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In the past, Nektar Therapeutics (NASDAQ:NKTR) has been primarily recognized for licensing drugs that have generated billions of dollars for some of the world's largest pharmaceutical companies. Now Nektar has several mid stage and late stage investigational drugs in the pain and cancer fields. Since these drugs have billion dollar blockbuster potential, Nektar is working to develop these drugs without a partner.

Nektar Therapeutics is a biopharmaceutical company developing therapeutics based on its PEGylation and advanced polymer conjugation technology platforms. The company's product pipeline is focused on drug candidates in oncology, pain, anti-infectives, anti-virals and immunology. Headquartered in San Francisco, California, Nektar also operates facilities in Huntsville, Alabama and Hyderabad, India.

Some of the world's leading pharmaceutical companies have used Nektar's PEGylation technology to develop products that generate over $7 billion a year in annual global sales. These products include:

UCB's (OTCPK:UCBJF) Cimzia (certolizumab pegol) for Crohn's disease and rheumatoid arthritis;

Roche's (OTCQX:RHHBY) Pegasys (peginterferon alfa-2a) for hepatitis C, and Mircera (methoxy polyethylene glycol-epoetin beta) for anemia;

Amgen's (NASDAQ:AMGN) Neulasta (pegfilgrastim) for neutropenia;

Pfizer's (NYSE:PFE) Somavert (pegvisomant) for acromegaly;

Baxter's (NYSE:BAX) BAX 855, a long-acting PEGylated rFVIII program, which has completed Phase I/II clinical development, and

Affymax's (OTCPK:AFFY) and Takeda Pharmaceuticals' Omontys (peginesatide) for anemia. Unfortunately, Omontys made headlines in February 2013 when Affymax and Takeda voluntarily recalled all lots of the drug in the United States due to serious hypersensitivity reactions, including several deaths. Healthcare providers were told to stop administering Omontys, which was approved by the U.S. Food and Drug Administration (FDA) in March 2012. Providers were ordered to quarantine supplies until further notice. Affymax shares fell approximately 85%. Omontys is the company's only FDA approved drug.

In contrast to Affymax, Nektar has a robust and diverse pipeline consisting of a number of innovative, investigational drugs:

Etirinotecan pegol (NKTR-102)

Phase III metastatic breast cancer

Phase II platinum resistant ovarian breast cancer

Phase II second line colorectal cancer

Phase I GI and solid tumors in combination with 5U

NKTR-214

Phase I oncology drug

Naloxogol (NKTR-118)

Phase III opioid induced constipation drug with AstraZeneca (NYSE:AZN)

NKTR-119

Preclinical analgesic drug for pain with AstraZeneca

NKTR-181

Phase II chronic pain

NKTR-192

Phase I acute pain

NKTR-171

Preclinical neuropathic pain

Certolizumab pegol (Cimzia)

Phase III psoriatic arthritis and ankylosing spondylitis with UCB

NKTR-125

Pre-clinical drug for allergic rhinitis

Amikacin inhale (NKTR-061, BAY 41-6551)

Phase II gram negative pneumonia drug with Bayer (OTCPK:BAYRY)

Ciprofloxacin DPI (BAY Q3939)

Phase III non-cystic fibrosis bronchiectasis drug with Bayer

BAX 855

Phase II/III hemophilia A drug with Baxter

Long-acting therapeutic clotting proteins

Pre-clinical therapy for hemophilia and bleeding disorders with Baxter

NKTR-226

Pre-clinical renal disease drug

Dihydroergotamine (Levadex)

Migraine drug. Phase III completed. New drug application filed with FDA. Partnered with MAP Pharmaceuticals (NASDAQ:MAPP).

NKTR-118

Naloxegol (NKTR-118) is part of a worldwide license agreement announced on September 21, 2009, between AstraZeneca and Nektar for the treatment of opioid-induced constipation (OIC).

Opioids are the most prescribed drugs in the United States. Approximately 250 million opioid prescriptions are written annually.

Opioids work by blocking opioid receptors in the brain to reduce pain, but these drugs also block mu-opioid receptors in the gut that often results in severe and chronic constipation.

OIC is the most common side effect associated with opioid therapy. In 2011, over 320,000 prescribers registered with the DEA (Drug Enforcement Agency) wrote at least one prescription for an extended release opioid pain medication. Approximately 40% to 50% of patients who take opiates for long-term pain management are believed to experience OIC. Only about 40% to 50% of those patients experience effective relief from current treatment options. Those figures translate into an opportunity for a billion-dollar drug, although there is a significant amount of competition in the development of an FDA approved, broad label OIC drug.

