling in, expect more deep-pocketed drugmakers to come calling with open checkbooks.

10 stocks we like better than Nektar TherapeuticsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Nektar Therapeutics wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 2, 2018

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.