Shares of Nektar Therapeutics (NASDAQ: NKTR) rose 26.4% in August, according to data provided by S&P Global Market Intelligence as the biotech recovers from a rough summer of releasing clinical trial data.
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In June, Nektar fell dramatically after presenting data from a clinical trial testing NKTR-214 plus Bristol-Myers Squibb's (NYSE: BMY) Opdivo at the American Society of Clinical Oncology (ASCO) meeting. Investors adjusted Nektar's valuation lower because the response rates came down compared to initial interim results. For example, in November, Nektar Therapeutics reported that 64% of melanoma patients responded to the combination, but that dropped to 50% at ASCO where the data included additional patients.
When you have a small number of patients, it's likely there will be variation above or below the true response rate, but as the patient count increases, the true response rate will be revealed. Investors should have taken that into account when valuing the biotech, but clearly they didn't.
It should also be noted that immuno-oncology drugs tend to take longer to produce a response than traditional oncology drugs because they have to activate the immune system to kill the tumor rather than acting on the tumor directly, so some of the recently added non-responding patients could turn into responders at the next update.
While the response rates for melanoma and other tumor types were lower, they were still pretty solid, and Nektar Therapeutics and partner Bristol-Myers Squibb are pressing ahead with 20 clinical trials. That's not a typo. Twenty studies in nine different tumor types!
Add in the rest of the pipeline, which spans the spectrum from NKTR-358 which recently entered the clinic for patients with lupus to NKTR-181 that's under FDA review for chronic low back pain, and it's understandable why investors' confidence in Nektar Therapeutics is coming back.
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