Alkermes Plc (ALKS), Theravance, Inc. (NASDAQ:THRX), Cubist Pharmaceuticals (NASDAQ:CBST), Sucampo Pharmaceuticals (NASDAQ:SCMP), Salix Pharmaceuticals (SLXP) and Progenics Pharmaceuticals (PGNX) all made recent major announcements about the status of their developmental OIC drugs.

In May 2012, Alkermes Plc announced that it would discontinue the development of its investigational OIC drug, ALKS 37, because the company said the drug did not meet "pre-specified criteria for advancing into Phase III clinical trials."

On July 10, 2012, Theravance announced positive topline results from its Phase IIb trial evaluating TD‑1211 as a potential treatment for chronic, non-cancer pain patients with OIC. TD‑1211 is an investigational, orally administered, peripherally selective, multivalent inhibitor of the mu-opioid receptor designed with the goal of alleviating the gastrointestinal side effects associated with opioid therapy, without affecting analgesia. Theravance stated that these positive clinical results supported progressing the drug into Phase III development for the treatment of OIC.

In November 2012, Nektar shares nosedived after the FDA raised concerns that several OIC drugs in development may cause severe, adverse cardiac reactions. The FDA is concerned that there may be severe adverse reactions in patients who use opioids for chronic pain with OIC drugs on a long-term basis.

In July 2012, shares of Salix Pharmaceuticals fell about 12%, and Progenics Pharmaceuticals plummeted over 40%, after the FDA failed to approve a new indication for their drug Relistor (methylnaltrexone bromide). In 2008, the FDA approved Relistor for OIC in critically ill patients receiving palliative care. Salix and Progenics sought to broaden the drug's label firms to include patients who are taking opioids for any kind of chronic pain.

On July 27, 2012, the FDA issued a Complete Response Letter "requesting" additional clinical data. The FDA was concerned that there may be a cardiovascular risk associated with the chronic use of mu-opioid antagonists in patients who are taking opioids for chronic pain. In order to understand this potential risk, the FDA wanted a large trial conducted to assess the safety of any mu-opioid antagonist prior to market approval for the treatment of patients with OIC who are taking opioids for chronic, non-cancer pain. In discussions with the FDA, Salix contended that the post-marketing, clinical and preclinical data currently available for Relistor adequately demonstrated a safety profile that was sufficient to approve the drug for an expanded market, as the company requested.

Salix and Progenics plan to continue to work with the FDA to generate "a reasonable path forward for the further development and regulatory review of Relistor that can be agreed upon by the parties." Salix and Progenics anticipate "a path forward" could be reached with the FDA during 2013.

Cubist Pharmaceuticals is conducting a one year Phase III trial with 1,400 patients to examine the safety and efficacy of their constipation drug, bevenopran, also known as CB-5945. Cubist obtained the drug, formerly known as ADL5945 when they purchased Adolor in October 2011. Cubist plans to commence three Phase III efficacy trials for the drug in the first half of 2013.

On September 25, 2012, Sucampo Pharmaceuticals (SCMP), and Takeda Pharmaceuticals U.S.A., Inc. announced that the FDA granted priority review status for their supplemental new drug application (SNDA) for Amitiza (lubiprostone) for the treatment of OIC in patients with chronic, non-cancer pain.

However, on November 30, 2012, Sucampo announced that the FDA extended by three months its review of the company's Amitiza (lubiprostone) OIC for patients with chronic, non-cancer pain. The extended user fee goal date is late April 2013. No new clinical trials or studies have been requested by the FDA. The FDA originally approved Amitiza for the treatment of chronic idiopathic constipation in adults in January 2006 and irritable bowel syndrome with constipation in adult women in April 2008.

On November 12, 2012, Nektar's partner, AstraZeneca, announced positive results from two naloxegol Phase III clinical trials. The company stated that there were no "clinically relevant" imbalances in cardiovascular events between patients treated with naloxegol and placebo. However, these two trials only studied NKTR-118 for 12 and 24 weeks.

There were other concerns about the study.

The Street's Adam Feuerstein questioned whether NKTR-118 really passed the Phase III study since AstraZeneca retrieved data from one patient "previously assessed as non-retrievable was found to be retrievable. These data were added to the database and the database was again locked and underwent a final analysis."

Locking and unlocking a locked database provides an opportunity for trial data to be improperly manipulated. Although AstraZeneca insists that the company complied with proper procedures and the trial results were accurate, unlocking the data base in this clinical trial generated a controversy that could compel the FDA or European Medicines Agency (EMA) to have additional questions about the company's naloxegol research program and request additional trials, that would require a significant amount of time and money.

On February 26, 2013, AstraZeneca announced high-level results from KODIAC-08, the fourth trial in the naloxegol Phase III development program. The study was designed to evaluate the long-term safety and adverse event profile of naloxegol in patients taking 25 mg once daily, as compared to "usual care," which was defined as the investigator's choice of an existing laxative regimen for OIC. AstraZeneca claimed that these high-level results were similar to the safety results seen in the Phase III studies previously reported and "provide further confidence in the data we've seen to date for naloxegol." The company stated that they planned to file a New Drug Application (NDA) filing in the United States and a Marketing Authorization Application (MAA) in the European Union in the third quarter of 2013.

There were a low number of major adverse cardiovascular events (OTCPK:MACE) in the KODIAC-08 trial overall with only two MACE events in the usual care arm (consisting of 270 patients) and two MACE events in the Naloxegol arm (comprised of 534 patients). Nonetheless, the big question for naloxegol (NKTR-118) is whether the FDA will accept the KODIAC trials or insist that AstraZeneca conduct additional trial evaluating the cardiac risks associated with other OIC drugs.

Approval of the drug would be a big win for Nektar. Nektar and AstraZeneca have a global agreement for both naloxegol (NKTR-118) and NKTR-119, an earlier stage development program that is a co-formulation of naloxegol and an opioid. Under the agreement, AstraZeneca has responsibility for the development, global manufacturing and marketing of both naloxegol (NKTR-118) and NKTR-119.

Nektar is entitled to receive $95 million upon acceptance of regulatory filings of which $70 million is upon acceptance of the U.S. filing and $25 million is upon acceptance of the EU filing.

Upon approval and launch in the United States and European Union, Nektar would receive an additional $140 million in milestone payments. Nektar is also entitled to significant escalating double-digit royalties on product sales from naloxegol. In addition to these royalties, there are up to $375 million in sales milestones at certain commercial sales level. AstraZeneca is responsible for all cost of commercialization of naloxegol.

NKTR-119

In addition to NKTR-118, Nektar has also partnered with AstraZeneca for the development of NKTR-119, a preclinical drug that would treat pain without an OIC side effect. For NKTR-119, Nektar would receive development milestone payments as well as tiered sales milestone payments. Nektar will also receive significant double-digit royalty payments on NKTR-119 net sales worldwide.

Nektar is also developing NKTR-181 for chronic pain, NKTR-192 for acute pain, and NKTR-171 for neuropathic pain.

NKTR-181

NKTR-181 is a mu-opioid analgesic investigational drug designed to provide potent pain relief while reducing the serious side effects of respiratory depression, sedation as well as the abuse potential associated with conventional opioids.

NKTR-181 was designed to cross the blood-brain barrier at a substantially slower rate than other opioid therapies. By slowing the drug's entry rate into the central nervous system, NKTR-181 has the potential to eliminate the euphoria associated with opioid abuse as well as other serious central nervous system-related side effects, such as respiratory depression and sedation. The unique molecular design of the polymer drug conjugate also prevents conversion of NKTR-181 into a rapid-acting abusable form of an opioid. As a result, NKTR-181 has the potential to be an effective analgesic with a favorable safety profile and a reduced abuse potential.

NKTR-181 is currently in Phase II development in osteoarthritis patients with chronic knee pain.

NKTR-192

Nektar developed NKTR-192 for the treatment of moderate-to-severe acute pain. NKTR-192 is a novel mu-opioid analgesic. NKTR-192 was created using Nektar's advanced polymer conjugation technology. The drug is designed to minimize the unwanted side effects of opioids and reduce abuse potential by slowing the rate of drug entry into the brain.

In preclinical testing, Nektar researchers found that NKTR-192 demonstrated a rapid onset of analgesia and relatively short half-life, without exhibiting sedative or abuse potential at analgesic doses. The unique molecular structure of the polymer drug conjugate was designed to prevent conversion of NKTR-192 into rapidly-acting, more abusable opioid.

NKTR-192 is currently in Phase I clinical studies to assess the pharmacokinetics and safety of NKTR-192 in healthy subjects.

NKTR-171

NKTR-171 is a novel sodium channel blocker designed to treat neuropathic pain while avoiding the side effects associated with many current drugs currently prescribed for this condition.

Drugs that act by blocking sodium or calcium channels, such as the gabapentinoids and anti-epileptic medications, are often used in the treatment of neuropathic pain. These drugs can have serious side effects, such as sedation and dizziness.

Neuropathic pain, also known as nerve pain, is a type of chronic pain that occurs when nerves become injured or damaged by systemic disease, infections, autoimmune disease, or physical trauma due to toxins or injuries. Neuropathic pain is estimated to effect more than 20 million people in the United States. According to the Neuropathy Association, an estimated one in 15 Americans suffer from peripheral neuropathy. Total U.S. neuropathic pain drug sales in 2011 were estimated to be $2.5 billion.

On October 15, 2012, Nektar announced that NKTR-171 effectively blocked the inactivated state of sodium channel cells and simultaneously demonstrated a significantly reduced brain-to-plasma ratio when compared to currently approved sodium channel blockers.

In preclinical studies, Nektar scientists also found that NKTR-171 showed superior or comparable efficacy to gabapentin in animal models studying persistent neuropathic pain.

In addition to these promising investigational pain therapies, Nektar is excited about NKTR-102, an oncology drug that has the potential to make billions of dollars while saving millions of lives.

NKTR-102

Some analysts believe Nektar has a "billion-dollar opportunity" with etirinotecan pegol (NKTR-102), a drug candidate in development for breast, ovarian, colorectal, lung and glioma cancers.

NKTR-102 (etirinotecan pegol) is a pegylated version of Pfizer's Camptosar (irinotecan). Excitement about the drug began early on when preclinical studies found that NKTR-102 inhibited tumor growth by more than 90% in mouse xenograft models of colorectal, lung and breast cancers. The studies also found that Nektar's small molecule PEGylation technology improved the pharmacokinetics of irinotecan by increasing the effective half-life of irinotecan's active metabolite in tumor tissues. In a colorectal cancer model, the half-life was increased to 15 days following NKTR-102.

Nektar produced NKTR-102 by joining irinotecan with a glycol through the pegylation process. NKTR-102 releases irinotecan into the body more slowly in the hope that the patient may get more benefit from the drug without having to take a higher dose.

NKTR-102 is in Phase III clinical development as a therapy for metastatic breast cancer and is in a Phase II trial evaluating the drug's effectiveness in treating patients with solid tumor malignancies, including ovarian and colorectal cancers. According to Nektar, these specific conditions are diagnosed in approximately three million people worldwide per year.

Nektar is developing NKTR-102 without a partner. In the past, Nektar has generated revenues by licensing their technologies to large pharmaceutical firms.

NKTR-102 is a next generation topoisomerase I-inhibitor with a unique pharmacokinetics profile that provides a continuous concentration of active drug with reduced peak concentrations.

Topoisomerase I-inhibitors are important chemotherapeutic agents used to treat cancer. Immediately after dosing, standard topoisomerase I-inhibitors reach high peak concentrations and diffuse quickly throughout the body. Although standard topoisomerase I-inhibitors penetrate and damage tumor tissue, these drugs also damage healthy tissue and bone marrow.

Breast Cancer

About 1.4 million people worldwide are diagnosed with breast cancer globally every year.

According to the research firm, Global Information, Inc., there are 351 companies plus partners who are developing 479 drugs targeting breast cancer across 247 different targets. In addition, there are seven suspended drugs and another 185 drugs where development has ceased. Global Information Inc. researchers found that breast cancer drugs accounted for $10.2 billion in 2011 and should total $11.2 billion in 2016, a compound annual growth rate (OTCPK:CAGR) of 1.9%. Quantitative immunofluorescence totaled $5.9 billion in 2011 and should reach $6.9 billion in 2016, a CAGR of 3.1%. Genomic analysis was worth $4.4 billion in 2011 and in 2016 should be worth nearly $5.2 billion, a CAGR of 3.1%. IHC and FISH accounted for nearly $678 million in 2011 and are expected to be worth nearly $788 million in 2016, a CAGR of 3.1%.

Anthracyclines and taxanes are the most active and widely used chemotherapeutic agents for breast cancer. Tumors often become resistant to these agents because they are introduced during an early stage of the disease. When the disease recurs, the number of treatment options are reduced. Drugs used to treat patients who progress following anthracycline and taxane treatment can have response rates of 20 to 30%, but resistance often develops rapidly. New drugs are needed that have the potential to overcome drug resistance to prior therapies. There are currently no FDA-approved topoisomerase I inhibitors to treat breast cancer. NKTR-102 may be the drug to fill much needed niche.

During June 2011, NKTR-102 generated excitement at the American Society of Clinical Oncology (OTC:ASCO) annual meeting. Nektar announced the results from a Phase II clinical study evaluating single-agent NKTR-102 as a second- and third-line treatment in patients with metastatic breast cancer. The study found a clinical benefit rate of 46% for the overall study population.

On December 12, 2011, Nektar initiated a pivotal Phase III global clinical trial evaluating NKTR-102 as a single agent in women with metastatic breast cancer. The BEACON Study (BrEAst Cancer Outcomes with NKTR-102) will include approximately 840 metastatic breast cancer patients who had prior treatment with anthracycline, taxane and capecitabine. Enrollment in the BEACON study is expected to be completed by the end of 2013.

The primary endpoint of the BEACON study will be overall survival, and secondary endpoints will include progression-free survival, objective tumor response rates, clinical benefit rate, duration of response, PK data, safety profiles, quality-of-life measurements, and pharmacoeconomic implications. Exploratory objectives of the study will include collecting specific biomarker data to correlate with objective tumor response rates, progression-free survival, overall survival and selected toxicities.

In November 2012, Nektar announced that the FDA designated NKTR-102 as a Fast Track development program for the treatment of patients with locally recurrent or metastatic breast cancer progressing after treatment with an anthracycline, a taxane, and capecitabine (ATC). Fast track status is given to investigational agents that treat serious medical conditions and fulfill an unmet need. Fast track status can lead to a priority review by the FDA.

NKTR-102 is also being tested as a therapeutic agent for ovarian cancer, colorectal cancer, and glioma.

Ovarian Cancer

Nearly all ovarian cancers will become resistant or refractory to platinum-based therapy over time. Ovarian cancer is the fifth leading cause of cancer deaths among women. Approximately 22,000 new cases of ovarian cancer will be diagnosed and 15,000 deaths are expected to be caused by ovarian cancer in the United States this year. Initial response rates to treatment with platinum-based agents are typically around 80%, but recurrence rates are very high. Treatment options following relapse are limited and overall long-term survival among ovarian cancer patients has not changed significantly in nearly 40 years. Agents currently approved by the FDA to treat women with platinum-resistant ovarian cancer have modest overall response rates of between 6.5% to 13.8%.

The pharmaceutical and healthcare research firm, Decision Resources, forecasts that the ovarian cancer drug market will more than triple over the next decade, increasing from $460 million in 2011 to $1.4 billion in 2021 in the United States, France, Germany, Italy, Spain, the United Kingdom and Japan. Market growth will be primarily driven by the penetration of new therapies into several market segments.

Decision Resources predicts that angiogenesis inhibitors are set to dominate the ovarian cancer market by 2021, as this drug class is expected to account for more than 60% of sales.

The firm predicts that Roche/Genentech/Chugai's Avastin (bevacizumab), already launched in Europe for the treatment of advanced first-line and platinum-sensitive ovarian cancer, will become engrained into treatment practice across the major markets through 2021. Amgen's AMG-386, which targets angiogenesis via a novel target, angiopoetin/Tie2, is also set to enter advanced disease treatment settings.

Another research firm, GlobalData, found the ovarian cancer therapeutics market grew at a compound annual growth rate (OTCPK:CAGR) of only 1% between 2002 and 2011. The patent expiries of major branded products, such as Taxol (paclitaxel), Paraplatin (carboplatin), Gemzar (gemcitabine), Hycamtin (topotecan hydrochloride) and the subsequent launch of generics, have acted as restraining factors to the market. The introduction of new and promising therapies such as Avastin, AMG 386, Endocyte Inc.'s (NASDAQ:ECYT) EC145, Morphotek Inc.'s Farletuzumab (MORAb-003), BioNumerik Pharmaceuticals' Karenitecin (BNP1350), Cell Therapeutics (NASDAQ:CTIC) Opaxio (paclitaxel poliglumex), OPT-821, Oasmia Pharmaceuticals' (OASM.ST) Paclical (paclitaxel), Boehringer Ingelheim's Vargatef (nintedanib), also known as BIBF 1120, and GlaxoSmithKline's (NYSE:GSK) Votrient (pazopanib) are expected to drive the market from 2011 to 2020.

Global Data found that in 2011, the ovarian cancer therapeutics markets in key countries (the United States, the United Kingdom, Germany, France, Italy, Spain, Japan, Brazil, Russia, India and China) were worth $736.7m collectively. GlobalData expects the ovarian cancer therapeutics market to grow three-fold by 2020, reaching $2,352 million at a CAGR of 13.8%. This high growth rate is expected due to the strength of the pipeline candidates, which are anticipated to change the treatment paradigm of ovarian cancer when launched.

In June 2011, Nektar announced positive results from a subpopulation of patients in a Phase II clinical study evaluating single-agent NKTR-102 in women with platinum-resistant/refractory ovarian cancer. There were 33 women in the study who were treated with Doxil (pegylated liposomal doxorubicin or PLD). Doxil is produced by Janssen Biotech, a Johnson & Johnson (NYSE:JNJ) company.

NKTR-102 is being studied as an ovarian cancer therapeutic in an expanded Phase 2 study as a single-agent in platinum refractory/resistant ovarian cancer in women who failed prior Doxil therapy. An expansion arm of the Phase 2 study of single-agent NKTR-102 in platinum-refractory/resistant ovarian cancer in women who failed prior Doxil therapy is also currently enrolling.

On November 15, 2011, Nektar presented positive preclinical data for NKTR-102 demonstrating that NKTR-102 administered in combination with pegylated liposomal doxorubicin (PLD) has strong synergistic anti-cancer properties exhibiting a 100% complete response rate with no tumor re-growth in over 90% of animals. In addition, the study showed that there was no additive toxicity when combining NKTR-102 with PLD in a preclinical model of ovarian cancer.

During April 2011, the FDA granted NKTR-102 orphan drug status as a treatment for ovarian cancer. The European Medicines Agency Committee for Orphan Medicinal Products (COMP) also granted orphan drug status in July 2011.

During the Q4 2012 earnings call, Nektar CEO Howard Robin reminded analysts and investors, "in platinum resistant and refractory ovarian cancer, we completed our Phase 2 study and expansion and rolling a total of 169 patients. The data show NKTR-102 clearly has significant activity in platinum resistant and refractory ovarian cancer with the 17% overall response rate and progression free survival of 4.4 months.'

Colorectal Cancer

Decision Resources forecasts that growth in the market for colorectal cancer (CRC) treatments will decline in the face of generic competition for a key cytotoxic agent, oxaliplatin [Sanofi's (NYSE:SNY)] Eloxatin/Eloxatine, Yakult Honsha's Elplat, as well as the entry of biosimilar competitors for key targeted biological agents. The CRC market totaled $8.3 billion in 2011 and is expected to decrease to $7.8 billion in 2021 in the United States, France, Germany, Italy, Spain, the United Kingdom and Japan.

Decision Resources found that Genentech/Roche's and Chugai's Avastin will be minimally challenged as the sales leader in the CRC market over the next ten years. The firm predicts that Avastin will dominate the CRC market with total sales hovering around $2.5 billion, comprising nearly one-third of total CRC treatment sales in 2021, despite erosion from biosimilar versions and launches of new angiogenesis inhibitors Zaltrap (ziv-aflibercept), developed by Sanofi and Regeneron (NASDAQ:REGN) and ramucirumab (IMC-1121B) produced by Eli Lilly (NYSE:LLY).

In colorectal cancer, a 174-patient Phase 2 randomized, head-to-head study of NKTR-102 compared to irinotecan in patients with second-line colorectal cancer with the KRAS gene mutation is in progress, along with a Phase 1 study to explore the use of NKTR-102 in a combination regimen with 5-FU based therapy.

Glioma

Every year, approximately 14,000 new cases of malignant glioma are diagnosed in the United States. High-grade glioma patients face a poor prognosis. The estimated median survival is 12 to 18 months. Most patients with an initial recurrence of high-grade glioma receive Avastin (bevacizumab). Bevacizumab has response rates from 32% to 62%. Although Avastin has improved median overall survival, the response is short-lived and the disease almost always progresses despite Avastin therapy. Death usually occurs within one to five months after resistance develops.

Decision Resources predicts that the approval of agents to treat glioma, most notably Roche/Genentech/Chugai's Avastin, will drive market sales to more than double to more than $1.8 billion in 2017 in the United States, France, Germany, Italy, Spain, the United Kingdom and Japan. The research firm believes that Avastin, which is already used off-label to treat relapsed glioma and is in development for treating both relapsed and newly-diagnosed patients, will account for more than half of the total market in 2017.

"The treatment of glioma, especially the most malignant form - glioblastoma multiforme - is largely ineffective, and the prognosis for these patients is very poor," said Ramya Kollipara, Ph.D. analyst at Decision Resources. "Considerable opportunity remains in this market as currently-approved agents provide only modest improvements in patient outcomes, leaving a high level of unmet need."

In August 2012, Nektar announced the beginning of a Phase II study of NKTR-102 in patients with Avastin-resistant high-grade glioma being conducted at the Stanford Cancer Institute. The Phase II study is an investigator-sponsored trial being conducted under the direction of Lawrence Recht, M.D., Professor of Neurology and Neurosurgery..

Lung Cancer

On February 5, 2013, Nektar announced the start of a Phase II investigator-initiated study of NKTR-102 in patients with metastatic and recurrent non-small cell lung cancer (NSCLC).

The study is being conducted at the Abramson Cancer Center of the University of Pennsylvania under the direction of Charu Aggarwal, M.D., M.P.H., Assistant Professor of Oncology and Corey Langer, M.D., Professor of Oncology.

The primary endpoint of the Phase II study is overall response rate (ORR). Secondary endpoints include progression free survival, overall survival (OS), median duration of response (DOR) and the safety profile of NKTR-102 in patients with NSCLC after failure of second-line therapy. The open label, single-arm trial is expected to enroll approximately 37 patients who will receive NKTR-102 once every three weeks as monotherapy.

Lung cancer is the leading cause of cancer-related mortality in the United States. NSCLC accounts for approximately 85% of all lung cancer diagnoses. Platinum-based chemotherapy is the standard treatment for first line, metastatic NSCLC. Even if a patient responds to first-line therapy, progressive disease usually develops, requiring additional treatment. Currently, pemetrexed, docetaxel, and erlotinib are the only FDA approved agents in the second line setting. Genentech/Roche's and Astellas Pharma's (OTCPK:ALPMY) Tarceva (erlotinib) is the only agent approved for use in the third-line therapy.

Pharmaceutical industry analysts disagree about the future growth rate for the NSCLC drug market. For example, GlobalData estimates that the global NSCLC therapeutics market was valued at $4.5 billion in 2010 and is forecast to grow at a CAGR of 9.7%, to reach $9.5 billion by 2018. Transparency Market Research predicts that the NSCLC market will increase from $4.3 billion in 2009 to $6.9 billion in 2019 and the market is growing with a CAGR of 4.84% during 2009 to 2019. Researchandmarkets.com analysts forecast the global NSCLC market will grow at a CAGR of 2.77% from 2012-2016.

NKTR-214

Nektar scientists also used the company's advanced polymer conjugate technology to develop NKTR-214, an investigational drug that has the potential to unlock the IL-2 pathway by selectively activating tumor killing T-cells. The drug has shown promising results in animal studies. Nektar plans to file an investigational new drug application ((NYSE:IND)) for NKTR-214 soon.

In addition to the company's pain and oncology investigational drug programs, Nektar is also developing NKTR-125 (oral PEG-diphenhydramine), a small molecule PEGylation preclinical development program in the CNS area exploring improved treatment options for allergic rhinitis. NKTR-125 utilizes Nektar's small molecule PEGylation technology and is designed to treat allergy symptoms while preventing unwanted central side effects, such as drowsiness.

The company's partnerships with Bayer and Baxter also look promising.

BAX 855

On January 7, 2013, Nektar's partner, Baxter announced it submitted an Investigational New Drug (IND) application for its investigational hemophilia A treatment, BAX 855, with the FDA, following positive results from a Phase I trial. Baster will initiate a Phase II/III study called PROLONG-ATE United States in the first quarter of 2013. This study will enroll over 100 previously treated adults with severe hemophilia A to assess the efficacy, safety, and pharmacokinetics of BAX 855 for prophylaxis and on-demand treatment of bleeding.

BAX 855 is a full-length longer-acting recombinant factor VIII ((rFVIII)) that was developed to increase the half-life of ADVATE [Antihemophilic Factor (Recombinant) Plasma/Albumin-Free Method], which is the most widely chosen rFVIII in the world. ADVATE is approved in 58 countries worldwide.

Baxter screened more than 100 molecules over several years and has selected one that has the potential to maintain the safety profile and meaningfully extend the half-life of ADVATE to allow for less frequent dosing.

Through a collaboration with Nektar, BAX 855 leverages proprietary PEGylation technology designed to extend the duration of activity of proteins. The technology has been shown to be safe and tolerable, and is used in various approved treatments.

Nektar will receive milestone payments as well as significant royalties on net sales of BAX 855 upon commercialization.

Amikacin Inhale

Amikacin Inhale, also known as NKTR-061 or BAY41-6551, is under development by Nektar's partner, Bayer, to treat gram-negative pneumonias, including hospital-acquired pneumonia (HAP), healthcare-associated pneumonia (NASDAQ:HCAP) and ventilator-associated pneumonia (VAP). Gram-negative pneumonias are often the result of complications of other patient conditions or surgeries. HAP and VAP are important causes of morbidity and mortality, with mortality rates approaching 62%.

Amikacin achieved over 1,000 times greater lung exposure to the antibiotic amikacin as compared to intravenous route of administration. Targeting antibiotic therapy to the site of infection may offer superior bacterial eradication and increased efficacy, which could result in a higher likelihood of the patient's survival.

Amikacin Inhale is preparing to begin Phase III trials.

Under the terms of the agreement with Bayer, Nektar is entitled to receive up to $125 million in development milestones for Amikacin Inhale, as well as a flat 30% royalty on product sales in the U.S. and royalties of up to 25% on sales outside of the United States.

Finances

On February 28, 2013, Nektar reported the company's financial results for the fourth quarter and year ended December 31, 2012.

Nektar's cash, cash equivalents, and investments at December 31, 2012 were $302.2 million as compared to $414.9 million at December 31, 2011.

Revenue for the fourth quarter of 2012 was $21.1 million as compared to $15.8 million in the fourth quarter of 2011.

Revenue for the year ended December 31, 2012 was $81.2 million as compared to $71.5 million in 2011.

Total operating costs and expenses in the fourth quarter of 2012 were $64.5 million as compared to $50.3 million in the fourth quarter of 2011. Total operating costs and expenses for the year ended December 31, 2012 were $222.4 million as compared to $195.4 million in 2011.

Research and development (R&D) expense in the fourth quarter of 2012 was $46.4 million as compared to $33.3 million for the fourth quarter of 2011. For the year ended December 31, 2012, R&D expense was $148.7 million as compared to $126.8 million in 2011. R&D expense was higher in the fourth quarter and year ended December 31, 2012 as compared to the same periods in 2011 reflecting the costs of the etirinotecan pegol (NKTR-102) BEACON Phase III study, the production of devices for the Phase III study of Amikacin Inhale, the Phase I and Phase II studies for NKTR-181, and the Phase I study for NKTR-192.

Nektar's net loss for the fourth quarter ended December 31, 2012 was $52.9 million or $0.46 loss per share. Net loss for the year ended December 31, 2012 was $171.9 million or $1.50 loss per share. Net loss for the fourth quarter ended December 31, 2011 was $37.5 million or $0.33 loss per share. Net loss for the year ended December 31, 2011 was $134.0 million or $1.19 loss per share.

Conclusion: Buy

I think Nektar is a great long-term buy.

Nektar is a leader in PEGylation and polymer conjugate technology. Amgen, Baxter, Merck, Pfizer, Roche, UCB, and other pharmaceutical companies use these technology platforms that generate millions of dollars in royalty and other revenue for Nektar.

The $121B market cap company is primarily focused on pain and oncology. Several of the company's drugs in Phase II and Phase III development have the potential to be blockbusters.

In oncology, Nektar is developing the topoisomerase I inhibitor, NKTR-102. An FDA-approved topoisomerase I inhibitor could fill a much needed void in the treatment options available for breast, ovarian, colorectal, and several other type of cancers.

Nektar is also developing NKTR-214, an immune system oncology drug that could fill a gap in the treatment options available for patients with melanoma, renal, and other cancers. Nektar claims NKTR-214 has demonstrated a "dramatic inhibition of tumor growth."

Pain drugs represent a multi-billion dollar market. Currently, Nektar does not plan to partner its pain drugs, NKTR-171, NKTR-181, or NKTR-192. By having drugs that address acute, chronic, and neuropathic pain, Nektar has the foundation to become a major player in the pain drug business. Nektar believes these drugs have "multi-multi-billion dollar" potential. In addition to serving a medical need, NKTR-181 addresses the opioid drug abuse epidemic by designing abuse deterrent drugs, which is a key issue for the FDA. The FDA even granted NKTR-181 fast track status.

2013 could be a transformational year for Nektar. With several promising, late stage investigational drugs that could come to market in a few years and a highly respected, revenue generated technology platform, Nektar is well-positioned for the future.

Source: What Is In The Future For Nektar?